patrick.net

it sounds like you have plenty of time. Wait a year and see how the market is doing. If it tanks then walk away if it recovers sell.

Easy.

Therapy,

I'm in a similar situation to yours except mine is worse in terms of money loss. I'm 27 and my husband is 29, he bought the Santa Clara, Ca condo in his name in 06' at the peak of the market for $305k and $330 hoa dues, 670 sq ft (much smaller than yours), much older than yours (a pos in my opinion, we put a little elbow greece in to make it a bit nicer) we do have three pools though but that is it! We make enough money to support our mortgage so we do not qualify for any federal government short sales or help. We want to get pregnant but know that we can't until we get ourselves out of this situation. I don't think 670sq ft is enough room to have a baby since it's barely enough room for my husband and our small dog. We got married last year and had to purchase a storage space for all of our wedding gifts. Zillow says our home would sell for $229k, however a real estate agent in the area said we would be lucky to get 200k. That would completely wipe out all of our savings and maybe even more than what we have saved in the bank. He also said our property may sit on the market for over a year at $200k. I personally want to walk away, but it's my husbands credit score not mine and he refuses to do so.

It certainly is a shitty time for people who were responsible and did not buy over their heads!!! I don't know what the answer is for us and am not sure what the answer is for you either.

Since you will only lose 20k I would say get the heck out now, since properties will continue to lose for a while in my opinion. For us if we only lost 20k we would do it but over 100k is way too much of a hit.

We spoke to our bank and they would not do anything for us in terms of a short sale. You might considering pleaing with them to see what they can do for you since your financial picture changes with a child.

Please post when you have made your decision! Good luck.

My opinion in all of this from all of the reading I have done on the current housing market/economy is that property values will take at least 10 years to go back up to the prices they were at in the peak. For us we can have a tenant but we would have to cover at least 1k of the mortgage each month until we could sell the property for what we purchased. I also think that is crazy, how can we survive giving up 1k a month?

I was in exact same situation except I put almost $300k down in my case.
I was single when I bought my place then I got married and had a baby.
We tried to ride out for three years but the price just kept falling and I believe it is falling further.
I tried to modify the loan to keep the place and renting it out but bank won't give me modification that would work for me. They were saying our income is too high.... So our family decided to walk. Now the property has no equity, perhaps a little bit under the market price.

Now we are renting much bigger and nicer place for the 1/3 less than what I used to pay!
We are happy. I lost big chunk of money but hey, I gained family!

Condohelp:

For you, if you really want a child, then the dog would have to go.

You'd have to get creative and hang a bassinet from the ceiling (sorry, but believe it or not, we had to consider this as an option since we had 2 toddlers and one newborn in a rental that was 750 sq ft) - raising and lowering it with pulleys (spouse is an engineer).

Happily, we found a rental that was 1250 sq ft. Heaven.

~Misstrial

"So obviously, one of you groups of people are going to look really dumb in a few years. Heh."

Yeah like you do now.

Misstrial, I don't know how you did that. I'm not yet that desperate for a baby, but in about a year I will be :).

Misstrial says

Condohelp:

For you, if you really want a child, then the dog would have to go.

I could never understand that kind of thinking - pets SHOULD be treated as long term obligations. Ours is a member of the family. He's not disposable when another priority comes in to play.

Yeah, I figure we are about 30-40k+ under water (we owe 260k on a completely rebuilt 1950s bungalow in an area where slight fixers are selling for 200-210k). Our total PITI is within a couple hundred of what one would pay in rent in a unremodeled slight fixer in the neighborhood without any deductions. It's frustrating, this is not the house we want to be in for the next 5-10 years but oh well. Compared to the rest of the world we are living in the lap of comfort and luxury in our 1000sf. Yeah, we "need" a bigger garage since we have motorcycles and my husband is a mechanic. Yeah, we "need" a second toilet, or a bathroom big enough for 2 people to stand in and brush their teeth! But hey...heat, running water and all that!

I think your options are stay or walk. There wont be a better time to do so if you decided to bail..

klarek says

“So obviously, one of you groups of people are going to look really dumb in a few years. Heh.”
Yeah like you do now.

Yeah, I thought that was pretty obvious by my post.

Thanks for clearing that up, though.

Liz Pendens says

Misstrial says

Condohelp:
For you, if you really want a child, then the dog would have to go.

I could never understand that kind of thinking - pets SHOULD be treated as long term obligations. Ours is a member of the family. He’s not disposable when another priority comes in to play.

Liz Pendens:

The key words here are "For you...." For the poster who lives in a 800+/- sq ft residence, having space concerns for a new wanted and desired member of the household was the main consideration.

Having lived this and not just randomly throwing out suggestions was my motivator.
Having a pet and a baby in a very small space was just not practical for us or possibly for other parents.

I appreciate your views though...

~Misstrial

@ Misstrial:

The key words here are "... then the dog would have to go."

So it sounds like you chose to give your dog up when it unwittingly became - well, impractical and second fiddle. I hope it found a good home.

Liz Pendens says

@ Misstrial:
The key words here are “… then the dog would have to go.”
So it sounds like you chose to give your dog up when it unwittingly became - well, impractical and second fiddle. I hope it found a good home.

Well I suppose what someone chooses to do with their life is their business.

I personally do not equate a pet with a human baby, although apparently you do.
I respect your views, I hope that someday you will respect mine.

~Misstrial

Liz Pendens says

pets SHOULD be treated as long term obligations

nah. They live for the moment. Their only importance in this world is what you (or somebody else) invests in them.

Putting a pet down is No Big Deal in the scheme of things.

Off subject a bit... but I thought I would vent. I'm just amazed on how I realize many people believe that the economy is not as bad as it actually is. Like we are in a "recession" and not a "depression". Or saying things are getting better. Some people actually say they don’t watch the news or want to know what is going on, because it’s too stressful and rather be in their own bubble of illusions (my boss). People are in denial. It seems like most can’t see more than 2’ from their face or don’t want to. They always think that someone else will “fix” all the problems and everything will be OK. Meanwhile, their jobs are taken / necessities are getting more expensive / and everywhere you turn you realize things are getting worse instead of getting better. These same people complain later about how stressed they are as a result of these problems without connecting the dots and really speaking out. Greed, stupidity, ignorance, & complacency are all in one pot, and it’s like a mob happy to drink the Cool Aide inside it.

lillybee62002 says

Off subject a bit… but I thought I would vent. I’m just amazed on how I realize many people believe that the economy is not as bad as it actually is. Like we are in a “recession” and not a “depression”. Or saying things are getting better. Some people actually say they don’t watch the news or want to know what is going on, because it’s too stressful and rather be in their own bubble of illusions (my boss). People are in denial. It seems like most can’t see more than 2’ from their face or don’t want to. They always think that someone else will “fix” all the problems and everything will be OK. Meanwhile, their jobs are taken / necessities are getting more expensive / and everywhere you turn you realize things are getting worse instead of getting better. These same people complain later about how stressed they are as a result of these problems without connecting the dots and really speaking out. Greed, stupidity, ignorance, & complacency are all in one pot, and it’s like a mob happy to drink the Cool Aide inside it.

I hear ya. Lebron and Lohan is more important than the BP spill for most people. It's disgusting.

I found this on the drudgereport.com
http://www.youtube.com/watch?v=3B_xBWsDpz0

lillybee62002 says

Or saying things are getting better.

No offense, but I think you need to look in a mirror. Things have been getting better for about the last 6 months or so. There is no denying that.

Now, they have gotten only marginally better from a very low point and it's unclear if they will continue to improve or not. But calling people delusional for saying things are improving is just plain wrong.

I agree completely with your point.

I guess people who are in their 20's and live in the Bay Area should really think twice about buying a "starter condo." A starter house is generally a bad idea because you pay a ton of interest and fees to live somewhere for a couple of years, but a starter condo is even worse.

Well, this whole thread has been an interesting read.
I am out here in Roseville, outside of SacTown. Condo prices have already fallen 60-70% of their sale price in 06.
1100 sf 2bd 2ba are going for 100k-120K range now...sold in the 250K-300K 4-5 yrs ago. these are units that were constructed in the early 2000's...so still relatively new...HOA's in 170/200 range

I have about 200K+ to invest, and am scouring this area, seriously considering buying two of these for income, 100% cash, no mortgage. Rentals for these are in the 1000/1200 range, so looking at annual return of 8% after taxes/hoa stuff...

But you people are scaring the hell outta me now with the predictions of another 2-4 years of price drops. Seems to me they can't get much lower than 30% of peak value! ( most of these at this price are REO's ).

IMHO the bay area is still way overpriced, but out here we are near or have hit the bottom........

i just shake my head when i see 300K+ and 300+ HOA for 800sf..........

that guy with the RV idea sure looks appealing after looking at those numbers...

Liz and Misstrial,

No one worry, we would never give up our dog!!! He is a member of the family.

If that's the complex by Mid Town, I'd either walk or if I insisted on not walking, sell out and take the loss. That big complex has all of the disadvantages of high density living, but none of the advantages; like a desirable/walkable neighborhood, or being steps away from the light rail or Caltrain, nor walking distance to any university; nor in the enrollment area for an elite public school. It doesn't even offer the benefit of walking distance from the old Saddle Rack after a night of slamming down tequilas (being as how I think they tore down that great old institution to build the new complex).

I have intentionally left "appreciation/depreciation" out of the equation. I am looking at a 10-15 year hold on these for income only. Unless of course another mini-bubble appears out of nowhere!! would be happy at the end of this period with the standard 3% annual appreciation that's harped all the time, but not keeping my fingers crossed..
then again, 100K to 130K does not sound like a huge jump for 2020 prices.....room to take a hit or two..

not really 'savvy' yet, but been scouring trulia, redfin, movoto, realtytrac, and blogs like this one for the past 6 weeks, gettin my feet wet..

edit: of course, i will get the 'depreciation' tax advantage every year....

not looking in sactown, in roseville/rocklin area....

xrpb11a,

I'm sort of at the same stage as you but gotta get over the hump of learning how to set up having my IRA buy a place. At the moment it doesn't matter because in the neighborhoods that I know around here the prices don't pencil out with the rents yet. But that may change in the coming years.

gotta do something....can't depend on SS or medicare, no one's got the acorns to legislate the fix to keep it all above water...so create the cash cows while 'the gettin's good', and hope the 'gettin' doesn't git better in a year or two lest what you got is going in the gutter!

You should think a couple of steps ahead of where you are now. If you sell at a significant loss (which appears most likely) how will you purchase a home in the near future? $20,000 is a lot of money to lose and odds are that you'll lose even more just for the opportunity to buy in the near future.

With that said, where are you going to come up with a 10-20% down payment on the next property in less than 2 years? Wouldn't you want to spend your savings on a place to live instead of just the opportunity to buy in the near future?

I was in almost the exact same situation. I had a condo that I bought for 350k (2004) become worth 250K (2008) (and this was AFTER 26k in improvements). Long story short I stopped paying because I was forced to move 400 miles away due to a job relocation. Sinking my life savings into the place so I could "do what's right" seemed really stupid.

Doing "the right" thing is keeping your $$$ and taking care of your family. The Bank would NEVER let a negative asset sit on it's balance sheet, why should you? I think you're being conned when you say, " I know it may be costing me money, but I guess I was always raised in the whole “if you gave your word, you stick by it” tradition."

I never once missed a bill in my entire life but losing my life savings to "do what's right" is a load of shit. Do what's right for those closest to you, not some giant bank.

Few Questions:
Are ABSOLUTELY you sure you'd ONLY save $200 on renting? Know the EXACT amount

Note: your wifes credit is also completely separate from your own as long as only your name is on your papers.

Note: I successfully did a short sale, the property went to a nice guy and the bank didn't have to go trough foreclosure. To do this I had to stop paying for 12 months.

We are in the same boat, but choose to stay in the condo because we pay 1.9K mortgage + 400 HOA fee + 300 property tax. That's 2.6K, some of which comes back in form of tax benefit. With renting there is no tax benefit.

Someone look really dumb buying a one bedroom apartment. Heh.

dajanara says

We are in the same boat, but choose to stay in the condo because we pay 1.9K mortgage + 400 HOA fee + 300 property tax. That’s 2.6K, some of which comes back in form of tax benefit. With renting there is no tax benefit.

But if the rent for the same thing is much less, you still lose by owning, even with the income deduction.

Misstrial says

Condohelp:
For you, if you really want a child, then the dog would have to go.

I'd say wait until the dog dies, or do the smart thing and don't have kids. besides being very annoying, kids are very expensive.

"child(ren)" ! Eeww, icky poo.

zzyzzmx, sounds like you belong out here in the Cool and Hip Bay Area.

I respect your decision to keep your word with the bank, as difficult as it may be at this time. You will be able to sleep at night knowing your honest and hard working. If at some point you need to make a hard choice financially ,you will do so with integrity and the best interest of your new family in mind. It wont be a character flaw, it will be living life, some times it works for you and sometimes it fills like it works against you.

Your real wealth is your new family. The equity will continue to grow with them the rest of your life regardless of your financial decisions. God bless

zzyzzx says

Misstrial says

Condohelp:

For you, if you really want a child, then the dog would have to go.

I’d say wait until the dog dies, or do the smart thing and don’t have kids. besides being very annoying, kids are very expensive.

Children are expensive, but well worth it. I love kids and do want to have at least 2.

Well - good news. I just sold the condo, and I didn't take too much of a hit. Had to pay a bit out of pocket, but nowhere near as bad as it could have been. Buyer is paying all cash. So all in all, a good transaction.

My next step is to decide when the right time to buy is going to be. We're going to rent a house or apartment for a while, a nice 2-3 bedroom somewhere affordable but clean and safe. Suggestions are appreciated, preferably in the Campbell/Cambrian area of San Jose.

So, when's the right time to buy? What do I look out for in the market? When interest rates start going up? When prices drop another 20%? What's the wisdom of the Patrick.net crew?

congrats on the news. Make sure to keep/establish the tax basis for capital loss you can utilize subsequently.

Take some time to look at things from the family perspective first and you'll have an idea what you will need going forward. The market/interest rate is not going anywhere in the short term.

Yeah. We are in for Japan style. Rates are just not going to go up dramatically. What you want to watch is the REO/short sales in your area. Most people here won't recommend to buy immediately.

Make sure to keep/establish the tax basis for capital loss you can utilize subsequently.
Ha ha, funny guy. You've been on the business side too long, SF ace. Under Section 121 he'll get nothing and like it!