Wednesday, February 18, 2009

Let's Talk Real Estate

For most of a decade I've been a licensed Realtor. I became a Realtor when mommy mush claimed my bookworm brain and lured me away from my writing and editing career. I thought selling land would be flexible, time-wise, and I thought it would be a new kind of challenge for my socially shy self.

And I've been a pretty good Realtor, despite the fact that the NAR's insistence on capitalizing the word drives the editor in me a bit bonkers. By "good" I mean principled and successful, usually in that order. I ranked among the top-producing brokers in the state for years and yet never gave in to the all-pervasive dark side of the profession. (You know, the side where Realtors rank below used car salesmen and attorneys in the latest barroom joke.) I managed to be successful because I worked my butt off. Is it any wonder that a marked decrease in real estate work over the past two years coincides with an increase in the size of my derriere? Nah. There couldn't be any corrolation there.

The past nine years in the world of real estate have been unprecedented in history for growth and sales. Most North Americans built their wealth and retirements around their home ownership. Home equity equals peace of mind. Home ownership equals prosperity. These were the mantras of the late 90s and the first half of this century to date.

If you didn't buy a home, why the heck not? This was the incredulous question of most Realtors and lenders in my circle of stellar acquaintances. What's not to love about one hundred percent financing? Incredibly low introductory rates? In fact it seemed the only hurdle to buying a home for any person with the hint of a job was the fact that they might have to make more than one offer and learn to "compete" with multiple buyers.

Our parents and grandparents purchased real estate when they had twenty percent or more saved for a down payment. They divided family properties and built homes next to one another, sharing the work of the land and the payment (if any).

They waited. They saved. They lived at home a little longer and started a little smaller. Most paid off their mortgages in 15 years. "Buying up" was not in the vernacular. Their house payments were generally twenty-five percent of their gross income.

Today's mortgages have many folks in payments that exceed fifty percent of their gross income.

Wait. Let's think about that for a moment. If it's half of your gross at the time of application and approval, it's significantly more than half of your "take-home," or net. And if your job is currently on the chopping block, or on the cutting room floor, that half of your former take-home is likely to be a lot more than your unemployment benefits will pay.

We Oregonians are several months behind the mortgage crisis. In my limited understanding I think it has something to do with how much an area's values had gone skyrocketing up. Anyhow we didn't experience triple-digit property value increases, but we did have our little run at it. So our property values are flattened more than plummeting. And the majority of homeowners who are in trouble here are facing that trouble not because they overborrowed, necessarily, but because they are now out of work or underemployed due to the crushing economic crisis that hit Oregon as hard or harder than some of our neighboring states.
Over the past few weeks I've been working with a half-dozen former clients who are all in different stages of wanting to sell and/or wanting to buy in order to take advantage of the prices that seem reasonable to them. Loans are still available (or are available again after a short hiatus) for those with down payments and good credit. Property for sale is plentiful. Sellers are motivated.
It's that "take advantage" part I'm having a hard time with. Oh, and some other nebulous concepts I'm sure to be miscommunicating here.
I truly believe that the American Dream (intentionally causing that proper noun) is married to home ownership. I've read all the news reports blaming unscrupulous lenders (no, really?!) and greedy investors and even all the news reports dissecting homeowners' levels of culpability in the mess.
Today's news was that President Obama has proposed a financial bailout for homeowners. I believe it's monetarily less than one-tenth of the financial market bailouts. I'm no policy genius, but I'm taking a couple of calls a day from former clients who are in huge trouble. I was giving them the 1-800 numbers for assistance, but have had many reports that help is difficult to find and mortgage giants' promises are hard to secure even with a government "hope" advocate on your side. The tangle of investors is spaghetti -- everyone wants a bite -- with no hope of a sauce-covered Disney kiss at the end.
I'm one formerly successful Realtor who likes to sit in the corner and read. I'm just a one-time editor who has a handful of real estate clients in trouble due to job loss and rate adjustments and a relatively minor amount of lost equity. I have no answers. I hope the government does -- but even as I type that it seems incongruous, unfair, to expect the help to come from Washington, D.C.
I just want to stay home and plant peas. In my mortgaged piece of dirt.


Katie said...

I just love that the government is so concerned about me and my mortgage.

Yea, right.

QuiltedSimple said...

All these bailouts make me sick to my stomach. And in the end, we'll have to pay for the bailouts AND pay our mortgages....