MinnEcon: December 15, 2010 Archive

As housing values drop, some eye the "swap"

Posted at 11:56 AM on December 15, 2010 by Molly Bloom (1 Comments)
Filed under: Housing & mortgages, Small business

Peggy and John Palumbo once hoped their home equity would finance their dream to open a restaurant. But when home values unraveled in the recession and they couldn't find a seller at the right price, they needed a new plan.

A Craigslist devotee, Peggy dove into the site's "Housing Swap" section, thinking it made more sense than letting a house languish in the slow housing market.

The Palumbos have yet to find the perfect swap. But with so many people stuck in their homes, she's seen an increase in the people looking for this kind of option and thinks it will only become more popular.

They were planning to swap with a young couple in Oakdale but the deal fell through when the couple was unable to get financing for their new mortgage.

Besides the frustration, Peggy feels that stifled entrepreneurship is one of the overlooked consequences of the stagnant housing market.

Start-ups will often take out second mortgages and use homes as collateral in order to get their business going. But without that, and the ability to downsize and free up money, it's much harder for new entrepreneurs to start businesses.

Peggy and John are doing everything they can to make their restaurant dream come true. They recently petitioned Ramsey County to get their property re-assessed and their property taxes will be $1200 lower next year.

"You have to get creative and think outside of the box," Peggy says. "It's not business as usual anymore."

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