We’ve blamed the banks and mortgage folks and the government – everyone from the dog catcher to the CIA it seems for our present economic predicament. And for sure there are plenty to places to place blame, and things that are happening that shouldn’t, over which we do not have control.
We are all sadder but wiser now. We’ve learned better, but we’ve lost a lot. Our resources are diminished. The gravy train has pulled into the station and the cars are empty.
I’ve work in real estate, full time, part time, and sometimes, for many years. I have managed a few rentals, but mostly I have sold: land and houses – mostly land. I watched land prices begin to rise sharply in this area in the 1990′s as loans became available for land. Prior to that banks had been reluctant to loan money on land. Most of it had to be owner financed. We did a lot of contract for deed financing arrangements. We had to if we were going to finance land. Contract for deed is still an excellent financing tool in North Carolina.
We did it for houses too. And it worked just as well. We weren’t big shots then. We were mostly ordinary people trying to make it. And we did. Some did better than others. A lot of folks did better than I did, but I had my reasons for choosing real estate.
In a very short time, the price of land became inflated. Was it worth what people were beginning to pay for it? Who knows. But sellers were happy and very pleased with the REALTORS who had represented them. And of course, we were happy every payday.
Soon the same thing began happening in the housing market. Savvy selling brokers encouraged sellers to go for top dollar. Many of us were genuinely surprised when these ridiculously overpriced properties began selling. But based on the comparables, we began recommending higher and higher prices to our sellers. And those high prices were met by eager buyers who could now get loans heretofore unavailable to them.
The pace quickened. People were buying properties and “flipping” or reselling them at tidy profits before the ink was dry on the closing documents. A feeding frenzy began…..
We watched. How many of us knew in our heart of hearts that this prosperity wasn’t real I can only guess. Some of us did. I did. I knew it couldn’t last. It was all happening too fast. Prices escalated to the point that a “junker” property was bringing what a moderate single family home had brought a few short years ago. Sellers were insisting on higher and higher prices for their properties.
And then it happened. In a little while the spigot dried up. The overpriced properties began to languish on the market. Now, about four years later, the market is flooded with foreclosures. I recently sold one for around $115,000 that had been mortgaged for nearly three times that amount.
As I look back, I do not know of anyone at present who bought a property through me that has had that property foreclosed. I suppose some of that is just luck. I do remember one person who was already in a subprime mortgage that was about to adjust upward when she came to me to sell her house. We tried, but she had paid too much for the property to start with. I don’t know what she ever did. She perhaps is still paying the mortgage; I hope so.
We still have a lot of foreclosures on the market and there are yet a lot to come I suspect. Until these properties are sold we will not really know how property values are going to fall out. But we are seeing a return to sanity, thank goodness. It is a good time to invest again in land, especially crop land and farms. They aren’t making any more of it you know.