Before buying a home in Riverside, I had weekly conversations with a good friend of mine about the bottom of the real estate market.  We discussed the mortgage meltdown, the cyclical nature of home sales, the efforts made by government to shore up home prices and stop foreclosures, the change in prices over different seasons, and historical cost data to evaluate home prices in areas throughout Riverside, Corona, Moreno Valley, and Norco.  While the conversation would usually end with uncertainty, I was hopeful that I could anticipate the bottom and buy a home at the best possible time.

Two years have passed since I bought a home in Riverside and the news about home prices continues to disappoint.  An article in the Press Enterprise confirms that prices continue to drop throughout the Inland Empire.  In Riverside County, homes prices dropped by nearly 4.5% when compared to median homes prices last year.  In San Bernardino County, home prices dropped 6.3%.

According to the article, many of these purchases are made by investors or first-time home buyers who have been waiting for price drops.  A third of the sales are for sales of foreclosed homes.  Sales of new home sales have dropped to the lowest numbers ever since these records were kept starting in 1988.

I find that more and more of my clients struggle with the continued fall in housing value in Riverside and whether it is worth it for them to stretch their budget to pay an inflated mortgage or even modify a home loan.  While this has been a problem in recent history, more people with jobs and income question whether this is the best option for them.

While I do not pretend to know whether all my clients should stay in their home, I try to discuss the following points with these clients.

  1. What is the value of the home and how much do you owe to the mortgage company?
  2. If you were to leave the home, what type of property would you need and how much would your rent payment be?
  3. Are you emotionally prepared to walk away from a home you may have lived in for a long time?
  4. If you could get a loan modification, would you be willing to stay in the property?
  5. What are legal ramifications of walking away from your home?
  6. What are the credit ramifications of walking away from your home?
  7. What other options do you have?  Bankruptcy, Litigation, Short Sale, etc.

While this is not an exhaustive list, it is good starting point for a client to determine their best course of action.

 

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