The Housing Issue

I live in a small town. I can't help but notice there are for sale signs all over the place here, I've never seen so many houses for sale at once. But at the same time, I know someone who has been trying to find a place to rent, and there is very little available. Doesn't that seem odd? If people aren't buying houses shouldn't that open up an opportunity for renters? Where is everybody living? Unless everybody is just moving out of town it's a puzzle to me. Is this an unusual situation or is this happneing in your area also? What is going on, anybody know?

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Reply to
iarwain
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The problem that renting a house out does not solve the problem for an owner. At the moment, they market price for rentals is far less than what it costs to own a home. So by renting it out, you don't earn enough to pay for the house, and as a result, many of those have already gone into foreclosure. In addition, with renting a house, the renters often use and abuse the house far more than an owner would. As a result, the value of the house drops rapidly when there are renters in place. If you are trying to sell a house, either as the person with the mortgage, or as the bank after taking the house back, the last thing you want is a renter in there beating up the house and dogs going wee-wee on the expensive carpet, or cats sharpening their claws on the imported hardwood floors.

The reason that you see so many home forsale is that people who already had a house were buying 2nd and 3rd homes on speculation. The sales of home to home were mostly between speculators. When the music stopped, a group of speculators all got caught with

2 or 3 homes that they suddenly couldn't sell, couldn't rent, and couldn't pay for.

The housing issue is not going to be solved until the current excess inventory of houses is absorbed by new homeowners. That will take time. The faster prices fall on existing homes, the more quickly the crisis will be over.

BTW, the houses that you see forsale are only the tip of the iceberg. In the community where I live, a 49 unit townhouse association, I know of several people who want to sell, but don't even bother listing because they are upside down at the new lower values, or see the same unit across the street that has been for sale for 18 months.

People say that we have never seen a market like this before. That has been true every day since Ogg sold Nog his first rock home and clay tablet stock certificate.

-john-

Reply to
John A. Weeks III

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