Just a 46-year-old mom of 2 in Northern California. My kids are Monkey Monkey(MM) and Drama Llama (DL). I am married to Monkey Hubby (MH). Well it was fun while it lasted...
We bought our home for about $295k when all was said and done, in 2001.
It appreciated quite rapidly and hit the $650k mark in 2005. Dh and I made a deal around then that if our house hit $750k we would move. $795k would be TOPS because we could sell and take out $500k profit tax free and go semi-retire in Oregon or something. Doesn't really matter where because such a windfall so young would be pretty sweet.
But of course we don't expect to get there anytime soon, but we see it as possible in our future.
Sure the market has stunk but we had our house on the market briefly last year and nothing in our neighborhood had sold for less than $600k. We would have sold for much less if any offers came in, but we were in a hurry (were trying to get into a specific house - make a lateral move) and we ran out of time in 2 weeks when they found other buyers. So we only had our house on the market 2 weeks with a few crazy $450k offers. We would have taken $499k to sell fast. In the meantime the other houses that were on the market with ours - the sellers were patient and they all got $600k+. I was absolutely amazed. I guess you start to feel a false sense of appreciation. & believe me our neighbors were NOT happy we low-balled our house. You hear about frustrated first-time buyers complain about the greedy sellers, but try selling your house for $50k less than other houses are selling for. IT would have been a $250k profit in just 5 years, sure, but the neighbors were ready to lynch us and the realtors were harassing us. They had worked so hard to keep these insane housing prices in the neighborhood, god forbid someone actually wants to make a fast sale and settle for a more reasonable price. Which is why we gave up on the whole move thing - we got so sick of looking at crappy homes in the $600k range - very unrealistic - people unwilling to admit the tides had turned.
So anyway, our neighbors just moved and had mentioned to dh they did not do well at all. But they had to sell fast and get out due to medical reasons. They sold within the month. The house is a bit bigger and nicer than ours. IT's frankly gorgeous. But I just opened the paper and they sold it for $490k! I was shocked!!!! Whoa! I told dh the realtors around here were going to flip out!
As for us, not much to complain about. We could still sell and move and plop $200k in the bank easy. We still have options. But dreams of independent wealth are slipping fast. We haven't had many foreclosures in our neighborhood, but you know that there will be more with time. IT feels like this is only the beginning.
Well it was fun while it lasted!
You would not believe how many people around here would freak out about our equity. Why don't we spend it all, or aren't we rich, blahblahblah. I am just like, "here today, gone tomorrow..." But it has been here so long I guess we were getting a little used to it. I am not sure if our house has been worth so little since 2003 or so. But all the same we didn't make grand plans our lessen our retirement contributions because of it. We lost $100k equity overnight while our last home was on the market so live and learn... It put things in perspective for us here as our equity grew even more rapidly than our first home.
I honestly don't expect our house to fall below $400k like ever. But I guess you never know... Well, I should qualify that as long as the Bay Area is still going strong, I don't expect much further of a fall overall. Of course I have no idea why the Bay Area is still going so strong - it is really the land of ARMs. The truth is really that anything can happen. But as I said a million times, I really didn't care how low our house got because we bought something WELL within our price range. I remember when we bought some relatives here thought we were insane and we were just like, you can't even buy a real house back home for $300k so we were happy to grab up a nice house for the price. We didn't buy to get rich, has just been a side benefit seeing all the equity. Honestly we just bought because it was dirt cheap form our perspective. & with a 50% raise from my job since it is just that much cheaper in our minds.
On the plus side we kind of like lower values. We have been wanting to make a lateral move, but the property taxes would be insane moving from a house valued at $300k to one valued $600k+. So as things settle it makes it easier on us. IT is also much easier to sell a $450k house than a $600k house. Finally, I am happy if things settle down maybe our kids won't be completely priced out of the state. When you have some decent equity, ever-rising prices is not necessarily the best thing. Our house would have to fall to the $200k range for us to be upside down. So falling prices isn't exactly keeping us up at night.
As for us we have a big adjustment to our net worth schedule. I valued our house at $550k which I felt was quite conservative. apparently it isn't any more. I seriously wonder if $450k is too much now. Kind of a bummer, but I can see the bright side. Maybe my kids will be able to live here into adulthood after all...
Well the realtors around here are going to have to work hard to get back to our neighborhood's over-inflated values. It will be interesting to keep an eye on sales prices. I think buyers are waking up though...
Independent Wealth Slips Further Away Today...
July 8th, 2007 at 05:18 pm
July 8th, 2007 at 05:40 pm 1183916411
One more thing: I don't really get how your neighbor were so mad about you dropping the price? Ok, yes, I get it, but WHO CARES?
July 8th, 2007 at 07:25 pm 1183922737
Oh I know we have done quite well, but we are slipping backwards fast from independent wealth. LOL. Certainly nothing to complain about here though overall. I can't say if my house was appraised at $0 I would lose a ton of sleep over it. We have found affordable housing where I thought we never would.
July 8th, 2007 at 08:50 pm 1183927802
Anyway though what can you do? It lowers the comps and you can't get financing so the buyer will not offer you $600k is the problem. They'll say the bank will give me $500k and that's it.
You know moving from a $300k to $600k move in this market is not a bad idea while rates are still low and dropping. But it's not worth it if you can't swing the extra property taxes, which in CA is cheap only about $3k/year.
July 9th, 2007 at 02:48 am 1183949333
July 9th, 2007 at 04:12 am 1183954356
July 9th, 2007 at 04:19 am 1183954745
July 16th, 2007 at 08:26 pm 1184617577
Price drops are great because you buy, hold, and refi if it drops more. If you are in a house long enough with enough equity it doesn't matter what it sells for.
And FYI I was one of those people who walked away in 3 years in CA with $120k in the bank.