CRASH! House values- what are people doing in this situation?

[Sleestack]

I now owe more on my house than I'd be able to sell it for in the next 10 or more years. I mean a lOT more. My house price has fallen from $600k range to $200k range. No kidding. Our houses were inflated (elite (so called) community) and then massive over building, and now massive abandonment. Now houses are in forclosure and for sale at CRAZY cheap prices... which basically screws me so much. I almost feel stupid for sitting here paying on it, but I dont really want to run and be a bum either. I have great credit and dont want to mess that up.
What are people doing in this siuation?
Is there anyone who knows some really cool "way" to make this better?

 

[cabanafrau]

Why not stay? Presumably it's a nice home & the area is still nice, so why not stay?

 

[Christine]

Very common. You are now upside down in your mortgage.

The best thing you can do is stick with it. As the housing market slowly recovers and foreclosures level out, your value will creep up. Just keep paying. And yes, it will take years. If you have the means to afford your mortgage payment, it would be crazy to walk away from it and ruin your credit.

 

[sunnyday123]

Very common. You are no upside down in your mortgage.

The best thing you can do is stick with it. As the housing market slowly recovers and foreclosures level out, your value will creep up. Just keep paying. And yes, it will take years. If you have the means to afford your mortgage payment, it would be crazy to walk away from it and ruin your credit.

This. Don't pay any attention to the value, as long as you can afford your payments, stick it out.

 

[RadioNate]

We are in a very similar situation with our house in Florida. Ours was complicated by a layoff there & relocating to a different state. We tried to sell & nearly did. I had 2 offers that didn't stick when they buyer couldn't get financed.

Since then we've lost about another $50k in value. We were just about even & had savings so our bank wouldn't approve a short sale.

Now we have a renter in the house which covers some of the mortgage & we are sitting on the house hoping we can get out from under it before it sucks us down. Right now we are fine but if we lose our renters or DHs job ends we are screwed.

 

[Colleen27]

Unless you need to sell it really doesn't make a difference what the house is worth.

We were in a little different situation, in that we really couldn't afford to stay in our old home, which lost about 70% of its value in the housing crash. We did think about just walking away, because the reality was that if we'd have stayed put we'd have burned through our savings by now and would be scrambling to avoid foreclosure. DH is in construction, and while he hasn't been as hard-hit as some our 2009 income was about half our 2007 income (this year, suprisingly, is a little better than last).

We used our savings to buy the house we live in now - a beautiful home, but a foreclosure that did need some work - for cash. But fortunately our old house wasn't an expensive place (paid 99K in '04, worth maybe 30K at the point when the whole neighborhood seemed to be in foreclosure, probably about 40K now) and we didn't have a big mortgage (conventional 30yr, 10% down, and we were on pace to pay it off several years early), so we've been able to rent out the old house for enough to cover the mortgage/taxes/insurance. In fact, our tenant is working with a lender now on improving his credit and saving enough of a down payment to buy the house from us next spring. We're not going to make anything on the sale, but I'm ready to be out of the landlord business and not have that mortgage around our necks any more.

 

[aml3679]

Were staying put for a while.

Our house was just assessed at $40K below what we owe and $60K less than we paid.

 

[minkydog]

You lost $400,000 in value? Holy cow. I know you must be sick about it. Still, I agree with others. Keep paying your mortgage. Don't ruin your credit. All those neighbors who ditched and went into foreclosure, well, it's going to be a long long time until their credit recovers. And when it does they aren't going to have a nice house to show for it either.

We didn't lose as much as you did, but our house value dropped by about $35,000. We're in a starter level home and we know we're not going to retire here. I had thought to sell next year, after DD17 goes off to college. But I think we're going to just sit tight and let the value recover some.

 

[Lisa loves Pooh]

We have moved out of state due to a layoff, but we are doing what we can to retain the home. In our case--it is still worth more than purchase..just quite a bit more loan though--making it upside down. But not as much as you.

We are sucking it up for now. We are looking at a possible 5 year turn around....but we are hoping that in less time than that that we can manage something.

I would hope that you bought the home that you loved and still love the actual home. It will make passing the time easier if you can enjoy where you live.

It is tough, you aren't the only one and any move made immorally, just makes the overall situation worse for everyone else. Stay put unless it is a financial problem--and by that, I mean that you for some reason are unable to pay your bills.

 

[kirstenb1]

Kind of like when the stock market tanked. It's not a loss unless you need to sell. And I truly feel for folks who have to sell. I've seen 3 houses in our neighborhood go for 100-250k less than the owners paid for them. I can't imagine. This could be any of us.

 

[phorsenuf]

I think at this point if we sold our home in NH we would just about break even....maybe. We too moved because of a job offer and after having the house on the market for a year, nothing. We are renting it now (to our children), but if they decide to move here or anywhere else, I don't know what we'll do.
Not that we would but I think so many people walking away just don't care anymore. They feel stuck between a rock and a hard place. Even though they will kill their credit, I don't think it matters. What else are they to do? I'm talking though about those who truly got stuck, not those that bought a place and kept taking money out over and over, making themselves upside down or took out a crazy loan amount for a house they couldn't afford. I also think that once the economy recovers and home sales make a little sense again, not the out of control like it was before, then mortgage lenders will be understanding of peoples plight. I don't think it will be the end of the world for them credit-wise.

 

[punkin]

If you walk away, the big issue is not the credit hit (give it 4 or 5 years and it won't matter), it's if your loan is a recourse loan or not. If your state does not consider mortgages "recourse" loans, you can pretty much walk away and mail your lender the keys. The lender only has rights to the equity in the house. If it is a "recourse" loan, then the lender can come after you and your other assets.

I figure it's a business transaction so you need to make a business decision. It's not a reflection on you personally if you walk away.

 

[golfgal]

Most people I know are refinancing with current mortgage companies to get their interest rates as low as possible, thus their house payments down and staying put. Our house has lost about $30K in value but we have no plans on moving any time soon so it really is just a number on a piece of paper for now.

 

[C.Ann]

If you can pay the mortgage, stay put..

 

[tvguy]

What part of the country are you in? Out here in California, the housing crash hit in last 2007, early 2008.
My house was worth $500,000 in 2005 according to Zillow.com
Today it's worth $300,000, up from a low of $250,000 a year ago.
Of course, I paid $101,000 for it, so I've still tripled my money.
Just my opinion, but people decide to upgrade houses far too often. I undertand having to move for a job, but I've been in my house almost 27 years, and my parents have been in theirs 50. We never found a need to move up.

 

[LuLuO]

There are several foreclosed homes in our neighborhood right now that are going for dirt cheap and there have been a lot over the last couple of years though prices are even lower now and they are not selling.

Several years ago, it looked like our home value hadn't decreased very much based on home sales, but now I bet we couldn't sell our house for even $140K which is $25K under what we bought it for. Thank goodness we bought planning to stay at least 20 years. It does kind of bother me though to see so many houses that were over $200K to $220K going for $150K because if we had waited we would hve gotten so much more house for our money. Oh well. Hopefully the values will increase in 16 years.

 

[mhsjax]

What part of the country are you in? Out here in California, the housing crash hit in last 2007, early 2008.
My house was worth $500,000 in 2005 according to Zillow.com
Today it's worth $300,000, up from a low of $250,000 a year ago.
Of course, I paid $101,000 for it, so I've still tripled my money.
Just my opinion, but people decide to upgrade houses far too often. I undertand having to move for a job, but I've been in my house almost 27 years, and my parents have been in theirs 50. We never found a need to move up.

Just because you never felt the need to move up doesn't mean that others don't. Things happen, you have a bigger family, you make way more money, your neighborhood that was once nice now is going down hill fast. So what if you don't feel the need, great, some do and that doesn't make it wrong.

 

[Mickey527]

I am in the same prediciment now too.
I have been in my house for 31 years. My ex and I bought it for 75,000 but when I bought him out after the divorce I had to finance $175,000 because the house was assessed at $375,000 then. I had to pay off 1/2 of what we still owed and then pay him off. I now owe $150,000. We had 3 houses in the neighborhood go for under $70,000, my neighbor was told to be out by Dec 31 and the neighbor on the corner is doing short sale.
I am talking to a real estate agent this week about trying to sell for what I owe but I doubt I will get it.
I spoke to the tax assessor about having my house reassessed but I was told they won't do it since they just reassessed last year. I am paying taxes on a house assessed at $325,000 at a mill rate of 59. My taxes are over $1,000 a month which really hurt.
When I refinanced my house I was working as a nurse and had another job that I worked per-diem so the money was easy. Now I am disabled and rely on SSDI and the money is tight.
I hate to walk away from a house I lived in for 31 years but if things don't work out with the real estate people I might be right there with all the others on my street.

 

[Planogirl]

Our house's value has been the same for several years so we are luckier than some. Our problem is that the house is in need of many updates and maintenance and we just haven't been able to afford all of that for several reasons. Hopefully, in the next few years we'll be able to make a dent on some on the things that need to be done.

 

[DisneyGal358]

I now owe more on my house than I'd be able to sell it for in the next 10 or more years. I mean a lOT more. My house price has fallen from $600k range to $200k range. No kidding. Our houses were inflated (elite (so called) community) and then massive over building, and now massive abandonment. Now houses are in forclosure and for sale at CRAZY cheap prices... which basically screws me so much. I almost feel stupid for sitting here paying on it, but I dont really want to run and be a bum either. I have great credit and dont want to mess that up.
What are people doing in this siuation?
Is there anyone who knows some really cool "way" to make this better?

A lot of people are walking away from their mortgages and not feeling bad about it. Take a listen to act 2 of last week's episode of This American Life http://www.thisamericanlife.org/radio-archives/episode/418/toxie . It's about a guy in your situation.

Basically the thought process is: if you want to continue living there, keep paying your mortgage. If you want to take the money and run, then default. There is nothing illegal about it, and you're not being a bum. It's the banks that are the bums for all that shady stuff. Your credit score is only really important if you plan on trying to borrow money. The score will repair itself over time. Although some employers/landlords will check credit scores too. However, don't make a decision based on this thread. Talk to an expert and do some research.