And we’re officially stuck…
We bought our house back in 2004 near the peak of the market. It still went up another 20% according the the tax assessments and an appraisal I had done when I was looking into a refinance years ago. But as of this week, that’s all officially gone.
Washington D.C. has weathered the housing crisis fairly well compared to other regions of the country, but not well enough to keep our home value from depreciating entirely. Unfortunately, we could never get a good gauge on our home’s value since we have some unique features not found on other homes in our community. For example, we have almost double the square footage, double the land, updated siding/roof/windows and of course, an in-ground pool. The closest house in size, lot and number of beds/baths is across the street, but no others come close after theirs.
Well, those owners finally decided to sell. And they couldn’t have picked a worse time to do so. Actually, another house across from ours went up for sale recently. The first, on a small corner lot with no additions but brand new siding/roof, went up for sale for $40,000 less than we paid for our home. I checked yesterday and they dropped it another $10,000!
But we’ve been waiting to find out what the other neighbors (the ones with a more similar house to ours) would price theirs at. I guess they’ve been trying to find a house to buy where the sellers would accept their contingency clause. Perhaps they found one because a for sale sign went up this week.
Their house is also priced $40,000 less than we paid for ours! They’re in a rush to sell and wanted to make sure it would go quickly. I guess if you had the option of their house or the one two doors down for about the same price, you’d probably go with theirs.
So now it’s official that if we needed to sell our house in the near future, we can’t justify listing for much more than what we paid, if that. And then after seller fees, we’re in the hole. I guess we’re staying put for a few more years, eh? And that’s assuming the house sells for the list price!
How has the housing market affected your decisions to move (or stay)?
The market was never “up” here so housing prices have been normal. We bought our home 6.5 years ago with plans to stay here forever. So we’re not too worried about the housing prices in the area, but since we live in a lake community that’s full of second vacation homes, the market hasn’t been affected too much (the house below ours sold for $30,000 more than we paid for ours and it’s smaller and not as nice).
I feel bad for those of you who live in those kinds of markets. I’m glad we live in an area where markets are stable. We can’t make tons on flipping houses of speculating, but we also don’t lose when the markets tank either. I’ll take stability anyday!
Interesting, I know right now is a really bad time, but most people say you need to live in a home for about 5 years for it to be viable to sell, you are almost at that mark and have almost no chance to sell, that sucks.
I think my market has stayed pretty steady, other than one forclosure near my house. I think I could sell for close to what I paid, and I have not been there very long at all yet.
i hear ya brother. i feel the same way – stuck. i’d like to move back into the city into a smaller place, but ain’t happening anytime soon…
at least you didn’t have a foreclosure right next door to ya! *shiver*
I feel your pain 🙁 Here in southern Baltimore County, values are definitely dropping, and we know we’re staying put for awhile. A house across the street was foreclosed on and is still sitting empty. It was purchased for the same price around the same time as ours (2006), and is now listed by the bank for $86k less. That sure won’t help!
I just keep reminding myself that we haven’t lost the money until we move. We originally planned on looking for a bigger house at the 3-4 year mark, but now are staying where we are for the foreseeable future. So while it sucks to feel ‘stuck’, at least we have a home, a mortgage payment we can afford, and we can continue to make it ours!
Time to write to our banks and ask them to cut our principle balance… maybe threaten to stop paying or something. Hey, it works for cable and phone companies!
Also, I’m looking forward to seeing a sharp drop in our property tax assessment.
That said, I can’t help but notice that it’s both the houses on either side of ours that are for sale…
@Nick, good point. Why do your neighbors want to get away from you so much? I just have divorced women on either side of us (as a note, Nick and I are neighbors directly across the street from each other. These two homes in the article are on either side of his house)
For the tax assessment, I won’t see much relief because I have that thing where the value can only go up 10% over the prior year. So even though it’s assessed at 470k, I’m only paying taxes on 300-something. The house has to plummet by half to see any tax savings, and I’ll have more problems than that if that were to happen!
Your house is cheaper but the house that you may want to buy is also cheaper, So, as long as your house could be sold, why care?
The scary part of your situation is that the house across the street may be listed $40,000 less than yours but what will it take for it to actually sell? I would keep a close eye on that one to see what the final selling price comes in at.
Hopefully in a couple of years, we will all have back some equity in our homes…or at least maintain the value that we paid for them.
Our home assessment for property taxes was recently sent to us and its $4,000 less than before. Sadly the total amount of drop in our fee’s is about 1/2 as much as the year to year increases had been in the last few years 🙁
We also are a little “stuck” but unless a job makes us relocate we are happy in our home and comfortable with the mortgage payment.
Housing always fluctuates though. A price drop should only matter if and when you want or need to sell. Our home value has dropped as well, but my plan is to live here a long time. So the current price is kind of irrelevant as this is my long-term home.
Actually, I’m having quite the opposite problem from a lot of homeowners.
As a renter, I have been noticing rents going up, up, up. Why? Because the housing boom meant everyone was building. They converted apartment houses into condos. Everyone was buying. Now, many are selling or just getting kicked out. They have to rent. So the demand is up. Landlords are loving it.
So my husband and I can’t even begin to imagine moving for quite awhile — which we’d probably put off for awhile anyway, since we have to pay down some debt.
Though already mentioned, it’s worth highlighting again that you should see the assessment value of your home drop. If not, dispute it. In fact, we should all pay close attention to the assessment value of our homes…even more so during the good times! There is a lot of public information available on real estate assessments in your area, and most of it can be found online.
Seize this opportunity to reduce the assessment value of your home, and then pay attention going forward. There’s a good chance this will be the only time in our lives that we will see housing prices decline so dramatically. Don’t let this opportunity pass you by, as the tax savings should go on for the rest of the time you own your home!
We are stuck as well. Between the tumble the stock market took (taking some of our down payment fund with it… stupid to have it in there, I know) and the falling home values, we are definitely not going anywhere any time soon.
There are a number of houses for sale in our neighborhood as well, far more than I ever remember before.
I have a client on the Money Merge Account who lives in Germantown (Montgomery Village) MD. When we first met about 6 months ago he told me he paid $500,000 about 2 years prior for his home (and had an interest-only mortgage of $432,000) and that home values hadn’t decreased much in his neighborhood. I suggested he talk to a realtor who was familiar with his community. He did – and found out that the value of his home was down to $300,000! Needless to say, he was pretty distraught – he owes $132,000 more than his home is worth.
In Hagerstown, where I live, the main thing driving down home values are the foreclosures and short sales, which are being priced well below market value in order to get them sold.
PS – with the program he’s using, he’ll have his mortgage paid off in about 14 years and will be saving over $308,000 in interest payments! By then, I’m sure that home values will have bounced back and he’ll make a fortune when he sells his mortgage-free home.
They (well, whoever “they” are) say you should always go for the worst house on the best street you can afford. Sounds like yours is vice versa so you may be screwed regardless. Hang in there and try not to check the comps too often, it only leads to heartburn!