AS I have mentioned on my previous columns before, if you are in a position where your property value is much lower than your current mortgage balance (underwater value) you will need to ride out this very scary real waves for the next 5 to 8 years before you see any real equity in your property. For those who have good paying jobs, those who can actually afford and qualify for loan payments, good for you. If your intensions are to keep your house, just try to pay down the balance and hang in there.
But for those who are making enough to pay for their mortgage and living month to month without any room for any savings or room to enjoy your earnings, I want you to rethink your situation and listen and learn about what your options are and what our nations economist are predicting about what will happen to real estate. Don’t close your eyes and roll the dice and take a chance, this is not a $100 bet for 7 or 11, this is a couple of hundreds of thousands of dollars which probably translate to an average of $ 3-5,000 worth of month payments to you. Remember to multiply for 12 to get your annual spending and multiply again by 60 to get your 5 years budgeting plans.
Don’t live day to day and hope things will turn around fast, because it most likely won’t. I certainly hope it does for all our sake, but I have to be the one looking out for us and hopefully advise you well.
For those who can afford their homes, if you are in a good area, if you have put in more money to your property and are enjoying your home. Hang in there, be conservative and start to save. Stop spending on unnecessary items that can wait, get your adult kids to help in contributing to your household expenses. I have a client who rented his other home out to his kids and he took the rent money saved it for a couple of years and gave it back to his son to buy a house. Which I thought was really a good idea and it benefited all parties equally. The father is very peaceful now knowing his son is sitting on a home with some equity and has learned how to be independent. The son is more than thrilled knowing his two years of rent money became his down payment to his new home.
For the homeowners who are knee deep in debt because of the mortgage balance, take your losses now and decide what is your best option. Short Sale, Deed in Lieu or Loan Modification (if u qualifies) but make a decision to resolve the problem, last thing u want to do is to walk away from your problems and bury it. Because it will surface someday soon and it will haunt you for many years to come.
I read up on some new about what might happen to our Real Estate prices and here are probably the most conservative realistic assessments that I would agree to. And I quote:
Home prices are expected to grow at an average annual rate of just 1.1 percent through 2015, The Home Price Expectations Survey, conducted by Pulsenomics LLC on behalf of MacroMarkets, is based on the S&P/Case-Shiller index over the next five years.
Pulsenomics surveyed 111 individuals, ranging from economists and real estate experts to investment and market strategists.
“Expectations for home price performance in 2011 have become somewhat less negative,” commented Robert Shiller, MacroMarkets cofounder and Yale University professor of economics. “Unfortunately, the average projection is somewhat more negative for each of the following four years.”
On average, respondents expect prices to decrease 2.53 percent this year and 0.13 percent in 2012. They expect increases the following three years starting in 2013 with a 1.77 percent increase, according to survey results.
“Markets and government institutions are visibly struggling to respond consistently to an unprecedented rash of crises and conflicts. These struggles diminish confidence, which compounds the underlying economic stresses and lowers expectations,” Shiller stated.
In addition to documenting home price projections, Pulsenomics asked respondents for their views on the government’s role in the housing market.
Seventy-three percent of respondents believe the government is “highly likely” or “likely” to implement new policies within the next 12 months.
Almost half – 49 percent – said further government intervention in the market is unnecessary, and 57 percent said further action by the government is “undesirable.”
“This data suggests that regardless of when and how housing recovers, controversy will persist regarding the role of government in the market,” said Terry Loebs, founder of Pulsenomics.
Those who stated that more government intervention in the market is necessary or desired cited refinancing, modifications, rental programs, and home equity conversions as ways the government can improve the market.
MacroMarkets LLC is a financial technology company. Pulsenomics is an independent research and consulting firm.
Okay, now will you please put this in front of your plans and goals and make sure you don’t shun this and think that values will go up 10-15% the next five years. It will slightly decrease before it starts to go back up. Primarily to me, new construction has to come back before everyone of us moves up a notch. Why? If there are buyers for new constructed homes, that means there will be jobs opening for that tier that left us three-four years ago. If they come back, money will flow everywhere from service, food retails etc. This will even help the rental market to get better and the cycle will begin to normalize.
My advice is to be conservative and save up for better days to come, it will come for sure just a matter of how soon.
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Thanks for your inquiries and support, please call Ken Go of 1st Innovative Finance Group for your mortgage and real estate questions or needs. Call 562-697-7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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