Why Owning a House Shouldn’t Scare You

in #market5 years ago (edited)

It has been almost eight years since the recent housing crash, and though economy has gotten back on its tracks, many prospective buyers are staying off the housing market. No wonder they feel less motivated then ever to own their own place having heard all the sour stories of their friends or relatives who had lost their homes as a result of a short sale or foreclosure. Many friends of mine, too, found themselves in a similar situation, and this is why I completely understand what a stressful experience it is. You still remember how excited you were when you finally received the keys to the place you were hoping it to remain your permanent residence when, then, a couple of years later, you suddenly find yourself not being able to make ends meet…and, boom, you are delinquent on your mortgage payments.
But, there are also many homeowners who survived the crash and who can share their rather optimistic and inspirational stories. Even though they really, really felt squeezed and depressed by the declining values of their properties and wished they could re-buy their houses at the low price others were buying at the time, which was not an option, it turned out the equity they had gained was so strong that the actual mortgage they had left to pay off was more or less equal to the values others were paying during the meltdown. And better yet, their time to repay the mortgage was a way shorter than that of the new buyers. Those who decided to keep their homes, then, were able not only to pay off their loans faster, or lower their payments through refinancing, if they wished to, but also to stay side by side with these new wave owners watching their properties’ values gain the upper levels in the home prices charts.
Undeniably, there are times in history when home prices drop from time to time, however, that does not stop them from getting back on the feet and rise back again. House is a commodity, as much as gold or silver is, and for this reason its value will continually climb. As a matter of fact, home prices were going up since the beginning of 1970’s (see chart 1 https://nowekatleaderrealty.wordpress.com/2016/06/24/why-owning-a-house-shouldnt-scare-you/). Of course, there were a few exceptions when slight downturns occurred during the five recent recession times. And, evidently the latest downturn was the biggest up until now, but the positive news is it eventually transferred into the most remarkable gain in order to catch up with the pre-recession values. What is more, the way the real estate has been performing for so long, it only validates these values seem to be destined to continue rising as a matter of course.
If you take a closer look into the latest recession and focus on the brutal drop in the home prices that picked up only three years after the recession ended, the chances are the majority of you envision those who had to give up their homes to prevail among all of the U. S. homeowners. Well, don't. Please, look at the data below, compiled by the real estate insider from Leader Realty, Inc. , Bensenville, IL, Sylwia Nowek. Though they examine only the percentage of the American society, as they depict the Illinois homeowners from the MRED (Midwest Real Estate Data) area to comprise 19 counties altogether*, you should be able to get an overall idea of the situation.
According to the data from the beginning of recession in 2008 until June, 2016, beyond shadow of doubt, the highest number of distressed sales occurred in 2013-approximately twelve months after homeowners’ first delinquency as well as the super low performance in the traditional transactions. Yet, the 48,000 of peak short and REO sales combined is not such a distressing number when compared to the bottom 37,000 of traditional sales, especially when you keep in mind the number of many inactive homeowners retaining their homes and postponing their decision to sell until a more suitable time. You should also know that altogether in the period between January, 2008 and December, 2015 there was a total of 8,664,582 homes sold among which there were only 858,817 short sales and as much as 2,107,824 REO’s, as Sylwia indicates, which gives us an estimate of 34% of total distressed sales during the seven year period, during and after recession. True, there were almost 3 million people in the Chicago Metro Area who had no other option but to give up their homes, but shall we not cherish the addition of almost 9 million new homeowners?
Should you still feel petrified of buying a home, you stick to the golden rule: stay within 30% of GMI (gross monthly income) to pay your mortgage and minimize the risk of being behind in your payments; take advantage of the low interest rates-this will guarantee not only lower payments, or quicker mortgage pay-off, but also a quicker equity build up to keep you among the strongest of them all; and, do not delay your decision to join the club-it really makes more sense to buy sooner than later with the home prices’ tendency to continually rise; the longer you wait, the more money you need. And remember: while “better late than never” suites you more, “better now than ever” will benefit you most.

*MRED area: Boone County, Bureau County, Carroll County, Cook County, DeKalb County, DuPage County, Ford County, Grundy County, Iroquois County, Kane County, Kankakee County, Kendall County, Lake County, LaSalle County, Marshall County, McHenry County, Putnam Count, Whiteside County, Will County.



Whitespace is your friend... How about a few paragraph brraks in there?

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