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Blaming Home Owners for Today’s Housing Crisis Is Not Fair

The first thing I read this morning was a real estate blog titled The McMansion Extra Value Package : Is it REALLY the Bank’s Fault You Can’t Afford Your Home Now?  (The post has been edited, since I first read it and wrote this, to remove the word “greedy” regarding home buyers.)

Crystal Ball Home ValueI disagree with the premise that home buyers who took advantage of low-down and no-down loans to buy a home in  the early 2000’s were greedy, or even over-reaching.  There were a lot of responsible people who purchased homes well within their means who have been hurt in today’s real estate market.  I don’t believe it’s entirely their own fault if they and others are in a financial crisis now.  And I don’t really believe it’s entirely the bank’s fault, either.  It’s a symptom of the overall dismal economy, in my humble opinion.

Sure, there were some naysayers predicting a housing collapse, but plenty of experts shunned that idea.

To be fair, I think we have to go back to those so-called “bubble years” and remember what the housing market was 5 or 6 years ago:Home buyers qualified for loan programs that were widely available, most people felt secure in their jobs, and there was no reason to expect anything other than continued growth in property values.  Level off, maybe…  but, in their experience (and ours), home prices never went down before.  We all knew that declining home values might be possible in theory, but it seemed unlikely based on decades of real estate history in this country –  certainly in the D.C.-Baltimore-Annapolis triangle, where we live and work.

It’s real easy to sit in an ivory tower now, point fingers and, in hindsight, sweep all those home buyers (and banks) with a broad brush labeled “greedy” – It’s just not fair or accurate.

IMG_0778In my experience as a REALTOR, responsible people used low-down and no-down loans to purchase an average home – a 2 or 3-bedroom townhouse with an hour-long commute to work or a modest 40-year old split foyer in the D.C. suburbs that needed updating – NOT a McMansion.  People felt they had to buy “now” – before home prices went any higher and completely out of reach in their lifetime.  They anticipated re-financing in a couple of years, as home prices continued to escalate and their equity grew.  

Home buying and borrowing decisions were made in good faith, based on conditions at the time –  and no one had a crystal ball in their back pocket to predict the future.

Fast forward five years to 2011, and frustration fills the air as many people lose their jobs or at least their job security… the price for gas and commuting goes up… higher costs for health care loom… taxes and fees are on the rise… bullies and bad guys threaten our kids online and on the street… our nation is threatened daily by extremists who chant in the streets of their homeland, “Down with America!”… and (drum roll, please) home values plummet.  

This must be a nightmare!

Unfortunately this is today’s reality, but it won’t fix anything to play the blame game or wallow in a pity party.  Let’s go about the business of coping with reality and finding a way to make lemonade out of lemons.  It could begin with something as simple as a random act of kindness for a stranger… or a smile…

With that in mind, let me share with you some positive articles about today’s real estate market.  (This is a real estate blog, after all.)  Why don’t you pass them on to friends… maybe you can put a smile on someone’s face.  It’s a start.

SmilingAmericans Still Want to Own Homes (MReport –  6/11)

Housing and Economic Forecasts Points to Rising Activity (NAR –  5/11)

5 Reasons You Should Consider Selling Now (KCM Blog –  5/11)

Still a Good Time to Buy a Home (Gallup Poll –  4/11)

Home Sweet Home. Still. (Pew Research Center –  4/11)

Real estate: It’s time to buy again (CNN Money –  3/11)

Why your best investment is a house (Wall Street Journal – 1/11)

Most people who purchased a home 3–6 years ago are still making timely payments on their homes, even though they probably owe more than their homes are currently valued.  Give them a break… don’t blame them for today’s housing crisis.  It’s not fair!  

Published yesterday at Margaret’s Maryland Real Estate Blog on Activerain

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