“How did we get ourselves into this mess?” This is the question I’m asked by clients of mine who don’t understand what happened to the housing market and want to know how and when we’re going to recover. Most people understand that the real estate market is cyclical. It’s always had its up’s and down’s. Fellow Realtors of mine who have been in the business for thirty plus years have often said “this is worse than they’ve ever seen it”. We often find ourselves in friendly debates of what we think it’s going to take to “fix” things. We can now see pretty clearly as to why we have a foreclosure crisis, but now the question is, how do we solve the foreclosure crisis and hopefully prevent this from happening again?
I am 27 years old and I have been working in real estate for the last eight years. I didn’t enter into this business because I had a burning desire to sell real estate. Like most Realtors, I kind of just fell into the business. As of recently, I’ve decided to go back to school and pursue something I truly do desire to do, which is Psych Nursing. With my background in Real Estate I found this essay to be quite appropriate for me. I think before diving into how we can solve the foreclosure crisis, we need to understand how we got into it first.
Everyone wants to place the blame on everyone else for why this all happened. I think it’s a combination of factors and I believe everyone has to take some responsibility for their actions. When the market started to pick up in the early 2000’s there were all these new kinds of sub-prime loans that were made available. These were loans that provided “creative” financing to allow almost anyone to be able to buy. They were unconventional loans and many of them didn’t include really any restrictions for the borrower. Since almost everyone was now able to obtain a home loan, more and more people started buying homes and entering into the market. Interest rates were low and prices were still reasonable, so it was “the time to buy”. Some markets including Florida got so out of hand in 2005 & 2006 that there were actual lotteries going on at new home builders for home lots. In 2006, I moved down to Florida to work for one of those builders and found it very strange that so many people were lined up at the door like there was no more land to build on. I wasn’t able to figure out why there was such a false sense of urgency. Between the really bad loans that were being created by Fannie Mae & Freddie Mac, the huge jump in appreciation (and real estate taxes), bad mortgage broker/lenders, wall street & investors, stupid buyers, and all the greed that was going on, it’s no wonder we’re in the mess we’re in today.
How do we recover from this crisis? One way to help sell the homes that have already been foreclosed on is to make the many repairs that are needed to make them marketable again. It’s really sad because I see so many homes every day that are either up for sale as a pre-foreclosure (short sale) or...