The Home Series: Buying a Home?
To close this series on housing I interviewed a woman named Ann Metzger. She is a practicing Real Estate Agent in southern California and she is very successful in her line of work. Although I initially asked Ann the following five questions I later thought that it would be interesting to add another professional’s perspective on the same questions, so I did. This ex-agent wanted to remain anonymous. For the purpose of presenting his answers below I refer to him as David. I met this tall and handsome gay man a few years ago and had been to his lovely home in Mission Viejo several times. I loved his backyard with the stunning views of the mountains in addition to the pool.
Unfortunately, David lost his home in this housing crisis and he is no longer a practicing Real Estate Agent—a career that once was lucrative for him for at least ten years. Due to his personal experience, David represents many Americans who have lost their home from the mortgage crisis that Martha previously shed light on in her role as an Eviction Coordinator (refer to part one of this three part series). While David’s view on home buying is quite different from Ann’s view it is a perspective that is certainly worthy of being heard, especially by people considering that BIG move to purchase a property. I hope readers appreciate the yin-yang angles that are presented below.
Lana: How has the fallen housing market affected your real estate business?
Ann: There was a lull and definitely a stall in my business from September 2008 through March 2009. I have seen many agents leave the industry, as they could not financially survive. In particular were those agents that had families and those agents that jumped into the business during the height of the market (Spring 2006) as they thought selling property was easy money. Business has picked up dramatically for me and that seems to be the case for the industry in general.
David: The fallen housing market has taken a once thriving full time business (as for many) into a business that is either non-existent if not completely vanished. I have also drawn some conclusions from what I learned as a practicing Real Estate Professional that won’t allow me to continue to perform this job in integrity.
Lana: How has the fallen housing market affected you as a home buyer/owner?
Ann: I currently own 5 properties; a single family home in Laguna Beach (primary residence), a flat in Venice (rented), a loft in Pomona (rented), a single family home in Dayton (selling), and a house in Palm Springs (co-own, short term rental). Fortunately, I have properties that have, for the most part, held their values. The Palm Springs market has been hit hard, but that investment will be fine, as we will hold it until the market comes back. I feel real estate is still one of the best long-term investments. All of my assets/money is in real estate and I am thankful for that today given the beating the stock market has taken especially during the past year.
David: As a result of this collapse I lost my personal home to foreclosure, along with pretty much everything else.
Lana: What, if any, opportunities do you see as a result of the housing collapse?
Ann: I see many opportunities now. For example: interest rates are at a historic low; there is a large amount of inventory and foreclosed properties to chose from; and, there is the tax credit for first time buyers (or even the tax credit as a home buyer). It makes sense to buy now. An indicator that the market is getting hot again (at least for the first time buyer, under 500K purchasers), I just sold two listings in the Los Angeles area in under 2 weeks with one property yielding 7 offers and the other begetting 4 offers. One sold for over 9% of the list price!
David: I see humanities freedom behind this collapse. This situation begs the answer to the question: Which came first, the chicken or the egg? Which came first: The home loan or the over inflated property values? After performing duties in the real estate business I witnessed the contribution that loans made to inflating property values. The invention of the mortgage has created a dependency upon it. Very smart invention if you’re a bank. It’s hard to believe that this exists in a “civilized” world. Because greed is short sighted, and loans and interest payments on real estate is not sustainable, it stands to reason that the only trend that is logical is for the eventual collapse of real estate values therefore eliminating the banks altogether. This may take a while, or it may happen quickly. Either way, this occurrence in our history has shown us how illogical and unsustainable our approach to ownership based on leveraging over inflated property. Basically put, ANY amount of equity that has to be leveraged into a bank loan IS false value in a home. This realization will lead to an ultimate freedom from the mortgage one way or another.
Lana: Is now a good time to buy a house? Should people wait? Is the bottom still coming?
Ann: We may see more of a bottom but my fear is if Buyers wait for the “bottom” they may miss out on the low interest rates and end up actually paying more for the house over the life of the loan. For example: $400,000 loan @ 4.5% = $2026.74 payment vs. $400,000 loan @5.5% = $2271.16 payment. We live in one of the most desirable areas in the world, Southern California. There will always be interest in buying in this location.
David: I feel that we have not seen the end of the correction in the market. While there are plenty of people taking advantage of the misfortunes of others and swooping in on fire sale pricing, it is my personal opinion that we have not seen the lowest prices yet. This is a correction in values and because a great many people have been taken out of future markets from loosing their homes, credit and reserves, it would be a long time if ever there is enough momentum behind an inflation in property values due to demand. Most people think that the best thing to happen would be for the property values to begin to inflate again, and the only person—business—that benefits in the end from that rise is the banks, as we have seen so clearly. Our entire monetary system has to be restructured first before anything positive can come from any aspect of the economy. This restructure must eliminate the unconstitutional privatization of our monetary system and the corruption in government so as to gain a momentum in the positive on any front in the economy.
Lana: Is there anything else you feel that is important to say to people that will help them to smartly buy a house in this economy?
Ann: Do your research. Read the paper. Go to Open Houses. EDUCATION IS POWER. Read www.inman.com. Find an agent you feel comfortable with and you can trust, as they will take care of you. Although buying a home can be stressful, it is an exciting and fun experience! I think real estate is THE key to building your wealth and it is never too late to start that process. (For more information on how to properly buy a home and to have your real estate questions answered Ann invites you to contact her at firstname.lastname@example.org or 949.464.3244.)
David: If you are able to pay cash for a house that you absolutely love and can call home GO FOR IT, otherwise it is not worth the risk. Allowing the system to completely correct itself is probably the best long-term solution. In essence, if you have to take out a mortgage, you don’t own anything . . . it owns you! Ask yourself who in that scenario is the master and who is the slave.
Lana: Thank you Ann and David for sharing your precious time and valuable information and experiences with readers of Queercents.
I hope the readers of Queercents have enjoyed this three part series on the housing market. I enjoyed interviewing all of these professionals. I certainly have appreciated the information they articulated. While it can be unfortunate to have to learn from other people’s choices that have created financial distress, it is imperative to learn from them and make better choices. I feel that all people interviewed had one common message and that is for homebuyers to be accountable and take control of their financial portfolio. Stepping up to the plate is something all people are easily capable of doing.
Edited by: Lana Marconi. For more information on Dr. Lana Marconi’s private therapy practice in the Orange County, California area, and to download her self-help books visit: www.drlana.com.
Photo credit: stock.xchng.