Now About the Housing Market…..

I know – you’re sick and tired of hearing about the housing market and its impact on our economic revival. I bet you never want to hear the words, “sub-prime lending” or “credit default swaps” or stuff like that ever again.. You probably don’t want to read another blog about it either, but before you take off, here’s a personal story from me.

My Dad passed away in 2008. Like many others in his generation, he only owned one house which was built in 1955. It’s a small four-bedroom (yes, four), 1,300 sq. ft. cape in a central New Hampshire community. It sits on a typical town lot with an additional lot in the back yard. On the same street is an elementary school. Only one family has lived in that house – mine.

As an old banker who has sold plenty of bank-owned properties back in the day, I look at this property that I am now selling and think this is the perfect “starter” home for a young family. Well built, good neighborhood, school nearby, added lot for the children to play, etc. etc. And yet, because of the financial culture we’ve lived in for this decade, here’s what I’ve learned:

• Most young couples want to live in the suburbs – the idea of a property in town is out of the question
  
• 1,300 square feet is simply not enough – “Where would the plasma TV go?”
  
• “The driveway only fits one car!”
  
• And I won’t even mentioned the comments that made my blood boil.

Funny thing is, given the fact that lenders have clamped down on loan qualifications (see this blog post in February), and down payment requirements, most young couples don’t have enough disposable savings to meet the requirement. One couple in their mid-thirties would like to have my Dad’s home but can’t come up with the 10% down payment of $17,000. And even if they could, their debt load is so great that they couldn’t maintain the property even if they got the loan.

So I guess I’m just wondering how the housing market is going to bounce back with this level of unemployment, deteriorating credit histories, tighter credit standards, and a growing list of foreclosed property. And what about buyers' expectations?

I’ll keep you posted on the progress of selling my childhood home.