The simple answer is MONEY. It is great the market skyrocketed last year, but 2014 has not been as kind. Property values are either staying steady or moving slightly upwards. In other words – we are on our way back to a normal market, wherein we see housing prices rise by approximately 3% per year, not 20%. In Las Vegas the housing market could possibly take a slight dip too because of the amount of people still delinquent on their mortgage. The numbers are astounding. Over 100,000 people are still delinquent on their mortgage. In addition, we have investors who bought homes really cheap a few years back and are now looking to unload them. The reality is our real estate market is controlled by consumer confidence and the employment numbers. Unemployment is down, but those numbers can be misguiding as the unemployment numbers only take into account people who are on unemployment. Many people were able to obtain new jobs, but they do not pay as much as their old job. In addition, many of the unemployment benefits people were receiving have expired. Lastly, all of the families who did have some savings before they lost their job have burned through that money to pay for essential services and basic needs.
An old friend used to always tell me that “facts and figures don’t lie, but people do.” The reality is he was right, so what do the numbers say about the market. The average person who is upside down on their mortgage has over $100,000 in negative equity. If this person was to continue paying their mortgage in a timely fashion and taking into a normal market appreciation it would take them nine (9) years to merely break even. Moreover, that same person could short sale their house and buy the exact same model and save over $800 a month. When you consider the amount of money a person would save a month and the amount of equity they would gain in their new property the number is astounding – $157,000. With that amount of money you could pay for your kid’s college education and medical school. Alternatively, you could simply wait out the real estate market and break even. What do you think the smart decision is?