YOUR PLACE TO CALL HOME: Is there really a housing crisis?
After all, every so-called expert on television has been carrying on about the crisis in housing for the last year. Now I come along to suggest maybe there isn't a crisis after all. So what gives?
No, I haven't lost it, and I am not Pollyanna looking at the world only as I wish it would be. Yes, there is a housing crisis if your family is caught in the web of foreclosures. Yes, there is a housing crisis in some parts of our country. Remember, however, all real estate is local. And we do not have a housing crisis in St. Charles County or in the St. Louis region.A recent commentary by Dennis Kneale on CNBC dramatically illustrated what we are experiencing is simply a market correction and a return to rationality. After all, he points out that is what "free markets do." While Congress debates the merits and particulars of a $300 billion bailout of the housing market, the market is at work making its own corrections, as it has for centuries.
Let me share with you some interesting statistics Kneale used to illustrate the fact that the supposed housing crisis really isn't a crisis after all.
There are 120 million homes in this country, one third of which are owned free and clear; so there is no crisis for those homeowners.
Of the 80 million homes with mortgages, 50 percent of those were bought before 2000. Even with the recent fluctuations in home values, on average those homes are worth at least 30 percent more than they were when they were purchased. Yes, they may get a little less than if they had sold their home a year ago; but if they don't sell, they have lost nothing. So, no crisis for those homeowners either.
Ninety-five percent of all Americans with mortgages pay those mortgages on time. About 2 percent of American households are in foreclosure. For those 2 percent of American families, there is a housing crisis. The crisis, however, is localized with states like California and Florida feeling a lot of the pain. There are more foreclosures in California than in 40 other states combined. In Los Angeles, home prices are down 20 percent.
In St. Charles County, the average home sold for $219,691 in June, which is a decline of just 2.2 percent over this time one year ago. Housing crisis, I don't think so. We are just experiencing a needed correction in the market.
Over time, this correction will be beneficial to our entire economy and society. If you have owned your St. Charles County home since 2000, as cited by Kneale in his commentary, your home has risen in value 50 percent. No other investment available to your family can offer you that type of tax-free return on your investment.
Yes, there is a need for reforms to our system of mortgage lending. Realtors have led the way in supporting much-needed reforms to FHA, Fannie Mae and Freddie Mac loan limits, rules and regulations. As Kneale says in his commentary, it seems that we have to call something a crisis before we can take action in this country.
While Realtors strongly support current reform and tax credit legislation before Congress, one has to wonder if by the time the government acts our free market will already be well on its way to correcting the problems that exist in the marketplace.
If you were waiting for the housing crisis to end before you jumped into the market, you have been watching too much television. The truth is that there has never been a better time to buy a home in St. Charles County. Our return to a "normal market" has resulted in a large selection of available homes being offered at stable and sustainable prices. This combined with near-historic low interest rates have made this a once-in-a-lifetime opportunity to purchase the home of your dreams. If you wait too long, the opportunity will pass and someone else will be gathering their family around the Christmas tree in your family's dream home.
When you look at the numbers there is not a national housing crisis. I invite you to go online to www.StCharlesREALTORS.com or www.RightTimeForRealEstate.com to view the entire CNBC commentary.
If you are ready to make your move, call your Realtor today. Your Realtor is dedicated to making sure you have a safe and secure journey to your new home.
For more information on why 2008 is the right time for real estate, call your Realtor and visit www.RightTimeForRealEstate.com.
Keith McCulloh is the 2008 president of the St. Charles County Association of Realtors. E-mail him at comments@StCharlesREALTORS.com if you have any real estate-related questions or comments you would like to see addressed in this column.
