"lost" $30,000 today

[cats mom]

I think one of the problems (besides property taxes. can't help those) is that people still think houses should double and triple in value in 1 year. Those returns were inflated and not sustainable. Houses are made for slow, steady rates of returns. So don't think of your house as "Worthless" or the value as "all gone". it is not.

ITA

I think the often-quoted nonsense that homes appreciate faster than inflation is just that... nonsense. Granted appreciation can definitely be higher in some locations, especially in the short-term; but average appreciation for the country as a whole, over the long-term, is very closely tied to the general rate of inflation (especially if you account for the fact that homes are getting larger). This has to be the case, because if homes always got more expensive faster than earnings went up, it wouldn't take long until nobody would be able to afford to buy a home (barring tax payer funded assistance programs, lax lending standards, and really stupid financing products of course).

When I run rent vs buy calculations I always run one scenario where I set the rate of appreciation and the inflation rate exactly the same, because long term I know that's a fairly safe bet.


I know it's easier said than done, but I wouldn't worry about paper losses if you can afford your home and you don't have to sell.

 

[mhsjax]

Some people say that only those who have to move to take another job might be in trouble. There are also those who lose their jobs, go through their savings and unemployment and still have a house payment to contend with. They would love to sell but it's hard in some areas plus if they are upside down then it's a big mess.

It's true that the structure might still be there but if you get to a point where you can't afford the structure then it might as well be gone.

Exactly, I don't think people understand that is what we are talking about. We aren't talking about greedy people that just want to sell and make money. I am talking about people that have to sell and can't and even if they do, they are getting any equity because of the housing market. It is a sad state off affairs that we are in.

 

[D&DDisney]

We got our house assessment today. Our house and land went down about $30,000 this year (Although I'm sure our property taxes will not go down )
We live in Wisconsin.

I hear ya sister!! There's one thing you can count in WI its high taxes.

 

[disneyfans95]

I don't think it is a right to gain equity, but usually you do. I am not even arguing for me, I am just stating that sometimes you expect to live somewhere forever and then plans change through no fault of your own, and if you can't sell your house and you have to move then you may not be able to afford to purchase another house for your family.

But that is life! I mean if you are that worried about having to move or whatever, then rent a little place and bank away some cash for when you are going to move.

Nobody is out there forcing people to buy homes. There are pros and cons with owning and people understand that.

 

[MommaSnowwhite]

But that is life! I mean if you are that worried about having to move or whatever, then rent a little place and bank away some cash for when you are going to move.

Nobody is out there forcing people to buy homes. There are pros and cons with owning and people understand that.

If we waited to buy until we would not have to worry about moving we would probably be waiting until retirement.

 

[brerrabbit]

It's all a matter of location and perception of the market. We have lived in the same house for 16 years and have no desire or plans to move. Our house has appreciated in value about $50,000 over that time. The good news/bad news for us is that over the same time frame if my house had been located in California, New York, Florida, or certain other areas I could have seen appreciation of $300,000 or more prior to the drop off. The Good side is that because of where I live and 16 years of payments I have $100,000 equity in my house. The Texas or more specifically Houston experience has been that house values go down just as easily as they go up. I lived and worked in Houston in the 80's when the real estate market took a huge hit due to the price of oil falling off the table. That created a different kind of buyer around here because people did lose their jobs and house values did nose dive. While certain areas in Houston appreciated a lot along with the rest of the country other areas just lagged behind and we saw modest growth but nothing compared to other parts of the country.

Taxes are based on valuations here but every county in Texas has their own independent appraisal district and set the value of every property every year. As a result we generally pay just under 3% of the appraised value. I have friends who fight their appraisal every year and companies have sprung up left and right that will oppose values every year for you in return for half of the amount they save you. Even during the downturn the Appraisal Districts are trying to increase values but homeowners are winning their appeals. This is really a hollow victory because come October the taxing authorities (City, County, School Districts) will just look at the tax base and set the rate per hundred dollar valuation at the level necessary to effectivly increase what we pay above last years level. So in the end they get you either way.

 

[mhsjax]

If we waited to buy until we would not have to worry about moving we would probably be waiting until retirement.

exactly, I am not in this situation. But like I said earlier, we have CSX here, railroad. Lots of great jobs but they do tend to transfer a lot. I guess our neighbors who had 4 children should just wait until they don't move anymore. Lets see they have had about 4 or 5 moves in 12 years. I think now as of about 3 years ago they are settled here. And yes they actually lived here once, got transferred to Atlanta and then 1.5 years later, back again.

 

[r1lissa]

Another Texan here.
Not smug, but extremely THANKFUL that our house has increased $30,000 in appraisal value in 3 years. About four months ago, we were able to refinance from 30 years down to 20 and go down 2% on the interest rate. This was a great blessing.
Though housing values are steady where we live, jobs are hard to come by. If you have one, you don't dare give it up!

 

[cats mom]

exactly, I am not in this situation. But like I said earlier, we have CSX here, railroad. Lots of great jobs but they do tend to transfer a lot. I guess our neighbors who had 4 children should just wait until they don't move anymore. Lets see they have had about 4 or 5 moves in 12 years. I think now as of about 3 years ago they are settled here. And yes they actually lived here once, got transferred to Atlanta and then 1.5 years later, back again.

I'm not trying to be snarky, honestly. But if you have a job where frequent transfers are a probability, why would you even want to buy a house when you know it will likely be for a short term living situation?

I've always thought the general rule of thumb was not to buy unless you planned on staying put for at least 7 years. Personally I'd extend that out even further right now, especially in bubbly or extremely economically uncertain areas.

But when it comes to rent vs buy calculations I try to be very financially aware; and contrary to what the NAR would like everyone to believe, IMO buying is not always the better wealth building option nor is renting always just throwing money away.

Honestly the rent vs own numbers are still so out of whack in my area, I don't know how anyone can justify paying the huge premium to buy right now, even if they plan on staying put for 30 years. Of course I'm looking at it from a financial standpoint, not an emotional one.

 

[crisi]

I don't think anyone was being smug. I think they were being honest and realistic.

We made sure when we bought our first house a year ago (after years of saving) that we had over 20% down and would be paying less then what it would cost to rent. Even after taxes, oil, etc that you don't pay with a rental.

Our vaule dropped about 10k in the year. We are not worried and understand it is not some right to gain equity. What we KNOW is that in the last year, we paid less then we would have to rent and are moving towards ownership and having it paid off.

Yes, but if you'd lost jobs in the past year, you'd have a mortgage that you wouldn't be able to get out of. A lease tends to be a one year at a time commitment - sometimes even month by month. A lot of people aren't able to pay rent right now, they've moved in with Grandma.

 

[BernardandMissBianca]

Yikes! The alligator thing really freaks me out.

yeah! We actually considered buying their house to A) help them and B) get us out of CT but after hearing that I told DH no way. I know there is a chance of alligators in a neighborhood but knowing they are turning into residents, no thanks.

 

[disneyfans95]

exactly, I am not in this situation. But like I said earlier, we have CSX here, railroad. Lots of great jobs but they do tend to transfer a lot. I guess our neighbors who had 4 children should just wait until they don't move anymore. Lets see they have had about 4 or 5 moves in 12 years. I think now as of about 3 years ago they are settled here. And yes they actually lived here once, got transferred to Atlanta and then 1.5 years later, back again.

Then do not buy a house in that situation. There is god given right to own a house. Let alone having it gain value.

They should be renting then.

 

[RadioFanatic]

Sorry I mis read. However, I didn't call you smug. I said all the people around here acting smug. I didn't say you where, I didn't say everyone was acting smug. so really you FAILED to read my post. If I would have thought that you were being smug then I would have said your name or said YOU were being smug.

Well, you quoted my previous statement when you posted; so I thought you meant me. I'm sorry for my mistake.

 

[Tri-Delta4Life]

Everyone come to Iowa! We have very affordable housing and no bubbles to worry about!

 

[melancholywings]

Yep, get used to the idea of "paper losses" and "paper gains" - That's when you look at the 401k you are still 20 years from needing and realizing you've "lost" $50k, but know since you don't need it now, its just on "paper." Likewise, when the market is really hot, your 401k goes up $50k....you don't really "have" that money because its just on paper.

Or, in simple terms, you might buy a Beanie Baby for $7, discover its selling for $50 on eBay. But if you don't sell it for $50, it isn't really $50 to you. Then the Beanie Baby market crashes and you sell it at a garage sale for $1. You lost $6 on your Beanie Baby investment, not $49. And, if you bought the Beanie Baby because you really liked it, you didn't really loose anything because you got your value from it. In fact, you can consider yourself $1 ahead if it was actually worth the $7 to you to own it to begin with.

If you don't NEED to sell, hang on and ride it out and try not to worry about it (hard, I know). The problem comes in when so many people need to sell and they are upside down. The family I was talking about upthread, there is no way a baby could fit for long in that tiny one bedroom house - they need to move.

This is well written. And oddly enough speaks to the 'hoarder' side of me. It's hard to let things go when you know at one point it was worth so much more.

 

[Carmell226]

We live in Michigan, our house was appraised $32,000 less than what we paid or it 4 years ago!!!! It is just terrible!

 

[pmaurer74]

we had our house appraised to refinance at in 2 years it went up 20k but we put 20k into it in renovations. We never really had a bubble in Pittsburgh but the market is slow.

 

[pixiewings71]

Count me in as another big "loser." I bought my townhouse in 2007. I did everything right: 20% down, 30 year fixed rate mortgage, etc. And then the housing market plummeted. My assessment has declined $130k and has left me upside down on my mortgage. My life savings has disappeared. No equity, no exit plan. I had an opportunity this year to relocate and would have loved to have taken it. But I don't have $50K plus realtor fees to shell out in order to sell my house. I do love my house, but at the same time, I feel trapped.

We did everything right as well, we had a nice big down payment, bought in an area we wanted to live in for about 20 years.....but the job market in CA is so bad that I have little hope of finding something here. I love my house too, after we had our house fire we built what we wanted because we intended to be here for quite some time but with no job it's not looking good....

I sure hope this doesn't sound smug because I sure don't feel smug, but, to some of you who feel trapped and seem disheartened, remember if you have to move for work there's always the possibility of renting out your house.

I'm thinking of doing a re-fi for just that reason. If my husband lost his job or got a great offer that required relocating we could rent this house and maybe come out even or slightly ahead. Of course, I understand this may not apply to everyone depending on the area in which you live.

Yes, we might be able to rent the house out, but to do so we will have to hire a management company because we will be 10 hours away. It IS an option tho, one we are considering. We won't come out ahead tho, we can't rent it for our full payment amount, we would have to make up a little bit. Not much, but a little, and the thought of being without renters is a bit scary too...because then we'd have to pay for 2 houses.....

Everyone come to Iowa! We have very affordable housing and no bubbles to worry about!

Do you have jobs? LOL

 

[Swimalie]

My house is worth about $135K LESS than I paid for it in 2006 (also in the DC area). No equity here anymore and I wish there was because I would love to refinance, but that's a no go for us.

Not much to do but wait it out, and hope nothing comes up that would cause us to have to move.

We also live in the DC area and bought in 2006. We've lost $150,000 since we bought. Luckily, we put down around 40% so we still have equity in the house but it still sucks! I'm happy that Northrup just decided to move their headquarters near our house. 300+ employees moving here so I'm hoping that will help.

When we bought we had 7 weeks to find a house while living across the country. My husband bought this house without me even seeing it. It is smaller than most of my friend's houses but then again, we're not living house poor now, either. We bought below our means on purpose and we're so thankful for that. Our mortgage is less than the rent for a house around here.

 

[mhsjax]

Well, you quoted my previous statement when you posted; so I thought you meant me. I'm sorry for my mistake.

No problem what so ever