I just wanted to get some perspective from you home owners.

I bought my home 2 years ago. Since then, the market has continued to go down around my area. I know zillow.com isnt the most accurate, but if I compared to when I bought and what zillow thinks it is worth now, there is a $59k difference. :wtc: When I did a refinance last year, it was assessed about $20k under what I paid.

I dont fully understand this "under water" thing with mortgages. My home loan is still less than what the home is valued at because of the down payment.

So I guess my questions are: Are you in a similar situation? How do you feel about it? Are you supposed to just ride it out until the market gets better? At what point do people consider walking out on the house because their monthly payments arent worth it?

(I am not considering doing anything, just wanted some perspective. Although a refinance looks tasty )

 

if you can afford payment just keep it. i'm in a similar situation as you. and i don't think zillow is anywhere near accurate. My house was assessed at 1 million 6 months back

 

Zillow estimates low around here.

 

zillow values my house right around where i bought.

the market is always going to fluctuate. i agree with phat and say that if you can afford your payments, it doesn't make sense to walk away. i think we're going to look at refinancing again soon. we did it about 4 months after we bought and dropped our payment by about $500/month. i'm thinking we could probably drop another point and save a bit more cash, but haven't looked into it recently.

 

I think most average home owners are seeing the same results. I still rent because of it. I want to make sure it's at rock bottom before I make any kind of buying decisions.

 

All in all it doesn't matter if you're going to stay there long term o:

 

Agreed with others, no reason to walk unless you can't afford it. That ish will stay on your credit for a long time and ruin any future loans you might take. I think the whole "walking away from payments" thing was really only for people who couldn't possible afford their mortgage -- those that bought too much house thinking they would sell it when their interest-only 5 year ARM came due, only to find that the market crashed and they were paying 3 times what they could afford for a house worth 70% of what it was when they bought it. They couldn't sell it because they owed more on the loan than what it was worth (upside down), and couldn't afford the recently increased payments.

We bought our house exactly 1 year ago (closed 9/22/10, moved in 9/25/10). We paid $475k (asking was $480k). The house was originally listed at $550k in June of '09, and was off-and-on the market and gradually price-reduced from then until we bought it 1.25 years later. Zillow said $469k when we bought it, it's now at $471k.

However, my wife bought a condo in 2003. 2 bedroom/2 bath. She paid $157,900... but she bought it on some sort of deal with no money down, interest-only payments for the first 5 years, with an ARM that adjusts the rate every 6 months. Her father talked her into it, saying it "couldn't fail." It was a bad move. By the time she started making principal payments in 2008, the housing market had just crashed and she still owed the full $157,900 on a condo that was now worth ~$140k. When we bought our house a year ago, we tried to dump some money into the principal so that we could sell the condo. But the market kept dropping and the condo is now worth ~$125k, so we would take a massive loss on selling it. We've got it rented out right now and are making enough to cover the mortgage plus some extra (it's a pretty good time to be a landlord since nobody is buying and everyone is renting), but it's still a hassle and we would rather sell it and be done with it. If my wife's income hadn't increased significantly between when she bought the condo and when her ARM came due (and she had never met me), she would have been in a serious bind and may have had to walk. She never expected to be in that condo for the 7+ years she was there, and her dad had convinced her that she'd easily be able to sell it for more than she paid any time she wanted to.

TL;DR - don't walk.

Edit -- I don't want to make it sound like I'm bad-mouthing my wife's dad, as he's more than made up for that tactical financial error by being VERY generous with us.

 

Most the people walking away are the ones either upside down due to equity loans adding up to a total of around half market value or more. These are mostly the morons who bought the big brodozers to tow their wakeboat and a string of quads with their equity loan then took another to pay off the first and fix the toys, then followed it all up by losing their jobs. Not always but its a good chunk of the walkaways from what I have seen.

The others are people who bought a mcmansion then either lost their job, bought too much house or they got an ARM that adjusted above the income threshold.

 

if it's not a burden on your finances why would you walk away? least of all why walk away when your going to take a loss to do so?

my appraisal about 12 months ago was 50k over what I payed a year prior to that so I figure I am still sitting a good 25-30k over my purchase price. I bought way under value

 

As others have said, if you have no reason to leave and you can afford the payment, there really isn't anything to worry about. Some of my clients have had to sell at a loss because life circumstances forced them to move. There are other options besides paying the balance and selling. Short sales relieve some of the financial burden if you need to sell and in some circumstances even strategic default is a sound option.

IMO the core of this problem isn't that real estate prices are in decline.... Any investment has that element of risk. The problem is the culture and lending practices that encourage anyone with a pulse to buy a house. Over the last 6 years I would guess that 80% of my clients bought a home with less than 10% down...probably half with less than 5%. Hell, I bought my first condo with a zero-documentation interest only loan.

Also FWIW, zillow is pretty grossly inaccurate around here.

:edit: to add punctuation and paragraph breaks, posting from my phone :ugh: