I was watching a recent television airing of the Suze Orman Show when she talked about the decline in the real estate market and how a great number of people are panicking and freaking out because they are watching the value of their home decline significantly. Many people are agonizing about what to do... should they sell? should they stay?
The truth of the matter is that while some people are in the position where they have to sell and will have to bite the bullet in order to move on with their lives, many more people have absolutely no intention whatsoever of selling their home. They are happy in their homes, they are able to afford the monthly expenses and they plan to stay there for many years to come.
These people were very happy in their homes until they started watching the negative news everyday, listening to the radio and reading the newspaper all beating the same drum that the value of their home is going down, down, down. All of a sudden, the bliss turns to frustration because they feel that they are now poor, they have lost a lot of money, they don't know what to do, should they sell and so on...
Suze warns it is time to stop thinking this way. She explains that while it is true that the housing market in many areas of the country is declining and it is possible the decline can continue for the rest of 2008 and into 2009, the fact of the matter is "a house is where you live." She drives home the point, "what do you care what the value of the house is, if you are not planning to sell?
"If you have a good mortgage, you are able to keep up with the payments, you love the house, you love the neighborhood, you love the schools, etc, than stop worrying, and stop paying attention to the value of your home! The value of your home will eventually go back up."
Suze cites as an example, the Hong Kong real estate market in 2001-2002. Hong Kong's real estate market was very similar to the real estate boom we experienced here in the United States. Properties were skyrocketing. All of sudden, in 2001/2002 the real estate market in Hong Kong fell apart, similar to what we are experiencing now. Properties there had declined drastically to a point that many property owners saw the values of their homes decline to far less than what was owed on the property. Sound familiar?
Suze's advice to them at the time, ironically, is the same advice she has now, "Just stay put. If you can afford the monthly mortgage and expenses, and you are loving everything about your home, just stay put!"
The real estate market in Hong Kong has rebounded and the property values today are higher than ever before. Will this happen in the United States? "Absolutely!" When it will happen, no one knows. Markets go up and markets go down. The key to remember is that your house is a home. If you can afford it and you love your home, stop worrying about the decline in value.
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