Has your home become your prison?

Is your house the main thing that is holding you back? Need to move to take that new job, but can't fford to sell? Want to downsize for retirement but can't. In fact many recent reports have shown that America’s workforce is frozen in place and unable to move to where there are jobs available because the workers have homes that they can’t sell – many that are worth less now than they owe on them. We’ve become a nation trapped in our homes.

The Obama administration has lots of programs underway to try to help lenders and homeowners deal with this problem, but many of them fall short, because home values have dropped so precipitously over the last 2-3 years. Programs that help homeowners refinance up to 105% of the current value of the home, don’t cover the 30% losses that have occurred in most areas – at least in Michigan.

It’s actually sad to see so many Baby Boomers who are at, or approaching, retirement age discover that they can’t sell their McMansion and downsize as they had always planned. I was holding a luxury condo open recently when a man came in and looked around. He commented that he’d love to be able to buy a condo like this one (which is priced above $500,000), but he can’t afford to sell his luxury home. According to him it was worth nearly $1 Million a few years ago and now he couldn’t get $700,000 for it, if there were even any buyers out looking in that range (very few). He says he’s looking for someone willing to do a trade (there’re even fewer of those people around). For him, that home has become his ball and chain.

So, are we all stuck in place, prisoners in our own homes? Perhaps. Perhaps the folks in Washington will figure out a program that deals with the depth and breadth of the housing problem. Whether or not this is a problem for you depends a bit on when you bought and what you’ve done since then. If you bought 8-10 years ago and had the discipline (some might say common sense) not to keep re-mortgaging and taking out equity over that time, then you should be OK. Your house is likely worth today about what it was when you bought. That’s not great, but think about it this way – you got 8-10 years of rent-free living out of the place. If you can walk away now owing nothing and perhaps with your down payment from 8-10 years ago in your pocket, that’s doing pretty good these days.

So give me a call and we’ll see if we can’t set you free of your prison. I’ll tell you exactly what your break-even point is and then do a Market Analysis to determine whether or not I think we can get that much for the house. It might still be worth it, if was can just come close, since you’ll be making the loss up on the purchase of a new place.