Will the dream survive?
Considering the unthinkable is not what most real estate people want to go any where near. The fact remains that this financial crisis has kicked home ownership as an investment squarely in the teeth. The concept of owning a home compared of where we were as a nation 5 years ago hs indeed changed.
Once upon a time, it was easy. Get a mortgage, put up the white picket fence and in 7.23 years you sold, got a big check and moved to a still bigger home that has faded. Then, there are cultural issues that have changed America profoundly over the last several decades that also are wearing on the concept of owning a home.
Compared to its peak, will we ever see citizens of America flock to residential ownership like we have in the past?
Sue Davis
March 21, 2010 at 10:02 am
I think many people will continue to want to own their own homes. Homebuyers will need to view their homes as shelter and purchase them for that primary purpose — not necessarily as a financial investment.
I worked with many military families and always counseled them about the length of time they would need to be in a home before they sold to cover their expenses of sale. There were times when I advised them NOT to buy, especially when they would only be in the area one more year and were not interested in becoming long distance landlords.
Homeownership isn’t for everyone, and we agents need to help prospective clients understand the pros and cons given their personal situations so they can make a good, informed decision.
Artur | Central Phoenix
March 21, 2010 at 10:16 am
We need to ask another question. Does the American dream of homeownership need to survive?
In an increasingly mobile society and less stability in the job market why tie oneself down.
Even having bad credit does not preclude one from owning real estate. There are other methods to ownership then a ‘normal’ mortgage. And, if we are to think of real estate as a way to grow wealth the we need to separate the two from each other, homeownership from investment. By doing that one becomes more open to purchase with creative methods in locations that would provide a better cash flow and/or return then a property that’s ment as shelter.
Ted Jernigan
March 21, 2010 at 11:03 am
Part of our recent bubble was caused by people thinking a house was a bank account and they kept making withdrawals and never made deposits. I sold a house in Texas in the mid 1990’s at the end of the savings and loan crisis. I think I had to reduce my price by $27,000, but I was realistic. That was not money I had put in the house. It was equity I thought I had earned. I walked away with about $20,000 instead of almost $50,000. About three years ago I resold that house for the people who bought it from me. I calculated that the seller made at least $100,000. The market had turned over a period of almost 10 years. This didn’t make me not want to own a home. I own one now. I still don’t view my home as a major investment. It is an investment in comfort and lifestyle. I enjoy it.
Ken Montville
March 21, 2010 at 5:06 pm
Assuming that all your suppositions are correct, who is going to own all the real estate that currently exists and is being built? As population continues to grow either “naturally” or through immigration, people need to live somewhere and even if it’s renting it’s renting from an owner.
My guess is that there will be a massive displacement of ownership from the middle class to the wealthier class who will be the landlords of the future. I’m also guessing that the current economic environment will cause people to be a lot *less* mobile because they know they won’t be able to sell and buy at the drop of a hat.
The current economic environment will also cause people to think twice about disposing things from toasters to spouses. After all, everyone knows it’s “cheaper to keep her.” 🙂
Greg Cooper
March 22, 2010 at 9:14 am
Ken…this is why you get the big bucks. I think you are right that landlords will grow their presence and own more of the property. I also think there is the potential of our culture at least slowing the march toward total disposability. We can’t all be Forrest Gumps (“If I could, I’d even rent my shoes”) but perhaps the economic mess we’re in will allow us to think twice before getting rid of everything, sacred or not.
Sue and Artur….what I really respect about your posts is that you showed great professionalism and responsibility toward your potential customers. Not everyone should own….amen! Our industry needs more of that…..a LOT more.
Ted we may become more realistic about housing expecations but it will take time. THere are people out there right now still thinking they’re going to get filthy rich by flipping. They may hit on a couple but in these volatile times flipping is risky. Long term fumdentals are what will sustain us all.