Page 34 - Flathead Beacon // 4.22.15

34 | APRIL 22, 2015
REAL ESTATE
MONTANA LIFESTYLES
Is Your House Under Water?
FLATHEADBEACON.COM
By BLANCHE EVANS
There are no guarantees that real estate will pro- vide a return on investment. While some people are able to sell their homes at a profit, others are not able to sell without incurring a loss. If you think your home is losing value, what should you do?
Don’t panic. Homes are not as volatile as other investments. Unlike stocks, which can gain or lose 100 percent of their value in one day, homes gain or lose value over months and years. Real estate, like any other commodity, is subject to supply and demand. Demand increases with the number of jobs in the community. If there are jobs, there is more demand for homeownership. If jobs are leaving the community, there is less demand for homes. Homes historically beat inflation. For this reason, falling real estate prices seldom retest previous lows except in extreme circumstances when communities are dominated by a single employer or industry that has suffered a downturn. In most cases, home values recede and go on to stabilize or test new highs.
Look at the local economy. Are businesses let- ting people go, or are they closing their doors? This is generally a slow process that can trend over years. In other areas, job loss is temporary as companies shore up bottom lines by letting personnel go. Even- tually, they find that they can’t compete, and they begin to hire back staff. So the housing stock that suffered devaluation may see itself rise in value again as jobs return to the area. The key is will your community come back or not? The answer to that lies in the desirability of the community. Has civ- ic planning for resources and local amenities been wise? Is the community attractive with natural re- sources nearby such as a lake or the mountains? Are community leaders working to attract new growth with incentives for relocating companies? Is this a place people want to live? If so, you can look forward to a turnaround.
Your home is more than an investment. It is a place to live. When you buy a home, you are buying more than an investment opportunity. You are buying a stake in the local community, which is one of the reasons why the U.S. government works to make homeownership so attractive. As a homeowner, you get mortgage interest rate deductions off of your income tax.
If you bought your home because of attractive qualities, and keep reinvesting in your home by per- forming repairs and updates, and your home is in a desirable neighborhood, chances are good that you will recover your investment and be able to one day sell at a profit.
If you aren’t in a must-sell position, review the state of your economy. If your finances are in disorder, with too much credit card debt, for example, and too many obligations, now’s the time to cut personal expenses. But don’t sell your home because you think prices are falling unless you have another reason to make the change. Do you want a different lifestyle? Want to live in a different area? Fine, go do it.
If you are in a must-sell position, now’s not the time to try to sell your home alone. Talk to a Realtor. Good Realtors are more diversified than you may think. Let
a Realtor help you determine your ability to sell. While they can’t perform voodoo economics and pull a profit out of your home if you are overextended with equity loans, they can certainly help you with a strategy to sell where losses are minimized as much as possible. Many Realtors are also cracker-jack property managers and can help you lease your home until selling is more prof- itable. The market sets the value for your home. Equi- ty builds with time and the reduction of loan amounts and interest – but only if a home continues to be well- maintained and improved when needed. If you haven’t made any improvements on your home and buyers are offering you wholesale instead of retail, again that is a reflection of the market. Anytime you are able to sell your home or any asset and walk away with a check, you did well in any economy.
Submitted by NMAR PR committee
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