Burned by the Housing Market

[Exile]

My wife and I have been living overseas for almost two years, and I hear that the real estate market in the U.S. is going to hell in a handbasket. First it was sub-prime loans. Now it's prime market mortgages, especially for those with good credit but were talked into taking out "exotic" loans to get into the house of their dreams. Now that real estate values are declining, a lot of folks are upside down on their mortgages.

This happened to my wife and me in the 1980's, and it took 16 years for us to be able to get out from under without losing our shirts. I would like to hear from other homeowners, present or former, who are or were caught in a home loan squeeze now or in the past, and what they are doing/ did about it.

[momof1in150]

The market here is very quiet. We are looking to buy our first home and getting people to come down to a more market realistic price is difficult. Most of the time it is because they are upside down on their mortgage (usually a first and second). Because of this nothing is coming on the market and nothing is selling. We have really good credit so getting the mortgage is the easy part but finding a home is a little harder. We have found one and plan to make an offer this week. It is nice that we can take our time before doing so. Also, this house is owned free and clear by the sellers so hopefully the negotiation will go smoother.

[dcox20]

we're kind of in the situation you are referring to, except that we knew exactly what we were getting into when we got our 5/1 ARM.

bought our place at $312,800 as the market was still increasing (roughly 3yrs ago)
Put $62,800k down
1st mortgage balance $250k (4.25% 5/1 ARM adjusts in '09)
value went up to about $380k and we decided to put in a pool (summer is brutal here) and re-landscape the backyard, enter the $106k 2nd (fixed at 5.825%)
values continued to rise and we were valued at $420k

Now total owed is $350k and value has dropped to $360k (if we're lucky, more realistic is $340-$350k)

We need to now sell the place and lower our total monthly payments. The unfortunate reality is that even if we sell at $360k we'll be facing a $10,000 "amount due" to close (because of escrow and realtor fees)... this could realistically be anywhere from $10-$20k.

we'll end up taking a personal loan from my in-laws at 8-12% to cover the amount due.

I love the idea of paying off a house - but with the reality of real estate value swings I'd almost rather pay the minimum on my mortgage and invest any potential overage until I can pay the house off in one fell-swoop. Nothing would be worse than getting to the end of the year and looking at your statement saying - I'm so proud we paid an extra $10k off on our house! but the value of the place fell $15k :-( that would suck.

BTW if you know anyone looking for a house in Sacramento - I offer a $2500 incentive to use our realtor (if you don't already have one)

[Ima saver]

Things are real slow here. This is a small county and we have over 500 houses sitting on the market for sale. Things were booming here for several years and everyone became a builder. Now they are paying interest only loans on their spec houses to the bank every month.
We are lucky. My husband is such a good builder, his houses have always sold. Plus, we build with cash, so we don't have to make payments.

I paid my first house off when I was 32 and have always paid cash for my upgrade houses. (I am fortunate in that my husband builds our houses)

[Scanner]

About 12-15 homes for sale in my neighborhood and only one sold to my knowledge.

I figure we are stuck here for awhile so we are hankering down and doing some improvements and making this the house our kids will grow up in.

I live in a McMansion neighborhood (big house, small lot). I could complain but I won't as I feel very lucky.

[MonkeyMama]

Out here the smaller homes are not selling at all (there are some in our neighborhood that have been on the market for years). However, the bigger homes are going strong. It's a sign that there are few first-time buyers in the market right now. The move-up buyers are taking advantage to lock in some lower property tax rates and search out bargains. We were looking last year but the sellers were in dream land. Then again a year has passed and houses are still going for the upper price ranges in our neighborhood. I thought they were crazy to be paying so much last year and we got fed up with most sellers. But here we are a year later and not much has changed. In our particular neighborhood most people bought 5 years ago for 1/2 as much so I think not many of them are bad off or upside down. Which helps. The process is definitely slower though. IT can take a year to get top dollar whereas a couple of years back it would take a month at most. Of course that is more like a "normal" market I guess. California is anything but usually. Most people I know took an hour to sell their home in the last decade or so. So this is pretty slow.