The Pocket Watch: Back off, Thomas Wolfe

It should come as no surprise that, as of yet, I haven’t been able to find a viable way to make a living exclusively as a writer. So, for the better part of the last 20 years of my life, I’ve been a licensed Realtor, and I’ve represented clients in the sale and/or purchase of homes in the Sacramento area, an avocation which has its frustrations, yes, but which can also be sufficiently fun and exciting.

Sometimes, I think those of us who have owned homes for several years often forget what an incredible feeling it is when you become a homeowner for the first time. It makes you feel like you’ve carved out your own place in the world, a refuge with all of your possessions, where you decide how the furniture is going to be arranged and what color the walls are going to be. There’s really no other feeling like it in the spectrum of human emotion. There’s nothing that provides as much relief and comfort as coming home.

It’s widely understood that the real estate market, like the national economy, is cyclical. Values go up, and they come back down. Interest rates go up, and they come back down. I’ve seen two or three of these full cycles in my time as a Realtor. I remember how I told myself if I lived through the first cycle, next time, when the economy got rough and prices took that invariably precipitous dip, I was going to buy five houses!

What I failed to factor into my planning was that, because my own income relies directly on the real estate market, when business is bad, and prices take a tumble, I don’t have the extra money to buy any houses. In fact, not only could I not afford any additional homes, I start sweating out making the payments on my own note.

This last recession was as bad as I’ve ever seen it. In fact, I believe that it was, statistically, every bit as bad as the Great Depression of the 1930s. This time, it wasn’t just the folks who are directly dependent on the real estate market, usually the first industry to bear the brunt of the initial wave of an economic crisis. Seemingly every industry across the board was affected by this crisis, and it wasn’t just a “squeeze” that was felt. It was a rear-naked choke that tapped out a lot of families.

Sacramento, capital of California and, thus, state worker capital of California, is filled with people who, because of the plunge in the economy, had their hours at work reduced dramatically, and many who lost their jobs altogether. Such a grave reduction in income meant that heads of households everywhere were compelled to make difficult choices each month. Forget new cars or boats or trips. It was more likely a matter of, food or mortgage? Utilities or mortgage? Soon, many folks found themselves behind on their mortgage payments and making that difficult call to their lender’s customer service department.

The lucky ones were those who were somehow able to convince whichever bank was holding their mortgage to modify the terms of their loan. In general, this meant either a reduction in their interest rates (an 8 percent loan became a 4 percent loan) or an extension in their terms (a 30-year loan became a 40-year loan). My albeit unscientific analysis of modifications was that the banks were only granting modifications to borrowers who weren’t really in terribly bad shape. The more dire cases were soon compelled to leave their homes, via either short sale or, unfortunately, foreclosure.

For the millions of displaced families across the country, gone was that aforementioned elation that came with the purchase of their home, and, in its place, for many, came a sense of shame at having to admit that they were unable to live up to their end of the terms of their loans, a sense of humiliation at having to pack up their children and remove them from the only home they’d ever known, a sense of failure at their shot at what has widely become known as the American Dream, home ownership.

Three and four years removed from the loss of their homes, these neighbors are now being allowed back into the market, as some lenders have relaxed their qualifying standards to include those who were party to a foreclosure as little as two years ago. In the interim, these former homeowners have watched their own homes be sold for a price that translated into payments that they could have easily afforded. And they’ve seen prices and, amazingly, interest rates, dip to unprecedented lows at the same time.

Usually, when we see low interest rates, we have high values. And when prices fall significantly, banks are generally charging high interest rates. To see both low rates and low prices, together, is almost a once-in-a-lifetime opportunity. That opportunity passed overhead at exactly the same time that the people in America most in need of such a break were powerless to take advantage. Imagine how difficult it would be to see homes selling for prices that would be less than your monthly rent while being unable to capitalize. This was the plight of many of our friends and neighbors.

But now it’s time for them to get back under a roof of their own, and I take enormous satisfaction at my role in facilitating that redemption. The only challenge now is the waning inventory in the market. For a variety of reasons, we just don’t have the volume or the selection that we’ve recently seen. Home buying, now, requires diligence and persistence. The right property is the needle in the haystack.

And that’s maybe as it should be. Sure, it makes my job much more challenging, but the payoff is sweeter than it has ever been, given the circumstances under which we’re working. You CAN go home again, friends. Welcome.

The Pocket Watch appears in every issue of the Pocket News. Jeff Dominguez can be reached at jeff.dominguez@yahoo.com..

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