TODAY'S HOUSING MARKET ANALOGY: A Giant Bloodsucker Feeding On Itself After Sucking The Life Out Of The American Dream...

By
Real Estate Agent with Douglas Elliman Real Estate 30HA0800896

A GIANT BLOODSUCKER SUCKING NTHE LIFE OUT OF THE HOUSING MARKETHOUSING MARKET ANALOGY: A Giant Bloodsucker Feeding On Itself After Sucking the life out of the American Dream..

The housing market is like a giant blood sucker feeding on itself --the market needs "blood" or money to survive--(to be able to sell those troubled houses), and there is so little of it and money is so hard to borrow that in order to survive, the sucker has turned inward on itself and the houses that can't sell now are added to the huge pile of already distressed homes.

There is now a never ending supply of vacant, empty shells (Bloodless) rotting into the ground! I have always heard that an empty house deteriorates much faster than one that is occupied....that is a fact and  there is evidence of it everywhere now! (Like carcasses across the land!)

 

 

With getting a loan difficult at best and owners wanting to "get out" from under the enormous costs of running and managing a home, where do they go??? How do they get out from under the burden of home-ownership?

  • They try to sell it
  • They try to short sell
  • They rent it out
  • The walk away as a last resort

None of these are ideal--unless you don't mind being a landlord!

The "American Dream" of owning your own home was always a rare one; it only came after years of sacrifice and hard work. It was the prize for a few who had discipline and an awareness  as to what owning a home really means: Expenses that can be unexpected and dramatic, a life long commitment to monthly payments, HOMEOWNERSHIP IS THE LOWEST SINCE THE GREAT DEPRESSIONthe risk of a bad housing market, and the value dropping precipitously in a prolonged down market.

RENTAL OPTION:

There is a shift going on that we, as real estate professionals need to be alert to it....Home-ownership has dropped precipitously in the last 2 years. Home ownership is at the lowest rate since the Great Depression! It is at a very low 65.1% versus almost 75% in 2007.

Figure 5. Annual Homeownership Rates for the United States and Regions: 1970-2010

In my opinion, we are just beginning to see the shift...The shift away from home-ownership to renting a home as an option. The rental option can be the answer to a huge problem and is one being considered more and more under the current housing pressure. Rentals are becoming the way of the real estate market.

What do we do now??? How do we advise a seller who needs to move for his work...What do we tell the buyer who is still trying to decide if they want to rent or to buy???

These questions have never been more difficult to answer for real estate professionals....We need to be prepared to advise the public to rent a home if they truly can not afford to buy. Unfortunately, home-ownership is quickly becoming a thing of the past for many middle income families. They need to find alternatives and fast.

THE AMERICAN DREAM OF HOME OWNERSHIP APPREARS TO BE FOR A PRECIOUS FEW NOW--I PERSONALLY, AM GOING TO KEEP UP ON THE MARKETS AS IT SHIFTS EVER MORE QUICKLY TO A RENTAL MARKET MENTALITY. 

 

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Rainmaker
922,413
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA

unfortunately I think the other thing we need to do is be knowledagle or know someone who is we can refer - about short sales.  Thanks for your post.

Oct 09, 2011 01:42 AM #31
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Chuck: Good for you and your marketplace--keep up the good work!

Marge: That's all I see; homes in foreclosure, distressed homes and no one can sell them...the number of good houses is much larger but these distressed homes are appearing more and more in the good neighborhoods and it is scary! One house that has a pool, great yard, beautifully maintained home with all up-dates necessary to get top dollar in a sale, can't sell because they are asking $1.250 and right next door is a foreclosure that is literally overgrown with the landscaping--and that is just after 4 months. Imagine what it will look like in another year!!! Those poor neighbors can't sell at ANY price right! 

Jane: Many markets are just like that....thsi one is headed that way. I think that with all the uncertainty in the economy it will continue and build for who knows how long!

Don: I agree! The rates just went below 4%!!! That is unbelievable to me---whay are not more people buying right now??? I will tell you that as long as the buyers think they may be getting a raw deal and if they wait they may get the house they love at 1/2 the asking price, you will not see anything change for a while---reminds me of the late 80's after the crash of '87 when houses sat for literally 4 years before they sold!!

Oct 09, 2011 01:49 AM #32
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Jon: You just named all the things that are affecting this market--how long do you think it will take to overcome these issues???Anybody want to make a guess???

Sandy: I agree---if the market comes back, then we can re-think the recommendation...butright now i am not comfortable looking to sell sell sell when there is no to buy buy buy!!! Personally, I am going to focus on rentals for the time being!

RuthMarie: I can empathize with those who have the money to buy but don't---I don't want to condem the American public by saying they are stupid to not buy now. I think there is something greater afoot! I think that when it comes right down to it--people really can't afford to buy now--at any price! The reason being: when they calculate the capital gains if they have to sell first, the increase in property taxes recently, the possiblity of losing the mortgage deduction, the cost of food which has almost doubled in a year, and the FEAR of losing their job, or their business if they are self-employed, plus the possiblity we are going into another recession--then the risk is just too great for them to step up to the plate!

Oct 09, 2011 02:01 AM #33
Rainer
76,593
Vance Booher
Re/Max Select, SRES - Greensburg, PA

The fascinating thing about this is the variety of experiences we are all having across the country.  The Hamptons isn't Vegas, isn't San Diego and it sure as hell isn't Western PA.  Here the economics truly do not support renting vs buying.  There are certainly many folks looking to rent a 3 or 4 bedroom single family home, but they are mostly doing that to scope out the region before jumping in to buy.  Our market is certainly soft like pretty much everyone's but it is a far cry from the coastal and resort area disasters.  Good buyers are getting qualified.  Loans are not impossible.  Rates are deliciously low.  Here at least, I think we are moving ahead.

Oct 09, 2011 02:02 AM #34
Ambassador
2,081,569
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Down here in the Clearwater area of the Sunshine State home sales have picked up and the inventory is shrinking......that is good news for the local economy!

Oct 09, 2011 02:07 AM #35
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Phil: I woke up in a good mood then read the newspaper and saw that the rate of home ownership is lower than it was during the Great Depression!!! Besides, whenever I hear Obama talk about people paying their "Fair share" and "redistribution of wealth" I break into a cold sweat!!! It may just be that the goal of the average American is to make LESS than they have in the past just so they don't get soaked for the additional taxes!!!

Fernando: Hope I didn't keep you in the sack! I am having trouble coming to terms with the idea that there will be so many fewer people with the money to buy as we go forward; so it makes sense, does it not, that we start to aggressively adjust OUR thinking???

Barbara: What confuses you? Do you not think the buyers out there are NOT confused? Join the crowd!!! :)

Mike: It is sad...so sad; and it has been going on for 3 years now! This time may be looked upon as the "Great, Great Depression" because I think that is what we are experiencing....

Michael: And that is another nail in the coffin of home buyers!

Oct 09, 2011 02:19 AM #36
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Bob: At the first of this year I was very excited to see the numbers of buyers pick up--there was a sense that we had gone through the worst of the worst and buyers were getting back into the swing of things--now, the idea of another dip and the fact that unemployment remains high, housing has not shown the growth we were expecting and the public at large is in a quandry about the government and it's roll in things....Well, it just ain't happenin!

Gabe: Lucky you! I thought I lived in area that is an exception too! Not so--it is hitting us hard again and unless something major chages, we will end up back where we were in '08 and '09!

Vance: That's great--I hope it contiues...We had a great market going until the bottom dropped out of it in August!

Jeremy: Thank you!..Schools here don't mean that much because it is not a primary home market--I can see why that would be important in your area though...

Joy: I agree; I have not touched short sales up to this point because unless you have had training and some experience it can be downright dangerous!

Oct 09, 2011 02:37 AM #37
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Barbara-Jo: That's great---obviously your market is not affected so much by WallStreet...that is the lions share of our sales so we are always at the effect of the stock market!

Oct 09, 2011 02:39 AM #38
Rainer
428,753
James Loftis
RealEstate911.com - West Palm Beach, FL
RealEstate911.com

Hello Paula,

  Great analogy and some great points on the current real estate market. Thanks for sharing with us.

Oct 09, 2011 03:10 AM #39
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

James: You are more than welcome! Looks like there are still many markets doing well--so I think that this applies to those who are witnessing a shutting of the valve of the supply of buyers!

Oct 09, 2011 03:16 AM #40
Rainmaker
810,127
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Paula:

I think we are doing better.  But who can tell for sure if this is a short term recovery or a trend.  Hope it is a trend.

Oct 09, 2011 04:58 AM #41
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Evelyn: I hope it is too; just don't get that message from the buyers right now...I thought we were coming out of the doldrums very nicely at the beginning of the year but things have chnaged since then...

Oct 09, 2011 07:03 AM #42
Rainer
284,468
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Paula -- Thank you for clearing up one point - that you are looking at super jumbo situations.  FYI - just heard today that Jumbo & Super-jumbos are becoming more available again.

Also, in our area - Seattle-Tacoma Metro -- the rental market is getting to the point that it is cheaper to buy (without counting tax savings) that to rent comparable housing.

Oct 09, 2011 04:47 PM #43
Rainmaker
749,686
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

The reasons to buy instead of rent are as valid as they have ever been. We are in a historic period of low prices and low interest rates. What is stopping what should be a strong buying environment is the world-wide economic uncertainty that is ceaselessly thrust into our faces and impressed upon our minds. If you are out of work, you can’t buy a house of pay for the one that you own. Of course, it is also difficult to pay rent if you do not have a job. If you are worried about your job, you will not take a new mortgage for the next 30 years.

This too, will pass. Not soon enough, of course.

Oct 09, 2011 05:09 PM #44
Rainmaker
453,706
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

Absolutely!  You have hit the nail on the head.  Rentals are on the rise for sure in my area.

Oct 09, 2011 10:07 PM #45
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Steven: Well that may be happening there, I ust don't think it is going to be coming this way too soon..otherwise the bankers would be letting us know!

Joohn: I am using that "This too shall pass" mantra a lot lately because it is so hard to see how things are going to work out--it looks very very bleak to me!

 

I at least will give rentals a good old try; can't live on air!!

Oct 10, 2011 12:42 AM #46
Rainer
181,841
Tatyana Makarov
Coldwell Banker Residential Brokerage - South Windsor, CT
Your Greater Hartford Area Realtor

Hello Paula,

what a great analogy! I couldn't agree more... I just hope that we will be out of this hole pretty soon...

Have a great weekend.

Oct 14, 2011 06:56 AM #47
Rainmaker
500,719
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...A Local Expert in all The Hamptons

Tatyana: I do too--it has gone on lonmg enough for me!! You have a great weekend too!

Oct 14, 2011 12:02 PM #48
Anonymous
Peter Michelbach

Hey Paula -- unfortunately, have a terrible flue - can't think clearly...just 2 words - out of Solidarity - you speak the truth! - let's hope that the voices of those heroes who have the courage and stamina to have their views peacefully raised in Wall Street will be heard Worldwide... in New York, London, Berlin...new policies implemented and proven ones revived from the dust of the closet so that ALL - including the other 99%!  can live in dignity, safety and harmony. Thanks for the Post.

Oct 16, 2011 02:11 AM #49
Rainer
20,179
Carol Babington
Carol Babington Associates - Las Cruces, NM
CRB, CRS, CIPS

It is a trend among realtors ~becoming property managers. Ultimately, the market will turn again. It's  just a question of

who will be left standing.

Oct 29, 2011 09:32 AM #50
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Rainmaker
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...A Local Expert in all The Hamptons
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