Keeping The Dream Alive

On Christmas Eve, one of the agents in my company came home to find her house had burned to the ground, and I have been reflecting on it ever since.   As she bravely rebuilds her home environment, so the whole housing sector must   begin to rebuild after the mortgage meltdown.   Despite the recent challenges in the economy, there is a reason why owning a home is still called the American Dream. A  safe, secure, and affordable living environment serves as a catalyst for many factors that contribute to a high quality of life,   especially for children.  In fact, a   study released about ten years ago by the Harvard University Joint Center for Housing, The Impact of Homeownership on Child Outcomes, found that even after factoring in economic, social, and demographic variables, children of homeowners achieve higher test scores and fewer behavior problems than do children of renters. For homeowners displaced by disasters like fires and hurricanes, the first step to rebuilding is to replace the basics, so must we as a nation get back to the basics of homeownership. 50 years ago, people would buy a house they could afford, and while some may have stretched to get their dream home, they worked hard to pay down their mortgages by the time they retired. Then the ATM syndrome hit, people started thinking about their homes as another investment vehicle.   According to Freddie Mac, in the second quarter of 2003, 33 % of refinancing involved equity withdrawals. By mid 2004, the cash-out ratio jumped to 43% (Americans withdrew an estimated $77 billion dollars of equity through cash out refi's in April, May and June of 2008 alone) and the number of cash out refi's rose steadily through 2006 to 88%.   Some of these withdrawals were necessary, but most went to new cars, glitzy furniture, trips to Europe, and dinners at expensive restaurants, but it was OK, everyone was doing it and houses were appreciating at incredible rates. For many Americans, the message came too late and they have been left hopelessly underwater on their mortgages. This Week's Real Estate Insight: If I did not truly believe in the American Dream, I would not   have stayed in Real Estate as long as I have.   If we are to regain that dream, we have to realize the value of a home, rather than the cost.