The New "House-less" Generation

Foreclosures are at an all time high. Many American families are starting to lose their homes along with their jobs. This phenomenon does not discriminate and is touching everyone. Sixty minutes did a special on the new generation of Americans who were successful, living the dream who are now living the nightmare of being without a home. The father of one family interviewed was a wall street stock broker who previously made $750,000 at the peak of the trading and now is working as a Pizza delivery guy just to pay the utilities. They were behind on their payments for over a year and foreclosure is imminent. The pool in their home was cracked and the house was deteriorating. The family could pay the electric one month and then the water then next month to keep things going. They have two teenage kids and are looking at being House less within a couple months. They have no family to move in with so where is it they are going to live after the bank takes the house?

Budgets are being cut, social service agencies do not have room at the Inn and the food centers are running low on food. The second round of foreclosures is probably on the way as there was the original ninety day moratorium on foreclosures waiting for the stimulus package to take effect. Where are these people going to live when they have no credit and no relatives to move in with?

Investors are the next group who will be letting the houses go back to the bank as the market value of the areas drop with foreclosures taking over the sold value pricing. When the foreclosures start creating the market values, many of the investment homes will have existing loans thousands over market value. With the drop in income at every level, investors who were leveraged into properties will just stop making payments and thereby let the homes go into foreclosure. When an investor lets the home go back to the bank it has taken a potential rental property out of the list of available homes until another investor or home owner purchases the home.

It appears we could be faced with many more “house less” families and a limited amount of rental properties or income to pay for the rent. Where is a family with three children and only one adult carrying a job or possibly both without a job going to live?

Do you think investors who still have credit should start investing in larger homes with more bedrooms and baths to be prepared for extended families getting back together? Do you think cities should look at zoning regulations to allow temporary boarding houses so people with extra bedrooms could rent out to people without homes?

What are your thoughts on this growing crises and what do you think communities and families should do to prepare for what could be coming down the road?

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About Carra Riley

Fun loving classic writer who is a life long learner. Helping people connect the dots as a consultant for small business and real estate along with custom workshops and seminars.

Comments

  1. I think the glut of housing on the market must be absorbed before much of anything can happen.

  2. Carra Riley says

    Do you have an idea about what could be done with the glut of housing? What about affordable rentals with income for the bank owned properties? Could rents help pay back the bail out loans to the Government then sell the houses when the market comes back instead of dumping them for half price continuing to drive the market values down?

  3. John Panico says

    As a real estate investor, I feel for all parties. Much of what I considered my “retirement” is gone. Still, I have a “buy and hold” attitude when it comes to the real estate that we currently have. Not that I have alot of choice, but fortunately, that is fitting my mode at the moment.

    We would like to move and buy a new personal house, but the credit is so tight that I am not confident that can happen anytime soon.

    Even though there are many people who have lost their homes, you would be surprised at the number of rentals that are currently vacant. Makes you wonder where the people are living.

    Unfortunately, I think housing isn’t going to see any improvement for the next year. It is like “dying on the way to the banquet”. If you can hold on, you are probably going to be ok. But holding on could kill you as well.

    From my understanding is there there is one more year of adjustable mortgages that have to “adjust” before we are at the bottom of this.

    In the end, I don’t believe government buying houses and then renting them will truly support home values. What it is going to take and what banks/communities don’t fully understand is that it takes real estate investors. If the banks would give folks who have assets access to the money, they would buy the houses and get the economy moving as a result

    Thanks for the opportunity Carra!

  4. Cosmic Cow Pie says

    John,
    You have very valid points and an idea just came for some type of steering committee to ponder in getting the banks to work with investors on some sort of equity share idea. It could be the investors come in to manage/buy the properties in partnership with the bank till the market turns around. The burden of management of the property is gone from the bank.. the bank has someone paying something on the asset and the investor is in a speculative mode waiting for the market to come back at the same time working with the bank who gave them a loan. Could be a win/win for all involved.
    I think it takes brainstorming for a solution and then someone taking action with an idea that goes out to help solve problems. Thanks for sharing. Hope this opens up to more comments on what we can do.

  5. Tony Cuckson says

    Dear Carra,

    When the focus for more of us is to invest in the Central Bank of service to others then there will be less and less of these swings that are generated from fear.

    Blessings

    Tony Cuckson

  6. Cosmic Cow Pie says

    Tony, you are so right. Living the Golden Rule and helping others.
    Thanks for your comments