Malaise is a word we don't use lightly. But we threw it out there a couple weeks ago after hearing from normally upbeat real estate sources in our Public Insight Network who are having a hard time staying positive.
With the worries of real estate professionals and the concerns that a next wave of mortgage problems is approaching, we wanted to step back and let you tell us what's happened to your housing or mortgage in the recession.
But you have to be brief. Six words.
We've challenged readers before to tell us stuff in six words. You've produced some telling, creative responses. Check out what Minnesotans told us when we asked: Your career. What happened? Six words.
Now help us all understand the impact on housing and mortgages.
For those who've been able to keep their heads above water with their homes and jobs, this is a great time -- mortgage rates are their lowest in decades, making it really attractive to buy or refinance.
Of course, if you've lost your job, the low rates won't help. You likely won't be able to refinance and you'll have a hard time hanging on to what you've got. Minnesota foreclosure rates outpaced the nation in May.
So tell us what you've seen or experienced when it comes to housing and mortgages. But make it short!
If you're renting your home, no doubt you've been affected in some way, too. Please tell us.
Post something below or use our handy form.
Like we did with Your Career. What happened? Six words., we'll share your housing experiences and stories.
NOTE: Our efforts were inspired by SMITH Magazine's ongoing Six-Word Memoir project.
There are 140 million personal residences in the US. Today, there are 19 million homes either directly or indirectly for sale. According to a survey by Zillow.com, a real estate appraisal website, 5 million homeowners plan to sell on any improvement in prices. Add to that 4 million existing homes now on the market, 1 million new homes flogged by companies like Lennar and Pulte Homes, and 1 million bank owned properties. Another 8 million mortgage owners are late on their payments and are on the verge of foreclosure, bringing the total overhang to 19 million homes.
Now, let’s look at the buy side. There are 35 million who are underwater on their mortgages and aren’t buying homes anytime soon, nor are the 35 million unemployed and underemployed. That knocks out 50% of the potential buyers. Here is where it gets really interesting. There are 80 million baby boomers retiring at the rate of 10,000 a day. Assuming that they downsize over time from an average 2,500 sq ft. home to a 1,000 sq. ft. condo, and eventually to a 100 sq. ft. assisted living facility, the total shrinkage in demand is 4.3 billion sq.ft. per year, or 1.7 million average sized homes. That amounts to a shrinkage of aggregate demand for a city the size of San Francisco, every year.
You can argue that the following Gen-Xer’s are going to take up the slack, but there are only 65 million of them with a much lower standard of living than their parents. Throw in the disappearance of state and federal first time buyer tax credit. You can count on a jump in long term capital gains taxes and state and local property taxes, further diminishing property’s appeal. If you are looking for a final stick to break the camel’s back, how about eliminating, or substantially reducing the home mortgage interest deduction? Add it all up, and there is a massive structural imbalance in residential real estate that will take at least a decade more to unwind. We could be looking at a replay of the same 26-year period from 1929 to 1955 when prices remained flat, and we are only 3 years into it! A second down leg in the real estate market seems a no brainer to me, as is the secondary banking crisis that follows.
I have three homes in a one block radius of my home that are in forclosure and been sitting vacant for up to a year.
Within 500 feet of my home there have been three homes that have been built within the last three months that range between $200k and $300k. What is wrong with this picture?
Maybe give a break in mortgage rates to those that are buying homes that are in foreclosures or homes that are not new.
My suggestion in 6 words or less is: "Stop building......buy what is built!"