Five Ways to Survive the
Housing Slump

Expert advice for would-be sellers and buyers.

The National Association of Realtors launched an ad campaign touting why buying a house "is a decision you shouldn't postpone any longer" and reminding buyers that "the value of a home nearly doubles every 10 years." But real-estate agents' forecasts have a history of being ridiculously optimistic. At the other extreme, homeowners' current woes have only just begun. Here's our advice for would-be buyers and sellers right now:

What was your house worth in 1997?

When we figured how far prices have to fall, we figured they'll return to 1997 levels, since that was the year in which many of the aggressive lending practices—like interest-only mortgages—really began to take off.

Take a hard look at your mortgage.
"There are very few good deals left in the world for consumers, and fixed-rate, 30-year housing debt is one of them. Complete Short Form >

Follow the bailout talk.
Most people with adjustable-rate mortgages would be better off with a fixed-rate mortgage, but that makes two assumptions: that they can afford the larger payment on a fixed-rate loan, and they believe the government isn't going to offer some sort of bailout plan for borrowers who've gotten in over their heads with mortgage debt. People in mortgage trouble who are thinking about refinancing would be wise to Consider Other Options >

Think about home renovations as an expense, not an investment.
During the boom many homeowners came to believe the money they spent on a new kitchen or bath constituted savings, since improvements would only add fuel to their home's soaring value. The bust should help people understand that every dollar homeowners spend on a renovation rarely pays back $1 when they sell the house. Renovations are mostly about comfort and status, no longer about improving home values. Refinance Today!

It may still pay to sell now instead of later.
With home values down, some people may be inclined to hold off listing a home in the hope of a quick recovery. But, home prices have been falling, and someone who can sell his home for 5 or 10 percent less than what he thought it was worth during the boom would do very well. List Your Property for “Free”