Real Estate opinion needed?
My wife and I live in a nice neighborhood- the homes are about 15 years old now. Up and down my street there are so many homes for sale and this means for the most part that the properties are becoming rentals. In this bad economy why would so many people be leaving their homes? My wife and I are concerned because right now our house is worth $50,000 less than the amount we are still paying back. Should not most people be in the same boat and can’t afford to not stay put?
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Can most people afford to pay $50,000 for a piece of bubble gum?
Hi No More,
It’s probably true that a lot of people in your neighborhood have homes that are ‘underwater’ (worth less now than they paid for them), but maybe the people who bought 14 or 15 years ago, when home prices were much lower, may still come out ahead or at least break even–and maybe they were at an age when they wanted to move on.
But sometimes people have to relocate because they lost their job and/or found work somewhere else. If there have been a lot of layoffs in your area, then a lot of those people may have no choice but to leave their homes and move elsewhere, even if they don’t want to move.
Some homeowners may have fallen victim to ARM loans, and find they can no longer make their payments. If they put 0 down on the house, sometimes people are better off just walking away from it.
But a lot of it just depends on your area. Why not ask your neighbors what they think the reasons might be?
Maybe they don’t want to keep paying the mortgage because they don’t foresee the value going back up within the next 10-15 years and they’d rather take a $50K loss on the home that see the prices keep slipping and possibly letting that go and buying something that’s already priced low considering the housing market. So even though they’re giving up their home, they might be getting a good deal on a home outside their price range in a normal market (ie: previous to 2008).
Also, some people can’t afford to stay put if they’ve lost jobs, etc.
Unemployed, job transfer, house is too small or too large, retirement, health problems, divorce, etc