Here are two actual examples of how two very different families in Baltimore recently rented homes that they felt they couldn't afford to sell in the current market. The neighborhoods are different, the circumstances are different, but the end result was the same. Two homes that would have sold quickly several years ago were never offered for sale, and two other families that wanted to buy a home ended up renting instead.
Family A is a retired couple, both of whom enjoy substantial state and federal pensions. They lived in a spacious condominium in an area that was normally immune to swings in the housing market. They had purchased a second home at the beach in 2005, and decided to sell their Baltimore home and move to the beach permanently. When an adjacent condo sold for $50,000 under the asking price, they realized they would never get their price - but they didn't want to keep paying two mortgages and two condo fees. The answer: they rented their Baltimore condo to another retired couple who actually wanted to buy, but thought they couldn't get a mortgage for the amount Family A wanted. So renting was a short-term solution for both families, but neither one got what they really wanted, and the process will start all over again when the lease expires.
Family B is a couple in their mid-30's with two small children. When the husband got a promotion requiring relocation out of state, they wanted to sell their home and buy another in their new location. Unfortunately, they had purchased their Baltimore home at the top of the market, and couldn't afford the significant loss that would be entailed in selling at current prices. And because they had to relocate quickly, they didn't have time to negotiate a short sale. Instead, they rented their home to another young couple who really wanted to buy, but didn't have enough cash to get the type of home they wanted at a monthly mortgage payment they could afford. So Family B solved their immediate problem, but of course without selling their previous home they had to rent at their new location - so another potential sale was lost. Plus, they are now out-of-state landlords, which they definitely didn't want to be.
These are real-life examples that illustrate what's happening to many families right now. People still want to own their homes, but some are using a rental strategy to buy time until the housing market recovers. Admittedly, it's better to have homes rented than going into foreclosure - but it's still a short-term solution - both for the families and for the housing market. Neither party on either side of these transactions got what they really wanted, and from an industry perspective at least three home sales were lost.
What could these families have done differently to get what they really wanted?
Yerman Witman Gaines & Conklin Realty is one of six complementary business units that comprise The Strata Group, which is headquartered in Baltimore, and offers specialized products and services targeting the residential and commercial real estate sectors. Other divisions offer title and escrow, mortgage funding, law, financial and home sales marketing services and support.