Carrying your home during the downturn, and then selling it when the real estate market recovers.

NEW -> Contingent Buyer Assistance Program
PANDA_IHB

PANDA_IHB

New member
I was wondering if any of you have had any experiences of purchasing a home in 1988 - 1990 time frame, and held the home during the downturn and finally sold the property at a profit when the RE market fully recovered in 1998 - 2002 timeframe? If you fit in this category, I have the utmost respect for you, as this time period can be very painful emotionally.



Reality is sinking in now that I have missed the boat for selling my properties and have made the decision to carry them until the market fully recovers. In hindsight, I am very lucky that I am able to afford the payments without any problems. I have a feeling that this housing recession is going to be a long one (perhaps 2-5 years from now until the market recovers), but I also realize that you don't lose money until you sell your property at a loss. Just would like to hear what others went through or decisions they made during the last real estate down turn from 1990 to 1995.



Panda
 
[quote author="WestparkRenter" date=1219646473]I bought at 1989. Sold at 1997 for 20% loss. I have no respect for myself either. :-) I should have hold on.</blockquote>


WestparkRenter,



That is 8 years of carrying. I totally respect you man!

What year did you have to sell your home in order to break even? 1998, 1999, 2000?



Panda
 
Traded up in 1990 with 20% down. Was underwater within three years. Traded up again in 2000. Learned that you can time the real estate market and it is probably the easiest market to time if you pay attention and realize that 50% of realtors do not know squat and another 45% are just plain liars.
 
<blockquote>WestparkRenter,



That is 8 years of carrying. I totally respect you man!

What year did you have to sell your home in order to break even? 1998, 1999, 2000?



Panda

</blockquote>


In 2003, the house was up 46%, so my guess is around 2000? However, the lawyer that bought it from me went into foreclosure in 2005(not sure if this matters).
 
We bought a house in 1993 with 5% down, 30-year fixed mortgage. We didn't even know about real estate cycles at that time. We just knew that it was cheaper for us to buy than it was to rent (at that time). We were able to fully pay off the mortgage before we sold the house in 2006 (it tripled in value during that time). Now we are just waiting to buy again.
 
My parents bought near the top in 1991 in OC for 350K. I think it was around 250K at the bottom in the mid 90s. They sold in 2004 for 720K. During that time, my dad rolled up 200k in credit card debt to survive the recession and hang onto the house.



Good fortune smiled upon him and he was able to pay off all his debts in 2000. Guess that was good karma for not declaring BK and paying 20% interest when most would have walked.
 
[quote author="rtlguru" date=1219664676]My parents bought near the top in 1991 in OC for 350K. I think it was around 250K at the bottom in the mid 90s. They sold in 2004 for 720K. During that time, my dad rolled up 200k in credit card debt to survive the recession and hang onto the house.



Good fortune smiled upon him and he was able to pay off all his debts in 2000. Guess that was good karma for not declaring BK and paying 20% interest when most would have walked.</blockquote>
That must have been a stressful time for your father.

I'm glad it worked out for him.
 
My dad bought in the lows of '96 and sold in 2004.



You don't have to sell at the highest or buy at the lowest of low to make money. Yeah, it's all about timing, and not panicking for a few small years...this sh*t is cyclic.
 
I will probably be shot down for this, but here I go:



Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? Isn't the important number the price you pay for your house when you enter the game?



If you do exit from the game and rent, isn't that the same as starting from scratch again?
 
[quote author="Stuff It" date=1219671747]



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


The home a couple doors down from mine sold for $675K a month before my landlord rented mine to me. Currently, you'd need to be around $350-325K to get a deal done in the same neighborhood. My rent is under $1800 a month for a SFR. The landlord has exchanged roughly $44K in rent for roughly $325K in capital depreciation.



Is starting in a $275K net hole after 28 odd months the new scratch?
 
[quote author="Stuff It" date=1219671747]I will probably be shot down for this, but here I go:



Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? Isn't the important number the price you pay for your house when you enter the game?



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


Starting from scratch if it meant you pocketed an extra $200-300k+ by selling in 2006 and renting until now...where do I sign up?
 
[quote author="optimusprime" date=1219704095][quote author="Stuff It" date=1219671747]I will probably be shot down for this, but here I go:



Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? Isn't the important number the price you pay for your house when you enter the game?



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


Starting from scratch if it meant you pocketed an extra $200-300k+ by selling in 2006 and renting until now...where do I sign up?</blockquote>


Basically you cannot compare the price of the house you sold relative to the price of the house you are buying since the market may have changed drastically inbetween.
 
[quote author="Stuff It" date=1219709930][quote author="optimusprime" date=1219704095][quote author="Stuff It" date=1219671747]I will probably be shot down for this, but here I go:



Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? Isn't the important number the price you pay for your house when you enter the game?



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


Starting from scratch if it meant you pocketed an extra $200-300k+ by selling in 2006 and renting until now...where do I sign up?</blockquote>


Basically you cannot compare the price of the house you sold relative to the price of the house you are buying since the market may have changed drastically inbetween.</blockquote>


That's your question... "Isn't everything just relative?" ..... NO
 
[quote author="optimusprime" date=1219712506][quote author="Stuff It" date=1219709930][quote author="optimusprime" date=1219704095][quote author="Stuff It" date=1219671747]I will probably be shot down for this, but here I go:



Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? Isn't the important number the price you pay for your house when you enter the game?



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


Starting from scratch if it meant you pocketed an extra $200-300k+ by selling in 2006 and renting until now...where do I sign up?</blockquote>


Basically you cannot compare the price of the house you sold relative to the price of the house you are buying since the market may have changed drastically inbetween.</blockquote>


That's your question... "Isn't everything just relative?" ..... NO</blockquote>


Now I understand why people don't like asking questions. They don't get very good responses because the people responding don't bother reading the question properly.
 
[quote author="Stuff It" date=1219713826][quote author="optimusprime" date=1219712506][quote author="Stuff It" date=1219709930][quote author="optimusprime" date=1219704095][quote author="Stuff It" date=1219671747]<strong>I will probably be shot down for this, but here I go:

</strong>

Unless you are one of the few who are willing to pull out of the real estate game and rent, does it matter (significantly) if house prices go up or down (lets ignore taxes and just look at the price of houses)? You will pay the difference between what you sell your house for and the house you are buying. Isn't everything just relative? <strong>Isn't the important number the price you pay for your house when you enter the game</strong>?



If you do exit from the game and rent, isn't that the same as starting from scratch again?</blockquote>


Starting from scratch if it meant you pocketed an extra $200-300k+ by selling in 2006 and renting until now...where do I sign up?</blockquote>


Basically you cannot compare the price of the house you sold relative to the price of the house you are buying since the market may have changed drastically inbetween.</blockquote>


That's your question... "Isn't everything just relative?" ..... NO</blockquote>


Now I understand why people don't like asking questions. They don't get very good responses because the people responding don't bother reading the question properly.</blockquote>


Maybe the person writing it should realize what they're expecting and ask BETTER questions :)
 
[quote author="Stuff It" date=1219713826]Now I understand why people don't like asking questions. They don't get very good responses because the people responding don't bother reading the question properly.</blockquote>


Stuff It -



You've asked several different questions, each with different answers. From your response it appears that you are looking for some validation on your opinion that it doesn't matter whether housing prices are going up or down. I would argue that it does.



I was in Vegas last week so I'll pull an investment analogy from gambling:



In the available card games, there are several different levels of table play available for different levels of addicts. You can bet at a $10 table, a $25 table, or a $100 minimum table. For these the odds are stacked in the favor of the casino equally (a downward market for the gambler) in each game, regardless of level of ante. The gamblers lose the most money more quickly when they play bigger pots. Likewise, trading up to a bigger home is going to have a larger cost during price declines. (A X% loss on a $1M home is greater than the same X% on a $600K home.) Moving to a smaller table (home) would instead cause you to minimize your losses. Significantly. Pushing the "smaller table" to the extreme would be stepping away entirely, i.e. renting, while the price declines are on. Renting does have its own cost, though, and No_Vas has pointed out in his example that it is heavily outweighed by the current price declines.



I'll add a warning that you shouldn't ignore taxes. Uncle Sam bats after Torii in the lineup - he's got wicked power to all fields and he's been known to charge the mound if he thinks you're pitching him too tight...



Thx,

IR2
 
No, I purchased my 1st home in 1995 and then sold in 2005. I purchased for 65k (in new mexico) and then sold for around 205k. I had it almost paid off with just rental $$, but it was stressful doing the long distance management (paid a company to do it, but overseeing them was quite a chore).



While not a downturn, it was a few years before I was able to actually run positive on the cash flow.

Anyways good luck

-bix
 
[quote author="IrvineRealtor" date=1219717723][quote author="Stuff It" date=1219713826]Now I understand why people don't like asking questions. They don't get very good responses because the people responding don't bother reading the question properly.</blockquote>


Stuff It -



You've asked several different questions, each with different answers. From your response it appears that you are looking for some validation on your opinion that it doesn't matter whether housing prices are going up or down. I would argue that it does.



I was in Vegas last week so I'll pull an investment analogy from gambling:



In the available card games, there are several different levels of table play available for different levels of addicts. You can bet at a $10 table, a $25 table, or a $100 minimum table. For these the odds are stacked in the favor of the casino equally (a downward market for the gambler) in each game, regardless of level of ante. The gamblers lose the most money more quickly when they play bigger pots. Likewise, trading up to a bigger home is going to have a larger cost during price declines. (A X% loss on a $1M home is greater than the same X% on a $600K home.) Moving to a smaller table (home) would instead cause you to minimize your losses. Significantly. Pushing the "smaller table" to the extreme would be stepping away entirely, i.e. renting, while the price declines are on. Renting does have its own cost, though, and No_Vas has pointed out in his example that it is heavily outweighed by the current price declines.



I'll add a warning that you shouldn't ignore taxes. Uncle Sam bats after Torii in the lineup - he's got wicked power to all fields and he's been known to charge the mound if he thinks you're pitching him too tight...



Thx,

IR2</blockquote>


Thanks for the input. Interesting how you compare housing purchases with gambling. I agree with your analogy. But so long as you are always looking to buy a bigger house and not retiring or leaving the housing market wouldn't these people want the housing market to decline? Suppose you lost 10% on a 600K home and you wanted to move upto a $1M home which had also lost 10%. You would only need 360K instead of the previous 400K
 
I also think it depends on what stage you are in your life when you decide to buy a house in a downturn is what matters. Are you starting out, raising a young family, or retiring soon(less than 5 years left). If you are near retirement, you may not want to loose that much money so waiting for a good price on a home is a good idea.
 
You must log in or register to reply here.
Back
Top