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Friday, April 25, 2008

Putting good people at risk...



I'm starting to see a new and alarming trend in the market, due, I'm sure to the recession that we're in now. I'm seeing good people, who did not take out toxic arm loans or overextend themselves to buy too much house, now getting behind on bills and mortgages. It doesn't take all that much to tip the scales, sometimes. A little less overtime or one spouse getting laid off or health care and gas prices going up by double digits. all of a sudden, Joe Average is in trouble, behind on credit card bills or on the mortgage.

Now, we could all pontificate upon the fact that Joe should not have used his credit cards or that he should have planned for this rainy day. In fact I'm seeing people who did plan become tapped out with their savings and some even with their 401K plans, trying to keep their heads above water, but to no avail. These are average Americans living what they saw and believed was the average American life. Now, they're trapped in houses which have lost 15-25% of their value in the last 2 years and upon which they owe more than the house is worth. And when the call the bank to see what can be worked out, mostly they get the run around or are told to come back when they are in default. No wonder so many get angry and take it out on the houses.

I believe that we are on the cusp of a more serious melt-down in the housing market than we have yet seen. The current recession-driven credit crunch is likely to hit most homeowners in America just when they would have wanted to tap into home equity to see them through, only this time the equity is not there and the mortgage bill is due, too. We Americans have lived by credit and many will now suffer due to credit problems. Let's hope I'm wrong, but an increasing number of economists seem to also think that the big foreclosure wave is yet to come and may hit later this year. I'm now seeing reports that 2009 may be the bottom out year and that a return to "normal" may have to wait until 2011.

In my little world, we've already had one homeowner on our block walk away from his house and move out of state to find work. I'm afraid that we'll be seeing much more of that later this year. Michigan's economy just isn't generating anywhere near the number of jobs that are required to replace the lost automotive jobs in the state and what jobs are created tend to pay less than half what the displaced autoworkers made before. You can't pay for that $200-300,000 house on $14/hour, especially when that $14/hour job has no benefits.

So, now I'm going to have to go off in a corner and stare at my green dot for a while and try to find a happy face again. Things will eventually get better for sellers and I'll feel better about dealing with them. Lately, I've been focusing more on the buyer side, since those folks are happy about the bargains that they are finding. Let's see maybe my mantra should be...be the buyer, be the buyer, be the buyer. There, I feel better already! Gotta run and find some buyers.

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