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I would fit your description. Bought my tiny 900 sf starter home in 2003 for about $205k, put in another $8k for insulation, double pane windows, and will need to rewire the whole thing, it now it is worth $175. I owe $180. I would like to be able to move to pursue professional options, but don't want to be bringing cash to closing, or short-selling. Not destroyed by the meltdown, but not keen to have paid $1400/mo for almost 9 years with nothing to show for it. Not sure how it will all play out, but we'll survive.
Don't forget your friendly neighborhood Realtor. Tack on another 10K or so for them.
To the OP, I feel your pain. I've bought/sold/moved a bunch of times over the past 25 years. Looking back on my bought/sold prices, I've made out fairly well, considering I didn't stay in each place too long:
However, after all those years of impulsively moving, all I have in equity is the 20% down payment on the house I'm in, minus all the money I've spent in updating/renovating -- so really I have no equity. I think the poster above who said you just need to tighten your belt and live with what you have is right on-point. Lots of people have raised lots of kids in small houses. It's not like your house will be bursting at the seams anytime soon. Hang in.
The 90's represented a serious rough patch in the real estate market in many areas of the U.S. History is loaded with similar patches and yet a blip in time convinced a lot of people that values would continue to at double digit rates, forever. That's mania.
The stock market outperforms real estate, over time. We cannot live in our investment portfolios.The alternative would have been paying rent for 25 years a with no shot at recovering a dime. I know you get the long term perspective.
I'm slightly underwater, though in a far different situation than you as far as plans for the future go. I'm in my early fifties and this was the first time in my life I was able to buy something. I bought a 942 s.f. condo 18 months ago. While I was raising my daughter, I had to pay $2200 a month for a 100+ year-old somewhat ramshackle house to live in a decent town with a decent school system and family nearby so that I could know she was safe while I commuted to another city and state 30 miles away. Then I moved to a two-bedroom, $1400 a month rental for nine months until I found my condo. The mortgage/taxes/insurance/maintenance come to about $1650 total. I know the value of my condo has dropped slightly since I bought it, but I'm not going anywhere so I don't care. It's a one-story ranch-style unit, and I have a front porch with no front steps, so I can get old and decrepit here. I won't be moving for a long time, if ever. The mortgage guys wanted me to buy something more expensive and assured me that I could with my salary, but I wanted a payment I could still afford in retirement, since it's unlikely I will ever live long enough to pay off my mortgage anyway. (With a 30-year mortgage, it should be paid off when I'm 82.)
Note that pre-1970, a "normal" house cost in the $10-15k range. It's not a stretch to think that a $200k house today will be worth, ... er,
... "cost" 5x what it cost today. It's not an increase in "value." It is an increase in dollar price. These things are entirely different things.
Assuming so, this suggests you might think housing is one of the better investments out there, ala buy now or forever be priced out....
We are effected by stuff that happens in Europe and Japan. Think of the US dollar as the cleanest shirt in a pile of dirty laundry.
( I didn't make up that quote, but I like it a lot. )
Me too.
We are going to see inflation. The Fed can stop it, but it won't. There is no way the US government is going to allow the pain.
The promise of pain is not a popular platform in elections.
I hope that makes things clear. I thought you had me on ignore. You haven't trashed one of my posts in a jillion months ...
I am sorry you seem to view asking a question as trashing. That's not my intent. (*) For those who don't remember the inflation of the 1970's, a gallon of gasoline once sold for 15 cents. I have some dimes made in the early 1960's that are made of silver. I can still buy a gallon of gasoline with 15 cents worth of those dimes.
The dimes and the gasoline didn't increase in value. The dollar decreased in value. It does so every year. It will get worse.
Fuel and precious metals may not be the best examples. The cost of food, clothing, furniture and electronics, expressed as a percentage of disposable income, substantially declined during the same period.
Federal income taxes also substaitally declined.
I entered the work force in the 70's during the "Whip Inflation Now" wage and price freezes. ( At what point does MaM become Old Age Mom?) It did not work and so monetary policy shifted to interest rates. That caused a tad of a problem for Savings & Loans ( along with the common greed thing) and thus the S&L crisis and bailout.
Some days it seems like we are caught in a perpetual "Groundhog Day" cycle.
Refiance fees are non trivial and unless you have substantial equity you will have to bring a 5 figure check to "closing".
True, assuming you count the first "figure" to the right of the decimal point.
Quote:
Originally Posted by middle-aged mom
I am sorry you seem to view asking a question as trashing. That's not my intent.
That is slang. You have not, er, ... taken up the opposing viewpoint, er, ... something - - - for quite some time.
Only wussies put people on [Ignore]. I never felt that you were a wussy, but
seriously, it's been a long time since I had a MaM comment - - - < or > a question.
Also, "yes" I put out that $million+ value as bait. I was trolling. Imagine my surpise to see you bite.
All the examples you cite are true. I used the silver dime example because that was our currency of the day.
Note that $1.25 in copper cents made in 1981 or before will also buy a gallon of gasoline.
Shirts and stuff like that are still subject to manufacturing efficiencies that commodities are not.
I'll say it again: deere110's house will be worth $1 million way sooner than anyone thinks.
Unless we can figure out how to build the components of houses like framed walls and tiled bathrooms
in another ( country ) place where we can utilize expendable child labor and completely ignore
environmental issues, and then ship for between diddly and squat, the price of houses is going
to ultimately move with the price of stuff like copper and lumber and cement, et al.
Most people don't realize that a person making $10k or more a year was referred to as a "Ten Thousand Dollar Man."
In the 1950's and early 60's you were considered to have "made it" if you achieved that level.
In the 1920's, the same could be said for someone who made $1,000/year.
In the 1980's, we started using "six-figures" for a great household income. Today: not so much.
It happens slow enough that we don't see it happen. You can't see yourself age from year-to-year.
Take a photo of yourself from 2000 - not so long ago and you cringe a bit.
1990 seems like yesterday and the guy in the picture had women looking ...
The dollar could buy a lot more then. It's handy for the government to blame
it on "greedy corporations," but that's not the driver of price increases.
As you like to point out with housing markets; the past will repeat itself sooner or later.
I recently ( Oct, 2010 ) bought a handful ( palmful ) of US $5 gold coins. They cost over
$300/per coin. There was a time when if you got one of those in exchange for a day's
work back in the early 20'th century, you had a nice-paying job. This hasn't changed.
If I were to get one of those coins in exchange for a day's work, that would be considered a decent rate of pay.
If someone doesn't understand what has happened to make this happen then they won't get the $1million house statement/prediction.
BTW, I generally stop and read middle-aged mom posts since the contents tend to be well-written,
with great content and full of the voice of reason and sometimes funny. Frequently, as I read down
a thread, I think of something to say and find a MaM post that already said what I was going to say.
We generally agree 99.999% on market and pricing issues.
Other stuff, ... not so much ...
I'm looking forward to being "trashed" in those areas soon. I'm a big boy and can take it.
True, assuming you count the first "figure" to the right of the decimal point.
That is slang. You have not, er, ... taken up the opposing viewpoint, er, ... something - - - for quite some time.
Only wussies put people on [Ignore]. I never felt that you were a wussy, but
seriously, it's been a long time since I had a MaM comment - - - < or > a question.
Also, "yes" I put out that $million+ value as bait. I was trolling. Imagine my surpise to see you bite.
All the examples you cite are true. I used the silver dime example because that was our currency of the day.
Note that $1.25 in copper cents made in 1981 or before will also buy a gallon of gasoline.
Shirts and stuff like that are still subject to manufacturing efficiencies that commodities are not.
I'll say it again: deere110's house will be worth $1 million way sooner than anyone thinks.
Unless we can figure out how to build the components of houses like framed walls and tiled bathrooms
in another ( country ) place where we can utilize expendable child labor and completely ignore
environmental issues, and then ship for between diddly and squat, the price of houses is going
to ultimately move with the price of stuff like copper and lumber and cement, et al.
Most people don't realize that a person making $10k or more a year was referred to as a "Ten Thousand Dollar Man."
In the 1950's and early 60's you were considered to have "made it" if you achieved that level.
In the 1920's, the same could be said for someone who made $1,000/year.
In the 1980's, we started using "six-figures" for a great household income. Today: not so much.
It happens slow enough that we don't see it happen. You can't see yourself age from year-to-year.
Take a photo of yourself from 2000 - not so long ago and you cringe a bit.
1990 seems like yesterday and the guy in the picture had women looking ...
The dollar could buy a lot more then. It's handy for the government to blame
it on "greedy corporations," but that's not the driver of price increases.
As you like to point out with housing markets; the past will repeat itself sooner or later.
I recently ( Oct, 2010 ) bought a handful ( palmful ) of US $5 gold coins. They cost over
$300/per coin. There was a time when if you got one of those in exchange for a day's
work back in the early 20'th century, you had a nice-paying job. This hasn't changed.
If I were to get one of those coins in exchange for a day's work, that would be considered a decent rate of pay.
If someone doesn't understand what has happened to make this happen then they won't get the $1million house statement/prediction.
BTW, I generally stop and read middle-aged mom posts since the contents tend to be well-written,
with great content and full of the voice of reason and sometimes funny. Frequently, as I read down
a thread, I think of something to say and find a MaM post that already said what I was going to say.
We generally agree 99.999% on market and pricing issues.
Other stuff, ... not so much ...
I'm looking forward to being "trashed" in those areas soon. I'm a big boy and can take it.
I was going to try to refi and I would have had to bring 16 thousand to closing. The only way you can get away with only writing a 1000 dollar check is if they are taking it out of your equity but thats the same thing as writing a check. Unless you are saying it will ONLY cost 9 grand, true thats not 5 figures lol, still WAY more than im willing to pay to knock 100$ off my monthly expenses lol.
Also, "yes" I put out that $million+ value as bait. I was trolling. Imagine my surpise to see you bite.
Touche.
I bought 30 and sold 29 homes before I got my own real estate license. Last time I bought was 2002. The market did not feel right to me after that so I stayed put, for once in my life.
The CMV of my first house is about 3x what I paid for it in 1980 . ( 2 br sf do not appreciate well in my area). My current monthly P&I payment would be about 1/3 of my actual payment 32 years ago. All things adjusted for inflation, it's about the same. This property did no better or worse than inflation.
My goal all along was to manage to live rent-free over time and I managed to do so and then some. I acted in the short term with a long run focus.
Housing is going to take longer than anyone imagined to work itself out and it will. As for the rest....it's all about taxes.
Check out the Buffet article in last week's Time mag and le us know what you think.
I bought 30 and sold 29 homes before I got my own real estate license. Last time I bought was 2002. The market did not feel right to me after that so I stayed put, for once in my life.
The CMV of my first house is about 3x what I paid for it in 1980 . ( 2 br sf do not appreciate well in my area). My current monthly P&I payment would be about 1/3 of my actual payment 32 years ago. All things adjusted for inflation, it's about the same. This property did no better or worse than inflation.
My goal all along was to manage to live rent-free over time and I managed to do so and then some. I acted in the short term with a long run focus.
Housing is going to take longer than anyone imagined to work itself out and it will. As for the rest....it's all about taxes.
Check out the Buffet article in last week's Time mag and le us know what you think.
Taxes are trashing real estate in alot of areas and make owning unattractive, or heck even living in a given state. I dont know how anyone affords to live in socal unless your a multi multi millionare.
Housing is going to take longer than anyone imagined to work itself out
I think housing is likely to correct more than people think. As for time? It could unwind faster than we think.
If Bernanke can generate 15-20% inflation for a few years, that will effectively
lower everyone's mortgage as it did in the 1970's and in the 2000's.
The inflation of the 2000's only effected the price of houses and
commodities, but it did effectively lower everyone's mortgage.
Bernanke is looking for a repeat of the 1970's, not the 2000's.
It's the only way to pay the debts - ALL the debts. You can give Social
Security recipients the illusion of more money every year while truly cutting
their benefits and the effect on the national budget. While that is done, all
the underwater mortgages will get smaller in real terms.
Quote:
Originally Posted by middle-aged mom
Check out the Buffet article in last week's Time mag and le us know what you think.
I'm not sure what you are looking for there, but soaking the rich is a fantasy.
I did taxes in the 1980's and no rich people paid the max marginal rate.
They just paid more money to get out of paying. Once the Reagan tax
cuts hit, they said "screw-it" the rates are OK now, I'll just pay them.
Total revenues went up.
I just don't consider it all that altruistic for someone worth well North of $10 B
to "give away" $1 B. Call me when you are no longer a billionaire. Attention hoar.
I think housing is likely to correct more than people think. As for time? It could unwind faster than we think.
If Bernanke can generate 15-20% inflation for a few years, that will effectively
lower everyone's mortgage as it did in the 1970's and in the 2000's.
The inflation of the 2000's only effected the price of houses and
commodities, but it did effectively lower everyone's mortgage.
Bernanke is looking for a repeat of the 1970's, not the 2000's.
It's the only way to pay the debts - ALL the debts. You can give Social
Security recipients the illusion of more money every year while truly cutting
their benefits and the effect on the national budget. While that is done, all
the underwater mortgages will get smaller in real terms.
I'm not sure what you are looking for there, but soaking the rich is a fantasy.
I did taxes in the 1980's and no rich people paid the max marginal rate.
They just paid more money to get out of paying. Once the Reagan tax
cuts hit, they said "screw-it" the rates are OK now, I'll just pay them.
Total revenues went up.
I just don't consider it all that altruistic for someone worth well North of $10 B
to "give away" $1 B. Call me when you are no longer a billionaire. Attention hoar.
That assumes that everyones income will rise significantly in a short time to meet that rapid inflation. The only way for your mortgage to become worth less is if your income rises to dwarf your payments. IF your income rises as a result of the inflation and your mortgage becomes only 5% of your net income its a smokin deal but if all that happens is the prices of goods and services increase while YOUR wages stagnate it will utterly sink the economy and there will be no recovery.
All these national policies are largly irrelavent, all that matters is your percentage of expenses to net income and how much value your disposable income buys you. If that does not change people will continue to default and not buy stuff.
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Not sure how it will all play out, but we'll survive.
