For those of you that bought right before the 2008 housing crash how did you cope?

[Chadnudj]

There is almost zero in common between the real estate market now and the real estate market in 2008. Lending practices are better/tighter, most borrowers have equity in the home thanks to a down payment and fixed rate mortgages, mortgage payments are generally more affordable thanks to still near historically-low interest rates, the economy is stronger, and housing supply stock is at all-time lows even as the large millennial/GenZ generations are beginning to enter the market.

In other words, I would have very little worry about your home losing value, and certainly wouldn't peg the odds at anything even approaching 33% due to macroeconomic factors (now, if a meatpacking plant opens up in your backyard or they re-route a highway outside your front door, all bets are off).

I know a few people who bought and/or are buying currently with less than 5% down...seems like lending practices aren't as strict as we were lead to believe

I would bet those people buying with 5% have stellar credit scores and income verification (likely through multiple years' W-2s). The problem pre-2008 was sub-600 FICO scores and people claiming massive incomes with no verification. In some of the mortgage-backed securities, 80% or more of the loans failed to meet underwriting standards for credit scores/income verification.

[tfunk]

Many have posted similar replies. Consider it a home and budget accordingly. It it ends up a good investment, so much the better.

We purchased at the top in 1989. Paid $240K
Got our property tax assessment lowered to $190K in 1993. Refinanced at a lower interest rate.
Finally sold in 2006 for $350K. Lots of mostly good memories from that house after 17 years.

[TallBoy29er]

Bought in 2005. Lost a boat load on paper initially. Didn't even approach break even til about 2018. Sold in 2020, and probably broke even when all is said and done (sold for what I bought it for + major improvements). We were there for 15 years. I never really thought about the value much. We had to have a place to live, and this did the trick.

We just bought another house recently. Expect to be her another 12+ yrs. The house market will do what it does, we are happy regardless, and aren't going to fret over something we can't control.

[Xrayman69]

Bought our forever home in seattle in 2009 after having started to look in 2006. We were often felt dejected from 2005-2008 when we were looking at seeing prices escalate beyond our “comfort” zone. We were seeing homes selling in our neighborhood of interest for what we thought was beyond “normal” income means. We stayed disciplined and did not cave in to our FOMO.

Our thought process during this period was our source of income had to be very very reliable and this was the major and only indicator of our comfort level to even consider an upgrade in our home. We lived in a home that we bought in 1995 as our starter home and by 2006 felt the career was going to be stable and work out.

We were not looking at the house as an investment but a place to live and a source of joy and comfort. But never the less it was still a financial decision (and going to be one of the largest financial decisions in our lifetime - next to having a kid) and thus we had to be disciplined and temper “emotions” of “I love this house- I think?? because prices are going up so fast and I don’t want to be priced out” etc.

There were several houses that we “loved” in 2008 that were just beyond our comfort level. We drive by these houses on a regular basis and the largest house, I’m glad we didn’t buy because it would have stretched us for 5 years and locked me into my “job” at the time and prevented me the freedom from gong a different path personally. The second smaller home would have been doable and I’m glad we didn’t buy it back then because it would have required a bit of hands on work and updates for the next decade to get it to what we eventually bought in 2009. In 2009 bought our “forever home” under comfortable financial situation and now the opposite issues. Will not be able to sell as the capital gains on appreciation with not a single major update over the past decade would be to great. The property taxes are the only annoyance. We had refinanced to such a low rate that the original loan (30 year terms) are now slated to end at the 15 year mark but with refinancing we dragged this our to 20 years (1.75% on the remainder and no intention of paying this off in total too fast).

Eventually sold the starter home in 2015 as we didn’t feel comfortable being landlords any further in seattle for the risk benefit ratio. Took those modest profits on that starter home to 1/2 put into equities (taxable accounts) and pay down the mortgage in 2015 when we were starting to realize our financial situation was going to be alright in this life.

In summary stay disciplined in your decision making of the purpose of the home. It’s a place where you live and balance in emotions of “loving” the house if you plan on living there a long time, it’s a financial marriage. Don’t let FOMO get your heart rate and anxiety up. Check your pulse and stay disciplined. We are now doing the same thing for our second vacation hime. We desire a beach house in Cabo but have not identified the comfortable balance between our forever beach house and the financial anchor. We are not worried about the finance of the beach house purchase but the lifestyle accommodations that we will subsequently be tethered.

[mnnice]

There is almost zero in common between the real estate market now and the real estate market in 2008. Lending practices are better/tighter, most borrowers have equity in the home thanks to a down payment and fixed rate mortgages, mortgage payments are generally more affordable thanks to still near historically-low interest rates, the economy is stronger, and housing supply stock is at all-time lows even as the large millennial/GenZ generations are beginning to enter the market.

I am less convinced. I just (like two days ago) saw a huge sign in front of a mortgage broker office about 4% loan with no income verification.

We bought in 2001 in a market that never seemed particularly overheated or bought with too much creativity financing. Our house slowly appreciated til 2009 or so. We had a layoff and then ended up with a new job in the same general area but a way icky commute. We could not sell it. Eventually we moved into a rental in the other town. Nothing was moving and the closest comp went into foreclosure. At the time we sold it we had owned for 11.5 years and sold it for 5-6% less than we bought it for. Much of the misery has to do with the illiquidity of real estate not if you lose or make money.

[White Coat Investor]

I am currently in the process of buying a house. It is at the top of my budget and the house has gone up in price 50% in the last 30 months. I am moving in large part because I could never afford to buy a house at my current location (this was even before the ramp up in housing prices during COVID). I am going into this with eye wide open that I could easily lose 200k (on paper) basically overnight if the market crashes. I feel there is a roughly 33% chance I lose a significant amount (on paper) so that is a reasonable high number. My question is for those of you that dealt with buying at the peak in 2007 how did you manage to not let it "keep you up at night" losing that much money? The house is at the top of budget but I have a very stable job so I should survive (ie still have money to pay mortgage and all bills) even if a recession comes (which hopefully it doesn't).

The way I am currently approaching it is that there is only a 33% it is an absolutely horrible purchase. There is a 66% chance it is a fine or even good time to buy. But I know there is a difference between saying something could happen in theory and it actually happening.

-33% this is basically the top of the market and the houses prices go down 20-30% over the next year. Mortgage rates pretty much stay where they currently are. This equals probably up to a 200k loss (on paper) for me. Would have been able to save a lot of money or buy a "better" house if I just waited a bit.

-33% no massive loss or gain the new few years. Might be a slight price drop or increase (say up to 10% either way) BUT the mortgage interest rates go up another 1-1.5% so I really don't lose that much money. I have a 30 year mortgage so the interest rates really do make a huge difference.

-33% it is actually a smart purchase. The house is in a nice neighbor of mostly middle/upper middle class or retired people. The prices increases slow down but say it gains 20% value over the next three year. The mortgage interest rates creep up another 1-2%. In this case it turns out to be a great purchase as I would have been "priced" out of this home if I would have waited a couple of years to buy. It is already at my max budget so zero chance I could absorb even a modest price increase and modest interest rate increase.

We had a pretty good idea the risk of buying in 2006 was higher than usual so we deliberately bought cheaper than we could have. However, it definitely turned out worse than we thought it would. We bought in 2006 and really couldn't sell in 2010 for any reasonable price. At any price we could have sold at, it would have been an absolutely awesome deal as a rental property. We eventually sold in 2015, still at a significant loss. Lived in it for four years, sat empty for > 1, then a renter for four before selling when that renter moved out.

The good news is that even losing 20% or so after 9 years wasn't a big deal because it wasn't a very expensive property to start with. But a good financial move? Not even close. 9 years. 20% loss.

Caveat Emptor.

[Paul78]

Well 15 months in and the crash hasn't exactly come just yet. So I guess I did not buy at the absolute peak. "On paper" house is probably gone up around 3% from my Feb 2022 purchase price (well of course that would still be a loss if I was forced to sell as there are cost associated with selling).

I have learned that this will absolutely be the last house I purchase unless I do indeed have children in the future. Don't get me wrong the privacy and quite that a home offers is amazing BUT it really doesn't outweigh everything else

-I had 50k in cash saved up for repairs when I bought the house. I used 40k of that within 12 months (as the house is 40 years old the more I looked for problems the more I found). As a result I went from working an outpatient clinic to inpatient (more money but have to work off hours, holidays, weekends). I am getting close to bringing that number back up to 50k in cash/cash equivalent reserves.

-stress. For the first 10 years of my working career I rented. I could care less about mold, water leak, ect. If something came up I called my rental company and they took care of it. With a house it is on you. The money is not necessarily the main stress. The stress is knowing any day you get home from work some costly repair could be waiting for you.

On the positive side

-I still believe I bought the house at the last possible chance I could have afforded it. I got a 3.625% 30 year mortgage (not the amazing sub 3% 30 year rates some got but still pretty amazing when you look at rates over the past 50 years). Even though the house has only modestly increased in potential price (3% over 15 mths) the monthly payment would have sky rocketed thanks the that major increase in interest rates.

-If I ever do have children I think the house will be a huge plus. I know from personal experience having a house growing up (compared to an apartment in my younger years) was a major benefit in my life.

[MillennialFinance19]

The way I am currently approaching it is that there is only a 33% it is an absolutely horrible purchase. There is a 66% chance it is a fine or even good time to buy. But I know there is a difference between saying something could happen in theory and it actually happening.

-33% this is basically the top of the market and the houses prices go down 20-30% over the next year. Mortgage rates pretty much stay where they currently are. This equals probably up to a 200k loss (on paper) for me. Would have been able to save a lot of money or buy a "better" house if I just waited a bit.

-33% no massive loss or gain the new few years. Might be a slight price drop or increase (say up to 10% either way) BUT the mortgage interest rates go up another 1-1.5% so I really don't lose that much money. I have a 30 year mortgage so the interest rates really do make a huge difference.

-33% it is actually a smart purchase. The house is in a nice neighbor of mostly middle/upper middle class or retired people. The prices increases slow down but say it gains 20% value over the next three year. The mortgage interest rates creep up another 1-2%. In this case it turns out to be a great purchase as I would have been "priced" out of this home if I would have waited a couple of years to buy. It is already at my max budget so zero chance I could absorb even a modest price increase and modest interest rate increase.

First of all, if you like the house and want to live there for the foreseeable future, loss or gains matter a lot less.
[Inappropriate comment removed. Moderator Pops1860]

[Inappropriate comment removed. Moderator Pops1860]

[huck22]

We bought near the top of the market in early 2008 and promptly watched our home value plummet. It took eight years to get to a point where we could sell without a loss. The good news is that the next house we bought has nearly doubled in value, so we’re better positioned if there’s another dramatic drop in home values.

[mnnice]

We bought a place in 2001. We sold it in 2012 for a loss. All these stay the course people don’t seem to have had lay-offs and be surrounded by other laid off people.

You house can start to feel like a boat anchor real fast. It limits your mobility and ability to find a new job. A real estate downturn can be a real PITA. Sure staying the course works as long as you have still have the cash flow to service the principal, interest, and taxes.

Anyway this experience didn’t kill us financially. Many other great non financial things happened in our lives during that time. The house thing still stunk.

[Sax32]

I am currently in the process of buying a house. It is at the top of my budget and the house has gone up in price 50% in the last 30 months. I am moving in large part because I could never afford to buy a house at my current location (this was even before the ramp up in housing prices during COVID). I am going into this with eye wide open that I could easily lose 200k (on paper) basically overnight if the market crashes. I feel there is a roughly 33% chance I lose a significant amount (on paper) so that is a reasonable high number. My question is for those of you that dealt with buying at the peak in 2007 how did you manage to not let it "keep you up at night" losing that much money? The house is at the top of budget but I have a very stable job so I should survive (ie still have money to pay mortgage and all bills) even if a recession comes (which hopefully it doesn't).

The way I am currently approaching it is that there is only a 33% it is an absolutely horrible purchase. There is a 66% chance it is a fine or even good time to buy. But I know there is a difference between saying something could happen in theory and it actually happening.

-33% this is basically the top of the market and the houses prices go down 20-30% over the next year. Mortgage rates pretty much stay where they currently are. This equals probably up to a 200k loss (on paper) for me. Would have been able to save a lot of money or buy a "better" house if I just waited a bit.

-33% no massive loss or gain the new few years. Might be a slight price drop or increase (say up to 10% either way) BUT the mortgage interest rates go up another 1-1.5% so I really don't lose that much money. I have a 30 year mortgage so the interest rates really do make a huge difference.

-33% it is actually a smart purchase. The house is in a nice neighbor of mostly middle/upper middle class or retired people. The prices increases slow down but say it gains 20% value over the next three year. The mortgage interest rates creep up another 1-2%. In this case it turns out to be a great purchase as I would have been "priced" out of this home if I would have waited a couple of years to buy. It is already at my max budget so zero chance I could absorb even a modest price increase and modest interest rate increase.

We bought in 2006 because we were told that after you get married, the right thing to do was to buy a house, so we purchased a charming little 3/2 house in a suburb of Minneapolis for 224k. It was a nice little house, but we were convinced by our parents to do an 80/20 loan @ 6.5% and 9% on the mortgage. Back in those days they didn't require anything down. We were naive to think this was a good idea. 9 years later, we sold that same house for 224k and were lucky enough to have 20% DP on a home we bought in a much better suburb for 280k. That first house was a terrible purchase financially, we lost money on the deal when you include renovations, closing costs, decorating and so on. So be careful of what you purchase a house at and don't overpay or the house won't be a blessing it will be a curse.

[Carefreeap]

I bought a place in AZ in mid 2003 and saw it double in price only to drop 50%+. Some places in AZ lost 70% in price. There were blocks not far from work where the majority of the block were foreclosures. I knew one lady that bought a very over priced house way out and she just walked away from it. Most places didn't get back to the peak prices until the last year or two so they would have had to wait ~12+ years to "break even".

For those that had no need (i.e., family, job, finances) to sell, they are ok. My biggest observation from that area was that if you bought in desirable more pricey areas, the houses kept more of their value (I guess I should say price) and rebounded better. The ones that got toasted were houses in bad areas and way out of town.

If you are buying for the long term (decades) it may hurt but it isn't terrible but if you have to sell it then it can be painful. Sometimes you can instead rent it out but that would depend on the mortgage.

Just about our experience too although prices up here are truly nuts for the average state income. The lot across the street from our AZ house sold for $625k in Nov. The new owners advised us they are building a single story 4k house including a casita. Given the prices of contractors and labor I bet they are going to building a $2M home.

We relocated overseas in 2009. It took a while to rent out the house because so many investors were snapping up foreclosures and flooding the market with rentals. I didn't expect that!

ETA: When I go on Realtor.com now I'm seeing several price reductions and contingent sales in my AZ zip code. That would indicate some cooling.

Saw this thread got revived and thought I would post an update. Said lot is now re-listed for $899k.

The last lot that sold in the area (about 5 houses away) sold for $300k six months ago.

[NiceUnparticularMan]

Looks like I missed this thread the first time.

We did a combination of things that in retrospect looks as close to as bad as you can imagine. And yet, it worked out fine.

As of the beginning of 2008, I was working as an attorney for the DOJ in DC, and my wife was working for a bank in Pittsburgh with our infant son. I was in an apartment, and they were in the starter home we had bought in 2000. After a lot of consideration of options, in early 2008 we decided I would move back to Pittsburgh, including because our combined career options and cost of living would be best in Pittsburgh, not least because housing prices were so much less.

Then a specific house in our Pittsburgh neighborhood that we loved from walking around came on the market, and we were able to outbid our main rivals by not making it a contingent sale. So, we ended up owning both the new house and the old house, both with mortgages. And meanwhile I left my job at the DOJ without yet having a new job in Pittsburgh. The plan was we would sell our old house without a seller's agent, and I would look for a new job, that summer of 2008.

And then . . . you know the big picture. We ended up renting out the old house for a few years before finally selling it. It also took me a while to find a job I really wanted (I mean, why not be picky . . . ). And so on paper, this was a total disaster scenario.

And yet, as mentioned, it all worked out fine. The rental income covered the carrying costs on the old home, and then we eventually sold the old home at a reasonable price. The new house has been great, and ultimately we have spent way less on housing relative to most people in a similar situation.

And part of why that worked is that the Pittsburgh market never really ran up much to begin with, and then what happened during the bust is prices flattened out and time on market got a lot longer, but prices did not really go down like they did in other markets that had boomed a lot more.

And I guess my point is this.

If you don't spend too much on housing to begin with, and then don't stretch to buy your "dream home", and in fact don't stretch to buy your dream home in a market where prices have recently gone up a lot--you have a pretty big margin for error. Which I know since we made basically every "error" you can imagine, and still did fine.

[quantAndHold]

I missed this thread the first time as well. In 2008, we had already had our house for over a decade, and we’re in a neighborhood that was quickly gentrifying, so we were unaffected. But I bought a place in 1990, right into the teeth of the real estate crash in California, which was underwater until 1999. What I did about it is…I lived in it. In a perfect world, I could have bought a place a year or five later and my financial situation would have been a bit better, but I had the place I had. So I lived in it, made the payments, rented it out when I met my wife, and sold it when it wasn’t underwater anymore. I still retired at 53.

[jumbo shrimp]

I've read in this thread and in others of people buying homes before 2008 and finally breaking even in the value of their home as far as 2019. Is this common across the US?

I'm in the Bay Area that is of course in its own world. From the people that I know and what I see online, it seems homes took a hit in 2008 and then rebounded over time. But breaking even until 2019? No, not that long.

[stocknoob4111]

Per the shiller hpi I believe we are even more overvalued now than in 2008, and the only reason home values recovered quickly after 2012 was due to Fed qe intervention... Don't think it's going to work now.

The housing bubble started with Greenspan in early 00s and the market has been extremely dysfunctional for 20 years... the market did reset to the mean in 2012 but the Fed blew the bubble right back up, It's my belief that the entire thing will reset this time as we will not be able to do any more QE.

[HomerJ]

We bought in a Kansas City suburb in 2008 for $480k, at the top of the market.

Put $10k in the backyard at one point.

Sold it in 2020 for $550k.

It didn't really drop in value that much, but it never really gained either.

12 years, made a little bit after realtor fees.

But since we had planned to live there a long time, we never really paid attention to what it was worth.

New house in Phoenix, we bought for $640k in 2020, supposedly worth $900,000 today, 3 years later (down from supposedly $1 million)

Again, we plan to live here a long time, so we don't normally pay attention to what it is worth (It is easier these days to check with Zillow, and of course, it's more fun when the numbers have gone up).

Oh, checking our old house, it was sold a year later for $660k, so we missed out on the run-up there (But then we wouldn't have been able to afford the Phoenix house)

Over the long-run, just assume one will break even on housing. I guess CA coast people can always plan on moving in-land and pocketing some big bucks someday, but most of them can't imagine leaving the coast after living there a long time.

[exodusNH]

I've read in this thread and in others of people buying homes before 2008 and finally breaking even in the value of their home as far as 2019. Is this common across the US?

I'm in the Bay Area that is of course in its own world. From the people that I know and what I see online, it seems homes took a hit in 2008 and then rebounded over time. But breaking even until 2019? No, not that long.

I bought in the summer of 2005 and didn't "break even" until 2020, and that is nominal terms. In real terms, I need another 20-25% appreciation to get to 0% real. Factor in the new roof and HVAC, and I need 30% to be at 0%.

All the houses in my area, southern NH, experienced the same rough level of drop. Some areas recovered more quickly. I have a well-maintained house from 1927. But with small bedrooms all on the second floor and only one shower, it doesn't fit most people's wants. (E.g. master bath, closets that are deeper than 3', big kitchen.)

[Carefreeap]

I've read in this thread and in others of people buying homes before 2008 and finally breaking even in the value of their home as far as 2019. Is this common across the US?

I'm in the Bay Area that is of course in its own world. From the people that I know and what I see online, it seems homes took a hit in 2008 and then rebounded over time. But breaking even until 2019? No, not that long.

These cycles run about every 10 years. Even the Bay Area got hit but it depends on where in the Bay Area. My house, on the Peninsula coast, was worth about $750k in 2003. We moved away for nine years returning in 2012. House might have hit about $1M in 2007 but my estimate in 2012 was back at about $750k. The run-up since then is that it may have popped up over $2.2M around Spring of 2022. I'm comfortable it's worth $2M now. Because we bought it in 1995 for $332k we never were "upside down" but you can see how timing really affects things. Add in selling costs and someone could have lost their shirt. We had one friend who bought a condo in Redwood Shores in 1990ish and walked away in 1995 because home values were flat during that time.

[hoofaman]

Here is our home buying/selling history so far:

- Bought first house 2003 for 120k
- Sold first house in 2006 for 145k
- Bought second house in 2006 for 225k
- Sold second house in 2014 for 180k
- Bought current house in 2014 for 475k


As you can see we sold our second house for 45k less than we paid after living there for 8 years, the loss would be larger when you factor in transaction costs, maintenance, etc. And we had 25k gain on the sale of our first house prior to that

Between 2020-2022 the value of the second house more than doubled and sold for 410k in 2022, so we missed out on that run up. Houses in that neighborhood stayed around 180k-200k until 2020 buying frenzy started. The house we live in now also doubled during that time and is worth around 1.2m now based on comparable sales, including our neighbors house which sold recently

So I guess the point is, even if your timing is off and you buy high and sell low, if your selling to buy another house your probably also buying that house at a relative low point. Unless you sell in a hot market and buy in an unpopular market, or vice versa, exceptions apply of course, but that's the way I look at it, gotta live somewhere anyway

[InNameOnly]

Never was comfortable with large debt. We built below our means in 2000 with 25% down on 40 acres we already owned free and clear. We played general contractor and borrowed 50% for construction, which we later converted to an 15 year mortgage and cash flowed the remaining 25% during the construction. We were living on DW’s income so I took all of mine and paid off our mortgage by the middle of 2004. Being debt free from 2004 on has been a comfort during the turbulent housing market years that followed.

[srt7]

We bought our first house in Q2 of 2008, a quarter before recession was declared. Never really bothered us as it was our shelter - a basic necessity. Value dipped a little and then gained (a lot!) so we lucked out. As an accidental landlord, we still own that house so couldn't have planned this one any better myself.

[NashTransplant]

Bought in December 2006 at height of market. Didn't worry, would love there forever, right?

Two years later, forced moved to a different city. House underwater due to 30% drop. Didn't have the cash to cash out. Rented the house out - series of renters with their own financial problems. Total disaster and albatross.

Came back to "even" (meaning: I could pay off mortgage with a sale, but my loss was enormous - including original downpayment) in 2012. Sold it to get out of it.

Bought a house in City #2 in 2012. That home has more than doubled in value. Total financial windfall.

Add in the loss from 2006 - 2012, and the gain from the next house for the next decade, and it's all about an 8% CAGR. But let me tell you, it was a lot more painful and emotionally draining than having $$ in a Vanguard fund that ultimately gets 8% over 15 years!

[Paul78]

Add in the loss from 2006 - 2012, and the gain from the next house for the next decade, and it's all about an 8% CAGR. But let me tell you, it was a lot more painful and emotionally draining than having $$ in a Vanguard fund that ultimately gets 8% over 15 years!

I have certainly learned I would rather take my chances with the market (in mutual funds) as that will probably work out ok and if it does not oh well. I am not smart enough to pick individual stocks so if we are entering a 20 year period of no or negative growth I am screwed anyways.

With regards to a house to me it feels more like picking one stock. Sure if it works out great it will be huge piece of my retirement and allow me to retire sooner but if it doesn't work I will probably still retire at my target age but will have to decrease my lifestyle a bit in retirement.

[goingup]

Bought in Seattle in 2007, and the home value quickly plummeted. We had no plans to move. I don't remember being particularly distraught about it.

There are a couple of things that were attendant to that, though. First, we weren't able to refinance for several years because I knew the appraisal would be low and didn't want to have to bring a huge sum to the table. Second, we weren't in the mood to make any substantial home improvements because you feel like you may not get your money back out of them.

It's not a great feeling to get caught in a real estate slump. But real estate is cyclical so it's not uncommon. I did know people who lost their jobs and walked away from their homes. It was a tough time.

[HomerJ]

Bought in Seattle in 2007, and the home value quickly plummeted. We had no plans to move. I don't remember being particularly distraught about it.

There are a couple of things that were attendant to that, though. First, we weren't able to refinance for several years because I knew the appraisal would be low and didn't want to have to bring a huge sum to the table. Second, we weren't in the mood to make any substantial home improvements because you feel like you may not get your money back out of them.

It's not a great feeling to get caught in a real estate slump. But real estate is cyclical so it's not uncommon. I did know people who lost their jobs and walked away from their homes. It was a tough time.

Yeah as long as you don't lose your job and have to move for another one, a housing slump usually isn't a big deal.

But that's a big IF.

[ddbtoth]

I closed in February, 2008. Never thought of it as an investment. Paid off the $160k note in 2011. House down the street, good comp, same build year, same footage, we have a better location, just sold for $325k (Peg, owner, told me they bout it for $99k in ‘95). First year property taxes were $3k, this year will be $5k. I wish the housing market would crash, lower of evaluations for property tax.

[goingup]

Bought in Seattle in 2007, and the home value quickly plummeted. We had no plans to move. I don't remember being particularly distraught about it.

There are a couple of things that were attendant to that, though. First, we weren't able to refinance for several years because I knew the appraisal would be low and didn't want to have to bring a huge sum to the table. Second, we weren't in the mood to make any substantial home improvements because you feel like you may not get your money back out of them.

It's not a great feeling to get caught in a real estate slump. But real estate is cyclical so it's not uncommon. I did know people who lost their jobs and walked away from their homes. It was a tough time.

Yeah as long as you don't lose your job and have to move for another one, a housing slump usually isn't a big deal.

But that's a big IF.

Agree with you, Homer. We were fortunate. We have always bought homes that didn’t stretch us uncomfortably. Could have afforded grander homes but paranoia kept us in check.

[trojans10]

Whats the general consensus at the current moment for first time home buyers?

Rates just hit 7% the other day... it should slow the market a bit... so less bid wars. BUT, what happens when rates go down - all of the folks waiting on the sidelines will enter the market and inflating the prices once again.. the whole, waiting for a dip or good time to buy just seems like a fallacy.

Anyways, if you were a first time home buyer - with rates at 7% and home prices still up... what would you be doing?

[gavinsiu]

I purchased back in 2007. The house crater afterwards, but since we staying long term the house value didn’t matter too much and also kept taxes low. Illinois has high property taxes.

Refinanced twice. I don’t even recall what the original rate was, maybe around 6%? Refinance twice and is now back to around 2.6%. The value appears to be 13% higher than when I purchased it, unfortunately my property tax has jump up by the same amount.

Basically if you plan to stay property drop is not an issue as long as we live near our work, and near our family.

[snackdog]

The California market really slowed in mid-late 2006 so we felt ok buying in April 2007 given that my employer was offering about $200k in incentives including a rate buy-down. At least we were able to find a place in the Bay Area without having to pay 20% over asking or all cash. We were a little sad when a house two doors down sold in 2009 for about 30% less than we paid. When we sold in 2021, we were up about 50% which about a 3% CAGR. Pretty grim, although we only lived there a year and then rented it which covered mortgage, insurance and taxes.

In 2012 we felt the market was bottoming and bought a second place (from a guy who paid about 30% more for it in 2005) and it sold in 2022 for triple what we paid. CAGR of 11.5% or so.

PS. The CAGR do not factor in the leverage from our borrowing.

[tesuzuki2002]

I bought a house in 2007….

It went down 45% by 2014….

I moved and it became a rental…. It’s up 350% today…


I’d do it again…

It’s cash flowing $30k a year now….

Nice bonus.

[bombcar]

I bought during the runup craze, and was underwater for 12 years, which was annoying as hell because interest rates had dropped down significantly, but I couldn't refinance until the house value caught back up.

But other than that it was OK. I wouldn't have been able to easily move, however. So always buy a house with a 10 year "living in this thing" plan, even if you might do otherwise.

[bltn]

We built a house on a very desirable location starting in late 2006 and finishing in early 2008. Two years later my builder told me his sub contractors were charging about 70% for the same work that I had on my house. So by that fact, I overpaid by quite a bit for that house. But we loved the location, and we weren t getting any younger. And those factors prompted the construction at that time. I thought of it as a home rather than investment.

Based on neighborhood sales, the house still doubled in value over the next 10-11 years, due to the location. Then, over the next 3 years, it doubled again. I still don t consider it an investment, but more of a last ditch insurance policy to cover long term care expenses if all other resources are used.

[HomerJ]

Whats the general consensus at the current moment for first time home buyers?

Rates just hit 7% the other day... it should slow the market a bit... so less bid wars. BUT, what happens when rates go down - all of the folks waiting on the sidelines will enter the market and inflating the prices once again.. the whole, waiting for a dip or good time to buy just seems like a fallacy.

Anyways, if you were a first time home buyer - with rates at 7% and home prices still up... what would you be doing?

Note you can probably re-finance later if rates come down, so you're not necessarily locked into a 7% rate forever (but make sure you can afford the mortgage, because you might be locked into that mortgage for a long time - who knows?)

[vfinx]

Whats the general consensus at the current moment for first time home buyers?

Rates just hit 7% the other day... it should slow the market a bit... so less bid wars. BUT, what happens when rates go down - all of the folks waiting on the sidelines will enter the market and inflating the prices once again.. the whole, waiting for a dip or good time to buy just seems like a fallacy.

Anyways, if you were a first time home buyer - with rates at 7% and home prices still up... what would you be doing?

1. The default position should be to NOT buy a house.

2. Focus on highly personal criteria instead of macroeconomic factors. Mortgagenewsdaily.com should not drive the decision. The micro factors should be so overwhelming that a decade from now, the decision will still feel good even if the macro conspires against you.

These micro factors might include:
- availability of comparable rentals in the exact location you want to be in
- your tax situation
- likelihood of needing to move again soon
- how locked in your friends/family are to the neighborhood (do they own or rent?)
- willingness and ability to deal with upkeep
- how much you value the ability to customize a home
- psychological value of not being under a landlord’s control
- whether the forced savings aspect has value or if you are already disciplined
- and so on…

3. Don’t think of it as an investment decision, but rather a consumption decision. Maybe it will end up being a profitable decision, but the hope of that is a poor reason to buy a personal residence imho.