Among the many definitions of the word, Webster’s Dictionary defines “trapped” as “a situation from which escape is difficult or impossible”.   This is exactly how many of my customers have been describing their real estate experience for the past two years.

Take Mark and Jane (real people with their names changed), who purchased their home in 2004 expecting to remain there for a few years with their eventual goal to then move-up to their dream home.  When those few years drew near, they called asking for me to “list their home for sale”.  Their dream home was simply a bigger home for their growing family, more land around them and to locate a home on a less traveled street.  Their expectations were not unusual or uncommon. 

They are the typical home owner today.  Strategically putting a 20% down payment on the home they currently own, combined with sweat equity of home improvements or anticipated home appreciation, they were right on target for their planned “move-up”.  What a wonderful time to purchase real estate reports the media---home prices are rock bottom and interest rates are the lowest in 50 years.

Unfortunately the recession of the past several years has erased any possibility of home appreciation.  Gone too is that nice 20% down payment they originally made on this home.  And their sweat equity of a kitchen remodel, bathroom improvements, new roof and exterior landscaping has not added the value that they squarely intended. 

Selling means that they may just barely break even after all settlement charges are complete.  Therefore they are left with no down payment monies for their next home.  Refinancing is equally distressing as the comparable sales indicate that the value needed for their new loan is not supportable.  If they choose a “short sale” option, the credit blemish prevents them from a purchase for 2 to 4 years going forward.  Yes, they are TRAPPED! 

My customers have come to me seeking professional advice.  I applaud them--this family has done all the right things.  It’s devastating for me to inform them that the best solution for them is to wait.  If doing all the right things has this as its “just reward”, is there little doubt that we have got to come up with a better solution than waiting for values to increase? 

To my customer, “take consolation by knowing that a huge majority of the population share your situation”.  Having been here before, our real estate market will mend and will improve.