Why I am nervous about buying my 3rd home of my life

jashleyren2

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Aug 27, 2018
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The link here explains why I'm concerned about buying another home, as my wife and I sold our home of 17 years this past May, 2021, in Pelham, Alabama.


When I bought the home in 2004, I had always been under the impression that home values "never go down". Sure, your're 401k might take a hit. Sure, you may go through jobs, and have other life events, but owning a home was the path to prosperity. No ifs, ands, or buts about it.

I kept the home and stayed perfectly comfortable, raised two beautiful daughters in it through it all. We bought in 2004, lost job after job through the first half of my career. I'd get a new job, work there, change jobs. Had several short instances of actually being unemployed. My wife worked too, and we're good savers, so we always navigated choppy water. We watched our value begin to drop on tax assessments and comparable sales around us, from 2009-2013. In fact, when we paid $162K for essentially a starter home back in 2004, the house right next door sold the same amount a month later. A year later, another sold for the a thousand bucks more. I might have liked to move to a bigger home, for a family of 4, in or around 2010/2011, but I'd have to have given up my down payment, as it was lost equity at that point. Might have even had to show up to closing, as the seller, with a personal check of my own.

We move down the road to 2018, and I do attempt to sell. A long line of supposedly approved buyers made offers to me, but each time, fell through due to financing issues of their own, or some FHA/VA modification that needed to be done, at my expense, to the home. We remained in the home until we finally sold it, for $226K, in May 2021.

17 years. A gain of $64K bucks. And, if any of you know Pelham, you know it's not considered a "po-dunk" neighborhood. Quiet, relatively safe, and not the farthest commute to Birmingham, or even Tuscaloosa, if you choose.

So, I look at the chart in the link, and I see what occurred over the life of my ownership in that property. I think of the circumstances that led to 2008/2009 and that terrible recession. I also know that there is more speculation, more risk-taking, going on in 2022, in places other than just the stock market or a craps table over in Tunica. Homes are being used as financial instruments, much the same as a stock purchase. It concerns me. The volatility scares me to death, and I'm very reluctant to make a purchase, at the highest price I've ever spent for a home, though I'm well-qualified CURRENTLY to do so, here in Destin, Florida. It is my wife's and mine dream location. I can still drive up to see momma whenever I like. I can see my sister and her family. But, I return to these beautiful emerald waters, just a stones throw from the house I currently rent.

To anyone who has read all of my drivel here: thank you. And, if I may ask, please give me consolation/opinion, as to why I should or shouldn't be at great fear, of taking the dive again, on my own property.
 

uafanataum

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Oct 18, 2014
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You paid 162 and sold for 226 after 17 years of use. That's a decent amount of gain ( though the stock market grew at a much faster rate) AND you got 17 years of use. Many people pay rent for 17 years and help increase another person's net worth with never a ROI for themselves. Owning a house is still a great investment.
 

2003TIDE

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You buy a home because you want to live in that home not because you want an investment. I feel like nobody ever factors in cost of ownership when looking at “profits” from a sale. They never factor in your interest paid on the loan, property taxes, home repairs, etc.
 

Chukker Veteran

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I’m sold on home ownership, I think it’s much better than renting when you can. I’ve been a landlord all my life.
If you can make the figures work, I think you are better off to buy, and not continue to rent because of market volatility. If this is your final home, you are buying it to live in rather than primarily as an investment.
Home insurance in Florida has changed how it’s figured in Florida this year, expect home insurance to rise sharply over the next ten or fifteen years.
 

jashleyren2

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Aug 27, 2018
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Thanks to everyone that took the time to read my diatribe, and thoughtfully responded. Certainly welcome others who have anything they'd like to share.

In the end, I'll likely buy. I'll be buying an expensive, for me, property. I'll be sure I can handle the service of the note, AND I'll not be over-buying, so that I may afford the reasonable upkeep of the place. I struggled with that, at times, in my home of 17 years. And, I didn't "over-buy" on that property. I just happened to live in it while one of the deepest recessions many of us have ever seen, was going on .

Back to why I will likely buy. The way I see it, and the comments that many of you have left here, is that others feel the same worry, about what tomorrow brings, but there's little you can do to change or affect external circumstances. You take the risk, which is probably a lot less of a risk than shooting 7's on the roulette wheel. You assume the risk. It's all part of the big game we are all in, whether we like it or not. My lease on the property here in Destin ends on April 30. It's a small home ownership market, but a BIG rental real estate market. I'm up against some deep pocket people in my search for a "forever home". In my price range, $300/sq foot is common. In Pelham, my life was $125/sq foot.

It's different, but we love living here, and we ain't leavin' haha.
 
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Its On A Slab

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You buy a home because you want to live in that home not because you want an investment. I feel like nobody ever factors in cost of ownership when looking at “profits” from a sale. They never factor in your interest paid on the loan, property taxes, home repairs, etc.
This.

Unless you live somewhere that has an incredible appreciation in the R/E market, buying a home is definitely not an investment. You spend a lot of money in simple upkeep.

I currently have what amounts to a 3 year house payment just because we replaced all the windows in our breakfast room.

I put hardwood floors and a new composite deck into my home in West O. When it came time to sell, I was nickled and dimed with stuff like Radon units, HVAC repairs, leaky faucets. Then the R/E agent took her chunk. Whatever gain I got from the sell got siphoned off pretty quickly.
 

TIDE-HSV

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You buy a home because you want to live in that home not because you want an investment. I feel like nobody ever factors in cost of ownership when looking at “profits” from a sale. They never factor in your interest paid on the loan, property taxes, home repairs, etc.
This is correct. People seldom figure in the entire cost. We are making modifications right now to make the house more livable but which may make it less salable. I've been here 37 years and hope to die here. In addition to the usual factors, whoever buys our house will probably bulldoze the house and subdivide the 3 acres it sits on. Property is going at a premium on the mountaintop...
 

CrimsonNagus

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You paid 162 and sold for 226 after 17 years of use. That's a decent amount of gain ( though the stock market grew at a much faster rate) AND you got 17 years of use. Many people pay rent for 17 years and help increase another person's net worth with never a ROI for themselves. Owning a house is still a great investment.
Tell me about it. We bought our first home in 2008 for $130K. Sold it last year for $135K. That house served us well and we love our new place. We do not see us moving again but, you never know. I'd consider moving again if it was to 1) move to the mountains somewhere, maybe when we retire or 2) move to the Atlanta area so I can go to more Braves games.
 
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CrimsonNagus

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Well, probably.

I don't have a problem with zero down as long as lenders are not approving people for loans they can't really afford. When we were buying are house last year, I told our lender that we couldn't go over $1200 for a monthly payment and she told us to stay in the 250K neighborhood. We found our house for 235K and we did have a down payment. At one point she did tell me that, with our credit, she could have approved us for almost 350K.
 

MobtownK

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Well, probably.

I don't have a problem with zero down as long as lenders are not approving people for loans they can't really afford. When we were buying are house last year, I told our lender that we couldn't go over $1200 for a monthly payment and she told us to stay in the 250K neighborhood. We found our house for 235K and we did have a down payment. At one point she did tell me that, with our credit, she could have approved us for almost 350K.
Our realtor tried to get us into more home than we were comfortable with as well. In 2018 we bought & wanted to keep the payment around 1k a month - so bought at 168k with zero down (usda loan). I'm glad we did now - we've been able to put a fence in and work on the land a bit - & not drown during the downturn in 2020. Also - our homeowners insurance is going up - so payments will increase by 150/month once it shakes out.

eta - My husband wants to move to Lucedale, MS - cheap land and not many people at all. Mobile has spoiled me - I have no desire to move to Lucedale. It's beautiful.... but I'd miss Mobile - & the food, not to mention the people & river & Gulf.
 
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TIDE-HSV

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Our realtor tried to get us into more home than we were comfortable with as well. In 2018 we bought & wanted to keep the payment around 1k a month - so bought at 168k with zero down (usda loan). I'm glad we did now - we've been able to put a fence in and work on the land a bit - & not drown during the downturn in 2020. Also - our homeowners insurance is going up - so payments will increase by 150/month once it shakes out.

eta - My husband wants to move to Lucedale, MS - cheap land and not many people at all. Mobile has spoiled me - I have no desire to move to Lucedale. It's beautiful.... but I'd miss Mobile - & the food, not to mention the people & river & Gulf.
Are those the only attractions of Lucedale?
 
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