Worried About the Real Estate Slump? Don’t Panic.

November 9, 2007 By Matthew Paulson

If you turn on any of the sensationalist news channels, chances are it won’t take long to hear a story about some poor family who signed up for an interest-only variable rate mortgage for a home they couldn’t afford in the first place and were absolutely shocked when the rate and their monthly payments adjusted upwards and now can’t sell their home. For people who made bad decisions and bought homes they couldn’t afford with rip-off mortgages, this real estate slump is probably going to be pretty painful, but for the rest of us, we have nothing to worry about.

The number home homes sitting on the open market waiting to be sold jumped over 50% in the last 12 months, leaving many home-owners who want to sell wonder if they will ever be able to sell their home. You’re not out of luck if you want to sell your home, it can be done; it just might take a little bit of extra work. You need to make sure the price you are charging is based on what the home will actually sell for in the open market, not what you think it should be worth, or what you would like to get for it. You also need to make sure that your home is in the best shape it can be and is as clean as possible. If there are any problems with your home, take care of them. Somebody’s going to buy a house in your area sometime in the next few months; you just have to make sure it’s yours and not somebody else’s.

Many parts of the country are largely unaffected by the real estate bubble. If you live on one of the coasts, Washington DC, or in Florida, chances are the home prices in your area have been somewhat affected in the last year, but there are many parts of the country where a bubble in real estate just never really occurred. For example, South Dakota has the lowest number of sub-prime mortgages per capita in the nation, and home prices have actually been slightly on the up-tick for the last few years.

If you’re living in a home and have no plans of moving in the next few years, you will be wholly unaffected by the real estate slump. Chances are your homes’ value has shot up every year from 2002 to at least 2006 and is worth quite a bit more than when you originally paid for it. The price of your home might have recessed to 2003 prices, but it’s still likely worth more than you paid for it. And if you don’t have any plans to move or sell your home in the near future, you’ll have plenty of time for the real estate market to make a correction and even out again while you keep living in your home, doing your own thing, and making your monthly mortgage payment.

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