As real estate values keep losing ground, many are still asking why. The answer may not be what everyone wants to hear. The questions will remain, as predictions of a recovery are still not reflecting any positives for the average consumer. Who doesn't have a family member who is suffering from either being jobless, or if still employed fears for the loss of their job?
Everyone lives in a piece of real estate. Everyone works in a real estate investment. What will it really take for a buyer to buy a home once again? No, I am not talking about a short sale. Why don't the feds and their economists see that this is another huge red flag for the mortgage industry? If I could, I'd stop the feds from allowing this to go on and tell them that this should stop immediately. The upside is home inventory is slowly being sold off, but at whose expense? The average homeowner who is in good standing (no there are not many) needs to know how the system really works.
I am Mrs. Homeowner. In about 5-8 years, I want to become Mrs. Home Seller. Now, in my neighborhood there are foreclosures galore. There are a few homeowners who are trying to sell for the normal reasons, such as downsizing, family changes, relocation and job change. So the homes that are selling are from short sales. They are being sold for less because of the mortgage meltdown. So as Mrs. Homeowner, when I am ready to sell, could the full value of my home be recognized or will buyers want my home for less? Who makes the decision on the value of my home? Is it my realtor?
Actually it is your buyer, Mrs. Homeowner. Your agent and you can set the price wherever you want but it is your buyer who offers you a contract, and it is the price that you settled upon that will dictate the sales price. Then it is the real estate appraiser who will value the property. They have had their own challenges in these times as well. Now the real estate taxes of the homes that are selling in these short sales seem so much higher than mine are right now. What is the real tax base for homes like mine? There are so many unanswered questions in these markets.
How can the real estate investment become a good value again? Are short sale techniques considered sustainable methods to turn around the real estate market? Is common sense a lost character trait in today's business minds?
As a green real estate educator and someone who has completed close to 400 real estate transactions successfully, the word sustainable should be a key in any plans or suggestions to turn the real estate markets around as well. Can we all agree, "it is not business as usual anymore"? The rules are changing and nothing is as it seems anymore. We hear of food prices going down, but no one will admit packaging from manufactures is smaller. There are no more half gallons of ice cream. Look closer. Loaves of bread are smaller. We are in an economic downturn that needs drastic measures and we need them now.
Here's my suggestion on how the real estate market can be turned around: If I showed you a home that had a utility bill that is 45% less than others in a neighborhood, would you have interest? If I showed you a home, priced within $10,000 of others in a neighborhood, that documented smarter use of appliances and the materials used to renovate it or build it were not producing harmful chemicals than the neighbors' homes were, would you want to know more? If you learn freshly painted smell is not good for your family, would you have wanted lower toxic paints? If this home were not hurting the environment as much, was within walking distance of schools and the park, would this be of interest?
Suppose rainwater was being recycled and the association fees were including no restrictions if you wanted to add solar panels when the prices come down, would you have interest? What about if this home had an energy audit documenting low energy use? Talk about sustainable steps to create lasting and sellable value. Then the competition really becomes "healthy" competition.
The real estate investment sector needs help. It needs a better product in more ways then one. Just lowering rates will not do it. Having a 3% interest rate and thousands off to renovate green would be a few steps in the right direction.
Now, I am a staunch Republican and proud of it. The way our president is addressing these issues is not the way to do this. Incentives are good, but give them to companies who will hire and retrain those who are out of work. We are all ready for a new industrial revolution and it needs to first address those who will represent renewable products in the marketplace. If you build a new economy with incentives for small enterprise and big business, jobs will be created and the new industrial revolution can begin. Pardon the level of my simplistic explanation but this is how I see it.
Kerry Mitchell is the founder and course developer of Green Real Estate Education, which is on target to educate more than 20,000 real estate professionals in going green by 2010. Mitchell established the recognized certification for the real estate industry, the GCREP.GL. She worked for 14 years as a licensed real estate broker in Maryland and Florida, where she now resides.
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