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View Poll Results: Hurt by a 30% collapse in the value of your home?
Yes 29 20.28%
No 86 60.14%
Maybe, don't know, don't care, other 28 19.58%
Voters: 143. You may not vote on this poll

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Old 09-06-2010, 02:13 PM   #41
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People often invest a lot of themselves in their homes, and this customization and dreamhome-ness winds up costing a lot of money and time. I think I understand this, but I personally do not feel any of these things. The day I start dreaming about homes is the day I will feel that I have forgotten how to dream. I think this "no-way" attitude is more common among men, and especially single men. By the time my Dad was 50 or so, what he really dreamed of was living in a hotel, and eating most of his meals at one of the old fasioned cafeterias or businessmen's tavern/restaurant to be found in those days in any big city downtown, with an occasional walk to a quality linen tablecloth restaurant. When he wasn't working he would have a beer and some sausage, visit amigos around town, and observe the flow of life.


Often a home becomes an ongoing project too, such that modificationas and upgrades are desired over time, not because anything has worn out or has become nonfunctional, but because a change or dressup of "tired" appearance is wanted.

A friend lives in a nice large townhome in a golf community. His wife is after him to build an addtional room so she can have a larger laundry room. I told him he could get her laundry picked up and delivered twice a week for the rest of her life much cheaper than spending the money and undergoing the disruption to get a larger laundry room. What kind of desire is that anyway, a larger laundry room? Have we sunk so low that we aspire to devote ever more resources to doing mundane tasks that in times past few middle class persons would have done for themselves?

He would prefer living in a city highrise, and outsourcing a lot more than laundry, as his happiest years were single living in a highrise in Manhatten. But I imagine there are more than one or two of you older gents who would prefer living differently from how you now live, but unfortunately you have 1 vote, and your wife has 2, and you feel that she can get along without you more easily than you could manage without her. QED

Ha
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Old 09-06-2010, 02:21 PM   #42
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Maybe that was just her way of asking for a "woman cave"?
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Old 09-06-2010, 02:38 PM   #43
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Originally Posted by LOL! View Post
Maybe that was just her way of asking for a "woman cave"?
Quite possibly, I didn't even think of that. So having her laundry picked up would not have met her perceived need. Still, their house is large, I think that she could perhaps zone some other room for her use fairly easily.

Her husband is kind of a bulldozer, so I suppose that one could get a little tired of too much exposure. Among most of my married retired friends the guy and the woman have tended to keep up their work-world friendships, so they have a lot of time apart from one another. What I see as the typical ER.org married and retired relationship of a great deal of very harmonious togetherness I haven't yet seen much of in the non-virtual world.

I see that this is an issue way more complex than than houses and chores, thanks LOL for pointing this out.

Ha
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Old 09-06-2010, 03:27 PM   #44
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We bought our current home in 1994; the purchase price was $97k. Since Megacorp moved us to hell Texas, they gave us $10k plus other relo monies (tax free) so we put that money down on the house. Ending purchase price for yours truly...$87k....have been mortgage free for four years.

The county has assessed our home at $143k. Would a 30% drop hurt us....no I don't think so. Might lower our taxes a bit, but I imagine they would make up for it somewhere.

Besides I have no plans to move anytime soon...

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Most new homes are over $100sf (some WAY more); at that rate, my house is "worth" about $165,000.
Yep...that's why our insurance company provides us with $180k on our dwelling.

Anyone got a match?
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Old 09-06-2010, 04:06 PM   #45
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I would be more curious to get a poll on that issue (% of house value drop), as I am not as confident that this is the case. (But KUDOS to you that you have not been adversely affected.) I know there are regional hot spots where housing is still good, but many places I have looked into are having "fire" sales in their RE Market. (snip)
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Old 09-06-2010, 04:29 PM   #46
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(snip) I think that many current owners would not be hurt by a collapse in the housing market. Only owners who bought in the last 5 years or so would be hurt. Many folks have owned their homes longer and have not used their homes as piggy banks. (snip) For this poll, a collapse would be a 30% drop in the value of your home. (snip)
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Yes another 30%. I'm guessing that "most of us" have not experienced a 30% drop already in the value of our homes. (snip)
This current owner certainly would. My house has dropped in value by over 35% in the last four years—see my poll. I was counting on having enough equity in this house at retirement to replace it in my new location and have six figures left over in cash to add to my nest egg. The amount it has dropped already has completely wiped out the "left over" cash, and if this house drops any more I don't know if I will even have enough from its sale to pay for its replacement. Where I'm planning to move to after retirement has been economically depressed for a long time, so maybe they have been hit even harder than here in Seattle (not that I'd wish that on them). OTOH, they may never have had a bubble there, so there may not be as much potential for decline in prices. And an area contracting firm has just gotten the contract to make some of the pontoons for the new Lake Washington bridge, which will increase employment prospects there and perhaps bolster housing prices in that county.

You don't have to have bought in the last five years, or to have taken out equity every chance you had, to be hurt by this downturn. I bought my current home in 1997, and my first house in 1985. There has been one cash-out refi on each house—on my first house to remodel the kitchen (and I probably got back every penny of that, plus some) and on this house to replace my (27-year-old) car.

I don't think I've been an irresponsible borrower. Even with the big drop since 2006, this house is still worth almost three times the mortgage. But an additional thirty percent drop could potentially derail my retirement plans, because my budget doesn't include any money for rent or a mortgage payment, only taxes, insurance and upkeep. I have to own a house free and clear to make ER work for me. If I can't walk away from this house with enough money to replace it, I can't retire.
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Old 09-06-2010, 04:43 PM   #47
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What I see as the typical ER.org married and retired relationship of a great deal of very harmonious togetherness I haven't yet seen much of in the non-virtual world.
Interesting observation! I don't know many retired married couples but the few that I do know are not like that either.
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Old 09-06-2010, 04:50 PM   #48
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Yep...that's why our insurance company provides us with $180k on our dwelling.

Anyone got a match?
I think my insurance is to about $180K as well. Anybody willing to give me that much for my house right now can have it, and I'll pay their closing costs and have the whole house re-carpeted.

(hint: I'm not holding my breath)
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Old 09-06-2010, 05:17 PM   #49
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I voted Don't Know, Don't Care. I know the value would be down from my 2004 purchase price...guesstimate of 20 percent. No plans to sell in the forseeable future. I had to have a roof over my head until retirement, and this place is nice and 10 minutes from the office, 5 minutes to shopping and almost anything I could possibly want. I don't have a mortgage. My feelings lean toward letting market conditions decide where the chips will fall. I find the unemployment figures (and underemployment) a more troubling indicator of economic health.
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Old 09-06-2010, 05:22 PM   #50
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[QUOTE=haha;975519] What I see as the typical ER.org married and retired relationship of a great deal of very harmonious togetherness I haven't yet seen much of in the non-virtual world.

.
/QUOTE]

You are hanging out with the wrong crowd . I have a group of either married or live in friends and all really enjoy each other and are harmonious . I do have to admit that none of them is in their first marriage so maybe that's why ?
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Old 09-06-2010, 05:34 PM   #51
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It seems that my friends are a mix of divorced, a sliver of widowed, and the large majority in long time first marriages, mostly harmonious but occasionally fractious (but not to the point that divorce would enter the picture). Here in western PA many people are ethnic, Catholic and grounded in tradition with close extended family ties which tends to discourage divorce.
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Old 09-06-2010, 06:23 PM   #52
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We're still in a bit of a bubble up here. No, not quite what Florida and SoCal had but our RE used to be affordable to young working people. I wouldn't mind a 50% drop. Here's why.

We paid ~$200K for our house in 1998. At the ROT that Cdn banks use of about 3 years gross income as max to pay, you'd have needed about $70K/yr to buy it (irrelevant since we paid cash). Today it would bring around $500K. Income required $170K. Salaries have not increased to that extent. If the market fell, young couples could actually afford a house. I'd prefer that housing was available to them rather than us having $300K we don't need. That's just me, YMMV.
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Old 09-06-2010, 06:27 PM   #53
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I said "no" to the poll (thinking I would just buy again) ... but in hindsight: we've already dropped at least 35-45%; Another 30% could only be the result of the recession becoming a DEPRESSION.

Yes THAT would hurt.
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Old 09-06-2010, 06:29 PM   #54
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ditto

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I voted Don't Know, Don't Care. I know the value would be down from my 2004 purchase price...guesstimate of 20 percent. No plans to sell in the forseeable future. I had to have a roof over my head until retirement, and this place is nice and 10 minutes from the office, 5 minutes to shopping and almost anything I could possibly want. I don't have a mortgage. My feelings lean toward letting market conditions decide where the chips will fall. I find the unemployment figures (and underemployment) a more troubling indicator of economic health.
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Old 09-06-2010, 08:59 PM   #55
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Dang, all the discussion of homes around $150K makes me realize how expensive Northern Virginia still is. Current home base is assessed at over $500K (down from the bubble price of $625K) and our very small modest rental is assessed at $325K (down from high of about $420). These are not luxury homes. Even in today's depressed market, I suspect we could sell them fairly quickly for about 10% less than current assessed value. Here are some pics of our two homes. The first place is a very standard 4 bed, 2 car garage kinda place. Nothing fancy, built in the 80s, a gillion places like this in the area. The second place is a small house, build in the 40s (on 2 acres but only about 25 miles from DC). If we didn't have such deep family ties here, I flee for a less expensive area for sure.
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Old 09-07-2010, 08:40 AM   #56
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Voted No. We own outright, and it's a modest home, never bought as an investment to yield cash for income one day. So if the value goes down, presumably the cost of the next house will have dropped as well, so virtually no impact. Another benefit of LBYM...
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Old 09-07-2010, 10:17 AM   #57
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To me, the question about housing today is: Why would anyone build a new house? Unless you've got a unique situation (limited mobility requirements, a piece of land with utilities that you already own, etc), the large existing stock of built homes offers a lot of selection and great prices. Folks who build new are usually surprised at the costs of all the add-ons needed to make a structure into a home (especially landscaping). Yes, lumber and construction labor are available at reduced rates now, but lots of the more expensive stuff is as costly as ever.


I was referring to new unsold spec houses. Building new would be an option if you were the general contractor tightly controlled the labor and purchase of materials.
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Old 09-07-2010, 10:51 AM   #58
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We paid ~$200K for our house in 1998. At the ROT that Cdn banks use of about 3 years gross income as max to pay, you'd have needed about $70K/yr to buy it (irrelevant since we paid cash). Today it would bring around $500K. Income required $170K. Salaries have not increased to that extent. If the market fell, young couples could actually afford a house. I'd prefer that housing was available to them rather than us having $300K we don't need. That's just me, YMMV.
That's the bigger picture that I think gets ignored too often. Would I love to pocket a half million quick bucks from a rise in the value of my house? Sure! Would I enjoy the prospect of my kids not being able to responsibly buy a house in the area? No.

To respond to OP's poll, if we saw a 30% drop from today's rough estimated price, we would be back at almost exactly the price we paid back in 2003 when we bought it from the City. We would still have a 20% equity cushion after the 30% drop since we only cashed out the equity once (to invest in the stock market) and have been paying the mortgage down aggressively since then.

To put a 30% drop in perspective, it would result in a reduction in our net worth of under 10%. Not inconsequential, but not a really big deal overall.

Second and third order effects would likely be much more significant, such as the stock market crashing (maybe) and the housing/real estate development industry I work in going to crap (to a greater extent).

But I might be able to snap up a ton of rental properties for cheap and in 10 years be filthy rich (or maybe just filthy).
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