Home sweet upside-down home
Perspective: Unemployment challenges homeowner's dream
By Inman News, Thursday, April 9, 2009.
Image by lumaxart.com.Editor's note: In this guest article, writer Jennifer Baldwin shares her personal experiences in weathering the housing market decline and economic downturn.
By JENNIFER BALDWIN
Whenever I feel overwhelmed about my upside-down home in Bakersfield, Calif., I remind myself of the mantra I've heard over and over from real estate and financial planning professionals: "Any time is the right time to invest in real estate."
During the boom earlier this decade, when home prices were skyrocketing here, it was the "perfect time" for first-time homebuyers to get into the market. Interest rates were low and homeowners were upgrading to bigger properties, leaving many starter homes available for sale.
Now, after the bust, it's also the "perfect time" to buy. Prices are rock bottom and the high rate of foreclosures in Bakersfield means a lot of bank-owned properties are on the market.
I sure wish I could buy a few investment properties now. Instead, I bought my home three-and-a-half years ago, when the market was at its peak. With zero down, I bought with an 80/20 interest-only mortgage totaling $235,000 in November 2005. Today, comps in my neighborhood are selling for about half that price. I had felt somewhat sheltered from the tanking market because I figured I'd live here long enough to ride it out. But then, two weeks ago, I was laid off from my job. Now I'm worried. What if I don't find another job here and have to move?
I do feel lucky, however. Yes, my loans are interest-only for the first 10 years. And no, I have not paid a cent toward the principle. But my interest rates are fixed, so I don't have to worry about my mortgage payments suddenly going through the roof. My monthly payments, including insurance and property taxes, are $1,660. Not too bad, except that my unemployment checks equal just $1,800 per month. Good thing I got a severance package.
Close eyes. Deep breath. Repeat: "Any time is the right time to invest in real estate." Open eyes and look around.
The truth is, I love my home. It's a 1917 Craftsman-style, 1,271-square-foot bungalow set in an older central Bakersfield neighborhood. Mature trees line the streets, along which quaint bungalows that are mixed in with larger estates. A park is within walking distance, where the local orchestra gives free summer concerts. ...CONTINUED
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Submitted by Robert A. Hulme on April 9, 2009 - 4:01am.
Many people are taking the easy route and just letting go, I hope people choose to stick it out and hope things will turn around sooner than later.
Robert A. Hulme
Realtor, GRI, e-PRO
Prudential Utah Real Estate
Loan Officer
Mortgage Xpress
www.roberthulme.com
www.springvilleuthomes.com
Submitted by Eve Thompson on April 9, 2009 - 4:50am.
A great reminder that while some of us do focus exclusively on investors, the vast majority of us are helping people to buy and sell homes not investments. I to am “upside down” on the condo my husband and purchased a few years ago…but as I sit here looking at the shadow patterns of the lake reflected on my ceiling I know I wouldn’t trade this for anything.
Eve Thompson
REALTOR
Long and Foster
703.585.6475
Twitter:EveMT
www.evethompson.com
Submitted by Mark Cofano on April 9, 2009 - 4:58am.
Mark Cofano
ocLUX.com
Your article talks about "investing" in real estate. You also mention an emotional attachment to where you live. These two words represent objectives that are often incompatible.
While it may always be a great time to invest in real estate, it is seldom if ever a great time to "emotionally invest."
Submitted by Jon Boyd on April 9, 2009 - 6:42am.
As a broker serving Southeastern Michigan, an area heavily impacted by the automotive market, I share your concerns and "hope".
It has always been interesting to see the comparisons of investing in your own home with investing in the stock market.
On the one hand you can't live in and enjoy a "blue chip". On the other hand, the sinking values cause a different pain when it is a home you've worked so hard on.
Good luck to you.
Jon Boyd
Broker/Manager
The Home Buyer's Agent of Ann Arbor, Inc.
1908 W. Stadium Blvd. Ann Arbor, MI 48103
http://buyersagentannarbor.com
Submitted by Alexis Eldorrado on April 9, 2009 - 9:26am.
There is nothing more satisfying than a labor of love such as you have for your home. Fortunately, you are able to maintain it and keep it. The lenders appear to be having more grace, compassion, and federal funds to help people that are less fortunate stay in their homes.
Here in the Chicago real estate market, the foreclosure market is very intense with the courts turning out over 750 a day. The lenders are starting to realize that by working with borrowers who hit bottom but now have some hope and are building themselves back up financially that loan modifications, however creative, to keep people in their homes are well worth it. The lenders end up with more money in the long run.
Alexis Eldorrado
Managing Broker
www.Eldorrado.com
Submitted by Bruce Wagg on April 9, 2009 - 9:46am.
Great Article!
Bruce Wagg
Oakland Real Estate | Berkeley Real Estate
Submitted by John Rakoci on April 9, 2009 - 1:43pm.
The article is by a person of 'integrity'. Sadly that is a rare commodity in Wash DC today. We are told over and over using homes to spend more than we could afford is a major reason for the bursting of the housing bubble. Our 'leaders' have not learned the lesson they are preaching.
Submitted by Sean OToole on April 9, 2009 - 4:31pm.
Her heart is refreshingly in the right place, but the concept that "Any time is the right time to invest in real estate" is a ridiculous notion.
It is also ridiculous to think that continuing to pay interest on a loan that is twice the value of a property is a "good investment". It may be what she agreed to do. It may be what she "should" do. But it will NEVER, EVER, be a "good investment".
That said, I do believe "Any time is the right time to buy a home". Subtle but important difference. If you love where you live and can afford to stay, it really doesn't matter what the home is currently worth or whether or not it is a good investment, after all we all want a place to call our own.
Sean O'Toole
Founder / CEO
ForeclosureRadar.com
ForeclosureTruth.com