Over 25% of residential real estate mortgages are upside down meaning that the mortgage borrowers owe more that the current property value. In some areas of California over 40% of mortgages are “under water”.
Foreclosure Is Ok
Foreclosure has become less of a stigma in the eyes of consumers and more and more people consider it not as a financial defeat but sound thing to do when they see that their neighbor pays $1,400 per month rent for the same house they are paying $3,800 mortgage payment.
Real Estate Agents Income Numbers
Real estate agents income has declined from a median $35,000 per year to $26,000 per year since 2006. Much of the real estate agent income goes towards commission splits and broker fees. Many agents are leaving traditional brokerages and join online realtor brokerages where broker fees are lower and commission splits are favorable to an agent. Veterans and new agents find new ways to prospect for new clients. Internet has become the main prospecting channel.
Real Estate Investments for Big Boys
The most valuable real estate investment is considered to be undeveloped property in commercially viable location. While residential and commercial real estate investments are not the targets of large investment companies, many of major players still acquiring most desirable chunks of land.
Big Brand Names in Real Estate Lose Steam
The power of brand name fails to produce the same results in the declining economy. Most buyers and agents do not care about the logo, they are looking for the best deal to work with. New small real estate franchises outperform the large companies in enrollments, sales and earnings. Consumers do not trust big business as they used to thanks to financial scandals, bailouts and inconsistent claims.
Real Estate Experts – Real Clowns
Over 95% predictions made by “real estate experts” in 2006 were dead wrong. Not only their arrogant assessment of the economic situation hurt real estate investors and home buyers but also people who decided to refinance their properties. Nevertheless, many of them are still preaching the same mantra, “market goes down, market goes up…”
Retirement and Housing Bubble
Many Americans have to reevaluate their retirement plans and try to find a job in a demising job market because they believed their home to be their best investment (see previous paragraph).