Why not walk away?

[paramount]

From marion: “don’t know about San Diego, maybe. However, I definitely see prices dropping to that level in Murrieta and Temecula. In 1997-98, my parents bought a 1867 sf house for $140k base price. I predict, by 2009 those will be the current prices here in this area.”

Uh, yah right….

[sandiego]

I don’t live in Aqua Vista.

I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.

The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.

Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.

I lived through it because it was a great place and it was affordable.

The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.

This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.

[sandiego]

I don’t live in Aqua Vista.

I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.

The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.

Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.

I lived through it because it was a great place and it was affordable.

The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.

This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.

[sandiego]

I don’t live in Aqua Vista.

I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.

The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.

Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.

I lived through it because it was a great place and it was affordable.

The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.

This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.

[sandiego]

I don’t live in Aqua Vista.

I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.

The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.

Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.

I lived through it because it was a great place and it was affordable.

The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.

This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.

[sandiego]

I don’t live in Aqua Vista.

I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.

The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.

Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.

I lived through it because it was a great place and it was affordable.

The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.

This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.

[sdrealtor]

So it sounds like the “$150,000 you lost” was actually proceeds from your the gain on your UC Irvine townhouse. The “$150,000 you lost” wasnt hard earned money or money you saved it is what I call Real Estate Funny Money. Now you come here with your Crocodile Tears. You rolled your gain and made major move up in price of over $300,000 which IMO is very risky and bold not to mention a bit foolish unless you are earning the truly big bucks. Sorry, still no sympathy here.

[sdrealtor]

So it sounds like the “$150,000 you lost” was actually proceeds from your the gain on your UC Irvine townhouse. The “$150,000 you lost” wasnt hard earned money or money you saved it is what I call Real Estate Funny Money. Now you come here with your Crocodile Tears. You rolled your gain and made major move up in price of over $300,000 which IMO is very risky and bold not to mention a bit foolish unless you are earning the truly big bucks. Sorry, still no sympathy here.

[sdrealtor]

So it sounds like the “$150,000 you lost” was actually proceeds from your the gain on your UC Irvine townhouse. The “$150,000 you lost” wasnt hard earned money or money you saved it is what I call Real Estate Funny Money. Now you come here with your Crocodile Tears. You rolled your gain and made major move up in price of over $300,000 which IMO is very risky and bold not to mention a bit foolish unless you are earning the truly big bucks. Sorry, still no sympathy here.

[sdrealtor]

So it sounds like the “$150,000 you lost” was actually proceeds from your the gain on your UC Irvine townhouse. The “$150,000 you lost” wasnt hard earned money or money you saved it is what I call Real Estate Funny Money. Now you come here with your Crocodile Tears. You rolled your gain and made major move up in price of over $300,000 which IMO is very risky and bold not to mention a bit foolish unless you are earning the truly big bucks. Sorry, still no sympathy here.

[sdrealtor]

So it sounds like the “$150,000 you lost” was actually proceeds from your the gain on your UC Irvine townhouse. The “$150,000 you lost” wasnt hard earned money or money you saved it is what I call Real Estate Funny Money. Now you come here with your Crocodile Tears. You rolled your gain and made major move up in price of over $300,000 which IMO is very risky and bold not to mention a bit foolish unless you are earning the truly big bucks. Sorry, still no sympathy here.

[temeculaguy]

I agree with paramount’s summary, “yeah, right.” Marion, it’s anyone’s guess what price level year equivalent we will reach but returning to 1997 nominal prices is too far fetched. If you go back ten years in pricing and count inflation, then they would actually be far worse, since there was no appreciation from 1992 to 1997, that guess would put you in the 1980’s and that is just silly. It’s going to land somewhere between 1999 and 2002 nominally. That would give you an inflation adjusted price of a little under 200k as a worse case scanrio for your parents house and that will be as low as it will go for an average property in fair condition or a new property. My guess is 2001 numbers nominally, giving it a 1999 feel, 250-280 for their house as a realistic guess. With your plan, condo’s will be going for 80k and that is too close to the median income. Think of rents as the floor, rent didn’t go crazy and people in this area are comfortably affording $1000 to $2000 in rent. If rent goes down, it only drops a little so you have to look for the floor at the point that zero down is cost neutral to buy (not that there will be zero down loans and don’t use the pmi for a zero down but don’t factor downpayment when determining the number for cost neutral). So a $1500 a month renter that is comfortable with their rent will buy it or an investor will buy it when it crosses a line, for 1500 that line is between 150k to 225k based on variables for a particular property (hoa, taxes, and other carry costs). You have to factor the thinking, ability and behavior of others when determining a floor price.

You parents house at 140k is (140k for 30yrs@6%=$839 a month P&I) so let’s say I rent it for 1500, my income tax deduction is roughly equivalent to the taxes and insurance so I can buy it for $839 or rent it for $1500. That is also just a formula counting nothing down, with 28k down (20%) my loan is 112K and I’m paying $671

If interest rates double, all these numbers are moot but when you get inside the numbers you will see that a return to 140k for a 1800 sq ft. sfr is a pipe dream. So, “yeah, right” is the correct response.

[temeculaguy]

I agree with paramount’s summary, “yeah, right.” Marion, it’s anyone’s guess what price level year equivalent we will reach but returning to 1997 nominal prices is too far fetched. If you go back ten years in pricing and count inflation, then they would actually be far worse, since there was no appreciation from 1992 to 1997, that guess would put you in the 1980’s and that is just silly. It’s going to land somewhere between 1999 and 2002 nominally. That would give you an inflation adjusted price of a little under 200k as a worse case scanrio for your parents house and that will be as low as it will go for an average property in fair condition or a new property. My guess is 2001 numbers nominally, giving it a 1999 feel, 250-280 for their house as a realistic guess. With your plan, condo’s will be going for 80k and that is too close to the median income. Think of rents as the floor, rent didn’t go crazy and people in this area are comfortably affording $1000 to $2000 in rent. If rent goes down, it only drops a little so you have to look for the floor at the point that zero down is cost neutral to buy (not that there will be zero down loans and don’t use the pmi for a zero down but don’t factor downpayment when determining the number for cost neutral). So a $1500 a month renter that is comfortable with their rent will buy it or an investor will buy it when it crosses a line, for 1500 that line is between 150k to 225k based on variables for a particular property (hoa, taxes, and other carry costs). You have to factor the thinking, ability and behavior of others when determining a floor price.

You parents house at 140k is (140k for 30yrs@6%=$839 a month P&I) so let’s say I rent it for 1500, my income tax deduction is roughly equivalent to the taxes and insurance so I can buy it for $839 or rent it for $1500. That is also just a formula counting nothing down, with 28k down (20%) my loan is 112K and I’m paying $671

If interest rates double, all these numbers are moot but when you get inside the numbers you will see that a return to 140k for a 1800 sq ft. sfr is a pipe dream. So, “yeah, right” is the correct response.

[temeculaguy]

I agree with paramount’s summary, “yeah, right.” Marion, it’s anyone’s guess what price level year equivalent we will reach but returning to 1997 nominal prices is too far fetched. If you go back ten years in pricing and count inflation, then they would actually be far worse, since there was no appreciation from 1992 to 1997, that guess would put you in the 1980’s and that is just silly. It’s going to land somewhere between 1999 and 2002 nominally. That would give you an inflation adjusted price of a little under 200k as a worse case scanrio for your parents house and that will be as low as it will go for an average property in fair condition or a new property. My guess is 2001 numbers nominally, giving it a 1999 feel, 250-280 for their house as a realistic guess. With your plan, condo’s will be going for 80k and that is too close to the median income. Think of rents as the floor, rent didn’t go crazy and people in this area are comfortably affording $1000 to $2000 in rent. If rent goes down, it only drops a little so you have to look for the floor at the point that zero down is cost neutral to buy (not that there will be zero down loans and don’t use the pmi for a zero down but don’t factor downpayment when determining the number for cost neutral). So a $1500 a month renter that is comfortable with their rent will buy it or an investor will buy it when it crosses a line, for 1500 that line is between 150k to 225k based on variables for a particular property (hoa, taxes, and other carry costs). You have to factor the thinking, ability and behavior of others when determining a floor price.

You parents house at 140k is (140k for 30yrs@6%=$839 a month P&I) so let’s say I rent it for 1500, my income tax deduction is roughly equivalent to the taxes and insurance so I can buy it for $839 or rent it for $1500. That is also just a formula counting nothing down, with 28k down (20%) my loan is 112K and I’m paying $671

If interest rates double, all these numbers are moot but when you get inside the numbers you will see that a return to 140k for a 1800 sq ft. sfr is a pipe dream. So, “yeah, right” is the correct response.

[temeculaguy]

I agree with paramount’s summary, “yeah, right.” Marion, it’s anyone’s guess what price level year equivalent we will reach but returning to 1997 nominal prices is too far fetched. If you go back ten years in pricing and count inflation, then they would actually be far worse, since there was no appreciation from 1992 to 1997, that guess would put you in the 1980’s and that is just silly. It’s going to land somewhere between 1999 and 2002 nominally. That would give you an inflation adjusted price of a little under 200k as a worse case scanrio for your parents house and that will be as low as it will go for an average property in fair condition or a new property. My guess is 2001 numbers nominally, giving it a 1999 feel, 250-280 for their house as a realistic guess. With your plan, condo’s will be going for 80k and that is too close to the median income. Think of rents as the floor, rent didn’t go crazy and people in this area are comfortably affording $1000 to $2000 in rent. If rent goes down, it only drops a little so you have to look for the floor at the point that zero down is cost neutral to buy (not that there will be zero down loans and don’t use the pmi for a zero down but don’t factor downpayment when determining the number for cost neutral). So a $1500 a month renter that is comfortable with their rent will buy it or an investor will buy it when it crosses a line, for 1500 that line is between 150k to 225k based on variables for a particular property (hoa, taxes, and other carry costs). You have to factor the thinking, ability and behavior of others when determining a floor price.

You parents house at 140k is (140k for 30yrs@6%=$839 a month P&I) so let’s say I rent it for 1500, my income tax deduction is roughly equivalent to the taxes and insurance so I can buy it for $839 or rent it for $1500. That is also just a formula counting nothing down, with 28k down (20%) my loan is 112K and I’m paying $671

If interest rates double, all these numbers are moot but when you get inside the numbers you will see that a return to 140k for a 1800 sq ft. sfr is a pipe dream. So, “yeah, right” is the correct response.

[Author]

Posts