The first wave of short sales consisted of people who bought using adjustable rate mortgages. They bought out of their comfort zone. They were quoted interest only mortgage payments and told they could refinance for something better when they needed to. Poor decisions and bad advice led them to situations they eventually couldn’t maintain. They had no choice but to walk away. It was ugly, but no one felt very sorry for them. They got us into this mess, was the war-cry.
The second wave of short sales was fed by the first. The economy took a nose-dive and jobs began to disappear. Marriages failed under the stress of money problems and lack of work. People were forced to relocate their lives just to find income. These people, the out of work, the divorcing, those following jobs across the country, were the second set of short sales. They couldn’t make their payments any more than the first set could, but their stories were more tragic. Poor planning didn’t get them into this mess, unfortunate circumstances did.
The third wave of short sales has now begun it’s assult on our shores and I’m starting to wonder if it won’t be the most dangerous and difficult yet. The newest group of people attempting to jettison properties for less than they owe the bank is the one that bought anytime in the last 6 or 7 years and is now realizing the home they own is a poor investment. People buy houses because it’s an investment in their future, it’s money spent paying themselves back every month, rather than rent money down the toilet. The people who realize this and who’ve had a life change since buying (got married, had kids, got divorced, realized they hate Queen Creek, changed jobs, etc) and now their house isn’t the right size or location are now feeling trapped and looking at their options. Why should I pay for a mortgage more than twice what my house is worth when I don’t even want to live in it any longer? is what they ask.
I feel for all of these people. I have yet to meet with anyone considering a short sale or a foreclosure who didn’t struggle with the emotional consequences of the decision. I haven’t met anyone taking this lightly or who ever thought this was a position they’d be in when they bought their house. It’s just not that fun to be a home owner right now.
We talk all the time about a ‘normal market’ and when we’ll be back to one. Can we be considered ‘normal’ when half of all home owners owe more than their homes are worth?
It’s not pretty, people. And I don’t have any answers.