What will the New Year hold in store for real estate? For the past year and a half to two years, we have been through one of the most volatile markets in history. Homeowners who once bought their homes with hopes and plans of building equity as part of their retirement portfolios have seen their homes fall to or below their original purchase price. Agents got into the business with plans to begin a new career and make a decent income. Some were surprised, even when home sales were good, as to how tough this business really is. It is not for the faint of heart. Nor, is it for those hoping to make a fast and easy buck. However, agents who wanted to work hard and treat their business as a business could make a good living. As someone told me one time, you’ll never “get rich” selling real estate, only by investing in it.
Yesterday, I was talking with an agent who has been in the business since the 1970’s. Actually he has been around the business most of his life since his dad had his own real estate company. I made a comment about how hard real estate must have been in the late 1970’s and early 1980’s when interest rates were 16% to 20%. He said it slowed but nothing like today.
Now, I don’t claim to be a financial guru, but it seems if the unemployment rate were down and people felt secure in their jobs, they would still want to buy homes. After all, owning your own home has always been one of the great American Dreams. That didn’t just stop. With interest rate as low as they are and home prices down, it is a great time to buy.
There are things our fearless leaders in Washington do that greatly affects the goings on across this great land. I read recently about the Glass-Steagall Act of 1933. According to the article, this act separated bank types according to their business (commercial and investment banking). The act was repealed in 1999. Banks had been seeking its repeal since the 1980’s.
According to the article, the year before its repeal, subprime loans were just 5% of mortgage lending, and by the time the credit crisis was in full swing in 2008, they were approaching 30%. I never argue against making a profit, but how much is enough and at what risk.
At one time banks were considered conservative institutions where your money and investments could grow. They were quick to take your deposits and careful on loaning them out. A borrower had to jump through hoops in order to get a loan. We got away from that. Why? I have a pretty good idea!
The National Association of Realtors® continues to tell us how pending home sales are up. That is all well and good, but I think we need to quit the cheerleading and acknowledge the fact; we are putting band-aids on open wounds. Spending at the national, state and local levels must be brought under control. People have to get back to work in real jobs, not government jobs which are paid for by our tax dollars. As much as it hurts, home buyers must invest some of their money into buying a home. It might take a little longer to buy their first home, but in the long run it’s worth it.
And one last thing, no one owes us a living. You may want to own a home, but you are not entitled to own one. Get out there and use your God given talents and make an honest living like our parents and grand-parents did. Start with a small home and build from there.
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