I see in my county’s public records that 15% less homes closed this past July week than they did in 2006, and the amount of foreclosure filings has doubled from last year. These are not separate occurrences, but rather closely intertwined facts that speak to the desperate times we’re now in.
As I stated here, July and August are usually the busiest months for me, getting buyers and sellers newly situated before school begins. But for the first time in 25 years I have had just a handful of closings this July, and the 15% drop-off is why. The owners of those homes that didn’t sell may not be more successful in August, or September, and may very well have an adjustable mortgage rate that kicks-up just as their next real property tax bill comes in with its guaranteed 5 to 11% increase.
If you are that Seller/Borrower in way over your head, which answer will you choose on today's newest quiz show, “Desperate House Owners”?
- Drop the price of the house below what you owe (and what any other nearby home is listed for) and hope your attorney can negotiate a short-sale with little or no future financial implications if a buyer comes along to buy your “bargain”;
- Put another $400-$500-$600 towards your mortgage payment each month and hold on until the market rebounds, whenever that is;
- Deplete your kid's college savings and your 401K plan, and sell your wedding silver, just to maintain your credit standing; or
- Stop making your payments and live “rent-free” for three-six months while the lender forecloses, and then rent for a few years until your credit rating is rehabilitated and/or lending practices become looser again.
Any wonder the amount of foreclosures doubled around here?