Oh no! People who have owned their homes less than 5 years may not profit on a sale! The sky is falling!
Investors in spec homes have a problem. Those living in their homes may need to stay longer than they want, or sell at a loss. If they sell at a loss, they will probably make it up buying at a lower price than they otherwise would.
We're seriously considering buying a second home, and renting out the one we live in. If I sell the one I live it, I'd lose a little. Its fair market value right now is probably 10% less than I paid. However, the home I'm looking at has also declined in value by an equal amount. So I'd break even on the swap.
It’s not about hurting people who want to make a buck on flipping houses anymore. Your comment is glib and does not address the real current problem. The fact that most everybody who bought a home in the last 5 years would lose money on it if sold today means that 100s of thousands of Americans who have lost their jobs in the last year are not able to easily relocate to find a new job. They are not all (or even most) speculators. A huge percentage of of the middle class is now upside down and must choose between moving to get a better (or any) job and short selling or foreclosing their home. The greedy people already took their beating. What you are seeing now is the damage spreading to the honest folks.
The reason the sky is falling is not because people who bought after 2003 are upside-down on their homes. The reason the sky is falling, is because a hell of a lot of people who bought their homes long ago, even had them paid off, extracted some or all of the equity in their homes to party like no tomorrow for home remodelling, furnishings, cars, TVs, vacations. I maen, people were pulling out money and spending it on things like going to the Super Bowl. Poof. Home equity gone in 60 seconds!
That is why the sky is falling. Responsbible people didn’t do this, but a hell of a lot of people bought the lie that real estate always goes up and they DID do this and are way upside-down on home and their homes repossessed. Haven’t you seen the articles here about people who inherited a family home free and clear and then lost it to foreclosure repossession when they sucked all the equity out to play?
That is why the sky is falling — which is a pretty good defintion of double-digit inflation, despite the government’s on-going attempts to doctor the numbers decade after decade.