Life probably sucks if you own real estate.  I don’t even want to look up the statistics as to what percent of homeowner’s are underwater, owing more than what their home is worth.  Right now, if you have the ability to purchase real estate, there are incredible values out there, both in real dollars, and relative values when compared to household income.

Has the market hit bottom?  I sure hope so; but I’ve thought that before.  I’ve had clients make the difficult decisions of bailing on their homes when they realized that making future mortgage payments on the home would simply be throwing good money after bad.  As difficult as it was, there are people that have, after walking away from their homes, turned around and bought similar homes, in similar neighborhoods, for a fraction of what they owned on their original home.  The astute client’s ears perk up when I use the term exit strategy when discussing their current mortgage situation.

Is it worth throwing good dollars after bad?  More than one client has realized that they will never dig themselves out of their negative equity hole.

What’s a good exit strategy for you? I can’t answer that.  My advice is simply to be aware of your alternatives, and cognizant of where your choices today will leave you 5 or 10 years from now.

Now, let’s take a look at my analysis of some relative values.

Of course, it’s pretty obvious that actual dollar values are depressed.  However, digging deeper into the analysis shows you that the relative values are at historic lows.  I’m not a financial analyst, but I’m guessing a stock market guru, if presented with this type of under-valued stock, would grab it in a heartbeat!