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July 8, 2006 at 10:34 AM #27901
powayseller
Participant

desmond, it is worth it to sell for people who have a fraction of the equity you had, if:

1) they have an ARM, I/O, or other resetting type of mortgage, and they won’t be able to afford the adjustedpayments.

2) their job is in the real estate related industries (construction, loan officer, appraiser, realtor, title officer, home inspector, termite inspector, escrow officer, home improvement, selling home materials such as shutters and carpets and wood floors, architects, interior designers). Only a fraction of people in these industries will have a job left by 2008. I would include jobs in retail and restaurants in this category. Government income will dip by 40%, so many government positions will be gone.

3) there is a possibility of them wanting to downsize, leave the area, divorce, or other reasons for selling in the next 10 years.

4) anyone counting on their home equity for retirement, college for kids. In 2008, you won’t get a HELOC to fund that college tuition, because the home value won’t be there, and bank lending will become conservative again. If you try to sell in 2010 to fund your retirement, you’ll be very disappointed.

All the above ought to sell now, while prices are high. The longer they wait, the more paper profits will evaporate.

The only group that ought to stay put is those who’ve paid off their homes, or those who are very confident their job is secure *and* they can service their mortgage through the down cycle *and* they will not care if their house loses 50% of value. Everyone else, sell now.

This downturn will financially devastate millions of households. Americans have counted on rising home equity to finance their everyday living expenses, increase consumption, and build dreams of a secure retirement. This is about to be shattered. How will Americans pay their daily living expenses without rising home equities? I realize that each person that is helped comes at the expense of one person’s loss…Each person that is convinced to hold off buying means that one seller is stuck with his overpriced home.