Are you ready for the next housing collapse? For several years house flippers and greedy real estate agents have driven up home prices to the point where the average working person can no longer afford to buy. With home sales and prices hitting rock bottom, when sales and prices start to go back up, there are going to be hordes of house flippers itching to get back to “business as usual.”
What I look for – as the home prices start to go back up, house flippers are going to jump in and will try to drive the market up even more. The average wage earner will not be able to afford a house, so prices will have to take a nose dive again.
This cycle will continue until people stop treating homes as a get-rich-quick scheme, and start treating them as a home – a place to raise a family.
Here is an easy test to know if your living in a bloated housing market.
What is the average home price in your area?
What is the average wage of a police officer or a teacher in your area?
If a police officer or teacher were going to buy a house in your area, could they pay the house note with 1 week of their wage? Or will it take the entire monthly wage?
In other words, if a police officer or teacher in your area makes $600 a week, their monthly house note should not be more then $550 – $600.
But instead of using a little logic – like not stretching your finances too thin – people put their financial future at risk by going into massive debt.
For married couples – could one or the other person pay all of the bills? If one person loses their job, will the family be driven into financial ruin?
Lets stop treating houses as a commodity, and start treating them as a home.