The more realty agents and lenders I talk with each week recently, the more I still wonder if people outside of the industry understand the magnitude of the real estate and mortgage fallout on the overall economy.
We are all impacted by the home sales that are not happening. Think about it. On average, with commissions, closing costs, home inspection, title search, legal, and other related services to a home transaction, you can figure that an average of 7% of the purchase price goes to the aforementioned. That provides individuals and companies with revenue. Revenue that normally goes right back out into the economy in the form of small, every day, and big ticket purchases.
Let's look at the figures. Say 1,000 homes with an average sale price of $250,000 each are sold in your community this month. The 7% in fees that go "into the economy" based on those 1,000 homes totals $17,500,000. If that figure maintains for 3 consecutive months, it would add a total of $52,500,000 to just the local economy. And that is just for your community.
Now, let's look at today's market. In many of the nation's larger cities, the percentage drop in home sales over the course of a month is DOWN by more than 1,000 homes compared with as recently as 2 years ago.
Based on the last two paragraphs, let's look at the results. Ouch. Put those together and you see the size of the impact on the overall economy. Cities, counties, and states losing upwards of $52,000,000+ during one quarter of the year compared with what used to be there.
There is no easy solution.
Meanwhile, the public continues to be swamped with mostly negative publicity about the industry. They don't want to sell at what they perceive as too low of a price in order to attract buyers more quickly.
Personally, I am not showing these links each week as an insult to the industry. My point is that there is far too little positive publicity geared toward generating buyer and seller activity.
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