The Department of Motor Vehicles is a funny place. It’s a cross section of humanity. From the under-dressed, to the unclean, to the polished, to the spiffy to the downright beautiful – every socioeconomic class seems to be represented.
A few weeks ago I had to visit the DMV. I lost the title to my Honda Accord and I needed a duplicate. As I looked around the waiting room it occurred to me that I had a lot to be thankful for. For starters, I was thankful I didn’t have to bring my daughters with me. Children under the age of 10 have a difficult time sitting still for more than 10 minutes so the two hour wait we all had must have felt like a lifetime. The crying was unbearable – and that was just the parents.
I was also thankful I wasn’t 16 again testing for my driver’s license. I find it scary that kids this young are allowed to get behind the wheel of a car. And did I really look this young and awkward when I was that age? After a long wait I picked up my duplicate title and hit the door in a dead sprint, thankful I didn’t have to return anytime soon.
If you think about it the line at the DMV is a lot like the real estate market crash. Just about everyone you know has had to deal with it and it seems like it is taking forever to get out. But should we be thankful for the housing meltdown?
Yes, absolutely. Why? I can sum it up with one word – affordability.
Now remember I live and operate my business in Arizona – one of the states hit hardest by foreclosure (California, Nevada and Florida being the others.) Real estate is a local business. If you live in San Francisco, Boston, New York or Chicago maybe prices aren’t affordable there – yet.
According to the S&P/Case-Shiller Home Price Index, values here in Phoenix haven’t been this low since March of 2001 (the index in August 10’ was 107.35 – in March 01’ it was 107.46.) For what it’s worth I don’t go around referencing the S&P/Case-Shiller Home Price Index very often because it’s a 30,000 foot view of our market. Another reason I don’t talk about it much is because it usually makes people fall asleep.
To generalize, the data suggests almost an entire decade’s worth of appreciation has been erased. That sounds like bad news but a lot of good has come from the meltdown, especially if you are a real estate investor:
- First-time home buyers can now buy for less than they can rent.
- Fix and flip investors need less capital to get in the game.
- Buy and hold investors can actually cash flow.
- Investors offering seller financing can earn above average returns lending to borrowers with good incomes but shaky credit.
So lift up your glass this holiday season and toast the housing market meltdown. You can also be thankful you’re not standing in line at the DMV.