I recently read a Seattle Times article by Eric Pryne which did not do anything to help my mood about the real estate business or the economy as a whole. In the article, statistics from zillow.com showed that the number of homeowners who are currently underwater on their mortgages has risen from 23 percent to 33 percent over the last year. this is really bad news for anyone who owns a home or condo. In the seattle area it means that everyone who owns a home or condo lost approximately $35,000 from their net worth and for 33 percent of homeowners , they owe more on their homes than they are worth on the open market.
When you listen to news channels or business channels on t.v , they usually have interviews with "experts " who claim that we have seen the worst and the economy is in full recovery mode. I, for one, do not believe it. Real estate values are still dropping all over the country, the number of foreclosed homes is expected to rise in 2011, banks are not loaning money on homes to even qualified applicants, bank owned and short sale homes are having dramatic effects on the value of homes both here in the pacific northwest and around the country. In some cases that I have encountered , bank owned and short sale homes are the market. If you want to sell your home in such a market you would have to compete with these bank owned and short sales homes yourself in order to sell your home.
Most of these "experts" point to the stock market which has been rising dramatically for the last 2 years as a sign that the economy is on the mend and recovering. Nothing could be further from the truth. These companies laid of anywhere from 10 percent to 50 percent of their employees about 2 years ago and they have not hired them back. These companies found that they can make more net income with lower revenues and less people working for the company and they are not about to change what is working for them. Therefore, these companies are creating value for their shareholders but they are not helping the economy, it could be argued that they are hurting the economy by not creating jobs with all the money they are sitting on.
The bottom line is that the Real Estate market is still in decline and until real estate stabilizes such that it finally quits losing value every year, we are in for a tough ride for a long time to come.
It should be noted that the author does not endorse zillow in any way, shape or form but the above statistics are very interesting no matter where they came from.
