I am seeing more and more people planning (yes planning) to walk away from their home. Planning to let their metro Detroit home go into foreclosure. Here are some of my latest examples of what is happening in our local real estate market.
1.) I took a older couple out looking at Southfield homes the other night. They just retired and they had bought a new construction home in Canton about 5 years ago. Their Canton home has lost between 35 – 40% of its value. Neighbors that are buying homes in Canton MI have payments a thousand dollars less than theirs.
At retirement age they are realizing that the home will never be worth what they paid for it. That if one of them dies they can’t afford the house. They are realizing that why should they pay all that money in a payment when the person next door isn’t. That the next door neighbor paid $100,000 less than their house is worth. Even if they pay for ten years they will owe more than the house next door. They will always be in a losing position.
The guy just got a cash buyout for retirement and they are thinking of paying cash for a smaller home and not having any payments in retirement.
Here is another example of what is going on in the Metro Detroit real estate market
2.) Husband and wife just got married. Husband had a Novi home. But now the original Novi home is worth $125,000 less than it was 6 years ago. They are walking away from the original home and buying a much bigger and newer home for a lower house payment than they had.
Is it wrong? Is it financially smart? Would you do it? Does it make sense? Isn’t it just getting back the money we gave away to the big banks and their executives?
This is the fourth deal I am working on like this. I myself think a few people are getting financially smarter. I myself think they are doing the right thing. Sure it may not be morally or ethically right, but financially it is the right decision.
Russ Ravary your Metro Detroit real estate
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