Beginning year 4 as a homeowner

[wayupnorth]

I have a gorgeous view of the sunset every night its not cloudy and stormy. My property tax bill is twice what it would be in Bangor, the nearest city for the same valuation and I get squat for services and my road is dirt, so I get a view tax. But I own everything free and clear. I did pay my mortgage down so when I retired I have the title. But after 23 years its just getting too much for me to handle alone and I cant hire anyone to help me do the stuff I used to do after 2 broken ankles, 2 rotator cuff surgeries and a double hernia all because I tried to do everything myself.[this post was last edited: 7/10/2018-21:56]

 

[tolivac]

The last recession we had-the home values went DOWN in my area-EVERYONES home values went down by 35-40%so-----NO MORE EQUITY!!!In this instance renting a house looks more attractive than buying it-and if the water heater dies or the HVAC blows out-the landlord has to fix it!!NOT you!
I like mowing,too but the cost of mowers is getting so high its just cheaper to smell the grass from the contractors mower-and if he lets me drive it-than the satisfaction is there.Sometimes he does.His Bad Boy ZTR mower is like 12 grand--no way could I buy a mower that expensive.Its for someone that mows for a living.The thing is as comfortable as your car.when I enquire about Hustler mowers at Lowes-its like they don't want to sell it to you!!There is one that has been there for two years-special order that a customer didn't buy.You would think they would be anxious to sell it.So-I continue to have the contracxtor do the lawn and yard chores-the only yard chore I like is mowing--the other gladly pay to have them done!!Esp now when its blistering hot!I do have to mow my back yard so I get mowing stifaction from that-the contrac tors Bad Boy mower won't fit thru the yard gate.

 

[ea56]

“The last recession we had-the home values went DOWN in my area-EVERYONES home values went down by 35-40%so-----NO MORE EQUITY!!!”

If you own your house outright, that means you don’t owe on a mortgage. Therefore, regardless whether or not if the property values drop due to economic downturn, you still have equity, albeit less. It is an asset that can be liquidated for whatever it is is currently worth. For those that used their home like a bank, and kept refinancing and pulling out the equity and spending it, the last downturn was disastrous. I would agree, these people would have been better off renting.

In California, the longer you own your home, due to Prop 13, your property valuation for tax purposes remains somewhat stable. By law, your assessed valuation can only be increased no more than 1% per year. Therefore, since we have owned our home for 24 years, we pay much less property tax than someone who may have purchased more recently at a higher price than we paid in 1994.

Between our property tax and HOA dues we pay approx. $600.00 per mo. for a home that would rent for $2500.00 per mo. So even if we have to replace a water heater or heating system once in a while, we are still spending way less on housing than if we were renting. And our HOA dues cover the exterior maintenance, landscaping, insurance, water and garbage.

If we hadn’t bought a home when we did, and paid it off, we couldn’t afford to live where we’ve both lived all our lives. And David’s ancestors came here from Italy during the Gold Rush in 1849, and were dairy ranchers. His family has a long history here. So, in my mind, being a homeowner has been one of the best decisions we ever made in our lives. But, homeownership isn’t for everyone. It requires commitment and financial discipline.

I sure would hate to be holding 24 yrs. worth of rent receipts instead of a paid for mortgage and a deed of trust on our home.

Eddie

 

[tolivac]

Most of the people I know are still paying for their homes-so in these case-just that no more equity-I don't want to go through this again!Next will be a rental-really don't want to own the place.In my area the rents are LOWER than the mortgage I currently pay.I would also like the idea of moving without having the hassles of selling.I was REALLY better off renting-and I could truly ENJOY the place without being a slave to it-like the HVAC dying or the water heater blowing up and YOU have to take care of it.Home Moanership as a neighbor called it.He moved back to a rental house.

 

[dermacie]

Eddie my home is very similar although it never lost tremendous value during the last recession. It is also paid off and it costs my around 600 a month to live here. Apartments are much more expensive and I am glad to have made the choice to own it.

 

[vacerator]

Real estate values, etc.

During the recession, most areas declined, while some which don't have significant inflated values otherwise saw little decline in values. Indianapolis, much of Ohio, Pittsburgh, etc. These are also areas of modest taxes.
Thats not to say some areas within these locales don't have exclusive and pricey neighborhoods.
The one that gets me is Minneapolis. It's expensive, and I don't get why. It's cold, and if you don't enjoy winter out door activities, except for 3 months per year on a lake, why?
As for builders grade appliances, if you don't pay them for upgrades which they mark up for profit from what they pay even on low end ones, you may as well take what is standard, and upgrade when those wear out, or you can afford to sell them.

 

[good-shepherd]

If we hadn’t bought a home when we did, and paid it off

That's the catch. If you bought in a few decades ago or happened to catch the bottom in between market crashes you may do okay in real estate. If not, one can get wiped out in the boom/bust cycles.

I know a couple of people who got caught at the wrong end of the last real estate bubble and it cost them big time. One sold out and will probably never be able afford a home again. The others took heavy losses and moved on.

On the other hand. a friend of mine bought in at the last bottom in 2013, paid $215,000 for a small house another young couple had foolishly bought for $464,000 6 years earlier. She'll do okay, although her property are steep at $9000 a yr.

Again winners and losers.

 

[ea56]

When we bought our home in 94’ we paid $120,000. At the bottom of the market 6 years ago our next door neighbor bought his unit for $108,000! Now that was disappointing to say the least. But we had always paid extra towards the principal, so at that time we owned the home free and clear, and weren’t underwater. Six months ago, the last unit that sold in our HOA went for $403,000, so we haven’t done so bad.

The secret is don’t borrow on the equity by refinancing every time the property values go up. That is a losing gamble almost every time. And as far as I’m concerned those people got just what they deserved. It is this kind of irresponsibility that causes real estate prices to skyrocket and makes the market unstable. Because when these people have their own finanical downturns, ie: job loss, serious illness, ect., they can’t make the paymts. and the homes go into foreclosure.

This incessant “flipping” to turn a quick profit is a lot of what has caused home ownership to be out of reach for the average person. This began here in California as I recall around the mid 70’s, and mortgages had interest rates of up to 22%! That and using your home like a piggy bank. Remember, what goes up. must come down.

Eddie

 

[vacerator]

Ineterst rates;

If I recall correctly, peaked at about 12.5% in the midwest in about 1981.
1982 brought a recession.
People were ballooning jumbo mortgages to buy huge houses with hopes of selling within 5 years and making profit.
The cash balloon payment was usually due within 3 years of inception.
It was a gamble. Timing the market was crucial.
Once interest rates settled to about 10.25% in 1988, the market recovered.
Most still had good paying jobs to afford a starter home. I was one of those.
We were paying $580 pr month in rent. With 20% down on a fixed 10.25% 30 year, our payment including taxes was $636.00. We did the cosmetic renovations, refinanced 2 years later at about 8.25% for 15 years. Within 5 years, appreciation was $12,000.00 That was also the equivalent of my share of equity when my ex bought me out. I would have only been age 47 when it was paid off otherwise.
Still did ok. Found a better spouse, bought a bigger house, and we paid this place off in 23 years. Age 56 still not bad to have free and clear ownership.
Almost as well as my folks did. We are thankful to be the tail end of the former middle class as it was.
Many will never achieve, regardless of how hard they work. Rich get richer, poor seem to be getting poorer.
It was Ronald Reagan who proposed and passed reverse mortgages. Why the need?
Although, they can be beneficial to some seniors. Had my folks had to do it, one of my siblings would currently be in a compromised living situation.
There is almost always one, especially from larger families today. Recession, paired with high unemployment, and or divorces. Often, job situations stress a marriage.
I find it all rather disgusting. My folks taught us family is most important, and that it doesn't matter the kind of family, only that there is Love in the home.

 

[good-shepherd]

incessant “flipping”

"Flipping" is back with a vengeance in my area.

Many older, small (or not so small) houses that go on the market get demolished and/or renovated, often to 4000 sf+, if the property allows.

Then back on the market for big $$ and hefty increase in the property tax assessment.

 

[twintubdexter]

Glen (DADoES)...

<span style="font-size: 14pt; color: #008000;">Looks like our annual property taxes are about identical for very different areas of the Country. I guess we all dislike taxes of any kind. About 5 years ago my taxes took an unexpected hike. I did a survey on my neighbors' tax bills (readily available online) and petitioned Riverside County to lower them which surprisingly they did. I live in an area where a home's value currently increases by about 30% a year. Does that mean that my bank account does the same? Silly rabbit, of course not. But the ever-increasing property tax puts a dent in it for sure. </span>

 

<span style="font-size: 14pt; color: #008000;">I take some comfort knowing my 2 good friends who live in a very nice gated community less than 1 mile away, Sterling Estates, own a fairly new 5,500 sq ft, 5 bedroom, 6 bath with maid's quarters home and pay well over $20,000 in property taxes per year. Their HOA fees are astronomical too. All that space for 2 people who sleep in the same bedroom is totally foreign to me. The 4 big central air conditioners are just  another story.</span>

 

<span style="font-size: 14pt; color: #008000;">I'll keep my cracker box thank you very much...</span>

 

 

[washman]

Joe brings up a good point

here.

 

I've known several folks over the years that are "house rich, cash poor".  Or "stuff rich, cash poor".  Once they get done paying on a massive home, new cars, the super duper off the chart cell phone bill, the cable and/or satellite, et cetera, they can't even afford a papa johns pizza.

 

 

 

[vacerator]

That's a gorgeous space!

If I need to ask the value, I can't afford it. Nor,also do I want it either.
Nice for them, not for us. I too like my cracker jack box.
However, many can afford the mansion, and they don't eat much pizza. Probaly Pappa John also. He just retired.
I'll have clams casino, oysters Rockefeller, lobster, Brazilian turf, escargot, etc. on a special occasion same as anyone else can. Just not on a yaght, or at our Mediteranian or lake Como villa.

 

[washman]

FWIW

I never order papa johns unless there is a coupon or something.

 

Like in years past, if and IF the Pirates win, we can order online and use BUCSWIN50 and get 50 per cent off pizza. that in my mind is the only affordable way to order his crap.  Pay full price for a large, hell, I can go to my local watering hole and get a friggin steak, real spuds, and some frost libations for the same price.

And I can exercise my 2nd class citizen rights there as well!