The Number of Foreclosures on My Street
By Daniel at 3 July, 2009, 12:11 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
I bought my current residence (Tampa, FL) in April 2003 for $143k. This was at the front-end of the formation of the housing bubble. Just three years later, my neighbor bough his house (same exact floor plan, no upgrades) for $311k. The rest of the ‘hood’ went nuts imagining what that would do to our home values - and most went out to immediately apply for HELOC loans. Pretty soon, everyone had $300k notes on their homes - even those who, like me, originally paid about half that for the house.
Now, 2009, after everything collapsed, my home is worth $170k… still $30k more than what I paid for it. I’m under NO pressure to sell, and I feel ’smarter’ than the rest of the saps that are now drowning due to greed and impulse decisions.
The neighbor that paid the $310k just 3 years ago, is now talking about a strategic foreclosure (he can afford payments but doesn’t see the logic). Four others have already foreclosed on my street. Many more are in the process, and even more are looking down the barrel of an ARM reset in the coming months.
So, while I sit pretty with equity in my home, I have very little sympathy for those that were reckless and careless with their money. I saw this coming. Anyone who didn’t predict this (after 150% increase in prices in just 3 years) is too dumb to have money.
Unfortunately, with the number of foreclosures on my street, the value of my home continues to drop. Who knows, it may eventually hit $90k. But if it does, it’s a direct result of my neighbors irresponsibility - not bad planing on my part.
I have two other single-family rentals - one with a $50k note (market value peaked at $225k 3 years ago), the other with a $60k note (peaked at $250k 3 years ago). Both are still higher in value that what i paid. BUT, if I lose my tenants, and I have not found new ones within 1-3 months, I will attempt to sell for what I paid for ONE month. If that does not work, i will walk away from them.
When you keep getting told your house is an investment and you treat it as a financial vehicle, you deal with losses like you do a stock. You sell your losses which is what you are doing with walking away. Banks are treating this as a cost of doing business and so are people.
My personal concern is the glut of new houses on the market will strangle the housing business for years to come.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.