Are You a Homeowner? Coping with the Realities of an Unrealistic Housing Market

Many homeowners are coping with the realities of an unrealistic housing market in the aftermath of the housing crisis. Here is a list of some of those realities:

1. Declining Property Values
Homeowners everywhere are dealing with drastic declines in home values, ranging from as little as a few thousand dollars to hundreds of thousands of dollars. And no one knows exactly when the housing market will stabilize. In fact, the question of when the housing market will stabilize has gone unanswered since the housing market crashed.

2. Unfinished Neighborhoods
Many homeowners living in new subdivisions have been abandoned by their real estate developers and home builders that went belly-up as a result of the declining housing market. Vacant and overgrown lots, with unfulfilled promises of amenities such as clubhouses with state of the art fitness centers, playgrounds and pools to name a few, are still haunting many homeowners.

3. The Cheaper House Next Door
Homeowners living in unfinished subdivisions breathe a sigh of relief when they finally see new homes being constructed on vacant lots in their neighborhoods. However, shortly after breathing a sigh of relief, many of these same homeowners will experience feelings of shock and disbelief. The reality is that after the first house is built, you may notice a sign advertising the homes at $100,000 less than what you paid for your home. Unfortunately, thousands of homeowners are dealing with what I refer to as "the cheaper house next door". Homeowners dealing with this situation are torn because they would rather see a family living next door to them rather than an overgrown, vacant lot. But on the other hand, the homeowners know that their houses will drastically depreciate in value simply because the house next door is cheaper.

4. Foreclosed Properties
The house with the overgrown yard, dirty pool, and mountain of trash is probably a foreclosed property. Currently there are over two million foreclosed properties nationwide according to Realtytrac.com.[1] And normally homeowners could care less about foreclosed properties, but with the overwhelming number of existing foreclosures, many homeowners are dealing with multiple foreclosed properties in their neighborhood and even right next door to their own homes. Not only are foreclosed properties a breeding ground for rodents and pests, foreclosures also lower the value of other homes.

5. Trapped In Upside Down Mortgages
Many homeowners have great credit and would love to refinance their homes to take advantage of lower interest rates. However, your great credit doesn't matter in this market if you're upside down, meaning you owe more on your mortgage than it is actually worth. Even if you've never missed a mortgage payment, no lender will refinance a property that is upside down, unless the homeowner is willing to cover the difference between the current value and the amount owed by bringing cash to the closing table.

6. Rising Property Taxes
Your house is worth $50,000 less than what you originally paid for it, but your property tax bill has increased. Many homeowners across the country are finding themselves in similar situations. Local governments are increasing property taxes in an attempt to replace loss revenues. And although these same local governments are aware that many homes have loss value, most of them do not have the manpower to reassess every single property. On top of that, it isn't in local government's best interest to reassess properties at the current fair market value. So homeowners living in homes that have decreased in value must be proactive and appeal their property taxes.

7. Rising Homeowners Association Dues
Living in a neighborhood with a homeowners association may have seemed like a great idea when the economy was booming. But in the aftermath of the housing crisis, the last thing any homeowner wants to pay is their Homeowners Association ("HOA") dues. HOA dues are primarily set aside for the maintenance and upkeep of your community. But when you live in a neighborhood where less than 50% of your neighbors are contributing or where the HOA dues keep increasing but your amenities keep decreasing, it seems ridiculous to keep paying for services that you aren't receiving. Unfortunately, homeowners must remember that mandatory HOA dues are enforceable and failure to pay could land you in foreclosure proceedings.

8. Buyers Market
Lastly, if you have decided to sell your home, it doesn't help that it is a buyers market. Your house is one of many that buyers can choose from, so hiring the right realtor to assist you in marketing your home is a must.

[1] RealtyTrac Inc., "Stats & Trends", RealtyTrac.com, http://www.realtytrac.com/trendcenter/ (accessed July 30, 2010)