[UCGal]

[quote=jimmyle]Now the broker is offering 3.875% with only $200 fee. The difference is $85 a month. But now my mortgage is 4 months longer.[/quote]
What if you were to make an extra principal payment of $85/month. How much shorter would the mortgage be.

(That’s what we did when we refi’d a few years ago – kept paying the same payment, with the extra going towards principal. We liked seeing the balance shrink so much we started throwing even more money at it. It’s good to be able to imagine a paid for house.)

[UCGal]

[quote=walterwhite]Probably true but I’m not buying it.[/quote]
Me either.
Maybe Brian will buy it for both of us.

[UCGal]

Thanks, Rich. He was going to be my first “ignore” candidate.

[UCGal]

First – congrats to your kid on the psat scores. IIRC – psats feed the national merit scholarships… which is money for college. Cha-ching.

(That’s the way it was 30 years ago, anyway.)

As far as free range… I have 2 kids. One would (does) do just fine free range. The other, er… not so much. His instincts for finding trouble, annoying authority figures, bullying…. As Yoda would say: “the force is strong in this one, it is.” If I let him act on every impulse he’d be in juvi.

Each kid is different. Some are self motivated, others not. Each kid has their own level of aptitude, also.

My kids are both pretty bright… but VERY different from each other. Not sure about the free range thing for the younger one.

[UCGal]

Congratulations

[UCGal]

bg – I’ve tried to make the point several times. Your “own” money was exchanged for a house. A house can fluctuate in value. Until you understand that this discussion is kind of pointless.

But to address some points in your very wordy post…
[quote=bearishgurl]UCGal and SDRealtor,

How long do you think one should own a property with a 68-70% LTV mortgage (amortized EVERY YEAR of ownership [over 30 years] before they can recover their OWN $$ out of it upon sale?).
…
Has anyone ever known an owner to LOSE their OWN INVESTMENT in a property bought 12-15 years ago at 78% LTV in SD County when they never refied or took cash out and also improved the property with their own funds?? If so, WHERE was the property and do you think they overpaid for it?
….[/quote]
It’s all a matter of the market conditions at the time of sale. There are no guarantees that when you want to sell, you’ll be able to extract your investment.

An actual example that fits your criteria. A friend had a horse property near escondido. (literally right outside the city bounds). They improved the barn and corrals. They put on a new roof on the house. They never took money out. When they got divorced and needed to sell, the market wasn’t good (mid 90’s). But they were divorcing and the property needed to be disposed of. They had to bring cash to closing. They lost their down payment and their investment (corals, barn, new roof).

[quote=bearishgurl]
If you are currently a prospective buyer, do you expect to find an “equity” resale out there (NOT a SS/REO) today where a longtime seller will accept ’99-’02 prices even though they have improved it in the last decade with, say $25-$50K of their OWN MONEY?? We’re talking in SD County, within 5 miles of the coast or bay. Truly, I want to hear your experiences…
…..
[/quote]
Buyers expect to pay market value. Why would a buyer pay over market?
Sellers either are willing to price to market and sell, or are pricing to high and have it not sell.
There’s a home for sale on my street. It’s been on the market since spring. It’s not selling because the equity sellers are pricing too high. They have made nice improvements (new roof, windows, landscaping, cosmetic stuff inside.) They want to pull out their investment and won’t sell for less than that. It’s been on the market a while and is not moving.

[quote=bearishgurl]
UCGal, you are fortunate in a couple of ways. You did not have a lot of building going on within a 10-mile radius of you in the last decade which was in direct competition with properties like yours and ALL financed with loose lending practices. There isn’t much distress in your zip code. In addition, your tax assessment is protected by Prop 13 for the life of you and/or your children/heirs in the property (if you decide to never sell it). This no doubt eases the pain greatly of your feeling you may have overpaid for your property. Since you paid your parents directly for your property, perhaps you will get some of it back when they pass…it isn’t like it was an arms-length transaction. How would YOU feel if YOU, as a single parent, lost $120K to $140K of your OWN money on a perfectly decent large home in a perfectly decent neighborhood after paying on it religiously for 14 years and never removing equity thru no fault of your own because you “had” to sell it in a fvcked-up market to finally “retire.” It’s not like “insurance” is gonna cover the loss, lol.
….
[/quote]
There’s distress in my zip. But it’s mostly in condos. The bubble drove prices up (and down) everywhere. There was a short sale across the street from me. Previous owners had heloc’d the heck out of the house. There are no exempt areas.

Not that it’s any of your business… I paid MARKET value for my house. If you had known my dad you’d know that this is the way he worked. The advantage I got was the prop 13. I will not deny that.

Since then I’ve been aggressively putting money towards retiring our mortgage. My debt reduction is not “my money”. It’s not cash. It’s not spendable. I made a choice to exchange money (liquid) towards retiring my mortgage on an illiquid asset. But I will have a fully paid for asset that provides shelter for my family. It may turn out to be a bad decision if hyper inflation happens. I will accept that.

I understand you’re frustrated. But you need to understand that “your money” was gone when you entered escrow. You have title to a house that is only worth what it is worth. Fair or not, that is fact. External factors DO impact the price. That is life.

[UCGal]

[quote=bearishgurl][quote=UCGal]Rich posted a graph on the front page of this blog that shows the long term, CPI adjusted, home price trends.

Inflation-Adjusted Home Prices Hit New Post-Bubble Low

You’ll notice that, yes, the prices went up from 97-2006. But they went down from 90-97… This was pre-bubble… just the previous cycle. And this is San Diego – so it applies…. not Texas.

Even San Diego has cyclical down trending markets. Real estate does not always go up in price.[/quote]

I’m uncertain about what “CPI-adjusted” means but as I posted before, I’m not necessarily stating that I need to obtain my purchase price. Just recover the amount of my own money that I have invested. They are not necessarily one and the same.

This seems more than reasonable considering the improvements I put in and long length of ownership.

It’s like this: if I can’t recover my OWN investment by the summer of 2014, it will be rented instead of sold. It’s as simple as that and I am NOT alone here. Life can be short. I won’t spend another minute waiting for lazy lenders to do what they were supposed to do all along.[/quote]

I don’t mean to keep harping on this but I think you’re missing a key point. You SPENT your “own money” when you out it as a down payment and spent it on maintenance and improvements. Your money went to the seller , the material suppliers, the contractors, etc. You exchanged your money for a house. A house that can go up or down in value. Your money was no longer yours when you delivered that certified check at escrow.

All this talk about how you have the right to get your money out of your house shows you are having trouble understanding that houses can change in value, even in coastal San Diego or that you don’t understand that a house is not a savings account at a bank.

It sucks that the house did not go up as much as you wished to recover your down payment, pay closing costs, and pay for the improvements and maintenance you put into the house….but that was never guaranteed.

[UCGal]

[quote=bearishgurl][quote=UCGal]It’s neither right or wrong. It’s what the market says it is.

There was NEVER a guarantee you’d be able to pull your principal out of your home. You’re old enough to remember flat markets. You’ve lived in other places and traveled to other places where markets have been flatter.

People who buy homes expecting to make money on them are making assumptions. Some people make money, others don’t. It’s like the stock market – it’s all about timing. It’s not about right/wrong. It’s not about fair/unfair.

I sympathize with your situation. But to say it’s “not right” is to be in denial of how real estate works.

You’ve had shelter for years. Does that not count for anything? Consider what you would have paid in equivalent rent for that period and it might make you feel better.

Yeah – it sucks that you may not get as much money out of the sale as you’d like… but that’s the objective facts. Subjective desires don’t factor in.

In an ideal world I’d be rich, thin, and have well behaved kids. It’s not fair.[/quote]

I never stated I wanted to “make a profit” or even get back ALL the money I spent/will spend on improvements. Just that I need to recover my downpayment and *most* of the money I spent on “hard” improvements (NOT replacements).

Yes, I have traveled extensively but have not owned any principal residences in other counties or states. I’m sure you’re aware you can’t compare values in coastal CA counties with “flat-throughout-history” markets such as in the state of TX. A longtime owner whose property is located in or near coastal SD County who invested in prudent improvements such as new windows, concrete work, landscaping, nicer kitchen, etc that were NOT overkill for their areas should be able to recover most of the cost of these improvements upon sale if they were NOT bubble purchasers and they did NOT ATM their properties. This is the way its always been here (yes, even in ’94).

My expectation upon purchase of this particular property was to use it to get my kids raised. It was NOT about making a killing or any profit at all.[/quote]

Rich posted a graph on the front page of this blog that shows the long term, CPI adjusted, home price trends.

Inflation-Adjusted Home Prices Hit New Post-Bubble Low

You’ll notice that, yes, the prices went up from 97-2006. But they went down from 90-97… This was pre-bubble… just the previous cycle. And this is San Diego – so it applies…. not Texas.

Even San Diego has cyclical down trending markets. Real estate does not always go up in price.

[UCGal]

It’s sad when families fight over inheritances. Unfortunately, I’ve seen it more than once in my extended family.

My dad and grandfather both put language in their wills/trusts that specifically addressed this – it basically said anyone who legally disputes the allocations is cut off and gets nothing.

In my grandfather’s case – it was probably necessary. There was a pretty big group of different factions hovering around the executor/trustee at the funeral.

[UCGal]

[quote=bearishgurl]
Let’s narrow the 10-45 yr ownership time frame into 10-15 yrs. Let’s make it about ME (since sdr thinks I’m the ONLY boomer who wants to sell/retire in the next few years, lol). I did NOT pay too much 11+ years ago (I actually rec’d a lg credit in escrow also). Even if I wanted to sell NOW, I need to make a few repairs and improvements before doing so. Whether or not I spend this money, I KNOW I may NOT be able to recover my entire downpayment and my improvement $$ upon sale with closing costs added in. That’s not right! [/quote]

It’s neither right or wrong. It’s what the market says it is.

There was NEVER a guarantee you’d be able to pull your principal out of your home. You’re old enough to remember flat markets. You’ve lived in other places and traveled to other places where markets have been flatter.

People who buy homes expecting to make money on them are making assumptions. Some people make money, others don’t. It’s like the stock market – it’s all about timing. It’s not about right/wrong. It’s not about fair/unfair.

I sympathize with your situation. But to say it’s “not right” is to be in denial of how real estate works.

You’ve had shelter for years. Does that not count for anything? Consider what you would have paid in equivalent rent for that period and it might make you feel better.

Yeah – it sucks that you may not get as much money out of the sale as you’d like… but that’s the objective facts. Subjective desires don’t factor in.

In an ideal world I’d be rich, thin, and have well behaved kids. It’s not fair.

[UCGal]

[quote=bearishgurl]
Why should an owner like this NOT be compensated for what they actually have IN their property (+ enough for closing costs) if they are NOT bubble-purchasers?? [/quote]

If they bought 10-45 years ago – they likely will be able to get out their sales price.

But to say they should be GUARANTEED that is to say that housing should “always go up in price”.

I’ve lived in other areas. I’ve seen flat to down markets. A friend bought in a western ‘burb of Philly in the early 90’s. When he sold 10 years later, even though he’d not taken any cash out and had put 20% down – he had to bring cash to the closing. That’s the reality. When I sold my house in a different burb, the increase in price barely covered the closing costs and returned my 20% down. That’s the reality. And I was lucky to get them covered because I’d only owned 8 years…. the market had increased slightly – but not dramatically in the CA bubble style.

The market price is completely unrelated to what the owner has in. Regardless of whether that owner pulled cash out or not… regardless of the size of the down payment they put down. The market price is what a buyer is willing to pay.

Is it fair that my father saw his house increase in price by 20x in 30 years. (29k to 600k). Is it fair that’s it gone down in value since we purchased it 8 years ago? It’s not about fairness. It’s about market value.

Lets say you have 2 houses, identical.. Both people paid the same amount at the same time. One refi’d, pulling cash out. Both did basic maintenance improvements – but nothing dramatic. Their houses should be worth the same if put on the market- without ANY concern over what the owners owe.

[UCGal]

Very cool. It’s a hobbit house.

[UCGal]

I took the 2% reduced SS tax and tossed it in my 401k… one way or the other that money is going towards my retirement.

[UCGal]

[quote=markmax33]Yes every time. The average currency has lasted 27 years. The other ones that haven’t busted aren’t old enough. Name a currency that’s lasted since the 1800s. EVERY TIME. Please go find one.[/quote]

I keep thinking about this and it bugs the crap out of me…

You’re claiming that the average currency lasts 27 years. I’m assuming you’re talking about fiat currency, and not gold back currency.

The US dollar went off the gold standard in 1934. That’s 77 years ago. 77/27 = 2.85… or almost 3. In other words, we’ve lasted almost 3 times the average since we went off the gold standard.

This would seem to be an argument for continuing what we’re doing – since it means we’ve performed 3 times better than average.

And as for old /long lasting currencies – as mentioned the British pound… That went off the metal standard around the same time (1931) that the dollar did… So it’s also beating your 27 year average.

I actually don’t have strong opinions on fiat vs gold standard. I’m fine with sponging off my kids in my advanced years… especially since I’m currently housing my in-laws… It’s what families do…. work together.

You’re passionate MM – but you are quick to make sweeping statements and disregard counter arguments. That’s not name calling, that’s just a statement of fact.

Oh… and I probably won’t vote for Ron Paul or start hoarding gold. But like Jacarondoso – I’m curious about the future price of tomatoes… my plants are still producing this year and maybe that will be worth something if hyperinflation takes off.

Edited to correct: I misstated the US dollar converting to full fiat in 1934. That was only a partial move. It moved to full fiat in the 70’s.
Gold bugs feel free to flame my mistake.

[UCGal]

[quote=pencilneck]”From the banks who gave out crappy loans to the buyers who bought more than they could reasonably afford. Neither side is paying the price for these stupid transactions.”

I think a whole lot of buyers who bought more than they could reasonably afford would probably disagree with you. In San Diego alone foreclosures are still nearly 1,000 a month.

And notices of default are no fun either. I’m not really defending people that buy stuff they can’t afford. But I think its a leap to say that they aren’t suffering.[/quote]
I’m not saying they’re having fun. I’m sure it’s incredibly stressful.

It’s also what they signed up for. They agreed to pay monthly payments on a mortgage in return for getting to live in a house – and if they’re lucky and stay there long enough – they’ll have a home that’s mortgage free after 30 years. If they don’t make the payments, they agreed that the house could be foreclosed. That’s the basic mortgage loan contract.

Under the current system, the foreclosure process is extended. Sure it’s stressful for the borrower to have to deal with the bank who regularly loses their paperwork… to have to submit documents to try to get a loan mod… But if they jump through the hoops – they can get a pretty long “free rent” ride. In some cases years of no mortgage payments and no rent. They benefit in a real, tangible way. This should offset some of the suffering and stress.

If they’re smart – they’re banking the money they would have put towards rent/mortgage so that they have a nest egg when they finally do get their walking papers. But we hear about the folks who a) were kicked out and b) had no savings or anyplace to go.

I feel bad for the folks who lost their jobs – and that kicked them into foreclosure. But they still should be foreclosed on if they can’t make the payments. Or they should short sell. The system where we’re supposed to feel like people living for free, for extended periods of time are victims never made sense to me.

Banks should absolutely have the right to foreclose. They also should do the proper paperwork and do it legally. And borrowers should have the right to get a few months free rent (minimum 4 months from last payment to trustee sale) if they can’t or won’t pay the mortgage.

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