At first blush, we ought to be easing around the bend, coming into the sweet, warm embrace of a Great Renaissance for First-time Buyers, right ? Any day now. The check is in the mail. Right?
First-time Buyers. That large, left over, endangered species list of haven’t-bought-yets that got totally priced out of anything resembling a home of their own during the long-running, 7 year super-market sweep of real estate from 1998-2005.
You know. All those people who didn’t just go crazy and jump into the abyss with 100% subprime loans, trying to leverage themselves beyond the wildest stretches of their own imaginations and their own yin yangs. Ready to risk all on a throw of the fuzzy dice with a lot of weird, fuzzy math attached.
All those teachers and civil servants. The one’s that, on a good day, when we aren’t all bemoaning the sad fates of our own sorry behinds, we cry elephant tears for. We play tiny violins for. And we pay endless lip service to and for – under the guise that in a just and rational world, people ought to be able to own a home in the same community they work in.
Home. A little corner of paradise found. A tiny sliver of the American Dream. A piece of the rock to polish with TLC . Not a lot to ask for. Specially for those brave and resolute souls who resisted the temptation to make that irresistible pact with the Devil four or five years ago before plunging headlong into the apocalypse with a tin-plated liar’s loan. The Devil is busy collecting his debts now. Without much sympathy. There’s a huge after-market price tag that comes when bubbles burst and tsunamis follow.
But Remember 1994? We were coming out of a recession then, too. (It’s the economy stupid.) We had a tight credit market. (Why does this idiot loan guy need a copy of my old divorce decree?) We were recovering from a real estate-fueled Savings and Loan Debacle (You mean financial institutions can be dishonest in a free-market system?)
Prices dropped. Interest rates dropped. And suddenly…Voila! The doors of perception and the windows of opportunity swung open – wide and inclusive for a bunch of really deserving people. More than half of the rebounding sales in 1994 in Santa Cruz County were generated by First-time Buyers. It was great. Real estate virgins were making hay. People who thought they were priced out of the market forever by the sonic boom of the late 80’s, were back in business.
So here we are in 2009. The Median Price is down from $780,000-ish to $510,000-ish. Average Price down from $900,000-ish to $550,000-ish. Interest rates are floating in an incredible range between the high 4’s and low 5’s. There’s a First-time Buyer Tax Credit. Tons of foreclosures. Lots of Sellers in trouble.
Isn’t this the perfect storm of events for First-time Buyers? Just like 1994? Isn’t there a wonderful upside to the downside for all those excited debutantes putting on their prom clothes?
Mortgage pundits and recovery addicts and real estate agents are beating the drum of a buyer’s marketplace. First-time Buyers are getting pumped up, psyched up, stimulated by talk of stimulus…but where is this market? Did it come and go? Was it ever here? Is it on hold? Is this another fake-out by the spinmeisters? Is this more myth than realty? Are we all addressed up with nowhere to go?
Where are all those low, low-priced homes? Why does every low-priced home smell like dogs or cats or people living like animals? What happened to the light fixtures? Who put the holes in the walls? Was there a motorcyle repair shop on the living room carpet? Is the promised land always on a busy street corner or the bad side of town? Why are so many septic systems failing? Is that black mold growing on the wall or just a bad case of terminal mildew? Why are there multiple offers on everything near the bottom? Why aren’t more REO’s taking FHA loans? Why are short sales so long? Why is the loan process so hard? Is there a secret “A” list of foreclosures out there? What if I don’ want to pay cash for these clunkers?
That’s not a blush of excitement you see on my cheek. That’s a blush of embarrassment and frustration that somehow we aren’t finding ways, as a collective industry, to create more real opportunity for First-time Buyers. That’s what would be a perfect storm and a perfect, poetic resolution to the sickening saga real estate has endured.
What’s wrong with this picture? Let’s spend the next couple of weeks trying to figure it out. Stay tuned.