House of Cards

House-of-CardsAfter a conversation yesterday with a lender, I was again reminded of years long ago when there were easy lending standards and investors as well as homeowners took the initiative to take advantage of the easy money to help them quickly build wealth via buying and selling. Everyone thought the market values would continue to climb and everything would be great and wonderful into infinity.

Well, the few of us that still remain in real estate sales can tell our grim stories about crisis. The investors who placed greed before level-headedness were the last to fall and fall hard. I really didn’t empathize with them much because I remember how they considered themselves on the top of the world. The savings and loans as well as many of the banks were bleeding with loan losses and many of them were forced to close their doors when the Feds moved in for their audits.

We had but a taste of what could happen in the mortgage crisis of 2007 but if something even worse should happen, it will likely be reflective of what happened back in the early 1980s. Seems in our perfect worlds, everything looks good on paper but when placed into practice with all the unseen variables that manifest themselves within our economy, that is when the melt-down starts.

Someone said just recently that over half of our country is two paychecks away from financial crisis. I hope that’s really not true, because if it is, there needs to be required credit counseling of those that are the most vulnerable. Landlords depend on income from tenants and homeowners depend on income from their jobs to meet their household expenses. If for some reason our communities find ourselves in another financial crisis, there will be yet another house of cards falling.

Most anyone with credit and stable income can purchase real estate, but if they don’t have the reserves to back them up during stormy months, then they will likely find themselves in life changing situations. Remember, with a house of cards, it only takes a gust of wind or excess movement to bring the house down. I do hope everyone takes a closer look at their financial situations and consider the what ifs before they take on the risks.