2007 in Review - What a Roller Coaster Year It Has Been
Where to start? Real Estate Bubble, Mortgage Sub-Prime, Devaluation of the US dollar, and God Bless us all in 2008.
Real Estate Bubble – Not a surprise here… Remember the Technology Bubble in the year 2000? How quickly people forget. 2005 saw homes appreciate as much as 100% in certain areas of the Country. The following doesn’t apply only to the Arizona Real Estate Market. I’ll share my views with you. We can agree to disagree, right?
In retrospect, now that we are out of the tornado, we can assess the damages. The media contributed to the false expectations and now is contributing to everybody’s nightmare. Don’t jump on the band wagon; if you don’t have to sell your home or investment property, don’t panic and don’t put it on the market for sale. Hold on to it and the appreciation will stabilize over the years (give it a least 5 years).
How did we get into this mess? The MEDIA…When the word goes out to the public, I can guarantee you that you are catching the end of the rope. What I mean by this is that the good deals are long gone, as the experts/investors (that’s what they do for living and they have deep pockets) have already made their money. You are now buying from them at an inflated price. You are coming in too late in the game. Yes, new built and resale. Got it? I will speculate that we might see national builders going under or merge. Builders were insane, too. As an example, in Scottsdale a parcel of land was purchased in 2005 for $1million per acre – 32 acres. They have not started construction yet and I don’t think it will be for some time.
Everybody qualified for loans…How can something so good turned so sour? Well, the vultures came in flocks or should I say the creative minds of Wall Street. They knew what they were doing, but the good ‘Old Boys’ are a tight knit group and they pocketed billions of dollars and now they are jumping the ship leaving us to patch the holes. And please, they did such a good job that they are jumping with over $100 million in bonuses and a slap on the hand…Bad boys! Don’t ever do it again.
Homeowners took advantage of the situation too, and I can’t blame them. Stated income, no money down, rolling in closing cost… mortgage companies were very flexible and creative and had a lending program for everyone. The homeowners didn’t win the lottery, but they could refinance their inflated property - remember the drive by appraisals - and they took the cash to get deeper in debt (buying new cars, toys, etc) and they didn’t plan for the rainy days. Their home would keep appreciating at this pace forever, right? Technology Bubble theory… how quick we forget. We are a society that lives “in the moment” and we will figure it out later… OUCH! FORECLOSURES... Why would the homeowners want to pay for a property that has less value than their loan? Give it back to the banks… FORECLOSURES.
Devaluation of the US Dollar – This is my opinion only. I see it has a good thing. It opens the doors to out of the Country and Overseas investors and buyers to come in and buy second homes and investment properties. It is also good for exports, therefore helping to balance our deficit and hopefully re-stabilize our dollar. But again, we have to worry about the ‘Good Old Boys’ as they need billions of dollars to cover their losses. Please, don’t sell America to the Middle East… the black gold aka oil Countries. Will we ever get a break?
God Bless Us All in 2008 – I say God and I hope it doesn’t upset anyone. I am born in North America and I was born with God. Whomever you worship or turn to, may we all be blessed in 2008. Let’s get our common sense back in the front row and remember that if it sounds or looks to good to be true… it probably is. Say no thank you and move on. Time is on our side, let’s use it wisely.
Copyright 2007 Carmelle Bernier
Scottsdale & Phoenix Real Estate Professional |
