Real estate ‘Car-Lot Syndrome’

Editor's note: Inman News has called upon our readers to engage in the Roadmap to Recovery editorial project, which focuses on the future direction of the real estate industry. Click here for details. By DICK DENNIS When you drive your brand new car out of the dealer’s lot (during normal times) you know that you have automatically lost between 10 percent and 20 percent of its selling-to-you value. Yet, most people continue to make their payments on their new vehicle for as long as six years even though they are “underwater” with the loan on their new car. They don’t turn in their keys and walk away. The main reason for this phenomenon is that in ordinary times they are churning out new cars daily, making sure the supply-demand principle holds up and almost any car will have a lesser value than what it sold for new. Then what makes people think houses are any different in this economy? The supply of houses has been warped by the overstocked inventories owned by lender...