Here is an overview.
Monday I am going to show a young buyer some Condos. The first two are near the airport, in a really nice neighborhood. They are only five years old, and they are both in great condition.
They sold in 2005 for $142,000 each.
They are now on the market for $85,000, and the are beautiful. They each have 2 bedrooms and two baths, and one has vaulted ceilings.
The same is true for the condos that I am going to show to him later on Monday.
You cannot tell me that these were all bad loans back in 2005.
You cannot tell me that every one of these was a “B” loan which was made with bad credit and a false appraisal. It is not possible.
These were expensive condos to build. They have good siding and stone exteriors and are well built.
Here is the reality: Everything costs more to build. Land is expensive. Development costs are really high. Tap fees are $15,000 per unit. Taxes are high. Materials cost more. The builders involved worked on a small profit margin, and had to pay for loans and brokers and permit fees.
The units cost a lot to build.
Then, the economy got bad. The corporations keep sending the good paying jobs overseas. We have off-shored manufacturing to India, Brazil, China, and anywhere else that labor is cheap.
Expensive costs and lower paying jobs are the problem.
The real estate market is in the mess it is in not because of a few bad appraisers, or because the lenders made marginal loans, but because the job market is a mess.
Without good paying jobs, the market will not get better.
I am glad that the $8,000 tax credit is helping, but that is not the cure.
The cure is employment.
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