The rest has been well documented.  Both consumers and institutions fueled the leveraging fire and everyone; banks, consumers, government agencies Freddie Mac and FNMA seemed to want to ride the exciting wave of cash flow and home appreciation.

Then, like all things that seem too good to be true; the air got thin at the top, and with the development of just one chink in the pricing armor, the bubble burst and everyone stampeded for the door.  Party over!

 So, what happens now?   

As a life-long practitioner of the markets, I’ve always looked at the business of homes as an asset class play.  Like commodities, equities or bonds, real estate trades and clears the market based on supply and demand – simple fact.  When homes become unaffordable the market corrects and prices go down.  No government program is going to overcome that eventual reality.  At some point, buyers and sellers need to agree on price – without that agreement, there is no transaction.

So, where should the government jump in and help out?  The government needs to free up capital and get out of the transaction.  Support private sources of capital and innovation - get the flow of capital back into the market. 

Government policies need to focus on wealth creation and increased investment velocity not additional constraints and wealth redistribution.  The market will correct on its own, the more the government meddles the longer that correction will take and cost.  Banks want to lend to qualified buyers and investors want to buy properly priced risk. 

Further government involvement will only reduce the ability of investors to invest and blur the line where investors’ risk begins and ends. Maybe President Obama should give Mr. Ranieri and other proven wealth creators a call and ask them what to do – chances are they’ll have some great answers.

 Brian Hickey is founder and President of teardowns.com, an online stand-alone marketplace for infill redevelopment property, and former mortgage-backed securities salesman, Kidder Peabody & Co.  1989-1996

Throw in new technologies, new architecture and materials and it just may add up to economic stimulation - something that could work its way into inner cities and rural communities throughout the U.S.  Maybe the new industry that brings the country back from this terrible depression is actually one of industries that helped found it?

Hmmm……..�

The teardowns.com marketplace does not favor fsbo’s or MLS postings - the marketplace simply offers connection services for buyers and sellers.  Sellers can post their own property or ask their agent to do it for them.  Buyers on the other hand, sign up to see redevelopment property opportunities in the community where they have interest.  The sellers are then connected to those buyers directly.

The NASDAQ for real estate?

While price discovery is still in process.  We are seeing buyers begin to be more aggressive in their search for property.  In some cases, we clearly have seen the pendulum swing too far to the downside filling pricing gaps formed from the great “run-up” in prices from 2002-20051/2.  New price handles in the $200’s are being bought up quickly.  On the other end, and most surprising, some new construction projects - both for “spec” and custom are valued and trading at price points actually higher than during the height of the bubble - figure that out.

It’s not easy out there but, at some point we will look back and see where we bottomed.  We just may be there now.

  Brian

The state of the current economy and crisis in housing has created a whole new purpose for recycling older housing stock.  Not only are investors, individuals and builders redeveloping for profit and improvement in wealthy infill markets, but the “phenomenon” is helping to clean up and stabilze communities within large Metropolitan neighborhoods - a fresh start.

New economy or old – buyers are looking to buy homes at “land-value” 

Clarendon Hills, IL - March 11, 2010 - Home sellers, whether reluctant owners such as banks or long-term prideful homeowners, are finding buyers unwilling to pay a “premium” for homes that need work or have become obsolete through deterioration, neglect, deferred maintenance or are simply architecturally out of favor.  Sound familiar?   

Today’s buyer wants to know what the land is worth before entering into negotiations.  “The traditional home buyer is reluctant to pay more than replacement cost or land-value for older homes that need substantial updating or total renovation” says Carrie Kenna of Re/Max Elite and owner of Kenna Builders, in Hinsdale, Illinois. 

Additionally, foreclosures and abandoned housing has left many once marketable homes saddled with irreversible mold and structural damage, opening up a whole new category of teardown properties. “Whether a prime, two acre property in Greenwich, Connecticut, or inner city bungalow in Chicago; these property types are still clearing the market at the value of their land,” says Brian Hickey, President of teardowns.com, a marketing firm and brokerage specializing in this sector of the market. 

Regardless of what the future holds or state of the current economy, the amenity and home preference wave has gone over the crest.  The 50’s ranch and 60’s split-level are not the dream homes of the new millennium.  While not every community shares the same economics, those neighborhoods that rode the high wave of the real estate housing bubble are still in redevelopment mode.  Though the pace has changed, the essence of the transaction remains very much the same.  

About teardowns.com 

Teardowns.com was founded in 2001 to satisfy the unmet needs of homeowners whose property value was in the land.  Teardowns.com is a stand-alone marketplace for consumers, brokerage and marketing tool for real estate professionals.  The Company licenses its national brand, systems and marketing programs to traditional local agents and brokers throughout the U.S.  

Contact: Brian S. Hickey                                                                     

Tel: 630-654-4100

You can contact Susan at 310-345-7450 or susanstarkhomes@gmail.com

 http://www.builderonline.com/infill-development/is-the-mcmansion-dead.aspx?printerfriendly=true

Take a look at an article from Thursday’s New York Times -  http://www.cnbc.com/id/33326331