[quote=SellingMyHome] We bought in 2003 hoping to own it for about 10 years , and then move up. I was pretty bitter that by the time we had kids and wanted a bigger house in a good school district, we couldn’t sell our house….[/quote]
SMH, I’m not judging you, honestly. I’m not walking in your shoes, and I don’t know what kind of load you’re carrying. But based on what you’ve written here, I’m not sure that home ownership is ever going to bring the rewards you anticipate.
You sound like you’re in your 20s or 30s. If so, you need to know that what happened to real estate in the aughts was a fluke. In fact, the incredibly rapid increase in RE values throughout the US over a several-year period should have been an unmistakeable warning sign that something was amiss, and that the rise would be matched by a similarly spectacular fall at some point.
There’s nothing wrong with wanting your house to maintain its value. But if you purchase your primary shelter with the idea that it should go up 10 or 20 percent a year, you’re going to be disappointed. However, if you do your research, choose your neighborhood carefully, bargain aggressively, avoid buying more house than you can afford, and work hard at keeping your house well-maintained and cared-for, you shouldn’t lose money on it over a 15-year period. But it’s not going to do double-duty as an ATM, or as a source of payment for future additions and upgrades. Nor do you want it to, since this is the kind of credit policy that contributed to the implosion.
[quote=SellingMyHome] …..So, we dumped it onto a bank that was the cause of the mess this country is in now. [/quote]
I’m no fan of the megabanks, but to believe that they are solely responsible for current conditions is naive, self-serving, and dangerous. I am convinced that they carry a very large chunk of responsibility, but they had plenty of cooperation from investment firms desperate for more product they could sell equally-desperate investors, politicians who pushed the “homeowner” fantasy while stuffing their pockets with campaign contributions, to the public-at-large who expected the lenders to parent them, and tell them what they couldn’t afford.
It is true that, after the fact, the average guy on the street is getting hit a lot harder by the circumstances of this debacle. But make no mistake: by strategically defaulting on your home, you are adding to his burden and pain. You hold an extremely narrow-minded opinion of the cause of the financial crisis, and, in keeping with that, you’ve convinced yourself that you are “sticking it to the bankers” and that they are the only ones affected. In reality, they are simply passing the effects of their risk-taking onto their poor and middle-class customers.
There are many reasons why homeowners are defaulting, but, no matter what the reason, the effects are the same: continuing reductions in housing values in neighborhoods everywhere, and resulting instability in the RE markets. Strategic defaulting exacerbates this, which is why I’m strongly advising you to look at whether your reasons for buying, and your expectations from home ownership are appropriate and realistic. If you’re looking at this purchase as a way to invest your income, I urge you to back away. I don’t know what happened the first time, but you’ve made it clear that no one is pressuring you to sign on to another mortgage (aka, an obligation to pay money back to an individual/entity who lent it to you), and that your family has a roof over their heads.
[quote=SellingMyHome] Was I really that dumb when I bought my first house in 2003? I didn’t get an exotic loan, had, still have, good income, etc. How many of you knew the market was going to crash in 5 years? Really? Honestly? Maybe a few of you.
I am now a lot more informed about the market , and won’t forget the bubble. My kids will probably not remember, and their generation will make the same mistakes. To answer your question, from what I’ve seen and read, it looks like the market is about at the bottom, plus or minus 5%.[/quote]
Of course you weren’t “dumb” when you bought the house in 2003. But you did willingly sign on to an obligation to pay a very large debt, and you haven’t mentioned anything that indicates that fraudulent activity on the part of the lender. Again, there may have been mitigating circumstances surrounding your decision that you’ve chosen not to reveal here. But since you are choosing to pursue home ownership again, in what can in no way be described as a stable or visibly recovering market, you need to take that obligation very seriously.
You say that your kids won’t remember, and that they’ll probably make the same mistakes. Kids see, and remember, a lot more than we ever give them credit for. And it’s up to you, as their parents, to ensure that they don’t make the same mistakes by teaching them to be self-sufficient and responsible, and by providing them with an education in the basics of personal finance. You didn’t learn it along the way, so where will they get it from? Use this rotten experience for something that will help the most important people in the world to you and your wife.
As for being a lot more informed about the market (” from what I’ve seen and read, it looks like the market is about at the bottom, plus or minus 5%”), I’d slow down a bit. You weren’t dumb during the boom. There simply wasn’t any contradictory information out there that was readily available. I was very concerned by what was going on (like Scaredy, I, too, had a reputation for being “off my rocker” among friends and neighbors because I kept insisting that the rapidly increasing RE values WEREN’T a good thing), but I would scour the newspapers, magazines, and internet for some evidence that the economists and the financial analysts – the “smart guys” – were seeing what was going on and were doing something about it. I never found them.
It was an education for me. I realized that a good many of the “experts” in all different fields weren’t experts at all. In fact, many of them aren’t even competent in their fields.
You can’t simply read something and believe it. You have to see what the writer is basing his claims on. Is there actual evidence, or is it really just his opinion? Obviously, you can’t know everything. But if you’re going to be jumping into the deep end again, you need to be basing that decision on something solid. Like where is the actual evidence that clearly demonstrates why this is the bottom of the market. Let’s see: huge inventory of homes, backlog of foreclosures, mortgages in default, record numbers of homeowners in upside-down mortgages. Throw in a steadily rising unemployment rate, and increase in offshoring of jobs.
C’mon, SMH, use your common sense here, and your gut instinct. Does this honestly sound like the “bottom” of the market? You’re a smart guy, and because you got caught once (like millions of other homeowners from all educational and economic levels), doesn’t mean you have to again. I’m willing to bet that the first homebuying experience was a very emotional experience. Here’s a handy tip: Keep the emotion out of the process. Take your time, use your brain, and listen to your instincts.
Time is on your side here. The bargains won’t go away; in fact, there’ll be even more of them. You’ll be able to gather more information about neighborhoods and school districts. And you’ll be able to stabilize your financial matters, and put yourself in a more advantageous bargaining position.
