Real Estate Blues

I was on zillow.com earlier browsing to see the value of our home and property. Since we bought our house in 2004, it has proven to be a consistently good investment. In just two years, the value of our home increased progressively reaching a peak of $150 K in late 2006. That was really exciting! However, in early 2007, the increase in value started declining at a steady pace. By the 3rd quarter of 2007, our home's value showed an increase of only $70 K from the 2004 purchase price. By the 4th quarter, it was down to a meager $50 K increase. And by the end of the year we were bordering on a low $15-20 K "profit". When I checked yesterday, I was dismayed to find that not only did we not have any "profit", we are actually down about $13 K. Meaning our home's value in 2004 was $13 K higher than what it is worth today. That totally sucks!

I guess I shouldn't really complain. We aren't really looking at selling right now so we have the luxury of waiting till the volatile and shaky real estate market settles down and hopefully starts moving up again. It's much worse for many others out there who are losing their homes because of plummeting home values and soaring mortgage payments. That's another thing I have to be thankful for. When we first invested in our home, my dad insisted on a fixed-30 year payment plan (rather than a variable 3, 5 or 7 year plan). I, being the naive and frugal (a.k.a. "barat") investor than I am, wanted to sign on with a variable rate since it was so much lower rate (which meant a much smaller monthly mortgage payment). Of course that was short term thinking. Good thing my dad and hubby talked me into a higher rate fixed rate but one that guarantees a stable 30-year payment plan. At least now we are locked into that rate (which could go lower if we refinance) and are not in danger of ballooning mortgage payments. I am so glad that my dad was astute enough to foresee these kinds of events and that we listened to his advice.

It's so sad to hear of stories of people lose their homes. The real estate market and industry is just a series of dismal news these days. I was listening to NPR a few mornings ago and heard about this Nicaraguan immigrant who brought his entire family to the States 20 years ago. As part of the American dream, they purchased their first home in early 2002. The home was then worth $510 K and their monthly mortgage payment was $2,800. Today their monthly payments have risen to $4,800 (which they can not afford to pay) and the home's value has decreased by $100 K. They are now forced to move out of their home and move their family of 6 into a tiny two-bedroom apartment. I felt so bad for them losing their home and everything they had worked so hard to get. I really hope, hope, hope that things start taking a turn for the better.