So what is all the fuss? The latest turmoil in the mortgage and real estate biz is with regards to appraised values and "lost equity". In many of the major cities, there has been, for the last four years or so, an absolutely crazy period of escalating values. Homeowners were seeing as much as 25 to 50 % increases in one year.
Well the markets have cooled, especially in these major hot-spots. Some say that the values have even declined as much as 10-20% in 2006 in cities like Phoenix, Las Vegas, California among many. So here is the issue: Did you really lose any money?
If your home doubled or nearly doubled in value during this recent boom, if there is a market correction, did you really lose money? My thoughts are NO!
It was only there if you sold or refinanced. If you sold to get to the equity, you had to turn around and buy in that same inflated market so did you gain anything there either?
These homeowners need to stop the crying... sorry!
Like any investment, there will be ups and downs, booms and busts and one... if they are investing long term and not 'day traders' should be in it for the longer term. it went out of control due to low rates and, insane (and unethical) creative loan programs and a consumer that was panicking . It wasn't real.
Now the guy or gal that sold high and bought low... just got lucky. Just because your home doubled and now is only up an actual 60% instead, you didn't lose money. The greatest problem now are the real estate agents and home owners that are still trying to capitalize on the market insanity of a year ago and are over-pricing their homes still today. That is why the average time on the market is now nearly 90 days (or more) instead of just a few days.
They need to forget what it "might have been worth" a year ago and look at how much you made overall and what your needs are now for your next home. Live with what you have and be grateful that you have a home in the first place... billions don't.
As for the ones that bought in the hype, only hoping to turn a quick buck and sell for a boat load of profit... well, like the stock market and any other investment vehicle, there are risks and you got caught up in the insanity. Keep it for a long term and you will get it back. Good Luck!
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