Are we stuck for now?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Houses have appreciated significantly, at least inside the beltway, for decades before 2008.

Who thinks they will continue to appreciate at least moderately?

Incorrect. Between 1990 and 1997/8 There was a run up in the 80's but it topped out and was flat for most of the 90's. We lived in a small rambler near Overlee Pool during that time - prices were stagnate.

We lived in bethesda from 1996 -2006 and every year our house appreciated 10-20%.

1996-2006 was the bubble. No one can afford those home prices unless you made money during the bubble for your next down payment. How can OP's house continue to appreciate. Who will pay these home prices? OP sell your house or take your kids out of private school. What was the old conservative rule. Buy a house that is about 2 1/2 times your salary.

[Anonymous]

Anonymous wrote:sheesh, we make $60K more and are stretched on a $700k mortgage.

you are at 350k HHI and are stretched on a 700k mortgage? You need to stop filling your pool with Cristal.

[Anonymous]

Anonymous wrote:Our HHI is the same as OP, but I am in much better financial shape. This is what I would do.
1. Sell the house (unless you believe that it will appreciate greatly. And even if you felt this way, you could invest in a REIT to profit from rising prices)
2. Rent a home for 3-5K a month. You can definitely get a decent home in this price range. You will save 2-4K a month without giving up much house.
3. With the savings, I would contribute more to my retirement account or to college savings.

I agree that private schools are completely unnecessary when you are in a good school district.
I am surprised by the number of conservative people here who are criticizing OP.
While OP is in bad shape, there are many many others that are in worse shape. Buying a home 4X HHI is not uncommon. I would even say that it was typical during that time period. Everyone believed home prices would go up, not down. In hindset, it was a huge mistake, but if things had worked out, the house could have doubled in value. Timing is everything!

Thanks for your thoughtful post. We will lose about $100,000 by selling our house. Do you think it's worth it? We may not be able to save up enough ever for a down payment for a house. We'll be saving about $4000. Per month by dropping private school, although we'll have college tuition soon.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our HHI is the same as OP, but I am in much better financial shape. This is what I would do.
1. Sell the house (unless you believe that it will appreciate greatly. And even if you felt this way, you could invest in a REIT to profit from rising prices)
2. Rent a home for 3-5K a month. You can definitely get a decent home in this price range. You will save 2-4K a month without giving up much house.
3. With the savings, I would contribute more to my retirement account or to college savings.

I agree that private schools are completely unnecessary when you are in a good school district.
I am surprised by the number of conservative people here who are criticizing OP.
While OP is in bad shape, there are many many others that are in worse shape. Buying a home 4X HHI is not uncommon. I would even say that it was typical during that time period. Everyone believed home prices would go up, not down. In hindset, it was a huge mistake, but if things had worked out, the house could have doubled in value. Timing is everything!

Thanks for your thoughtful post. We will lose about $100,000 by selling our house. Do you think it's worth it? We may not be able to save up enough ever for a down payment for a house. We'll be saving about $4000. Per month by dropping private school, although we'll have college tuition soon.

How old are you, OP?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our HHI is the same as OP, but I am in much better financial shape. This is what I would do.
1. Sell the house (unless you believe that it will appreciate greatly. And even if you felt this way, you could invest in a REIT to profit from rising prices)
2. Rent a home for 3-5K a month. You can definitely get a decent home in this price range. You will save 2-4K a month without giving up much house.
3. With the savings, I would contribute more to my retirement account or to college savings.

I agree that private schools are completely unnecessary when you are in a good school district.
I am surprised by the number of conservative people here who are criticizing OP.
While OP is in bad shape, there are many many others that are in worse shape. Buying a home 4X HHI is not uncommon. I would even say that it was typical during that time period. Everyone believed home prices would go up, not down. In hindset, it was a huge mistake, but if things had worked out, the house could have doubled in value. Timing is everything!

Thanks for your thoughtful post. We will lose about $100,000 by selling our house. Do you think it's worth it? We may not be able to save up enough ever for a down payment for a house. We'll be saving about $4000. Per month by dropping private school, although we'll have college tuition soon.

Thanks for the compliment. Who cares if you will lose about $100,000. Every investing expert will tell you that this is a common mistake. People are overly obsessed about not taking a loss. Get over it and focus on the present and the future. The loss was in the past and you can't change that. Saving $4K a month is a great start. In a couple years, you should be ready to buy another house. But for now, renting is a pretty good deal. In the past, it was a bad idea, but recently, it is not a bad idea. Many people also overestimate the value of home ownership. As you know from experience, home ownership can be a very bad thing too.

[Anonymous]

OP, even assuming the house appreciates in value over 8-10 years, at that point the house will likely need new kitchen, bathrooms etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Our HHI is the same as OP, but I am in much better financial shape. This is what I would do.
1. Sell the house (unless you believe that it will appreciate greatly. And even if you felt this way, you could invest in a REIT to profit from rising prices)
2. Rent a home for 3-5K a month. You can definitely get a decent home in this price range. You will save 2-4K a month without giving up much house.
3. With the savings, I would contribute more to my retirement account or to college savings.

I agree that private schools are completely unnecessary when you are in a good school district.
I am surprised by the number of conservative people here who are criticizing OP.
While OP is in bad shape, there are many many others that are in worse shape. Buying a home 4X HHI is not uncommon. I would even say that it was typical during that time period. Everyone believed home prices would go up, not down. In hindset, it was a huge mistake, but if things had worked out, the house could have doubled in value. Timing is everything!

Thanks for your thoughtful post. We will lose about $100,000 by selling our house. Do you think it's worth it? We may not be able to save up enough ever for a down payment for a house. We'll be saving about $4000. Per month by dropping private school, although we'll have college tuition soon.

Thanks for the compliment. Who cares if you will lose about $100,000. Every investing expert will tell you that this is a common mistake. People are overly obsessed about not taking a loss. Get over it and focus on the present and the future. The loss was in the past and you can't change that. Saving $4K a month is a great start. In a couple years, you should be ready to buy another house. But for now, renting is a pretty good deal. In the past, it was a bad idea, but recently, it is not a bad idea. Many people also overestimate the value of home ownership. As you know from experience, home ownership can be a very bad thing too.

$100,000 is a lot of money. I'd rather not lose all that money. We only lose that money (via realtor fees and closing costs) if we sell. So the lose is not in the past and we can prevent it by not selling, which we don't have to do. I doubt we can save $100,000 or two in a couple years. We have a bunch of college tuitions to pay. The consequences of not selling is we have a very tight budget and a large part of our income goes to housing. We also can't save as much as we should for retirement or college. However, we hate the idea of renting. Uprooting kids, not necessarily long term, many rentals are dumps or expensive, not building equity, can't change it or make improvements, feeling like you are regressing financially.

[Anonymous]

Op, you seem like a lost cause. I get that taking a loss sucks, but sometimes you have to make a hard decision for the long term. You aren't looking At the flipside ... In ten years would you rather have money to help your kids put their first down payment down or not? Do you think they'll give two shits if they grew up in a rental? When you hit retirement age will you say "Fucking tumbleshits, thank god we have enough to retire" or will you say "Thank Christ my counters are carrera and not some fucking soapstone".... And when you lay on your deathbed will you say "I helped my children grow and leave them enough money for them to be less stressed in their own life" or will you say "That twat next door doesn't have a Mercedes!"

[Anonymous]

I agree that renting a house and owning an equivalent house is the same damn thing. My wife INSISTS that owning is a completely different feeling. She thinks it's important for the kids to identify with 1 home that you own and live in for a long time. I wonder if OP has this problem too?

The $100K is called a sunk cost. Whether you paid $200K for the house or $2 million for the house is irrelevant. The important thing is comparing the amount you would pay for rent vs. the amount you pay for interest. Even if you consider the tax savings, I think you will find that you are better off renting.


You put yourself in a hole and you have to choose between a bad decision and a worse decision.

[Anonymous]

What is a tumbleshit

What are are you in? 100k seems like a lot to make up but 20 years a similar crash happened. People gave up on 30k and if they had stuck it through they would have made triple that.

[Anonymous]

Anonymous wrote:What is a tumbleshit

What are are you in? 100k seems like a lot to make up but 20 years a similar crash happened. People gave up on 30k and if they had stuck it through they would have made triple that.

I don't understand "what are you in?" Are you suggesting we not sell and stick with it?

[Anonymous]

Well, OP, if you feel that paying $7000/mo is less "regressing financially" than renting and saving, that's your prerogative. Its the choice between remaining pinched for cash, versus a one-time outlay to get started on more solid financial footing. Pretty much everyone here agrees that the latter will be more rewarding--in the long term, though not the short term. One had to start somewhere...

I suspect what you really mean by regressing financially is that you will feel less successful if you don't have those trappings of success that you do now. Understandable, just remember that's what led you to your current predicament.

[Anonymous]

Anonymous wrote:Op, you seem like a lost cause. I get that taking a loss sucks, but sometimes you have to make a hard decision for the long term. You aren't looking At the flipside ... In ten years would you rather have money to help your kids put their first down payment down or not? Do you think they'll give two shits if they grew up in a rental? When you hit retirement age will you say "Fucking tumbleshits, thank god we have enough to retire" or will you say "Thank Christ my counters are carrera and not some fucking soapstone".... And when you lay on your deathbed will you say "I helped my children grow and leave them enough money for them to be less stressed in their own life" or will you say "That twat next door doesn't have a Mercedes!"

I am considering selling. However, I do wonder if our house will be a nest egg for our kids. In 25 years we will hopefully have a good amount of equity and it will have appreciated some. On the other hand, investing some of that money in a 401k might be smarter, just not sure.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op, you seem like a lost cause. I get that taking a loss sucks, but sometimes you have to make a hard decision for the long term. You aren't looking At the flipside ... In ten years would you rather have money to help your kids put their first down payment down or not? Do you think they'll give two shits if they grew up in a rental? When you hit retirement age will you say "Fucking tumbleshits, thank god we have enough to retire" or will you say "Thank Christ my counters are carrera and not some fucking soapstone".... And when you lay on your deathbed will you say "I helped my children grow and leave them enough money for them to be less stressed in their own life" or will you say "That twat next door doesn't have a Mercedes!"

I am considering selling. However, I do wonder if our house will be a nest egg for our kids. In 25 years we will hopefully have a good amount of equity and it will have appreciated some. On the other hand, investing some of that money in a 401k might be smarter, just not sure.

I don't what more to tell you. The real estate will never ever be more than 25 years of $5,000 or more month going into tax advantaged accounts. You can easily prove this yourself with some simple math. You'll have recouped losses in two years, and in five you'll have $300k in an account throwing off perhaps $15K a year. In ten years your contributions alone would have hit $600k, to say nothing of the hundred grand or more you'll have seen via appreciation. It's entirely possible that within 15 years you could have a million in there. Even at the five year mark you could easily take out $200k for a sow payment on a house and not be stretched (assuming of course you buy what you can afford). Anyway I digress, best of luck to you.

Signed - 33 yo, $1.6M and making far less than you

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Our HHI is the same as OP, but I am in much better financial shape. This is what I would do.
1. Sell the house (unless you believe that it will appreciate greatly. And even if you felt this way, you could invest in a REIT to profit from rising prices)
2. Rent a home for 3-5K a month. You can definitely get a decent home in this price range. You will save 2-4K a month without giving up much house.
3. With the savings, I would contribute more to my retirement account or to college savings.

I agree that private schools are completely unnecessary when you are in a good school district.
I am surprised by the number of conservative people here who are criticizing OP.
While OP is in bad shape, there are many many others that are in worse shape. Buying a home 4X HHI is not uncommon. I would even say that it was typical during that time period. Everyone believed home prices would go up, not down. In hindset, it was a huge mistake, but if things had worked out, the house could have doubled in value. Timing is everything!

Thanks for your thoughtful post. We will lose about $100,000 by selling our house. Do you think it's worth it? We may not be able to save up enough ever for a down payment for a house. We'll be saving about $4000. Per month by dropping private school, although we'll have college tuition soon.

Thanks for the compliment. Who cares if you will lose about $100,000. Every investing expert will tell you that this is a common mistake. People are overly obsessed about not taking a loss. Get over it and focus on the present and the future. The loss was in the past and you can't change that. Saving $4K a month is a great start. In a couple years, you should be ready to buy another house. But for now, renting is a pretty good deal. In the past, it was a bad idea, but recently, it is not a bad idea. Many people also overestimate the value of home ownership. As you know from experience, home ownership can be a very bad thing too.

$100,000 is a lot of money. I'd rather not lose all that money. We only lose that money (via realtor fees and closing costs) if we sell. So the lose is not in the past and we can prevent it by not selling, which we don't have to do. I doubt we can save $100,000 or two in a couple years. We have a bunch of college tuitions to pay. The consequences of not selling is we have a very tight budget and a large part of our income goes to housing. We also can't save as much as we should for retirement or college. However, we hate the idea of renting. Uprooting kids, not necessarily long term, many rentals are dumps or expensive, not building equity, can't change it or make improvements, feeling like you are regressing financially.

OP, you have lost the $100k, you just haven't realized the lost for tax purposes. It is gone. You can hope that your home increases in value, but it is a long way to go and no guarantee. You could take the proceeds and cash flow and put it into a more diversified investment or take a flyer and buy twitter stock. All of these are gambles, just like keeping your house.

And one hint: you haven't built any equity in the house over the time you've owned it, so why do you think the future will be any different?