·In the past 12 years, the net worth of the typical home owner has ranged between 31 and 46 times that of the net worth of the typical renter.
·Home owner equity is a substantial component of home owner wealth. The Federal Reserve'sSurvey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth along with basic demographic details and more detailed information on where families keep the wealth they have accumulated.
·The most recent survey, concluded in 2007, offers a picture of the situation before home price declines and the tumbling equities market hit household balance sheets. At that time, median home owners had well over $200,000 in net worth or 46 times that of the median renter who had just over $5,000. Furthermore, $200,000 was the median value of owners’ homes.
·Looking at aggregate data, the National Association of Realtors® estimated the impact for renter and home owner households through mid-2010 taking home price and stock market performance into account. The result suggests that despite declines in equity and housing markets, homeowners have a net worth orders of magnitude greater than renters.
·How has the recovery of the stock market and a sluggish housing market affected owners and renters? For the first time ever, the Federal Reserve resurveyed the 2007 participants in 2009 to directly measure how the crisis and recession affected their finances. These results are expected later this year.
This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >
There's Hope Beyond Foreclosure
By Patti Gilman, Coldwell Banker Weir Manuel www.callpatti.com
One thing we in Michigan constantly hear from around the country is that our economic situation is hopeless. As a Realtor, I can't control what people say or what they believe about our current predicament. But what I CAN control is how people feel when they're upside down in their homes. I want to tell you, that no matter your situation, there IS HOPE for those of you who feel trapped in homes you can't sell.
It doesn't matter if you're behind in your payments or not, when you work with a qualified Realtor and lender, there's always options and always more hope than you thought. Whether you work towards a loan modification, a short sale or engage your rights in a foreclosure process, there are ways you can manage your current situation in your favor. But you have to be aware of your options, because your lender treats each one separately.
Loan Modification Under the terms of a loan modification negotiated with your lender, you can potentially move from an adjustable rate mortgage to a fixed mortgage and from a higher interest rate to a lower one, depending on your credit and a number of other factors such as how many loans you have on your property. This must all be coordinated with the lender and people who are in the market with the expertise to help you meet the necessary requirements. Short sale If you owe more money than your home is worth (that's a lot of you), we can work with the lender(s) to get them to accept less than what the house is worth, with the eventual goals of doing the least amount of damage to your credit and so you owe no money at the end of the process. That's the tricky part.
The ultimate goal is to have it recorded to the credit bureau and have the home paid off as agreed. That way you know the debt is settled. There are a number of reputable companies out there who specialize in short sales who work with Realtors like me to help you make sure you have the reams of information you need that the bank requires, from hardship letters to your complete financial statements. Ultimately if the short sale option does not work, your lender can take it all the way to ….
Foreclosure Even in the last resort of foreclosure, you need to know you have rights in the State of Michigan. For instance, you, as the homeowner, have a redemption period of 6 months, or a full year if you're on 12 or more acres. These rights allow you to say in your home for the applicable period of time without having to pay your mortgage.
But remember, this should be your LAST resort. With a foreclosure, not only are you damaging your credit, but you are contributing to the huge inventory of bank owned homes in the market, which in turn is contributing to your neighbors' inability to live in a home that is worth more than they owe. Bottom line, the glut of bank owned homes is a main cause of the vast amount of homeowners who are upside down.
