I have been an active investor for almost 30 years and have owned hundreds of properties during the majority of that time. I have been a real estate broker in multiple states for many years and have made a large portion of my income by coaching, speaking and training people in real estate and related industries, please consider this as you ask yourself the following questions . . .
Who decided that “The American Dream” is/was home ownership?
Was it the National Association of Realtors?
Any agenda there?
Do they EVER tell the public the truth?
If in most parts of the country today you can live in and enjoy a home for a fraction of the cost of owning why wouldn’t you?
What will happen to real estate taxes as the revenue received by our state and local governments continues to shrink from fewer real estate transfers, lower market values, less builder and developer profits to tax, higher defaults where taxes aren’t being paid etc?
Will our governments some how start operating on less?
Will they actually cut back?
Will they attempt to raise taxes?
How will that impact demand?
How about insurance . . . as more and more premiums aren’t being paid for homes in default, what will happen to the rates being charged to those who are actually paying?
As more and more home owners find themselves in trouble, or simply choose to walk away from properties they are struggling to keep, or that they are just upside down in . . . what will happen to the supply of “distressed properties” on the market?
How will that impact prices?
As lenders continue to be forced to tighten standards and credit continues to more and more difficult to find, what will continue to happen to demand?
As supply goes up, and demand continues to stay low, or perhaps lowers further . . . what will happen to prices?
If you don’t believe in, or want to acknowledge, the law of gravity and you jump out of a tree . . . what happens?
Does that happen because the law of gravity applies whether you want it to or not?
Have you ever heard of the law of supply and demand?
Does that law care what you want to believe?
Realistically, which do you see happening first – supply somehow magically disappearing or demand miraculously reappearing without credit being available?
Do you think lenders can go on indefinitely not receiving income on loans that have been made, or do you think that foreclosures are going to have to increase significantly over the next several years?
Did you know that in most parts of the U.S. today that even if demand increased to the insane levels we saw at the peak of the market, current supply numbers would still grow as even that level of demand would not be enough to absorb the supply?
Can you say “too many rooftops?”
What can you do today about that fact that the number of dwelling units in the US was permitted to grow at a pace far in excess of the number of households?
How do you get rid of supply?
Are there options other than natural disaster or allowing the time to pass to absorb the supply?
Could you just burn it down or demolish it?
Do you think that’s a realistic option?
How long do you think it will be before supply is absorbed?
How long do you think it will be before demand returns?
Do you think the media will let us soon forget the pain of millions of distressed homeowners?
How will that impact demand over the next decade, or more?
What if you don’t live in a market where prices appreciated in a ridiculous manner, are you immune to this correction?
Or do the people buying US mortgage backed securities simply say “I’ve had enough and am not willing to provide more capital to buy paper that has a value far less than I was promised and for which I can’t collect on the so called insurance I was promised?”
When the capital goes away and credit is no longer available does it only impact the high appreciation markets or does it impact all non cash buyers in all parts of the country (and eventually Canada, the UK, the balance of Europe and in about 5 years or so most of Asia?)
What will the buyers who have come into the market over the past 1-3 years with little or no money out of their pockets, do when they realize that the $250k debt they have is costing them $2500+/mo for something that is only worth $150k?
What are they likely to do when they realize they could live in the same type of property in the same neighborhood for $1000/mo?
What about the people who bought into the negative amortization loans, you know where the amount they owe grows each month while the underlying asset value declines . . . what will happen to those loans as the majority of them convert to huge fully amortized payments peaking around 2012?
Will there be a few more defaults across the country between now and then?
Is there a realistic, logical possibility other than market forces, supply and demand etc working themselves out, such that we see a bottom around 2015 +/- and then we regroup?
If you answered yes to that last question – what are you smoking?
What if after booms we always see busts which take us back to, or perhaps below the 100 level on the Shiller index? Would that mean that if we peaked at 199, without adjusting for inflation, we would most likely see an adjustment to prices in the range of 50-70%??? If you knew the 2005 value of your home may well drop by 50-70% before a bottom is reached . . . what different decisions would you make?
Want to see the charts? Thank you Alex!
http://www.thedigeratilife.com/blog/index.php/2007/07/09/historical-financial-charts-are-you-invested-in-these-markets/
I live in Naples FL; I reside in a home that at the peak was near $1,000,000. Today I could buy it for under $600k; it will bottom in another 7 years or so under $400k. If I can live in this home for $1500/mo, not have any capital at risk, not worry about real estate taxes and insurance escalating rapidly, not have to mess with repairs, etc . . . how would owning be a dream?
When you dream about hundreds of thousands of dollars disappearing in equity, and paying monthly expenses 4 times what you need to be paying . . . what do you call that type of dream?
American dream or nightmare?
Is this all doom and gloom super negative stuff?
Or do you have the ability to see the opportunities and possibilities in this?
Did you know that the greatest opportunities to make a real difference occur when people are hurting?
Do you think that 95%+ of Americans will be worse off financially tomorrow than they are today, and worse still in a month, even more so in a year and far more so in a decade, or two?
Are you going to be one of them?
Can you help any of them?
Would you like to?
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Want to learn to see the beauty in all of this? The possibilities and the opportunities to truly help others? Email “help me to see” to info@trgcoaching.com
