06 Nov 08 Government is Going to Bailout Homeowners

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I read Jay Thompson’s blog at least once a day. Jay is an amazing blogger, an educator, an Arizona real estate broker and the owner of one of Arizona’s best brokerages, Thompson’s Realty - okay, enough about Jay.

Yesterday, Jay posted a very informative post-titled “Obama on Housing“; as the title suggests, the post talks about what Obama has mentioned, or plans to do to fix/repair/jump-start the troubled residential real estate market. A comment by a blogger on the post got me thinking about a current government proposal  - Reset mortgage loans so that the principal on the loan matches the home’s current market value -. I know what you’re thinking: “Is this going to be done monthly as home prices decrease?” and “Who decides what the current market value of the home is?”… sorry, I don’t know.

In the comment, the blogger mentioned that he was “dead set” against the government resetting loan values to match the current market value of the home. There are many reasons why the government shouldn’t reset these mortgages… it’s not their responsibility, not something all taxpayers should pay for, not fair for those homeowners that are not under on their home…the list goes on and on and on. I can see why the blogger, and others, would be against this move by the government.  I’m still not sure I’m for resetting mortgage principals and getting rid of negative equity, but I can’t help thinking of what could happen if the government decides against resetting mortgages.

In an earlier post, I mentioned that real estate has traditionally created wealth for Americans and that many Americans depend on this wealth as part of their retirement. As of right now, for millions of homeowners, that future potential wealth is off the table. For many homeowners, it’s going to take close to a decade, if not longer, for their home to appreciate back to what they paid for the home. I probably don’t have to tell you that 10 years of equity typically does a lot for a family besides retirement…new appliances, consolidating debt, school tuition etc… In addition to the overall economic effect of millions (approximately 7.5 million) retiring with less, moving less and buying less of everything, nearly 60% of the mortgages that exceed a home’s value are in Nevada, Arizona, Florida, California, Michigan and Georgia. Negative equity shared by many homeowners in these states could destroy these economies for years and inhibit growth throughout the rest of the nation. If the reset is not done, millions of homeowners may choose to foreclose on their home, which would only keep home prices declining and may end up costing everyone much more. It seems like a lose-lose situation regardless of how you look at it.

What do you think? Should the government reset negative equity home loans, and if so, would you think that; if you didn’t have negative equity in your home?

Tags: arizona, California, florida, foreclosures, georgia, hope for homeowners act, house values, jay thompson, michigan, nevada, obama on housing, phoenix real estate guy

24 Oct 08 Pasta, Poker and Pets Party Tonight!

Tonight is Lost Our Home Pet Foundation’s Poker, Pasta and Pet Party and I am really excited to attend. Lost Our Home Pet Foundation is a nonprofit organization who rescue, foster, heal, adopt and advocate for dogs or cats who have been abandoned or left behind due to foreclosure or eviction. They provide options for families to keep their pets. They are also a source for real estate professionals when they encounter a pet in need, while inspiring community action on their behalf.
I believe that this is a truly worthy cause and I am very excited to be a part of it. I have to be honest this is my first event of any kind and I am a little nervous. The board members are all really great and I have no doubt that this will turn out to be a great evening.

What I am looking most forward to besides meeting with everyone is the poker tournament. I invited Jay Thompson the owner of the best damn real estate blog on the planet to come down for the poker tournament, however he had plans already and I didn’t give him really any notice. He did write a very kind post about the organization and went above and beyond by offering an advertisement spot for LOHPF on his blog!

I will write about the event next week and post some pictures too.

Tags: board, foreclosures, Lost Our Home Pet Foundation, members, organization, poker, Real Estate, tournament

09 Jan 08 Real Estate in 2008

It’s a new year and several experts have already released their predictions of what may come of the real estate market in 2008. After reading several predictions, opinions and statistics there is one thing that almost everyone agrees on… there will be more foreclosures in ’08.

After 2007, with an unbelievable 1.39 million foreclosures, it’s hard to believe that 2008 could be any worse, but according to Moody’s Economy.com we could face as many as 1.67 million foreclosures. It’s easy to see that- that’s a huge increase, approximately 280,000 more foreclosures. An article by Harold Brubaker of Philly.com states that the average amount of foreclosures annually for the period 2000-2006 was 872,764. In 2008, it looks like we will experience a little more than a 52% increase over the 7 year average beginning in 2000 and ending in 2006.

What’s this mean for the national real estate market? In short, more economic instability, a greater supply of homes, and a decrease in the price of homes throughout much of the United States. For those of us that bought homes over the past few years we are looking at a greater loss on our investment. The little good news is that, on a national basis, our real estate was overpriced and a decrease in home prices will make homes more affordable for many renters and first time home buyers.

There are some experts stating that the market will bottom out in the next 6 months and others speculate that this won’t happen until 2009 or later. Regardless of who’s right and wrong it’s important to our overall economy that we continue to buy homes when we need and can afford them. Waiting until the market bottoms out will just make things worse and prolong the current real estate dilemma.

Pay attention to your local market – real estate is, and always has been local. Don’t read too much into what experts say – they couldn’t predict the exact date of the real estate bust and it’s likely that they can’t predict when things will get better.

Tags: economic stability, economy, foreclosures, harold brubaker of philly, market trends, national real estate, Real Estate, real estate market