Debt, Meet Savings: Wish it Were Under Better Circumstances
In the current marketplace, there is a very fine line between savings and debt. At any given time one can become the other depending on what’s happening to and around a particular property. Other things like when you bought and when you need to sell can make the difference between whether or not your home is an asset or a thorn in the side.
In all likelihood, the further before the boom you bought, the better off you’re going to be. To weather a storm like this, those who stockpiled early on are going to have a much better chance of getting through with the least amount of collateral damage. On one end of the extreme is people who purchased real estate, say, ten or twenty years ago. They’re going to be sitting pretty because time has been good to Southern California real estate values. Owners in this situation may be mourning the loss of some equity, but it was pretty tenuous anyway. The only way they could have maintained that bubble of appreciation is to have sold before it burst, but you can’t go back. On the other extreme is those poor folks who bought at the height of the real estate frenzy and, oh boy, are they in a heap of trouble. Forget lost equity, they have much bigger problems to deal with. Upside down, inside out, it isn’t pretty no matter how you choose to characterize it.
The thing that saddens me the most with the present predicament is the personal losses. One of the most important things about owning a home is the promise of building wealth over time. When economic conditions, lending fiascos and falsely inflated real estate values cause a major collapse like this, the fallout is massive and so are the casualties. As with any tragedy, there are lessons here. Let us not forget this one even after the smoke has cleared.
Recent Orange County Sweet Digs Posts:
Tustin Kicking it Up (or Down) a Notch
What do Homebuyers Want? NAR and HGTV Weigh In
It’s Beginning to Sound a Bit Like Christmas
El Camino: Affordable Detached Homes – by Irvine Standards
