DWCAP, nice post, bonus points for chris farley reference!!! Fretting over values is usually a sport for buyers and marginal owners. Most people buy and hold based on affordability and not profitability. Buy and hold is a poplular strategy, not a old fashioned and outdated philosiphy. Look at UCgal’s scenario, she’s not alone, today’s value is less important than her ability to pay the debt and more importantly, her ability to pay off the debt.
scardey, the market has stabilized to some degree, two years ago, it was moving faster than zillow or appraisers could keep up with. It has leveled off, if it goes up or down in the coming years, it will likely be in very small ways with a few exceptions, which is a good thing.
My own anectdote, after my much talked about (by me) purchase some 14 months ago, my place has appreciated about 30%. A model match just went pending for 30% more than I paid and should be valued lower as it lacks a view and has a smaller lot. Am I excited, do I feel excited that I properly guessed the overcorrection, actually I don’t. At this point, my home value is not too relevent. I’ve got a fixed 5% mortgage, my total housing costs (piti) are less than 25% of my income, over the next two decades, the mortgage will not go up, yet my income more than likely will. In time, the 25% number will decrease. If the value of my home goes too high in that time, there may be temptation to borrow from that equity, it will also impact my teenagers ability to buy when they reach that phase of their lives. The best scenario for me would be slow or no appreciation.
Scardey, you need to look at potential purchase of your primary home as fixed rent costs, not an investment strategy. Buy the house that you can afford and can suit your needs for the longest amount of time, not the one that you can make the most profit from. If it were to go up or down in value, the only thing that is really affected is your mind. If you made a fundamentally sound, long term financial decision, it really doesn’t matter.
