Fix You — Coldplay
Everyone either has or will be impacted by the housing bubble. It will be one of the defining events of our lifetimes. It changed lives.
Like many others who either could not or would not buy, I had to rent during the housing bubble.
So tell us, how did the housing bubble affect you?
.
When you try your best but you don’t succeed
When you get what you want but not what you need
When you feel so tired but you can’t sleep
Stuck in reverse.
And the tears come streaming down your face
When you lose something you can’t replace
When you love someone but it goes to waste
Could it be worse?
Lights will guide you home
And ignite your bones
And I will try to fix you
And high up above or down below
When you’re too in love to let it go
But if you never try you’ll never know
“Just what your worth”
Lights will guide you home
And ignite your bones
And I will try to fix you
Tears stream, down on your face
When you lose something you cannot replace
Tears stream down your face and I…
Tears stream, down on your face
I promise you I will learn from my mistakes
Tears stream down your face and I…
Lights will guide you home
And ignite your bones
And I will try to fix you.
Fix You — Coldplay
I moved to Phoenix in 2005 from Tucson.
While living in Tucson, I was a debtor on an 80K townhouse that I purchased in 2002. When I bought it, I knew nothing about house bubbles, flipping, creative financing, etc.
Upon moving to Phoenix, the original plan was to purchase a similar townhouse in Phoenix and sell the one in Tucson. Not really a trade up or a trade down.
I started looking at Phoenix townhouses that were similar to the one I had in Tucson and was completely shocked at how the seller’s prices were in the 300K range.
I was also completely surprised by the amounts of money people “appeared” to have in Phoenix. I was seeing Hummer H2’s on every block, lavish shopping mall parking lots over-flowing with cars, lots of people in restaurants drinking margaritas, Starbucks, etc. I didn’t know it at the time, but the whole place wreaked “conspicuous consumption”.
It was one big party.
I started looking into Phoenix house prices on the web and all these blog sites started popping up that warned of a “housing bubble”. Out of curiosity I started reading and within an hour I knew that I needed to sell the Tucson townhouse ASAP and find a place to rent.
Began renting an apartment. It was pretty difficult to find a one because during the Phoenix boom – so many of the apartment complexes “went condo” which significantly reduced rental supply and increased prices.
Sold the Tucson place in early 2006, put the bubbly profit in the bank.
I’ll continue to rent until I feel comfortable that the speculation frenzy is over and people buy houses to live in (which is why I bought in the first place)
I was “fortunate” to finish grad school in 2001. Hence, I had no money in the market to lose in 2000 and no money to buy a home for the next few years. When I was finally in a position to buy something I could live in for 10 years, the bubble had been fully inflated and not grown much for two years.
So, I bought a townhouse here last year, but I bought very conservatively spending less than 2.5 times my/our income and a 25% DTI (around 18% considering the tax shift).
Considering everything, I would still do the same thing today. However, if/when Irvine housing declines even further (30%+), it will have been a huge lost opportunity.
Mark (06:51 AM),
If you purchased last year, it already is a huge lost opportunity. Being able to “hold on” to a place that is depreciating year by year, and will likely take at least 10 years to get back to break-even, is not a blessing; it is a financial curse. Saying you don’t regret it, after reading this blog, is essentially saying you do not wish to maximize your hard earned dollars. That is irrational to me, and hard to imagine.
“Huge” is a relative term, and I agree that if things play out as IR has illustrated it will be huge, but it’s certainly not huge today (“huge” in that the price we paid could possibly in the near future buy a much “better” home, which is certainly not the case today).
“Huge” must also be weighed in terms of the lost opportunity relative to our income. And there again, it’s highly unlikely to be very huge.
And since we’re in a plain-old 30 year fixed mtg at a very low rate, the principal is declining regularly. So if/when Irvine housing returns to 4-times median household income, assuming 3% annual wage apprecition, we’re likely to “break-even” within 5 years, not 10.
I’m with you on maximizing my hard-earned dollars. That’s one reason I can’t convince myself to buy a new car eventhough mine is 11 years old. And we currently save 35%+ of our gross income.
It hasn’t affected me.
It will to some extent in the sense that the collapsing economy in CA will affect the rest of the country sooner or later.
After managing to recover from a business disaster that destroyed me financially, I had at last managed a shaky recovery in 2002, and contemplated a condo purchase.
I wanted a one bed, four room with 800-1100 sq ft, and I wanted something built in the 20s, with the decorative details intact. I started looking, and was shocked to discover that prices had more than doubled between 1999 and 2002, and were still ratcheting straight north. I had a small downpayment, and wanted a loan for about twice my income, but could see that it would be impossible even for the modest unit I desired.
In a word, I was effectively priced out of the market for even “starter” condos, and noticed that everything I could afford was half the apartment I was renting (which I would have happily bought). I was offered the “voodoo” loans everyone else was getting, and I could see that it was this type of lending that was driving the prices to these levels. I was tempted, but frightened of borrowing on these terms. I thought, either I will have to get a better job or the prices will have to back off, but I was also not encouraged by the places I could afford at even twice the salary I make.
I’m so glad it’s finally over and that the prices are collapsing. However, I am still paying the price in shrinking employment opportunities, and am paying 40% more rent than in 2001, because of monster tax increases based on the insane evaluations of 2003-2006.
Sorry to hijack the thread but had to comment on this article in la times
http://www.latimes.com/news/local/la-me-taxes3-2008may03,0,418412.story?track=mostviewed-storylevel
“A woman looking for the cheapest jolt of caffeine on the menu at an Alhambra Starbucks offered one response: She’s already broke.
“There must be some other way,” said Gwen Angert, 38, a student at the California School of Professional Psychology who says she and her classmates have up to $80,000 in education debt. “We’re struggling to make ends meet.””
WTF…
When I was in college, I couldn’t even imagine spending $3 for a cup of coffee (on rare occasions we did drive to Vegas for the $0.99 brunch buffet they used to run, back then not getting a speeding ticket was more concerning then the less than $1/gallon gas). Here is a broke, heavily in debt college student thinking that her budget allows here Starbucks. The bubble mentality still permeates all levels of society. I can only conclude that she anticipates she will never ever have to repay her college loans, that’s the only way I can rationalize her poor judgement.
Why do you think there is a potential crisis in the student loan market? Same problem as housing, except, the bank can’t repro your education … which I’d say makes it a smarter, though still immoral bet …
Fed `Rogue Operation’ Spurs Further Bailout Calls (Update1)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axSyA04372Fw
You can’t get a student loan debt discharged in bankruptcy. If you fail to pay, they can hound you for payment forever.
Yes, the collateral for your student loan is your brain. It is assumed that they loaned you money to learn, not drink booze, at college.
Oh, don’t get me going. Thanks to the number of deadbeats who figured that “I didn’t get enough out of my college time, so I’m not paying my loan,” the IRS is authorized to garnishee income tax refund checks, both of the debtor and his/her spouse. My ex-wife defaulted on her student loan unbeknownst to me (as she told me, one of the many reasons why we divorced, “the creditors stopped calling, so I figured that I didn’t have to pay it any more) with about $3000 left to go, and I only discovered this when a massive tax refund check in 1999 turned into pumpkins and mice. The next year, I got hit with another garnishee, and I’m now very glad that I’m no longer responsible for her irresponsible debts.
Oh, and to add a little extra, expect lots of extra penalties for defaulting on a student loan. You know all of those newspaper articles hyping the stability of a government job that are making the rounds these days? Default on a student loan, and kiss goodbye any chance of snagging one of those jobs in your lifetime. Oh, my ex is going to make one hell of a bag lady…
I’m amazed at the debt amounts that so many students are taking on without much thought on how they’re going to pay it off.
I’m not surprised. What’s the alternative – don’t go to school?
Apparently the resident bull on Lansner’s blog did not like it when I suggested that there is no tragedy in property values falling for homeowners who bought conservatively and can afford their mortgages and won’t be foreclosed on, because I guess that would mean the parents can’t pull HELOC money out of the home to pay for college. I had suggested the “tragedy” was that they would be unable to move up to a bigger house for a few more years.
— I’m not surprised. What’s the alternative – don’t go to school?
How about going to a cheaper school? Or working while in school? Or living more cheaply? Or doing all three?
The cheapest coffee at Starbucks is $1.40, not $3.00.
It’s not really so shocking that she was there trying to buy their cheapest coffee. It’s not like she was at a 5-star restaurant ordering a three-course meal, or buying tickets for a two-week vacation. I think people’s indignation at someone getting a coffee at maybe the only cafe near where she was, gets a little old and cliche.
I agree, she should plan her budget better, but you seem to be saying “Starbucks!!! Who does she think she is!?? Donald Trump?”
She’s definitely F-ed up. During my college years, any lunch or dinner that cost more than $4 was a huge hit on my budget. I was quite happy to get a complete Headline meal in Westwood (so you know what univ I went to) for under $4 back in late 80s/early 90s.
Nowadays, even with a net worth that can be envied by some folks, I consider a lunch/dinner that cost more than $15 a person a hit on my meager budget (even though I’ve done more than $15 a person on some special occasions….have to….with the net worth that I got….gotta enjoy life sometimes). I cannot phantom how a couple can spent more than $40 on lunch or dinner with regularity without breaking their bank unless they’re filthy rich.
Anyway, to sum it up, one should LIVE WELL BELOW HIS OR HER MEANS in order to have a *financially* healthy life.
Try conveying this to the kool-aid drinking Irvine RE invespeculators….they’ll laugh at your face 🙂
I was eating $1 subs in Westwood as an UG.
Of course all that penny-scrimping really didin’t matter a whole lot when you take into the account that your money all got eaten up by rent. My guess is that her finances aren’t sunk becuase she had a coffee at Starbucks, but because she spend money on something else.
BTW, I finished my PhD program 65K in the red (7 years agos) and I hit zero net worth last year. I suppose if I were more frugal, I might have a bit more money. But my guess is that most people get in trouble not because they’re penny-foolish, but that they were pound-foolish. A latte at Starbucks isn’t that big of a deal in comparison to that crazy night at Vegas or that awesome car you probably shouldn’t have bought.
OK, my story. In 2002 I was considering a very desirable job possibility in San Diego (I live in Tucson). On investigating, I discovered I could not possibly afford to make the move. As my financial advisor pointed out, I would make 30 K more in salary, but pay 60K a year more in mortgage payments and taxes, for much less house in a less desirable location than I now enjoy (has anybody noticed that you can’t actually _park_ at the beach in SoCal? So unless you live near it, it’s kinda irrelevant. Why I prefer the odd weekend at a beachfront hotel). Let me echo Laura Louzader’s pointing out the property tax issue. My house in Tucson that has probably lost about half its 2006 book value in the last year and a half. All of our property taxes went up hugely during the bubble, and I’m afraid that the only way to get those back down to reflect actual value of house will be to formally protest the assessment, a time-sucking process that will be made even worse because every homeowner in the city will be trying to do the same thing.
That is a GREAT point. Whenever someone tries to tell me that CA RE costs more because of the ‘location’, I always reply that you can’t see the beach from Temecula or Escondido. Unless you’re between the 5 and the coast, why pay that premium?
Take the beach out of the equation and the only other reasons left for paying the CA RE premium are the more diversified economy, the ‘lifestyle’ and the climate. The first and last of those are undeniable; as for the ‘lifestyle’, an Arizonan can make a whole lot of weekend trips to Disneyland for the 30%-50% price differential.
I watched the house next door sell with the buyer and builder commiting fraud ($100-large seller kickback on closure)on a 100% LTV loan and then go into foreclosure 11 months later. Another house up the street was sold under very similar conditions, but this buyer never moved in, just took the cash at closing and ran; it too has been foreclosed. Thank you First Franklin!
It has been a positive experience for me. Before it started, I was only in a position to buy a small condo in a less than desirable neighborhood, so I stayed a renter. Quality of life, lack of a commute, and proximity to the beach are priorities to me. Now, 5 years later, I am making double the income I was in 2003 and have money in the bank. In time, when prices sink back down to reality, I will be able to buy a home in the neighborhood I choose.
I would say the whole experience of the housing bubble has been a positive one. As I sold a vast majority of my property in 2005 and went to about 90% cash, I would have to say this distressed market is a godsend. I’m happily picking up property around the country from highly distressed sellers willing to sell their property for pennies to the dollar of what they originially purchased their homes at. I understand that as this economic distress works its way through the market we will see larger discounts in home values for the next 5-10 years and I’m quite happy with that. A reset in values is both healthy for the market and makes my life easier in the end. Being a long term holder of both residential and commerical property I see this overall market changing experience as both positive and a good oppurtunity to move back to about 50% real estate, 30% cash, and 20% alternative investments. Good luck to all the other smart investors of real estate and thank god for getting rid of all the speculators…
As a late boomer, I’ve spent my entire life watching the earlier boomers get rich on “sure things”, then just after I scrape enough together to get in on the ground floor, whatever it is loses money.
We moved back to greater Vancouver in 1996, and after about a year we saw a place in Coquitlam for just over 3x my income. We almost qualified, but I don’t regret it too much because although Coquitlam is a decent suburb, this was in a new section with lots of traffic nearby but not too pedestrian friendly.
We instead rented in Richmond, which is a delta island-basically a floodplain with really good dikes (Built to withstand 1896 flood levels with a couple extra feet margin).It’s much closer to work and the neighborhood is pretty nice, but there is about a 9.0 quake about every 300-500 years and the last one was about 308 years ago and especially after what happened to New Orleans, I am pretty sure I don’t want to buy here.
Since 1996, prices here have just gone up and up and up-I really thought they were going to level off around 2001-but no. Two bedroom condos near where we live are going to be sold “from $399k”, which is double what they should be adjusted for inflation.
So we’re still renting, still waiting for real estate to adjust here, but I’m thinking it’s going to be after the 2010 Olympics have come and gone….Maybe they’ll take a $200k offer on those condos then-$200 a square foot sounds fair to me!
As another very late boomer, I have found “standard” economic opportunities (“get a good job”) limited my whole life by the huge glut of slightly older, slightly more experienced boomers just ahead of me.
By the time I have ever gotten to “where I am supposed to be,” there is nothing left but devastation.
And at age 47, pretty much unemployable.
But that’s ok, because I am totally debt free, very close to a tidy $200k net worth within a month or two, and over the last 2 years made a successful transition from employee to self-employed. Soon, I will be the employer.
As far as this bubble is concerned, I have been waiting for it all my working life. Personally, I felt the start of the run up in the late 80s, early 90s was jarring, “where’s the beef?”
Turns out there’s hardly no more beef than there ever was.
So I’m in my comfort zone.
Buying in 2000 would have been an excellent idea. Buying in 2005 is one of the dumbest move a person could make.
I strongly believe that owning a home is a great value. You just have to know not to buy when it’s WAY overpriced.
Hello everyone, this post is from one less potential buyer in California,
In 2005 I moved in with my now wife and had a son, we live in Glendale on the Burbank border. Needless to say prices for everything are very high. I have a decent job, my wife is at home with my son, a situation almost unheard of in this town where 2 incomes are so near, “must have”, but we said F*** society’s greed, my wife is going to stay home (she wanted to) and give my son his mommy.
I, and my wife, drive used cars, and I have one $300.00 credit card. We have 12k saved (a hardship on one income).
To get to the point, I looked on http://www.bestplaces.net at what people are paying to live else where, and after much thought, have decided to move the family to another city, one with double digit job growth and a lower cost of living.
So I say goodbye to California. I came here to remake myself.
I did.
Now it’s over. There is nothing left for this place to give me.
Oh, that, and the schools suck!
Why do you think the schools suck? Irvine is supposed to have the best schools in the country.
Sorry, my comment was specific to California as a whole. It’s too bad there can only be exception cities like Irvine. It’s also too bad the general quality of education is so low. It’s just no place to raise a kid.
It’s been hugely positive.
Because prices got so silly in the Bay Area, and there’s a lot of cash sloshing around, a lot of high end rental complexes went in, perfect for people like me who want a nice place with amenities that’s someone else’s maintenance headache.
I sold my house in 2004, made a killing, and now I’m putting half my money in the bank, since my monthly expenses decreased by about half. I now live in a large apartment, close to the ocean. Buying a house is not worth the expense for me, especially while they are losing value.
Even in the rosey boom times, I just got the money that I put into the payments back, so it was like living rent free. Buying a house is entre into wasting money on expensive baubles. I am in no rush to get back onto that hamster wheel.
I relocated to Concord in 2006, at the height of the bubble. Housing prices were *insane*, and the radio waves were filled with commercials for “creative” home financing packages. In that environment, it was a no-brainer for my wife and me. We agreed immediately that it made more sense to rent. Two years later, we have no regrets whatsoever, and heaps of empathy for our neighbors who are trying to sell. One property has been on the market the entire time we’ve been here!
I’ve shared my experience before so here’s a shortened version…
Bought in 2001, sold in 2006 and moved to Charlotte. Made a killing, bought a really nice McMansion and don’t regret it one bit.
The bubble has been very kind to me. What amazes me is that people think we are anywhere near bottom – especially in Irvine. I’ve lived there – it’s nice in some ways, but not that ‘special’.
My wife and I settled in Santa Rosa in 1997 where we rented a literal shack for a year while we planned for our next move.
Her family gave her the money for a down payment and we began to look for a our starter home. We bought in 1999 at 210K. The house is poorly built in one of the least desirable neighborhoods the city has to offer. The house was actually listed for 199K but we got into a bidding war and had to go higher. Somebody actually bid 218K but didn’t have solid financing so we got it. We did a 20 year loan at a low fixed rate. So, thankfully we’re not underwater and have payments we can afford.
By 2006, houses on this street without any improvements were selling for 498K. Absolutely insane.
I sold cars during most of this time. I would fill out credit applications everyday. The average income I saw was around 60K-100K for families.
Everyday I would walk my dog and see new houses being sold for 600k-850k and I would ask in utter bewilderment “where are these people getting the money? I know what the average income is, how the hell are they doing it?”
Now I know the answer.
There are four foreclosures on my street right now with the lowest being listed right now at 249k and they are not selling.
I mortgaged the house my wife and I owned free and clear in Feb. 2006 (85% of appraisal combined first and HELOC) to pay for the construction of our new house on her parent’s property. I’d do it again, but I’d lean on the builder to stay on schedule.
Renting for a loss through the foreseeable future. Although we have gotten some bottom-feeding, borderline illegal offers.
We bought our house in 1993, so no good stories to tell there. According to Zillow our house was worth fabulous amounts briefly a couple of years ago, not that we knew or cared.
But I just recently realized why people all around us had so much money for new cars and kitchen remodels. We couldn’t figure it out – you can make a good guess at what people make in certain jobs, and it didn’t add up. Aha. They were increasing their debt while we were paying ours down.
I’m stuck in my 1000 sq. ft ‘starter home’ because we couldn’t afford to move up. We bought it as a major fixer in ’97, figured we’d put some sweat equity in it, sell it for a price that reflected the improvements (that we did ourselves) and move up. Never expected there’d be 10-15% annual appreciation coming up. So here we are, 11 years later, with 2 8 year old kids in this tiny house, and still can’t move up.
I’m also rather bummed because I have a 5/1 ARM that resets in September, so guaranteed I’ll be paying a higher interest rate than I’m currently playing.
Ummm . . . 11 years later and you have a 5/1 ARM . . . trying to reconcile that . . .
Ha! Real Estate Bubble?
ROTFLOL.
You want a real bubble?
The MOTHER OF ALL BUBBLES was the NASDAQ between ’94 and Y2K. I bought big into CSCO (with a bit of MSFT, EMC and INTC) between 95 and 97.
Sold it all on Y2K.
There were days during that bubble where I made more in one day that I earned in a whole month, and dudes, I was consulting and making some real nice money.
In S2K+1 we paid taxes like you wouldn’t believe, but dudes… that put the RE bubble to shame.
Yeah, I always thought that the tax bills started the decline. The timing was uncanny.
My story … moved to SoCal in 1998 from the Midwest after a messy break-up that cost me a few large and perhaps some of my sanity. Found a good job in the IT industry and managed to sock away about 60K in a money market before the ’01 NASDAQ crash took more than half of it. To top it off, the company I worked for nearly failed in the process so I found myself bouncing from one job to the next until late 2002.
I wanted to by a small condo in Irvine but as a single man, I simply could not qualify for a 30 yr. fixed large enough to cover the purchase price of even a modest condo (even though I make more than the Irvine median by myself) and not sink every last dollar I had into the deal. I continued to rent as I watched the market price further and further away from me and the fundamentals grow further out of whack, it was then I knew something was seriously amiss, after all I watched it happen to me in the pre-Y2K stock market.
Since then I got married and my wife and I between us have over $100K saved for downpayment and we nearly bought a place in Lake Forest last year. Nearly. Fortunately we found an honest appraiser who came in $62K lower than our escrow offer. That gave me time to come to my senses and we walked away. Smartest and luckiest thing that ever happened to me. Now my wife and I continue to rent while we save $1K a month and watch our “downpayment fund” earn interest and we keep a watchful eye on the neighborhood we want to buy into. So I suppose I’ve been both unfortunate and fortunate during this bubble. One thing is for certain, I learned A LOT during all this and will never get suckered by the “get rich quick” bullshit that passes for wisdom these days.
Mine is a sad, but eventually sanguine story. I started “one of those” messy divorces in 2003. The soon-but-not-soon-enough-to-be-ex managed to get control of the house right after she talked me into an interest-only refi (family court judges hate men more than Gloria Allred). Gotta give the ex credit, though: she was milking me with both fists while paying maybe a fourth of what rent would be. Of course I wanted to sell the place, but as the bubble progressed she would not get out, and, it made a buyout by either one of us more unlikely all the time.
A funny thing happened in 2005, though – interest rates started to surge. The “rent” was getting more expensive, and finally, she relented (after missing lots of payments and damaging our mutual credit). We sold in 2006 for $1.25M, and finalized the divorce. I really wanted to buy a place, but the legal fees and accumulated debts took more than half (of my half) of the bubble profits, and prices were still going up, despite all the bubble blog predictions! So, I continued to rent, opened up some CDs, and am waiting it out. I’m debt free and never stressed about toys or money (except when the ex has her hand out). I’m troubled by the state of our economy and our country’s outlook, and inflation and taxes are not my friends. I’ll probably break down and buy a place before “the bottom,” but I expect to be there long enough that my impetuousness won’t matter much in the long run.
While shopping for a house in South OC in 2002 I got a promotion that moved us to Boston for the next 4 yrs. Bought a house in early 2003 with a mortgage 3x my income. Prices went up and we loved being homeowners.
Over the next 4 yrs my income more than doubled. Company knew we wanted to get back to CA and offered another promotion in mid 2007 to come home to HQ in Silicon Valley. Sold our house back east with company relo plan (which payed the sellers commission etc), but it required aggressive price cuts which wrecked the neighborhood comps. Oh well. I still made money. I had a great realtor that worked her ass off, and had all the latest e-tools. She was the third we interviewed. I’m glad the relo company required 3 opinions.
I got very lucky and found a small private party rental house in one of the nicest SV towns, for the same as my old mortage + taxes on a monthly basis. Landlord owns and lives in the small house next door, and is an established local professional that has owned these properties for 20 yrs. The lease was recently renewed for zero % increase. Apparently creditworthy stable tenants are hard to find. Helps that we’re a family as well.
As other Bay area dwellers have commented, Irvine prices would be welcome up here. We’re still looking at $850K min for a piece of crap in a nice area (meaning good schools) that makes El Camino and College Park properties look palatial and new. But my earnings keep growing, lots of opportunity up here, and I have a exec deferred comp plan to replace the interest and RE tax deductions. We definitely want to buy, but fortunately my wife’s self esteem isn’t wrapped up in having to buy a house now at any cost. So we wait and watch, thankful for valuable resources like the IHB and IPO/Shiller.
My boyfriend and I live in Madison, WI. For the first year we lived here, we were renting a townhouse in a complex that is a mixture of rentals and owner-occupied units. We really liked the neighborhood and the size of the townhouse, so we decided to buy. We bought a unit in the complex in the fall of 2005. We only put about 7% down (thanks to my mom, who gave us the money), but managed to get a 30-yr fixed rate mortgage with a low interest rate. So really, the bubble hasn’t affected us yet. We can comfortably make our monthly payments, and put money into savings every month. We are, however, paying a premium over renting. Our mortgage payment is $10 per month less than we paid to rent, but we have to cover the condo fees, which are $86.50 a month. However, up to this point, I’ve been really happy owning. This complex was built in the 70’s, and most of the rental units have seen no updating. It’s been really nice to be able to paint, install a new front door, rip out ugly dark wood baseboards (though replacing the furnace in January last year was no so much fun).
I’ve learned a lot from reading this blog, and I don’t know if I would buy, were I to do it all over again. My boyfriend and I are graduate students, hoping to graduate next year. At that point, we’ll have to sell the place, and I am pretty sure we’ll have to sell it at a loss. I don’t expect to see our downpayment back. Of course, there is an identical unit in my complex that just recently went on the market. The asking price is $11,000 more than what my boyfriend and I paid just 2.5 years ago, with no significant upgrades. You can bet I’ll be watching that unit closely, to see how quickly (or slowly) it sells.
Bought in the west SF Valley in 1993.
Sold in 2005.
Just as I’d probably sell any other 15 bager.
Anyone know when I should “jump” back in?
thx
Jack
Was shopping for a townhouse with my fiance in 2001 — we expected to pay about $300k at the time. Along came a career making job transfer up to Silicon Valley area — and we took it with an expectation of a 2 year rotation. We made the move in October 2001. I can recall looking at my (now) wife after touring a 1,300 sq ft townhouse priced at $435k and saying “these prices up here are f’ing crazy, let’s just rent and buy when we move back to LA”. We rented a two bedroom apartment in the under development area of Rivermark in Santa Clara, and settled in for what we planned to be 2 years.
Along came marriage in 2002, and baby in 2003, and another promotion in 2004 — and lo and behold, our 2 year rotation turned into 4 years.
We finally engineered our transfer back to So Cal in October 2005, and settled into Irvine — thinking we would soon be buying our family home for the long haul. Well, that dream was quickly shattered once we realized that So Cal had gotten nearly as bad as the Bay Area. After probably close to a year of trying and failing to find something that came close providing the value we expected for our budget (about $750k), we were feeling pretty down and out — and like we had been “priced out forever” during our Northern California adventure.
About that time we found IHB and other like minded bubble blogs. Once we started reading and realizing what was really going on, we felt smarter and smarter for not getting caught up in the mania. We have since put ourselves on hold until at least 2009, and maybe 2010 if the percieved value is still not there for our buck. Down payment increases every month, as does the size of our eventual home. For now, I’m a very content renter…But I’m ready to pounce as soon I see the “one” for “the price”. It’s a good place to be.
Bought in late 1996. House values went up and down. House is paid off.
But I am (was) a real estate lawyer. No closing business for anybody. Doing real estate litigation. Love the theory, hate the judges and opposing counsels. And I’m not too fond of the clients either, who unlike real estate clients are virtually never satisfied with what you get for them.
Mtg and real estate brokers out of business. Office building chums gone. Survivors trying to survive on short sales and REOs. My bills are paid, but I really miss examining titles and closing house transactions. It’s like somebody died.
Sometimes I feel that I am waiting for the end of the world. The last days of Pompei. The stock mkt makes no sense to me. The fact that the home atm is now closed has got to mean that the consumer’s hurting is gonna affect the rest of us, but somehow it hasn’t.
I paid $55 to fill up my car which gets a reasonable number of miles per gallon.
But my house is paid for, the credit cards are at a low point, only thing we have is a car payment.
Where are the foreclosees going? Anybody know?
Hey Tonye, where ya bin?
Hi Liz. Sorry to hear that you are really feeling the pinch of this mess, it must truly feel like someone died. However, perhaps like a death, you will go thru the phases of grief. I hope it goes well for you and this too shall pass.
I do sometimes look at all the bad news and the likelihood that this country is in for some very tough times over the next few years and your description is very apt … the last days of Pompeii.
The stock market is going crazy because, like sharks, they must continually be in motion or they die. Brokers live on transactions so they look for any kind of positive news to spin to attract investment dollars that and a volatile market is good for institutional investors who know what they’re doing. For the average Joe, not so much.
The best we can do is what you have already done, live within your means, carry no debt (or keep it very manageable) and ride out the storm. Take solace in the fact you saw it coming and came out of this with your integrity and reputation intact.
Time heals all wounds.
What is with the random music crap on the blog?
I’m in Atlanta, so haven’t seen the craziness you all have. I have friends in Newport and couldn’t believe what they were telling me. And I’m in real estate, so found this blog very interesting.
Wife and I found a partially refurbed ’30’s house in a somewhat sketchy area – that I thought (correctly) would be primed for a renewal. I put 3% down, in 1999! I could’ve put more down, but why, if the bank was just giving away 97% mortgages at a fixed rate.
5 years later, our house appreciated 35%, even during the 2001 recession it never went down in value.
We found our “dream house” in the same neighborhood after looking for 7 months. It was discounted somewhat after a slow-down in the ATL market. We sold our 1st house and put 10% down on the new one, paid off our cars, credit cards and bought land in the mountains with the rest of the profit.
Our new house increased in value almost 40% in 3 years. I didn’t take out any of the equity, because I didn’t believe the hype. The prices at the peak are coming down now. Our neighborhood didn’t grow in price like Irvine, so we don’t expect the fall to be as drastic either.
I am interested in what it will settle at, but we expect to be in for the long-haul.
Good luck to everyone!
Actually it worked to my advantage.
I bought in late 1999 when housing was just starting to take off (4 months later I couldn’t have afforded my own house) at a pretty good 30 yr fixed interest rate. I refinanced about 2-3 years later and prices had gone up so much I didn’t have to pay PMI, took it to a 20-year mortgage at a lower rate. All in all I paid less per month and I will likely pay less over the life of the loan because I cut about 7 years off the life of the loan. I did take out a home equity about 2 years ago for a new roof, new kitchen, new bath, and other home improvements that were needed. And I will not borrow against my house again.
the bubble affected us (and virtually everybody else we know in our age range) by keeping us stuck in small apartments or condos that don’t meet the needs of our growing families. our plan was to buy the townhouse as a starter, live there for 5 or so years and then upgrade into a modest SFR once our income increased (we were relatively young when we bought, 27 and 28). ha ha! if we’d had a crystal ball we would have sold in 2006 and rented for a few years.
so since we couldn’t afford even a tiny fixer-upper in unglamorous Lake Forest, we are now accidental landlords, tenants again, and none of our “world-saving” plans (like solar panels and a water recycling system) have come to fruition. we’re just waiting and watching. like everybody else we know…
No save place for financial crisis.
We bought our first home in 2001 in Baltimore city for 115K– a 2200 sqft rowhouse in a “transitional” neighborhood. Concurrently with gentrification, prices went up and up and are now hovering around 300k-400k in the immediate area. We refinanced in 2003 order to remodel the kitchen and bedrooms and now owe about 90K total. I expect that prices will drop somewhat but not anywhere near 2001 levels.
Currently, we are thinking that soon might be a good time to purchase and investment property that would double as a home for my aging parents. I would like them to hold on to their current home and to sell it when price goes up again (their home is in a very nice but grossly undervalued street car suburb of Pittsburgh PA).