Middle Class Millionaires

I’ve been watching the papers. For the last three weeks there has been a minimum of 4 business section front page articles, per week, about the suffering real estate or mortgage industry. You’ve seen them too. “Home prices dropping.” “Mortgage companies going bankrupt.” “Major Banks and Savings and Loans cutting staff and closing offices.” All the press is feeding fear and causing even more bad decisions. Don’t let it affect you negatively. Rather than respond to fears about dropping prices, mortgage market shakeups and inflation outpacing growth, just sit tight. Yes there are some problems in the industry right now. They were caused by bad decisions and the price of that poor judgment is now being paid. However, these problems relate almost exclusively to the single-family detached market. That’s where property prices have been pushed by greed and stupidity and fueled by too-aggressive real estate agents, appraisers and lenders loaning over 100% of already inflated values to homeowners with mediocre or poof credit ratings. Come on. With this nonsense going on what did you expect to happen?

This market correction was overdue and will disappear with a very few months. In the mean time the single family market will take its lumps, but nothing you can’t survive.

Simultaneously however, the multifamily rental market is thriving. So if you were wise enough to buy multifamily properties, good for you. Sit tight and let the market push up your equity and profits. If on the other hand you own single family homes, sit tight and let this shake up stabilize. It will be a soft landing. Getting out in a down market now will only eat up your profits and long term potential. I hope this doesn’t sound rude, but you bought the ticket, now take the ride. It may be scary but it will be over soon.

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