Affordability: The Key to a Housing Recovery?


Ever had to purchase a new cell phone before you were eligible for an upgrade?  Maybe you spilled something on it or if you’re like my wife you dropped it about 300 times and the phone finally died?  Last week I found myself in this vulnerable position.

My options were very limited.  I could buy a new phone (for my wife) at the retail price, which would cost us our first born child, or find a used one online.

Since I’m more concerned about the bottom line and having grandchildren someday I chose the latter.  As I walked out of the store the Verizon rep warned me – get the ESN number from the seller BEFORE you buy a used phone.  That way I could verify if the phone was lost or stolen.  I guess this must be the wireless phone industry’s version of a title check. 

I got on Craigslist and started my search.  I quickly found a phone that would work.  The seller asked to be contacted by text.  We struck up a text message dialog and I asked for the ESN number.  This is how he replied:

You haven’t bought it yet lol

Now I don’t know about you but I find it rude when someone laughs at me – even more so when they do it by text.  When I proceeded to explain that I needed the ESN number to find out if it was lost or stolen I got this response:

Lol if it was lost or stolen how would I have factory reset it?

This joker was really getting on my nerves now.  He laughed at me again.  And what the heck is a factory reset?

The most frustrating part of all is that none of this was necessary.  If Verizon would just make the retail price of their phones a littler cheaper I wouldn’t be in this mess.

Buying a new cell phone before you’re due for an upgrade may not be affordable but purchasing a home right now is.  According to Trulia’s rent vs. buy index it is less expensive to buy than rent in 36 of the 50 largest U.S. cities.  The report also lists 10 U.S. cities where it may be less expensive to rent but may still be a good idea to buy.  There are just four cities where it doesn’t make sense to buy (San Francisco, Kansas City, Seattle and New York.)

After reading the list I had two questions.  First of all, what’s the deal with Kansas City – why is it so expensive there?  Secondly, why isn’t this news being more widely reported – how come Realtors everywhere aren’t shouting it from the rooftops?

Then it came to me – the cold hard reality is that it doesn’t matter how affordable homes are to buy if banks won’t loan money out for people to buy them.  And that is good news for us real estate investors.  If you’re buying and holding demand increases and rents go up.  If you’re seller financing there’s a larger pool of qualified buyers with money for a down payment and solid income.

I used to believe that affordability was the key to recovery.  Not anymore.  It seems like a little loosening of the extremely tight credit standards these banks have would do the most good.

By now I’m sure you’re wondering if I bought that phone.  Well, I called Verizon to verify the ESN number and the customer service agent gave me some good news.  After we hung up I got the pleasure of sending the seller this text message:

Called Verizon to verify ESN – they gave me an early upgrade and new phone for free – lol

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.


  1. Nice post Marty. I agree with your conclusion, the loosening of money is the key. I have a c21 office, and the most difficult issues we deal with are seller negative equity (they are trapped) and buyers who cannot get loans.

    The “biggie” that the lending community needs is the 100% CLTV loan. These failed during the boom because the lender was providing all 100%. We should allow sellers to hold part of the debt to keep lenders secure (like 30%). The lender would be in at 70% and would be relatively safe. This would allow buyers with solid jobs (but little cash) to be able to buy immediately.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here