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The market may be better in metro areas, but calculating a recent sale of property, shows that east tennessee (this is 5 hours east of Nashville and Memphis for those not familiar) does not retain its value.
Selling conventionally is not cost effective. I have a friend in Bristol who walked away from his house, the area had 7 abandoned houses on his block.
It means he had a loan paying 10k a year in interest (about average) for a conventional loan, owned a house in Bristol for 8 YEARS, paid all that money and can now sell and makes a max of 10k.
It means he had a loan paying 10k a year in interest (about average) for a conventional loan, owned a house in Bristol for 8 YEARS, paid all that money and can now sell and makes a max of 10k.
See.
Eight years ago, average interest rates were running just under 6%. With that interest rate, $10k per year in interest payments would mean a loan of roughly $180k. Assuming he put down 20%, that would mean a down payment of $45k and property value of roughly $225k. If he sells now, you say he will make a profit of $10k. A $10k profit on an initial investment of $45k works out to be a return of a little over 2.5% per year. Add into that the money he would have paid to rent a similar home if he didn't own this one. So now what's his complaint? And certainly there's no reason to walk away from that.
Also remember, a house, if it's your primary residence, is not just about it's monetary value. It's also about the security, the ability to live the life you choose to live. And you just can't figure that into the numbers.
It means he had a loan paying 10k a year in interest (about average) for a conventional loan, owned a house in Bristol for 8 YEARS, paid all that money and can now sell and makes a max of 10k.
See.
Still don't see what it has to do with walking away. Also don't really see how interest paid factors in. What if he had a smaller loan, or a shorter term loan, or paid additional principal for those 8 years or had no loan at all?
He would have walked with $0 if he had been renting.
Yeah, I just can't possibly look at it that way. It makes no logical sense in my head.
I pay $750/month in PITI. If I wanted to rent a place similar to mine, in today's market, it would cost me around $850-$900/month. Given that, what difference does it make how much of that $750 is interest each month? It is still cheaper than renting.
Eight years ago, average interest rates were running just under 6%. With that interest rate, $10k per year in interest payments would mean a loan of roughly $180k. Assuming he put down 20%, that would mean a down payment of $45k and property value of roughly $225k. If he sells now, you say he will make a profit of $10k. A $10k profit on an initial investment of $45k works out to be a return of a little over 2.5% per year. Add into that the money he would have paid to rent a similar home if he didn't own this one. So now what's his complaint? And certainly there's no reason to walk away from that.
Also remember, a house, if it's your primary residence, is not just about it's monetary value. It's also about the security, the ability to live the lifeyou choose to live. And you just can't figure that into the numbers.
2.5% gain is pitiful.
Granted if they stayed another 5 years, it wouldnt be an issue. However divorce and child support is something no one plans for, plus a downturn in is local area for business.
I get what you are saying, but not everyone stays in the same house for 8 years in America. On average they relocate.
You are up north also, and have better values up there. Believe me, it is very different in the south.
A "decent" market is now where a seller makes any tiny profit.
Very very bad.
So its very bad that the seller lives in a home and provides himself shelter(for 10,15,20 years) for not only free but actually has a little bit of gain afterwords. I am not shedding any tears.
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