The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
The Losers …
I was reminded by several readers that I did not deliver what was promised… the identification, if not at least a description, of the losers in today’s market. Guess I was trying to avoid labeling and discouraging folks… You see defining the losers in today’s real estate market is a bit more tedious and difficult. With that in mind here goes…
With the notable exception of the nomadic… those folks who are likely to move or be transferred every three years or less, the big losers are those who are renting. Rents are definitely on the way up and rental properties in “good” neighborhoods in short supply as the number of persons now unable to buy due to foreclosures, short sales, bankruptcy, job loss, and pay reductions grows daily putting an ever increasing demand on a commodity already in short supply. These folks will be missing the opportunity to participate in the unbelievable buying conditions in today’s real estate market while being required to pay rents on the rise with none of the advantages of home-ownership.
A second class of loser strangely enough is the homeowner who decided to offer their home under a lease purchase agreement since they could not sell it for the price they wanted. The reality of the lease-purchase option is that the option to purchase is rarely exercised. In a declining market, as the one we are currently in and will remain in for at least the next 24 -36 months, that home will be worth less at the end of the lease period than it was at the beginning… and usually the home will be in worse condition that when leased… I have seen clients lose as much as 20% in the market value of their home during that lease period. True enough that some of that loss was offset by the non-refundable deposits and lease payments (if all those payments were collected) and the home not overly damaged or worn; however, those are almost never sufficient to offset the loss in value. And so, the homeowner remains the owner of an asset of less value often having moved on making decisions based on the assumption that the sale would be consummated… a recipe for loosing.
You know well we are experiencing the Great Recession… Not quite the Great Depression but still a period of great opportunity for those capable of acting with knowledge and foresight. The Great Depression made many wealthy, because they understood the value of buying while conditions were right. At the same time many were left behind… they lost the opportunity to improve their lot because of fear of the future… buying in a down market. My wish for you is that you will not be frozen into inaction because of a lack of knowledge or the presence of fear… I want you to be a winner.
May the market be with you.
