Well, I’m pretty sick to my stomach!

[PerryChase]

Now that you’ve made the mistake, it’s hard to undo. Try to list the house at a high price and see if you find some greater fool. Offer to give cash back to the buyer to the maximum possible. You might be able to get out. If not, you have no choice but to hunker down.

On property taxes, no, I’m not incorrect. I was attempting to debunk the argument that if you hold long term and that when you market recovers, you’ll be OK. Certainly not as far as property taxes are concerned.

Say the market troughs in 2012 and takes off again and by 2020 the house is worth $800k. In that case, you’ll definitely pay $4004 more than the neighbor who buys at $350k in 2012. That difference will grow as time goes by.

Yes, you can temporarily appeal your property taxes, but as soon as prices get back to above purchase price + 2% compounded annually, the county will adjust you right back to the high basis (Proposition 8).
http://www.sdarcc.com/arcc/docs/calrev.pdf

Personally, I would not be happy to pay $4,000 more in property taxes than my next door neighbor based on time and price of purchase. I’d rather donate the money to charity.

[PerryChase]

Now that you’ve made the mistake, it’s hard to undo. Try to list the house at a high price and see if you find some greater fool. Offer to give cash back to the buyer to the maximum possible. You might be able to get out. If not, you have no choice but to hunker down.

On property taxes, no, I’m not incorrect. I was attempting to debunk the argument that if you hold long term and that when you market recovers, you’ll be OK. Certainly not as far as property taxes are concerned.

Say the market troughs in 2012 and takes off again and by 2020 the house is worth $800k. In that case, you’ll definitely pay $4004 more than the neighbor who buys at $350k in 2012. That difference will grow as time goes by.

Yes, you can temporarily appeal your property taxes, but as soon as prices get back to above purchase price + 2% compounded annually, the county will adjust you right back to the high basis (Proposition 8).
http://www.sdarcc.com/arcc/docs/calrev.pdf

Personally, I would not be happy to pay $4,000 more in property taxes than my next door neighbor based on time and price of purchase. I’d rather donate the money to charity.

[SD Realtor]

Perry if she purchased at price X and the house immediately depreciates and continues to do so, wouldn’t she be paying the reassessed value (assuming she petitioned the assessor to get the lower rate) until the market bottomed out then came all the way back up to her purchase price of 550k or whatever she paid for it?

I did not clarify my point well enough. The interest and HOA you cannot control. What you pay in property tax you can control. This is what I was trying, (and miserably failed at) to point out.

So yes let me ammend my post, you will be paying more in property taxes then your neighbor who bought lower and you will ALWAYS pay more, AS LONG AS the market value of your home is above what you payed for it. If the market value of your home is below what you payed for it, then you will pay based on what the current assessment is. Theoretically if your neighbor buys a house that matches your floorplan, you will pay the SAME as your neighbor IF you go to get your home reassessed using that home as a comp AND the assessor agrees to reassess your home to that value. You should then pay the same as your neighbor UNTIL the value of market comes back to what you originally paid.

Perry I “think” I got it right.

Thanks

SD Realtor

[SD Realtor]

Perry if she purchased at price X and the house immediately depreciates and continues to do so, wouldn’t she be paying the reassessed value (assuming she petitioned the assessor to get the lower rate) until the market bottomed out then came all the way back up to her purchase price of 550k or whatever she paid for it?

I did not clarify my point well enough. The interest and HOA you cannot control. What you pay in property tax you can control. This is what I was trying, (and miserably failed at) to point out.

So yes let me ammend my post, you will be paying more in property taxes then your neighbor who bought lower and you will ALWAYS pay more, AS LONG AS the market value of your home is above what you payed for it. If the market value of your home is below what you payed for it, then you will pay based on what the current assessment is. Theoretically if your neighbor buys a house that matches your floorplan, you will pay the SAME as your neighbor IF you go to get your home reassessed using that home as a comp AND the assessor agrees to reassess your home to that value. You should then pay the same as your neighbor UNTIL the value of market comes back to what you originally paid.

Perry I “think” I got it right.

Thanks

SD Realtor

[PerryChase]

Chris is right that a house is not an investment, but, value is in relation to other things that money can buy.

Chris is apparently a wealthy investor and he’s certainly not giving up trips to Europe in order to own his house. His lifestyle would not be affected by a 30% to 50% drop. He probably would not give up anything else that he could buy. Well, perhaps a fractional ownership airplane.

relo, if you’re giving up trips to Europe to afford your house, then you’ve definitely made a mistake.

But once you make a mistake, it’s best to call it water-under-the bridge and move on to other things. But it’s important to recognize the mistake to you don’t repeat it. Don’t delude yourself by thinking that you’ll be “OK.”

Chris seems to say that you should work harder and earn more money to make up for your buying decision. What are you giving up when you work harder?

Do you want to be a mortgage slave?
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458487&in_page_id=1770&

[PerryChase]

Chris is right that a house is not an investment, but, value is in relation to other things that money can buy.

Chris is apparently a wealthy investor and he’s certainly not giving up trips to Europe in order to own his house. His lifestyle would not be affected by a 30% to 50% drop. He probably would not give up anything else that he could buy. Well, perhaps a fractional ownership airplane.

relo, if you’re giving up trips to Europe to afford your house, then you’ve definitely made a mistake.

But once you make a mistake, it’s best to call it water-under-the bridge and move on to other things. But it’s important to recognize the mistake to you don’t repeat it. Don’t delude yourself by thinking that you’ll be “OK.”

Chris seems to say that you should work harder and earn more money to make up for your buying decision. What are you giving up when you work harder?

Do you want to be a mortgage slave?
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458487&in_page_id=1770&

[PerryChase]

SD Realtor, you’re almost right 🙂

You can appeal your property taxes to then current market value if the market is lower than the price you paid.

However your neighbor who bought at the very low is capped at purchase price + 2% compounded annually.

Say the neighbor buys in 2012 for $350k. If you appeal, you can have your house reassessed to $350k that year. If the following year, in 2013, prices move higher to $400k (still below your purchase price of $550k), the county can assess you based on $400k. You neighbor, however will be capped at $350k + 2%, or $357k. Your taxes will be $4800 ($400k @ 1.2%) and your neighbor’s taxes will be $4284 ($357k @ 1.2%). The difference of $516 is an air-ticket to Europe in the winter and the market hasn’t even recovered to your purchase price yet — you’re still upside down by $150k.

[PerryChase]

SD Realtor, you’re almost right 🙂

You can appeal your property taxes to then current market value if the market is lower than the price you paid.

However your neighbor who bought at the very low is capped at purchase price + 2% compounded annually.

Say the neighbor buys in 2012 for $350k. If you appeal, you can have your house reassessed to $350k that year. If the following year, in 2013, prices move higher to $400k (still below your purchase price of $550k), the county can assess you based on $400k. You neighbor, however will be capped at $350k + 2%, or $357k. Your taxes will be $4800 ($400k @ 1.2%) and your neighbor’s taxes will be $4284 ($357k @ 1.2%). The difference of $516 is an air-ticket to Europe in the winter and the market hasn’t even recovered to your purchase price yet — you’re still upside down by $150k.

[SD Realtor]

Yes I see and do agree with you on the math.

SD Realtor

[SD Realtor]

Yes I see and do agree with you on the math.

SD Realtor

[sdduuuude]

One thing you might consider is to save a little more aggressively, and possibly make some extra payments to the higher-interest loan.

Keep on top of the market. Know what your house is worth. If the market does start to slide, try to keep some money around in case you are forced to sell, or try paying off the second really early.

That way, you always have some equity and a forced sale doesn’t kill you.

i.e. now that you know the reality of the situation, don’t just ignore it, bite the bullet now to keep yourself from a short sale later.

D

[sdduuuude]

One thing you might consider is to save a little more aggressively, and possibly make some extra payments to the higher-interest loan.

Keep on top of the market. Know what your house is worth. If the market does start to slide, try to keep some money around in case you are forced to sell, or try paying off the second really early.

That way, you always have some equity and a forced sale doesn’t kill you.

i.e. now that you know the reality of the situation, don’t just ignore it, bite the bullet now to keep yourself from a short sale later.

D

[CardiffBaseball]

My friends from Ohio that relocated a couple of months after us, just bought in Westwood, and I posted here sometime back. $595, and the house needs a lot of work from what I could tell. Not much of a yard to speak however the memorial day view wasn’t bad. The neighbors below had a pool and one of the ladies was sunbathing topless (on her stomach) however we got sidetracked and missed her getting up. Kind of strange though looking right down into someone’s backyard, but that’s Cali for you. He tried convincing me to buy a certain house that was listed at 617, (5-BR, 3-BA, 2400 Sq. Feet or so) which apparently ended up going for 575, but I wasn’t interested to say the least.

[CardiffBaseball]

My friends from Ohio that relocated a couple of months after us, just bought in Westwood, and I posted here sometime back. $595, and the house needs a lot of work from what I could tell. Not much of a yard to speak however the memorial day view wasn’t bad. The neighbors below had a pool and one of the ladies was sunbathing topless (on her stomach) however we got sidetracked and missed her getting up. Kind of strange though looking right down into someone’s backyard, but that’s Cali for you. He tried convincing me to buy a certain house that was listed at 617, (5-BR, 3-BA, 2400 Sq. Feet or so) which apparently ended up going for 575, but I wasn’t interested to say the least.

[Bugs]

I liked sdrealtor’s suggestion to slow down and really think through your next move. Booking a $60,000 cost-of-sale loss right now and jumping into the renter’s lifestyle is a drastic life-altering decision, and you may or may not be prepared to live with the downsides of that decision. On the other hand, the $60,000 won’t seem like a loss if you’re forced to sell at the bottom of the market and those prices turn out to be 30% lower than where they are right now.

Nobody KNOWS when or where this slide in prices will stop. We’re all just guessing, and there’s no doubt that some of us are just flat-out wrong.

Stick around for a while and read up on the analyses and the data that pops up here, and then decide how you feel about the reasonableness of those opinions. You may end up deciding that staying where you are and riding it out is the best choice to make for your family.

[Author]

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