Sold my house today... at a loss

[GreenSheep]

I did a very un-Mustachian thing today. I sold my house for 25% less than I paid for it, and that doesn't even include the improvements I made over the years. Unfortunately, I bought it in 2007, when I was young and stupid and had no idea that the real estate market was about to crash. I was hoping to hold onto it until prices rebounded, but some simple math made me realize that I was fighting a losing battle thanks to HOA fees, utilities, property taxes, general upkeep, etc. I've been living with my boyfriend in his house for several months, and it was just making less and less sense to leave my house sitting there empty. Renting it wouldn't have brought much income, and I'd just worry about renters destroying it.

Surely there are other people who have been in this boat. How did you manage such a crushing blow to your financial psyche? I'm trying to tell myself that if I had been renting a place for the past 8 years, it would have cost me about the same, but since I was a homeowner, I learned a ton about DIY home improvement that I will be able to use in my next home. Plus I really did enjoy the process of making a very basic house into one that received 5 offers from buyers in its first 3 days on the market and ended up selling higher than the asking price. Still... that 25% loss... ouch.

[dude]

If the loss basically matches what you would have paid in rent over that period, I would not consider it much of a loss.  You now have a clean slate having unburdened yourself of that albatross.  I would be feeling pretty damn good about myself in that case, as opposed to hanging on to something that far underwater.  Let it go.  Consider it a fresh start.

[lavagirl]

I'm in a similar boat as you and I plan on selling my condo at a loss in the near future.  I figure ill cut my losses and move on and try not to make the same mistake in the future. 

[Davids]

Bad timing but you have learned. The path to success slways has mistakes along the way.

[gliderpilot567]

I am preparing to liquidate my one rental property next year when the current tenant's lease is up. I have too little equity in it (bought it for 0% down in 2009 on a 30 year) and will probably break even or take a small loss after paying the agent commissions.

Here is how I made myself ok with it (breaking even or taking the small loss):

1. Every month of vacancy is worth one mortgage payment. Therefore, selling it today for a certain price is the same as selling it 6 months from now for (price + 6 * mortgage payment). The property will NOT appreciate fast enough to make the risk of vacancy worth it. There is always at least a few weeks of vacancy in between tenants to repair/clean/maintain the property.

2. If I "own" the property, but am living in another, and the only way I can pay to keep the second property is by renting it out, then what do I really own?

 - The tenant's rent payment is just shy of covering the mortgage, so I have to feed it about $50/month and thereby am very slowly gaining equity, so overall it is essentially a net wash on my books each month
 - I "own" the structure, but I don't get to use it because it has to have a tenant in it for me to keep it, so what do I really own?
 - The answer: I own the risk. Financially, it is almost a net wash, except that I have to carry landlord's insurance which costs money, and I am always at risk of the property going vacant OR the tenant not paying. Two factors in the reliability equation, in series, either which could potentially screw me (and have, last year when the property was vacant for 5 months). And the benefit of this significant risk is a thin trickle of equity.

Not worth it in my book. I won't take as big of a loss as you did (sorry to hear about that, but like the others said you will recover; I took a 25% loss on an airplane project that I sold, but it was a valuable lesson) but it will be nice to be free of the encumbrance and the risk.

Now if you can buy a rental property for cash, or leverage it intelligently (unlike what I did), then it's a different story. I am by no means a real estate guru but there are plenty of people here who are if you're interested!

[honeybbq]

Sh*t happens.

I lost about 100k on my last house I sold.

According to Zillow, I've made 200k on my house since I bought it 3 years ago.

You never know, just roll with the punches and do what you can.

[Mr. Green]

Unless you live in one of a couple markets, anyone who bought in '06-'07 will lose money on the sale these days. We'll be selling about a year from now and we'll be selling at just over a 10% loss. It would take almost ten years to get back to that price though. You just can't think about it that way. At this point that loss is a sunk cost for us. Fortunately, we've paid our mortgage down enough that we'll still walk away with good money in our pocket from the equity. Hopefully an entire generation learned a lesson from that madness.

[jms493]

Yeah...sometimes you need to take a step back in order to move forward.  In June 2015 I sold my rental condo and owed 80K at the closing...I still owe 30K on the loan I took out to pay for it.  It will be paid off in March 2016.

Totally sux but it was just bad timing and a bad investment.  If I ever buy a rental property I will pay cash for it....so I can ride out a bad turn in the market.

[mxt0133]

Is it really a loss?  What would have been the cost of renting for the past 8 years?  How much rent would you have paid?  Do that math and you might be more ahead than you think.  Don't forget to include the tax savings on mortgage deductions and property taxes assuming you itemized vs taking the standard deduction.  With all that you might have come out ahead.

[GreenSheep]

Thanks everyone. It does help that I paid down the mortgage and it will feel like I've made money at the closing.

mxt0133, I did mention the idea of comparing with renting above. That is also something that helps a bit.

[Astro Camper]

We are in the same boat. Paid 170K in January 2010 after the crash. At that point I thought I was getting a steal. The house was sold in 2006 for 240K. Turns out the market kept dropping all the way to 2014. Next year we may get 150K if we're lucky. Oh well, never again.

[begood]

We bought in April 2007 and sold in August 2009. We lost 13% of the purchase price, which at the time translated to  not quite twenty years of equity. BRUTAL. And then I reframed it as "Hey, it's like we rented all that time." And then I could sort of let it go. Would I have preferred to make 13% on the sale? You bet. Do I still miss that moolah? Yup. But holding on to the house would have been SO much worse. We were lucky - it sold in 4 months. We were living 550 miles away from it by then, and I couldn't imagine trying to maintain a house in a different state over the winter. I've never been so glad to have a closing.

This too shall pass!

[Mikila]

Chalk it up as the price of education and freeing yourself from that debt burden.  You learned from it and will no doubt not make the same mistake again.  As you said, you also had a place to live and hands-on diy experience.  Pain helps us learn.

[justajane]

Another fellow 2007 buyer here who sympathizes with you. Even though I never plan to sell my house and actually put an addition on it, if the house were as we bought it in 2007, we would still have to sell it for less than we paid for it. But I don't regret buying then. We had gotten married the year before and were ready to buy.

[FenderBender]

i bought second home in 2006 did quite a lot to it.  bought for 450k and county reassessed for 160k in 2009 so in that year i started to rip out everything i could take with me .... entire kitchen, all flooring down to just concrete, everything lights, medicine cabinets, mailbox, screen doors and neatly put it into a truck around moving day.  i also dismantled the garage doors on the way out on moving day.  they foreclosed which was fine.  my credit took a hit for about 2 years.   when i'd apply for a CC, they would give me the card but at low credit limit.   now when i apply for cards, they give me credit limits around 15k so basically back to normal.   my score never went into the 500s and now high 700s.  i churn CCs for free travel nowadays.

i took stuff with me, but i didn't destroy the house.

every now and then i look up the value of that house and it still isn't what my mortgage was. 

prior to the foreclosure i didn't churn CCs for travel so i only ever had 1 CC which always had a zero balance and i have always drove older cars so paid cash so i never really used my credit especially since i had cash in the bank so the low credit score hurt my feeling a little at the time but really didn't impact my life at all.

you got to know when to hold them, know when to fold them, know when to walk away.... take your money while the .....

[dude]

As if on cue, this article today:

http://www.marketwatch.com/story/if-you-bought-your-home-during-these-years-youre-really-hurting-2015-11-16

I really feel for everyone out there who took a bath.  The whole real estate thing can be so random.  For no other reason than blind luck really, we bought in an area that has seen an incredible renaissance (Greater Boston Area), and home prices have skyrocketed since we purchased in 2007. Crazy shit. Feel very fortunate.

[dadu007]

You're definitely not alone.  Bought a house in 2004 for $195,000.  My company closed my office in 2010 (think housing crisis era) and we were forced to move out of state.  Took us 9 months to sell it for $155,000.  That was after about $20,000 grand of improvements; so about a $60,000 loss.
Really a tough and bitter pill to swallow, especially since we played by the rules and "did everything right".
Our only consolation is that the move to our current place turned out to be very good thing for our family.

[GreenSheep]

Really a tough and bitter pill to swallow, especially since we played by the rules and "did everything right".

Thank you for bringing that up. The fact that I didn't drop my end of the deal makes me feel good. Not that I ever considered it, but I can't even remember the number of people who told me I should just do a foreclosure or short sale or whatever. No. I'm not that kind of person. I could easily afford the mortgage, so there was no reason to back out. I paid more than my mortgage every month, made all sorts of nice improvements to the place, and still lost in the end, but at least my integrity remains intact.

[cbgg]

Surely there are other people who have been in this boat. How did you manage such a crushing blow to your financial psyche?

Did you learn something?  Then call the "lost" money tuition.  If you are learning and will apply these lessons in the future, the money is not lost, it just bought you some valuable experience.

[DirtDiva]

Bought in 2005, house is on the market right now for $10,000 less than we paid back then...and we put way too much money into improvements and maintenance. Will lose at least $80k.

I don't have any rationalizations.  We lost the money. It won't kill us.

[Rural]

Bought in 2005, house is on the market right now for $10,000 less than we paid back then...and we put way too much money into improvements and maintenance. Will lose at least $80k.

I don't have any rationalizations.  We lost the money. It won't kill us.

 You didn't exactly lose the money – you spent $10,000 a year on housing yourself. Not so bad in the grand scheme of things.

[justajane]

Bought in 2005, house is on the market right now for $10,000 less than we paid back then...and we put way too much money into improvements and maintenance. Will lose at least $80k.

I don't have any rationalizations.  We lost the money. It won't kill us.

 You didn't exactly lose the money – you spent $10,000 a year on housing yourself. Not so bad in the grand scheme of things.

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

[I'm a red panda]

I have never considered my house an investment. It is a place for me to live, which I have to pay for. 
Perhaps you paid a bit of a premium over renting, maybe you broke even or made out better.  But were you happy with where you were living? Did you have some freedom in it that renting would have provided?  Then to me, it doesn't matter if you lose out a bit.

And yes, we sold our last house at a loss. Didn't bother me in the slightest.

[RWD]

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

We bought a house in 2008 that we sold this year at about a 25% loss. Renting would have cost $1000-1100/month for a similar house. Our house cost us $1800/month, not counting opportunity cost. That does not make me feel better...

Though I don't kick myself for accidentally purchasing near the top of the bubble as that's hard to control. I kick myself for not saving up a 20% down payment so that we wouldn't have had to pay mortgage insurance for seven years.

[rantk81]

I bought my first condo in my early 20s for just north of $150K, in 2005.  It is paid off now, but even after many improvements, I'd be lucky to walk away with $120K after transaction costs--even 10+ years later.  I still currently own it and rent it out.

I don't really think it is a great comparison to offset the loss in equity value by the utility value of not-paying-rent-while-living-there.  (I think the BLS calls this the OER - "Owner's Equivalent Rent.")  I feel this way because of all of the property taxes, HOA fees, etc, that I paid in the meantime, not to mention considering the interest I paid on the mortgage when it was mortgaged (and also the opportunity cost of the $150K after I had the loan paid off.)

It's a lesson learned for me, for sure.  At the time in my early 20s, I had no idea we were in a real estate bubble with a highly distorted market.  My Mustachian self had done the "Right Thing (tm)" and saved up a 20% down payment, for a place I intended to live in for several years, with a purchase price less than 2.5X my salary, and I bought it as a home, not as an investment.  Little did I know, I was bidding against other people who were approved for liar-loans with 0% down required and cash back at closing, and many were likely trying to flip before even making their first mortgage payment.  Uuugh, it makes me angry just to think about it.

[lostamonkey]

Bought in 2005, house is on the market right now for $10,000 less than we paid back then...and we put way too much money into improvements and maintenance. Will lose at least $80k.

I don't have any rationalizations.  We lost the money. It won't kill us.

 You didn't exactly lose the money – you spent $10,000 a year on housing yourself. Not so bad in the grand scheme of things.

This is not true. You would have to add in mortgage interest, property taxes, repairs, insurance, condo/HOA fees, and opportunity cost of equity to calculate the true cost of housing.

That being said losing money in real estate isn't really a huge deal. No one can see the future and it might have just been poor luck. If you said in 2007 that the US housing market was going to crash people would have thought you were crazy.

[justajane]

I don't really think it is a great comparison to offset the loss in equity value by the utility value of not-paying-rent-while-living-there.  (I think the BLS calls this the OER - "Owner's Equivalent Rent.")  I feel this way because of all of the property taxes, HOA fees, etc, that I paid in the meantime, not to mention considering the interest I paid on the mortgage when it was mortgaged (and also the opportunity cost of the $150K after I had the loan paid off.)

I see your point but, in essence, you also pay property taxes, fees, and repairs when you rent. It's just built in to the cost of the rent.

The rental market value for our home is likely still a couple hundred dollars more than the monthly mortgage and taxes. Once you factor in the repairs, it's probably break even, but slowly over time we are building equity. It's just more risky than renting, since it's not a given that the value of the home will go up. 

[RWD]

I don't really think it is a great comparison to offset the loss in equity value by the utility value of not-paying-rent-while-living-there.  (I think the BLS calls this the OER - "Owner's Equivalent Rent.")  I feel this way because of all of the property taxes, HOA fees, etc, that I paid in the meantime, not to mention considering the interest I paid on the mortgage when it was mortgaged (and also the opportunity cost of the $150K after I had the loan paid off.)

I see your point but, in essence, you also pay property taxes, fees, and repairs when you rent. It's just built in to the cost of the rent.

The rental market value for our home is likely still a couple hundred dollars more than the monthly mortgage and taxes. Once you factor in the repairs, it's probably break even, but slowly over time we are building equity. It's just more risky than renting, since it's not a given that the value of the home will go up.

Yes, the taxes, fees, and repairs are built into the cost of rent and that is why you have to add those to the loss in equity to have a fair apples to apples comparison.

[catccc]

Well, fwiw, I think you made the right choice.

Also, I'm sure glad I've continued to rent.  Although our town seems to be a bit of an anomaly and prices have gone up since 2007.  So maybe I'm not glad I've continued to rent.  The point is, it's hard to guess what will happen with home values, you can only do what is reasonable in the moment, which you've done.  Yes, it resulted in a financial hit, but sometimes that happens...

[Bearded Man]

I am preparing to liquidate my one rental property next year when the current tenant's lease is up. I have too little equity in it (bought it for 0% down in 2009 on a 30 year) and will probably break even or take a small loss after paying the agent commissions.

Isn't it interesting that like lawyers in a divorce, RE agents are the ones who always win...Finacially. You take on the risk, use your money, and they make a profit to unlock the door for you and fill out a cookie cutter contract.

[Roboturner]

Isn't it interesting that like lawyers in a divorce, RE agents are the ones who always win...Finacially. You take on the risk, use your money, and they make a profit to unlock the door for you and fill out a cookie cutter contract.

This! RE agents are one of the many "Leech jobs" i can think of. I think the worst hands down though are corporate recruiters. Literally no skills of their own, having to leech of the skills of others to make a quick buck.

[Bearded Man]

We are in the same boat. Paid 170K in January 2010 after the crash. At that point I thought I was getting a steal. The house was sold in 2006 for 240K. Turns out the market kept dropping all the way to 2014. Next year we may get 150K if we're lucky. Oh well, never again.

Curious, where is this? I'm shocked to see so many people with declining home values when other markets have recovered. Can't be small towns in the middle of nowhere, with no economies at those prices.

[Bearded Man]

Isn't it interesting that like lawyers in a divorce, RE agents are the ones who always win...Finacially. You take on the risk, use your money, and they make a profit to unlock the door for you and fill out a cookie cutter contract.

This! RE agents are one of the many "Leech jobs" i can think of. I think the worst hands down though are corporate recruiters. Literally no skills of their own, having to leech of the skills of others to make a quick buck.

Yeah, I'm hoping to downshift into a CORPORATE recruiter role for exactly that reason. In my area they make 60-70K a year easy. To do what? Post jobs, make calls and screen resumes? I know guys who make 60K a year doing web app dev. If you can't beat the corporate idiocy, join 'em.

[BTDretire]

Yep, "just call it a fresh and forget it."
 We bought our home in 94' for $81,000 at the peak around 2007 it
would have sold for about $260,000, today about $140,000.
 Just glad I wasn't one that tried to flip condos during that time.
I know retires who lost big money during that time when real estate was hot.
And then not!

[Bearded Man]

I was looking at a listing the other day where the owner bought in 2000, and just now sold. I ran the numbers, and adjusted for inflation, even with principal paydown, after factoring in transaction costs for buying and selling, they STILL lost a lot of money. Where was this at? Olala, Iowa? Flint, Michigan? NOPE. Seattle (King County). Basically, it seems to me even over a 15 year period, when you bought has as much to do with your gain than where you bought. I'm swimming in money from my real estate deals, largely because I bought at the bottom, near bottom and just a year past the bottom.

This is one of the reasons I always buy with an eye to what a property would rent for/like. If I can't turn a profit renting it out at some point, I don't buy it.

[MakingSenseofCents]

I know how you feel. We just had to pay money in order to sell our house. I'm not as upset though because our home is valued at even less right now, even though we just sold it in July of 2015.

[dragoncar]

i bought second home in 2006 did quite a lot to it.  bought for 450k and county reassessed for 160k in 2009 so in that year i started to rip out everything i could take with me .... entire kitchen, all flooring down to just concrete, everything lights, medicine cabinets, mailbox, screen doors and neatly put it into a truck around moving day.  i also dismantled the garage doors on the way out on moving day.  they foreclosed which was fine.  my credit took a hit for about 2 years.   when i'd apply for a CC, they would give me the card but at low credit limit.   now when i apply for cards, they give me credit limits around 15k so basically back to normal.   my score never went into the 500s and now high 700s.  i churn CCs for free travel nowadays.

i took stuff with me, but i didn't destroy the house.

every now and then i look up the value of that house and it still isn't what my mortgage was. 

prior to the foreclosure i didn't churn CCs for travel so i only ever had 1 CC which always had a zero balance and i have always drove older cars so paid cash so i never really used my credit especially since i had cash in the bank so the low credit score hurt my feeling a little at the time but really didn't impact my life at all.

you got to know when to hold them, know when to fold them, know when to walk away.... take your money while the .....

Sounds like you're lucky not to be in jail

[Bearded Man]

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

We bought a house in 2008 that we sold this year at about a 25% loss. Renting would have cost $1000-1100/month for a similar house. Our house cost us $1800/month, not counting opportunity cost. That does not make me feel better...

Though I don't kick myself for accidentally purchasing near the top of the bubble as that's hard to control. I kick myself for not saving up a 20% down payment so that we wouldn't have had to pay mortgage insurance for seven years.

I'm of the opinion that if one can't put 20% down, they can't afford it. Those 3% down loans are back, oh are they back...

Did you run a buy vs rent calculator before buying? Sounds like you were paying twice the cost of rent, factoring in maintenance, and with huge transaction costs and risks.

[RWD]

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

We bought a house in 2008 that we sold this year at about a 25% loss. Renting would have cost $1000-1100/month for a similar house. Our house cost us $1800/month, not counting opportunity cost. That does not make me feel better...

Though I don't kick myself for accidentally purchasing near the top of the bubble as that's hard to control. I kick myself for not saving up a 20% down payment so that we wouldn't have had to pay mortgage insurance for seven years.

I'm of the opinion that if one can't put 20% down, they can't afford it. Those 3% down loans are back, oh are they back...

Did you run a buy vs rent calculator before buying? Sounds like you were paying twice the cost of rent, factoring in maintenance, and with huge transaction costs and risks.

I agree, though I would phrase it as "if a house is affordable you will be capable of saving a 20% down payment". We could have done so, but I didn't want to wait because I thought we should buy a house before prices went back up. Our house lost nearly half its value in two and a half years (according to Zillow) so that didn't work out very well...

I didn't run a rent vs buy beforehand, but checking now with our initial conditions/assumptions it says we should have come out ahead unless rent is less than $850/month (add ~$150/month for mortgage insurance and HOA). Though that assumes we could deduct all of our mortgage insurance on our taxes, which we couldn't. But we did refinance after a couple years which pretty much offsets that. We only did so terribly because the housing market crashed.

Or looking at it a different way... The default for home appreciation on the rent vs buy calculator is 3% per year. The difference between expected appreciation and actual depreciation works out to ~$1000/month in our case. I don't think it's fair to expect us to anticipate such a huge discrepancy.

Of course, I'm not trying to rationalize our decision. Even assuming the market didn't crash it would have been better to save up a 20% down payment and not accept a 6.5% interest rate on our mortgage. And we should have considered renting simply because we knew there was a good chance we wouldn't stay in the house for too long.

[Bearded Man]

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

We bought a house in 2008 that we sold this year at about a 25% loss. Renting would have cost $1000-1100/month for a similar house. Our house cost us $1800/month, not counting opportunity cost. That does not make me feel better...

Though I don't kick myself for accidentally purchasing near the top of the bubble as that's hard to control. I kick myself for not saving up a 20% down payment so that we wouldn't have had to pay mortgage insurance for seven years.

I'm of the opinion that if one can't put 20% down, they can't afford it. Those 3% down loans are back, oh are they back...

Did you run a buy vs rent calculator before buying? Sounds like you were paying twice the cost of rent, factoring in maintenance, and with huge transaction costs and risks.

I agree, though I would phrase it as "if a house is affordable you will be capable of saving a 20% down payment". We could have done so, but I didn't want to wait because I thought we should buy a house before prices went back up. Our house was $260k when built in 2006 and we purchased it for ~$195k in 2008. Zillow valued it at $100k in 2011 so that didn't work out very well...

I didn't run a rent vs buy beforehand, but checking now with our initial conditions/assumptions it says we should have come out ahead unless rent is less than $850/month (add ~$150/month for mortgage insurance and HOA). Though that assumes we could deduct all of our mortgage insurance on our taxes, which we couldn't. But we did refinance after a couple years which pretty much offsets that. We only did so terribly because the housing market crashed.

Or looking at it a different way... The default for home appreciation on the rent vs buy calculator is 3% per year. So it expects our house would have been worth $240k at the time we sold it. The actual sale price was ~$155k. So the difference between expected appreciation and actual depreciation works out to ~$1000/month. I don't think it's fair to expect us to anticipate such a huge discrepancy.

Of course, I'm not trying to rationalize our decision. Even assuming the market didn't crash it would have been better to save up a 20% down payment and not accept a 6.5% interest rate on our mortgage. And we should have considered renting simply because we knew there was a good chance we wouldn't stay in the house for too long.

I see, you didn't buy at the bottom. Impossible to pick. I bought my first house in very late 2010. Second in early 2013 (closing), third mid 2014. I didn't buy at the exact bottom except maybe the 2013 house. What about the economy where the house is? Is it in decline? Why does the house keep dropping in value?

[MayDay]

Hello!  Checking in!

We bought for 260K in Mpls in 2005.  5% down, with a second mortgage for 15% at 4.xx%. 

We spent about 3 years putting all our extra "DINK Money" to paying down the second mortgage.  Got it paid off. 

Then we relocated and sold for 205K in 2012.  This was also after major improvements- don't even want to think about how much we spent on that stuff.  Probably we lost about 80K total.

Then the new owners sold after 3 years for 285K.  FML.  We sold RIGHT before the Mpls market took back off.  We were like 2 seconds away from renting it out instead of selling, but we would have lost money renting it, plus had to fix stuff up before selling, so I am still glad we sold it.  But it fucking sucks.

[RWD]

Yeah, you should always subtract the amount that you would have realistically spent in rent during that time from your losses. It will make you feel better.

We bought a house in 2008 that we sold this year at about a 25% loss. Renting would have cost $1000-1100/month for a similar house. Our house cost us $1800/month, not counting opportunity cost. That does not make me feel better...

Though I don't kick myself for accidentally purchasing near the top of the bubble as that's hard to control. I kick myself for not saving up a 20% down payment so that we wouldn't have had to pay mortgage insurance for seven years.

I'm of the opinion that if one can't put 20% down, they can't afford it. Those 3% down loans are back, oh are they back...

Did you run a buy vs rent calculator before buying? Sounds like you were paying twice the cost of rent, factoring in maintenance, and with huge transaction costs and risks.

I agree, though I would phrase it as "if a house is affordable you will be capable of saving a 20% down payment". We could have done so, but I didn't want to wait because I thought we should buy a house before prices went back up. Our house lost nearly half its value in two and a half years (according to Zillow) so that didn't work out very well...

I didn't run a rent vs buy beforehand, but checking now with our initial conditions/assumptions it says we should have come out ahead unless rent is less than $850/month (add ~$150/month for mortgage insurance and HOA). Though that assumes we could deduct all of our mortgage insurance on our taxes, which we couldn't. But we did refinance after a couple years which pretty much offsets that. We only did so terribly because the housing market crashed.

Or looking at it a different way... The default for home appreciation on the rent vs buy calculator is 3% per year. The difference between expected appreciation and actual depreciation works out to ~$1000/month in our case. I don't think it's fair to expect us to anticipate such a huge discrepancy.

Of course, I'm not trying to rationalize our decision. Even assuming the market didn't crash it would have been better to save up a 20% down payment and not accept a 6.5% interest rate on our mortgage. And we should have considered renting simply because we knew there was a good chance we wouldn't stay in the house for too long.

I see, you didn't buy at the bottom. Impossible to pick. I bought my first house in very late 2010. Second in early 2013 (closing), third mid 2014. I didn't buy at the exact bottom except maybe the 2013 house. What about the economy where the house is? Is it in decline? Why does the house keep dropping in value?

Moving did reduce my commute from 15 miles (all city) to 5 miles (half highway), so that was nice. The market in that area has been recovering slowly. When we purchased there were still new homes being built in the neighborhood. Seven years later they still hadn't developed all the lots...

When we moved to the area we initially were set up to rent a house for ~$1000/month but it wasn't ready the day we arrived. In addition, it turned out to be a sketchy neighborhood so we cancelled that and rented a smaller apartment on the extreme edge of town. Hence why we were already looking for a better location so soon.

[Roboturner]

Isn't it interesting that like lawyers in a divorce, RE agents are the ones who always win...Finacially. You take on the risk, use your money, and they make a profit to unlock the door for you and fill out a cookie cutter contract.

This! RE agents are one of the many "Leech jobs" i can think of. I think the worst hands down though are corporate recruiters. Literally no skills of their own, having to leech of the skills of others to make a quick buck.

+1, my dream has always been to switch from engineering to HR, MY GOD WHAT A CUSHY JOB, why was i busy doing all the thinking when i literally could make roughly the same in HR?!
Yeah, I'm hoping to downshift into a CORPORATE recruiter role for exactly that reason. In my area they make 60-70K a year easy. To do what? Post jobs, make calls and screen resumes? I know guys who make 60K a year doing web app dev. If you can't beat the corporate idiocy, join 'em.


Edit: out of quotes - thanks!

[Bearded Man]

Robo, I think your post got embedded in my quotes.

[Cassie]

WE have both made $ & lost $ on real estate through the years. It always hurts to lose.  In regard to the person that took out everything valuable in the house before leaving that is terrible & unethical.  No one forced you to buy  the house & improve it.  The lender is taking a double loss because of your actions.  That kind of thing actually makes me sick but I am sure you have figured out a way to rationalize it or you wouldn't have done it in the first place. Talk about a lack of integrity.

[Bearded Man]

Isn't it interesting that like lawyers in a divorce, RE agents are the ones who always win...Finacially. You take on the risk, use your money, and they make a profit to unlock the door for you and fill out a cookie cutter contract.

This! RE agents are one of the many "Leech jobs" i can think of. I think the worst hands down though are corporate recruiters. Literally no skills of their own, having to leech of the skills of others to make a quick buck.

+1, my dream has always been to switch from engineering to HR, MY GOD WHAT A CUSHY JOB, why was i busy doing all the thinking when i literally could make roughly the same in HR?!
Yeah, I'm hoping to downshift into a CORPORATE recruiter role for exactly that reason. In my area they make 60-70K a year easy. To do what? Post jobs, make calls and screen resumes? I know guys who make 60K a year doing web app dev. If you can't beat the corporate idiocy, join 'em.


Edit: out of quotes - thanks!

And I thought I was the only one. We should talk. I've done some research on this, maybe we can help each other make the transition by sharing information.

Considering the PHR designation and going into Corporate recruiting. Pretty good salaries for an easy job with little actual responsibility.

[frugalmamma13]

I can empathize.  We are getting ready to sell in the next couple of years and it will most likely be at a pretty significant money loss.  We bought more than 10 years ago and this house is not longer a great fit for us.  At some point living in a house that feels like home becomes more important than recouping the $$ put into the house.

[Petunia 100]

i bought second home in 2006 did quite a lot to it.  bought for 450k and county reassessed for 160k in 2009 so in that year i started to rip out everything i could take with me .... entire kitchen, all flooring down to just concrete, everything lights, medicine cabinets, mailbox, screen doors and neatly put it into a truck around moving day.  i also dismantled the garage doors on the way out on moving day.  they foreclosed which was fine.  my credit took a hit for about 2 years.   when i'd apply for a CC, they would give me the card but at low credit limit.   now when i apply for cards, they give me credit limits around 15k so basically back to normal.   my score never went into the 500s and now high 700s.  i churn CCs for free travel nowadays.

i took stuff with me, but i didn't destroy the house.

every now and then i look up the value of that house and it still isn't what my mortgage was. 

prior to the foreclosure i didn't churn CCs for travel so i only ever had 1 CC which always had a zero balance and i have always drove older cars so paid cash so i never really used my credit especially since i had cash in the bank so the low credit score hurt my feeling a little at the time but really didn't impact my life at all.

you got to know when to hold them, know when to fold them, know when to walk away.... take your money while the .....

Wow.  That was not cool.

[intellectsucks]

Staring down the barrel of this gun right now.  Bought in ’09 for $172k.  House directly across the street from us sold 3 months ago for $150k and zillow says prices are expected to continue to drop.  Rents in the area are $200-$300 less than our mortgage payment.
Made lots of mistakes in buying this house (not enough knowledge of prices in the area, not enough knowledge of the rental market in the area, not enough of a down payment, etc) but it all boils down to one thing: I didn’t do enough research beforehand to really know what I was getting into.  I did what I now realize is the worst thing you can do when making financial decisions: I went with my gut.  It’s really no surprise that I got burned.
My consolation prizes (maybe they will help you too): really enjoyed my house (even if I didn’t like the neighborhood so much), got a grant to pay for closing costs from local FHA program, was able to take advantage of the $8000 first time homebuyers fed tax credit, learned a SHIT TON about home maintenance and home repair (I’m now confident that in the absence of other income I could realistically open a flooring or painting business), now know WAY more about the right way to buy a home.  Already started planning the process for the next house, even though it’s 2-3 years away.

[dragoncar]

We are in the same boat. Paid 170K in January 2010 after the crash. At that point I thought I was getting a steal. The house was sold in 2006 for 240K. Turns out the market kept dropping all the way to 2014. Next year we may get 150K if we're lucky. Oh well, never again.

Curious, where is this? I'm shocked to see so many people with declining home values when other markets have recovered. Can't be small towns in the middle of nowhere, with no economies at those prices.

Could be any pocket area with a collapsing local economy, like an oil town (for example).  Although I'm also curious on the specifics