How will we persuade the disillusioned to believe in real estate ownership again?

By
Real Estate Broker/Owner with Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes

Three weeks ago, I read Andrew Lenza's post What the Mind Has Spawned, the Hands Have Wrought: The Weighty American Dream of Home Ownership. 

Andrew's post dealt with broken dreams, with disillusioned former homeowners, in Andrew's words, "Too weak to lift another Dream, too broke to afford a new one".

There were an estimated 1.2 million foreclosures nationwide in 2006, with a significant increase in 2007. 

And it's not over yet.

How will real estate professionals bring the millions who have become disillusioned with the concept of home ownership back into the fold?

Over three-quarters of a century ago, when the Great Depression threatened home ownership in America, the government responded by making a commitment to the "American Dream" of owning a home.  And since that commitment was made, the result has been a tremendous boost to the American economy, an engine that has sustained and fed our economic growth over multiple generations.

Today, the disillusioned feel the rug has been pulled out from under them.

Do we just write these people off?

Once the blame game has run its course, once real estate agents and mortgage brokers have finished lecturing consumers who may have speculated in real estate or just plain folks who overextended themselves in housing and short-term credit, the problem will remain. 

All the lectures and moralizing in the world won't make this go away.

The ranks of the disillusioned are growing. They do not represent a tiny or insignificant segment of the American publc.

How do you suggest we restore their belief in the American Dream of homeownership?

Will these folks trust our industry again?  Will they trust themselves enough to try again?

Posted by

Contact Broker Eric Kodner with Wayzata Lakes Realty about Minneapolis & Saint Paul area properties, including Lake Minnetonka, Edina and the Minneapolis City Lakes area (Lake Calhoun, Lake of the Isles, Lake Harriet). We also sell on the Saint Croix River and on Lake Superior, including Bayfield, Wisconsin and Madeline Island homes.  With sixteen years experience marketing and selling waterfront properties in Minnesota and Wisconsin, we know Lake Minnetonka and Madeline Island real estate.

Wayzata Lakes Realty LLC (Minnesota) and Madeline Island Realty LLC (Wisconsin)

Real Estate Brokerage licensed in Minnesota & Wisconsin

Phone or Text Message 612.670.2539

EMKodner@Gmail.com  or

MadelineIsland@Gmail.com

Wayzata Lakes Realty

 

 

 

 

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Rainmaker
1,057,869
Steve Loynd
Alpine Lakes Real Estate Inc., - Lincoln, NH
800-926-5653, White Mountains NH

I was joking with a fellow broker today "If every licensed real estate agent purchased one foreclosure property right now we could wipe out the problem". The problem is if that actually happened then the consumers would blame agents for stealing their opportunity rather than seeing it as attempting to right our own ship. It's tough to win one even when you are on the home team. Steve

May 31, 2008 06:32 AM #1
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Steve, you make a good point.  We can't buy our way out of the foreclosure crisis.

I'm wondering how we'll deal with the aftermath.  Are we supposed to just write off a couple of million people, as if they don't exist?  There's a problem here that's begging to be solved.

May 31, 2008 07:12 AM #2
Rainmaker
662,741
Randy Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

I think that when these losing owners do come back in the market, they will be much better educated and less likely to repeat history.

May 31, 2008 07:53 AM #3
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Randy, I hope they DO come back.  All the emphasis on punishing and attacking those who've been foreclosed upon is like kicking someone when they're down.  Few in our industry (or in government) have given any thought to how we're going to bring them back to home ownership.

May 31, 2008 08:06 AM #4
Rainmaker
1,042,380
Charles McDonald
Charlottesville Real Estate Solutions - Charlottesville, VA
REALTOR®, Blogger, Principal Broker®, Owner

I showed a client (who has been renting for a year and a half) 3 homes yesterday and we are ratified. People are starting to see the values.

I may do a post on this one... stay tuned :-)

May 31, 2008 08:18 AM #5
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Charles, I'll be watching for your post.  I enjoy reading your perspective on the market!

May 31, 2008 08:29 AM #6
Anonymous
Blogger To Be Named Later

Eric, thank you for the gracious link. It is an honor for my name to appear on your blog. You raise such salient points -- how will the consumer trust the process again? 

Unfortunately, although asset bubbles circulat from stocks, oil, gold, fine art, Pokemon cards, real estate the one true constant is that the layman devoid of resources of expert guidance buys at the top, sells at the bottom and never ever enjoys the recovery in prices. 

I sense a recovery around the corner. 

Jun 01, 2008 04:33 PM #7
Rainmaker
1,768,353
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Hi Eric - Over the last few years there has been too much of an emphasis on homes as investments. Looking at a long-term historical view, real estate has appreciated at about 6-7% per year. The huge spikes of a few years ago and the corrections we're seeing today aren't normal.

Instead of investments, people need to think of home ownership as a lifestyle choice, a source of pride, a way of putting down roots and getting involved in the community. Many will find the intrinsic benefits are just as worthwhile as the financial ones.

Jun 01, 2008 04:47 PM #8
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Andrew -- This post merely picked up on your own excellent post by asking a future question that agents and brokers should ponder. 

We can't just write off a couple million consumers and say "oh well, tough luck for them, but we have to move on".  Many of those who were foreclosed upon were NOT speculators.  It's too simple for industry folks and others to say "I've got mine, too bad for you".

I wrote a similar post on this subject a couple of days ago:

"I've got mine"

Jun 02, 2008 05:00 AM #9
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

John -- Yes, a lot of people got swept up in the investment frenzy, especially in the recreational/second home market.  This was a major contributor to the problems we're all seeing in the market today.

Helping to re-shape and create a more realistic view of the value of real estate would be one GOOD example of doing something positive for the consumer.

Jun 02, 2008 05:03 AM #10
Rainmaker
44,615
Rich Quigley
Chicago, IL

Eric-Very good post and a good question. I think we have to (1) find people who would like to buy and (2) earn their trust. I think most people are nervous about making an investment that they feel may decline in value. I would, and do, council people that if they can get a home for a reasonable price and plan to keep it for a while, they should be OK.

I've actually told some potential sellers that, unless they absolutely have to sell now, don't put the house on the market.

We need to reduce inventory everywhere and we have to clean up the tarnished reputation of real estate.

Illinois has enacted some tougher consumer protection laws, which is certainly a step in the right direction.

The whole economy is in trouble, so everyone needs to make informed decisions. I think that is where we can help. It will take time.

Jun 03, 2008 02:45 AM #11
Rainmaker
428,555
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Rich,

What kind of real estate-related legislation has Illinois passed?  Is it aimed primarily at mortgages or at other aspects of the industry?

Jun 03, 2008 05:33 AM #12
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Rainmaker
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Eric Kodner

Wayzata Lakes Realty: Twin Cities, Madeline Island
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