A new perspective
Bruce Nemovitz | Apr 13, 2012, 10:43 a.m.
Are we angry about the inexcusable and irresponsible mortgage lending starting in the year 2000, culminating in the mortgage meltdown of 2008? Are we upset about losing value in our homes from 2008 until present? Here is perspective that may provide some peace and solace as well as allow you the freedom to move forward!
Here is a graph that charts mortgage prices back to 1890, for existing housing as an investment over time. The cost of inflation is factored out of this chart. The figures are national, as our Milwaukee-Metro market varies in swings up and down. One fact is certain, that in the years 2000-2006 prices skyrocketed to exaggerated highs, coming back to pre-2000 prices where we are today.
Why did those prices spike to unsustainable levels of 2006? Because of the irresponsible mortgage lending that went on from 2000-2006! Therefore, we can’t have it both ways. If we are angry at banks and mortgage companies for issuing mortgages that never should have been given, then we are saying in effect that we would be satisfied if that had never taken place. If those mortgages were not issued to the millions of unqualified buyers, we would not have seen that spike in prices from 2000-2006. Do you get the picture? We are currently at price levels prior to the lending practices that caused the meltdown in the first place.
I have spoken to thousands of seniors at various senior communities who are considering moving from their long time home into senior housing. I can assure you that when I met with my audiences in 2000, they were excited and happy about the appreciation over the years in their real estate investment. When I asked what their purchase prices were when they bought their first home, (most bought in the years of 1950-1960) the responses came back at prices averaging $17,000. In the year 2000, most had seen their original investment increase by ten times. Most would agree that is a substantial return not only on investment, but a home that provided security and stability for one’s family.
We were all comfortable and somewhat lulled into thinking that our investment had suddenly shot up by another 30-40 percent in those six years of bad lending. My point is to count our blessings and realize that if we hoped all of that irresponsible lending had never taken place, we have the results of that wish. We are right back to where we were in pricing, and buyers today can afford to start their families in affordable housing that will create security and happiness for their families, just as folks before them. Coupled with affordable pricing, interest rates are at historic lows (3.75 percent for a 30 year fixed mortgage) making purchasing a home more affordable for today’s first time buyers who are creating stability in home prices.
Now that perspective has been provided, shed the upset and anger over the past and know that your investment has and always will be one of the best choices you ever made in your financial lives! Bruce Nemovitz is a Senior Real Estate Specialist, as well as Certified Senior Advisor. Bruce has sold residential homes in the four county Milwaukee-Metro areas for 33 years. He has just received the 2010 “Realtor of the Year” from the 3,800 membership of the GMAR (Greater Milwaukee Association of Realtors). He has been listed in Milwaukee Magazine’s 5-Star Agents list for three years in a row. As such, he’s one of only a handful of Realtors who are continually included in the top 7% in client satisfaction in the Milwaukee Metro area. He’s rated A+ by the Better Business Bureau, and was a finalist for Concordia College’s Ethical Business Leadership Award. He has published a book called “Moving in the Right Direction”, A Senior’s Guide to Moving and Downsizing. He works with his wife Jeanne at Realty Executives Integrity. Please feel free to call Bruce or Jeanne with any real estate questions you may have at (262) 242-6177, or email at Bruce@BrucesTeam.com. You can go to their website at www.brucesteam.com and view the many articles and important information related to moving and downsizing!
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