The value of homes in a neighborhood near my own have dropped precipitously in the last two years.  The developer and builders rode the wave of the 2003-2006 bounty of plentiful buyers getting in for little money.  They jacked up prices on the homes as quickly as they could because at the time no one stopped them.

As a result, a home with 1800 square feet sold in 2005 for about $165,000.  Today these same homes – even those in mint condition – are selling for prices ranging from $105,000 to $145,000.  It’s devastating for the current homeowners in the subdivision.

So what should the homeowners do if they’re desperate to leave?  Should they ride it out hoping the market will return in a couple of years?  Or should they cut their losses and get out while they only need to bring $10,000 to the table at closing as opposed to $20,000 or $30,000?

In my opinion, it depends on the local government.  You need to know if the elected officials are doing anything to help.  For example, will they support a neighborhood association?  Are they mowing the common areas to keep weeds at a minimum?  Will the community garden help keep bored teens out of trouble thereby making the neighborhood safer?

One elected official wants a moratorium to be placed on any new construction.  It should be halted immediately until the market revives itself and the demand for homes in that subdivision return.  The other elected officials poo-poo her ideas (which would work, by the way).

If you live in a situation like this, consider the long-term future.  Will future leaders have the vision and know-how to deal with the problems?  Do they have the business-savvy to address the concerns or are they stuck in the good-ol’ boy mentality for “I’ll scratch your back if you scratch mine.”

Write a list of pros and cons and figure out what you can afford.  Maybe the solution is for you to become a vocal advocate to the local government to fix the problems.