Foreclosures
by David Lamb
CBS 42 News
2007-11-13 20:00:00.0
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If you bought a home when it seemed like the real estate market would never slow down, join the club. Massive numbers of homeowners signed on the bottom line ready to pounce on a great investment and then take advantage of the steady rise in the market and have some quick equity to have fun with.
Well the brakes have been hit on that plan, so what is a homeowner to do now?
Doug Horst and the folks at the Credit Counseling Service usually see people at their worst, when times are tough and making ends meet is a struggle. These days a large number of those who call in or walk through the door are trying to figure a way to recover from a real estate dream gone bad.
“There were some of us because of the low interest rate bought more house than we could afford. We jumped in saying that houses will continue to increase in value long term thinking that we could turn around and sale that home in two to three years. We got caught,” said Horst.
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Todd Cheney is senior Vice president at Synovus Mortgage. He is on the front line for those who run into obstacles on their way to cashing out of the real estate boom. Cheney says the reality is clear; the days of quick equity are gone, at least for now.
“People that have invested in housing and who thought housing prices would always go up and would never level out or go down. Quite honestly those people are in trouble," said Cheney.
And the reasons why so many are in trouble are relatively simple. Right now, there are an estimated two million homes for sale in the U.S. To put that into perspective, that is roughly the equivalent of every home in the Detroit, Michigan area.
And the sale of existing homes is at the lowest level since 1998. It seems the signs are pointing to more rough days ahead. But Doug Horst says the proper reaction for a homeowner should be to wake up and change your mindset.
"The idea that our house is a piggy bank is simply not the case and we can't plan for the future that it is always going to be that way," said Horst.
Cheney agrees that the struggling housing market calls for a change in plans and perspective.
"How much can I afford to put into housing and housing expenses knowing that I could have a medical emergency, washer/dryer go out, car issue. You've got to have money on hand. You've got to know how much you can afford and stick to it,” said Cheney.
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