How to dig out of hole in a tough real estate market?
Basic human greed is the necessary ingredient for turning around the tough market we are experiencing. Even when the chips are down and consumers are faced with tremendous uncertainty in financial markets, families still dream about improving their housing situation. When greed outweighs fear, the housing market will turn.
My husband and I have lived in the same home since 1982. It is a spacious three story brick traditional in the Emory University neighborhoods of Atlanta, Georigia. Despite all the economic bad news we are being bombarded with from evey media outlet imaginable, we still took a few minutes this morning and looked at some "bargain" homes", priced far above our pay grade by the way, that are available in our community.
It occured to me while scrolling through photos of one very nice home on the MLS website that at some point greed will be the catalyst that finally gets the housing market in gear again. There will be a tipping point where families will decide they want that dream home bad enough to chance going against the grain and making a purchase. When a a couple fo families make this decision, others will jump on the bandwagon so they don't "miss out" on these incredible deals. When will this happen?....that is the golden question.
OBSTACLES TO HOUSING RECOVERY / Steps to a Housing Recovery
Potential buyers have a couple of hurdles to overcome before they will "make the leap" and purchase a home they have long considered way out of their price range.
1. Potential buyers need some reassurance from the marketplace that they are not going to be terminated. Job security has gone out the window and almost everyone considers their job to be threatened by our national economy. Our government leaders are working on this but we do not feel reassured at this point in time,
2. Buyers have to improve their credit scores to qualify for mortagage loans in the "new" economy. Lender guidelines have tightened and many potential buyers simply do not qualify.
3. Potential buyers must build up a cash down payment equivalent to 20% of the purchase price of their "bargain" dream home. Note: FHA has more flexibility.
4. Where homeowners are "upside down" in the mortgage loans on their present homes, they must negotiate short sales with lenders and bite the bullet on losses they incur. Congress could provide a lot of assitance in this area by removing the tax implications of debt forgiven by a lender.
5. Buyers who already own a home must get realistic about what their present home is worth in today's market. If they want to sell these homes (so they can purchase the "dream home"), they have to deal with the emotional aspects of the decline in value of their present home.
Our problems are man-made, therefore they may be solved by man. No problem of human destiny is beyond human beings......John F. Kennedy
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