New wave of foreclosures coming?

Taypayer 1

 

If I bought a new house today, I can guarantee you that I would not still be living in the same house when I retire or even 20 years from now (nor will most people that buy a house today). Eventually, I would sell and at that point my gains and losses would be realized. Who is to say my house would be worth more at that point? No one knows that for certain. And, unfortunately, you can't always conveniently decide when you will need to sell your home.

 

Even if my intention was to stay in my house until retirement, doesn't mean that I would be able to. Sometimes life's realities, ie., layoffs, divorces, pregnancies, marriages, medical conditions, deaths, etc., don't always fit right into the perfect little plan of how we dream for our life to turn out. So then what? You have to sell, hope you can sell, hope you don't end up having to A.) put money with your mortgage to rent at market rate (know lots of people doing this right now) or B.) pay out of pocket to sell your house for less than owed if bank refuses to do a short sale (personal experience) or C.) lose your home in foreclosure.

 

Many, many people are going through that right now. People already in retirement. People who were dealt one of life's realities, because unfortunately no matter how well you plan out your life, life doesn't follow any rules set out on paper. So, what are their rents going to be? How are they any better off now than the person who rented all along. What do they have to show for? Having to re-enter the workforce?Lossed investments put into their home, ie., painting, new decks/patios, lawn treatments, landscaping, appliances, window treatments, carpet cleaning/replacements, floor refinishing, satellite installations, roofing, insulation, alarm systems, etc.,etc.,etc., that they can't take with them?

 

So, what will my rent be when I retire? I have no idea. At 30, I still have time to think about it. But in the meantime, I'm having to start over financially and re-coup all my hard earned savings that I wasted throwing at a mortgage on a house that I wasn't able to keep. But it was worth it, because now I'm able to save way more (for cash reserves and retirement) than I was able to while owning. I've already re-couped the money I had to fork over just to get rid of my house. So, maybe oneday, if I'm lucky and smart enough about my savings, I will be able to buy my retirement home in CASH with the money I saved from renting. And if not, hopefully, I will at least be able to better fund my retirement and more able to afford whatever rent I might have.

 

In any case, the money I am saving now belongs to me, and I can take it with me whenever and wherever I move to, regardless of what the market conditions might be at the time. It will not be tied up in something that could be taken away at any moment, simply because I fall on hard times and miss a few payments on my mortgage, or property taxes (if paid off), or HOA fees, despite having had a perfect payment history.

That's right Hub, always blame somebody else. Why take any personal responsibility if you don't have to. Blame the rich , it's their fault.

Thanks for the comment... however, I am in the situation I am in because I never "jump into anything".  Not sure if you noticed but I mentioned that I could have bought (and been given the credit for) this same house 4 or 5 years ago for 2 million dollars.  I have been shopping for a home and actually visited a model of this builder 5 years ago.  This home was priced in the 1.2 - 1.3 million dollars.   I was trying to purchase this home now for $850,000 which means the price has already reduced $400,000+.  That is a decrease of 33%!  Now, I hear what you are saying but I highly doubt the cost of this home will drop another 20%... Maybe 2 -3% but when you investigate into a product you will learn that there is a true cost in order to actually build a home.   Huge conglomerates that package together "cookie cutter" homes can pad some profits because everything they make is bought and built in bulk.  This custom builder has only built about 3 homes in my area in the past 15 months.  If the profits are not there, he simply won't build.  No one will work for a cost and then sell a product at a loss no matter how many car salesmen say they do;)  Still, even if this market causes another drop of 2 - 3% of the cost of this home... Since that is only about $25,000 at most I am willing to lose out on that since I am already saving $375,000 since a few years ago.  I am not trying to buy a "dream" home.  I am trying to buy my home.  One that I can afford to pay off in 5 years.  5 years from now this same house could actually bear equity... homes could still do that if purchased properly.

Why is everybody so hard on the subprime buyers and Community Reinvestment Act types? Banks walk away from mortgages on properties they buy all the time, when it makes business sense. Just read about a bunch of office buildings Wells Fargo walked away from in SF. Judeo-Christian morality- that Hank Hill decency and honesty and forthrightness-has no place in capitalism. Subprime buyers who walked away or got forclosed played the game as brilliantly as the Wall street bankers who got the taxpayers to cover their losses. They got the good life for a while, and that's all that matters. If you're a decent, honest person-sorry sucker! But please, keep playing by the rules, after all, none of it would be possible without your tax dollars. Don't forget-get it done before April 15th!

Sorry, total with crappy school should have been $2990. with total savings lowered to $14000 - $28000. Don't know why edit won't work.

fdasfdsa, you left a few things out about buying. I bought my 1,800 sq ft house 19 years ago for $125,000 (30 year fixed @5%). My payment is $671  a month plus taxes of $1,100 a year ( can't go up more than 3.5% per year) and insurance of $1,700 a year (it's high here in Florida). I have 11 years left on my mortgage. I've been paying around $1,000 a month for everything less utilities and in 11 more years it will drop to about $350 per month. How does that compare to someone who has rented for the same amount of time and what they will be paying going forward. Not to mention the privacy, freedom ( I can work on my car and boat in my yard), and night time quiet I enjoy.

Thanks, I'll get the "snowball" book. I had not heard of it before

fadasfdsa - the amount you pay in interest is not static.  your numbers show non-equity building expenditures to be about the same for renting and owning (less for owning if you factor in tax deductions).  so, it all comes down to mobility.  i agree, most renters do not invest the difference if there is one.