For those of you that bought right before the 2008 housing crash how did you cope?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
CaptainT
Posts: 635
Joined: Tue Feb 15, 2022 7:20 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by CaptainT »

The alternative to owning is renting. If you rent you pay an amount to live somewhere for a time. That may be hundreds or even thousands of dollars a month. If you have a loss in a house one can think about it as rent all at once.
I bought in 2007. I purposefully bought in a place I thought was gaining in desirability and as such even during the downswing my house didn't lose much if any value. Now it is worth much more and has almost but not quite doubled in value.
Additionally mortgage rates are very low still 2.5 to 3.5%
It is likely that inflation alone might be over that over the next several years let alone investments.
User avatar
max12377
Posts: 293
Joined: Tue Jul 15, 2008 4:02 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by max12377 »

Elysium wrote: Wed Feb 16, 2022 7:24 pm
Paul78 wrote: Wed Feb 16, 2022 3:38 pm I am currently in the process of buying a house. It is at the top of my budget and the house has gone up in price 50% in the last 30 months. I am moving in large part because I could never afford to buy a house at my current location (this was even before the ramp up in housing prices during COVID). I am going into this with eye wide open that I could easily lose 200k (on paper) basically overnight if the market crashes. I feel there is a roughly 33% chance I lose a significant amount (on paper) so that is a reasonable high number. My question is for those of you that dealt with buying at the peak in 2007 how did you manage to not let it "keep you up at night" losing that much money? The house is at the top of budget but I have a very stable job so I should survive (ie still have money to pay mortgage and all bills) even if a recession comes (which hopefully it doesn't).
I would stay away from buying a house in an overheated market, period. I am not saying I know it is overheated or not, it's been a while since I tracked home prices actively since I no longer have a need having bought my current home at lowest point in the crash back in 2009. I also sold a house for a profit during the crash, and I was able to do that only because it was bought when prices were not overheated. What you pay certainly matters when it comes to housing market.

One thing I have known is that home prices do not keep going up 20% 30% 50% forever, they are not supposed go up over 5% average nationally over long term, and even high priced markets shouldn't be able to keep up increase like excess of 20% without a pull back. Therefore, if you feel they have gone up a lot, and out of your reach soon, then there are a lot more buyers in your situation, in fact many worse than your situation likely, and all of these folks wouldn't be able to keep the prices up forever. I wouldn't buy a high priced property in an overheated market even with a stable job. House is an illiquid asset that you cannot get rid of easily without significant costs. There are exceptions of course, for some individuals it wouldn't matter what they pay.
I agree! I've owned a few houses over the years, and it really stinks if you have to take a loss IF you need to get out early. In my case, the house was a major lemon, and it made my life miserable. I put a lot of money into it to try and fix it, but I eventually threw in the towel. I broke even but felt so free when I got rid of that ball and chain. It sucks that rents are rising, but many homeowners will also see a rise in property taxes as well as cost of materials to maintain their home.

My concern for you is that, with today's market, people are buying houses in such a short time I think there is significant risk that people could get stuck because they are being forced to waive everything and not do enough due diligence. So far prices keep going higher, but as mentioned, the rate of increase is absurd. Buyers, especially first-time buyers, are in a terrible position. That said, even people I know that want to list their homes won't do it because they don't want to submit themselves to the current frenzy. So it's a stalemate.

Perhaps rising rates is a signal that things will start to cool off, but in the short term, I think demand will spike as FOMO takes hold. I was convinced that rates would have gone up years ago, but I have been wrong. Perhaps soon, we have to pay the piper, or risk things getting much worse.

I am curious to see if deflation becomes a thing at some point. This is all very concerning.

I feel for you, this is not an easy time to get into the housing market. Best of luck whatever decision you make. It is stressful for sure.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JoeRetire »

Paul78 wrote: Wed Feb 16, 2022 8:59 pm But I am not going to be naïve and think there is zero percent chance I will 100% be able to ignore a huge market downturn (hence the reason for posting the topic to see what others did in that situation). Cause if there is a significant downturn it will be obvious even without me actively looking for it (ie I am not going to be checking estimates on Zillow or any comparable site).
(shrug) If you can't "ignore" a market downturn that doesn't actually affect you, then you need to decide to either take that risk or avoid buying anything. Perhaps renting is in your future.
This isn't just my wallet. It's an organizer, a memory and an old friend.
chazas
Posts: 851
Joined: Wed Nov 01, 2017 1:22 pm
Location: NoVa

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by chazas »

Monsterflockster wrote: Thu Feb 17, 2022 12:03 am We bought a townhouse in Silicon Valley before the crash. It was what we could afford, in a not so great part of town for 570k. When the market crashed it also coincided with my wife being laid off, a new baby and a pay 5% pay reduction for me. We had no debt but put a hearty down payment of 80k and had a balance of about 455k when the sh*t hit the fan. We tried to make it work, felt trapped in a no so great part of town and made the decision to short sale. That cost us a lot of money and we should have touched it out as the home is valued around 900k now.

It took us some time but we ended up moving to a beach town and started over. It still stings to think of the money we lost, but in a weird way we are better off for it, better paying jobs & in a better community. My brother once said, “all we can do is make the best decision for our family in the moment. Can’t look back, just forward.” Tough to do but good advice.
Excellent, excellent advice. I had just built a $2.2M custom home when the crash happened. I was lucky to keep my job, but my comp got cut substantially and no other job alternatives that paid as much. We had a lot of equity but that mortgage was still difficult for a few years. We toughed it out and ended up selling in 2013 for a forced job transfer. At least we came out even, which we wouldn’t have if we’d have listened to the realtors. If we’d toughed it out until now it would be worth $3 something.

Piling on with the bad decisions, the transfer led to a house purchase in flyover country where we lost $200K on a house under a million to start with, that took 2 years to sell, which I would never have thought possible, after my employer went under. Then another $200K loss on the acreage on which we were gonna build our dream home when we moved back to the DMV, but then divorced. I feel fortunate we never managed to move forward with the build, as that would have complicated the divorce immeasurably.

My ex always looked backwards with regret. Luckily, I’m not wired that way, I’ve made a lot of good financial decisions too and focus on those. Can’t cry over spilt milk.
Last edited by chazas on Thu Feb 17, 2022 6:34 am, edited 1 time in total.
Nate7out
Posts: 410
Joined: Wed Jan 16, 2008 1:06 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Nate7out »

rage_phish wrote: Wed Feb 16, 2022 11:44 pm Never effected me. Kept paying my mortgage. Sold in 2025 for high then I bought. Worked out fine for me (since I didn’t need to seek when I was underwater)
Let us all know where the S&P 500 was at in 2025 when you sold!

Anyway, I bought in '03 for $165 (5.75% fixed mortgage). Market peaked in '07 with comps in my 'hood going for $230. Cash-out refi's everywhere. In 2011-2012 value was probably down to $130. Next door neighbor was foreclosed. I refinanced in 2015 (3.625%) and it was worth $150ish. By the end of 2019 it was worth $190 according to Redfin, and $207 at the end of '20. Listed at $215 summer of '21 and sold for $240.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by exodusNH »

LSGP_545 wrote: Wed Feb 16, 2022 11:38 pm We bought a new construction home and closed Sept 2007. The cost was $315k at the time, over the next few years we spent maybe another $10-15k in landscaping, garage renovations, etc. During the lowest part of the market here (Albuquerque, NM) and that was maybe sometime in 2011/2012 our home would have been hard to sell for $200k. Fast forward to today and we’re just about to put it on the market for around $385k - 405k. I had a 15 year mortgage on the house and it is now paid off, but never really thought too much about the decline in value during those years. I never really planned on selling, but conditions were right for us to build a bigger house in a better location not far from our old house. Had I sold, it would have been a loss, but we were never underwater as were many of our neighbors and the area in general. I remember homes listed as foreclosures everywhere during that time. We initially put 20% down and always put more down on the principal, so we were able to pay it off a couple years early. Maybe never being underwater help me sleep better too.
Assuming 2% inflation over that time, $315,000 would be about $423,000 now. (Not to mention your improvements needed to be added on top of that.)

You're in a similar situation to me, where you need additional appreciation to net 0% real.
pindevil
Posts: 193
Joined: Thu Apr 03, 2014 11:04 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by pindevil »

barberakb wrote: Wed Feb 16, 2022 3:48 pm But I never rec buying a home at the top of your budget.

If I am approved for say 500K, I will look at houses between 300-400k max
Bingo. This is my thinking and I did exactly this when buying my current home. If you are stressing over the value of the home, you are paying too much. Dial down your expectations and you will be much happier.
tsohg
Posts: 187
Joined: Thu Mar 07, 2013 9:30 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by tsohg »

We bought in 2007 right before everything tanked. It was a little frustrating, only because I knew I could have gotten a bigger/nicer house for the same amount of money.

How I coped: I focused on why I bought the house in the first place, I knew I wasn't planning on selling for at least 5 years, and I never considered my home an investment anyway. Finally, I didn't look at comps or estimates on its price. In other words, you bought the home for a reason-- to live in-- tune out the noise.
CoastLawyer2030
Posts: 989
Joined: Wed Dec 30, 2020 7:44 am
Location: The Buckeye State

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by CoastLawyer2030 »

Paul78 wrote: Wed Feb 16, 2022 3:38 pm I am currently in the process of buying a house. It is at the top of my budget and the house has gone up in price 50% in the last 30 months. I am moving in large part because I could never afford to buy a house at my current location (this was even before the ramp up in housing prices during COVID). I am going into this with eye wide open that I could easily lose 200k (on paper) basically overnight if the market crashes. I feel there is a roughly 33% chance I lose a significant amount (on paper) so that is a reasonable high number. My question is for those of you that dealt with buying at the peak in 2007 how did you manage to not let it "keep you up at night" losing that much money? The house is at the top of budget but I have a very stable job so I should survive (ie still have money to pay mortgage and all bills) even if a recession comes (which hopefully it doesn't).

The way I am currently approaching it is that there is only a 33% it is an absolutely horrible purchase. There is a 66% chance it is a fine or even good time to buy. But I know there is a difference between saying something could happen in theory and it actually happening.

-33% this is basically the top of the market and the houses prices go down 20-30% over the next year. Mortgage rates pretty much stay where they currently are. This equals probably up to a 200k loss (on paper) for me. Would have been able to save a lot of money or buy a "better" house if I just waited a bit.

-33% no massive loss or gain the new few years. Might be a slight price drop or increase (say up to 10% either way) BUT the mortgage interest rates go up another 1-1.5% so I really don't lose that much money. I have a 30 year mortgage so the interest rates really do make a huge difference.

-33% it is actually a smart purchase. The house is in a nice neighbor of mostly middle/upper middle class or retired people. The prices increases slow down but say it gains 20% value over the next three year. The mortgage interest rates creep up another 1-2%. In this case it turns out to be a great purchase as I would have been "priced" out of this home if I would have waited a couple of years to buy. It is already at my max budget so zero chance I could absorb even a modest price increase and modest interest rate increase.
You should not be buying a house unless you plan on living there for a long time. And if you are planning on living there for a long time, the market temporarily taking a dive should not be of any concern whatsoever. Who cares what the value of the house is if you're not going to sell?

This is why most on here state that your house is not an investment. It is a purchase. Do not monitor it like you monitor your 401k. It is a tool that provides you shelter in a desired location. Nothing more.

If you are going to constantly check Zillow for your home value and praying that it does not drop, then buying a house is not for you.
Last edited by CoastLawyer2030 on Thu Feb 17, 2022 8:40 am, edited 1 time in total.
Exchme
Posts: 1322
Joined: Sun Sep 06, 2020 3:00 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Exchme »

tsohg wrote: Thu Feb 17, 2022 8:30 am In other words, you bought the home for a reason-- to live in-- tune out the noise.
I agree with this sentiment. We live in an area where house prices don't appreciate much but got a bigger house in a nicer part of town in 2007, near the top of the market. We've enjoyed our nicer house and most of the times we've thought about the old place were as we were comparing how much more we like the new place. Oh, plus the time that the old area flooded and put 6 feet of water in our former house.

Never worried about the financial shoulda, woulda, coulda aspects
barberakb
Posts: 622
Joined: Fri Apr 21, 2017 11:14 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by barberakb »

CaptainT wrote: Thu Feb 17, 2022 3:17 am The alternative to owning is renting. If you rent you pay an amount to live somewhere for a time. That may be hundreds or even thousands of dollars a month. If you have a loss in a house one can think about it as rent all at once.
I bought in 2007. I purposefully bought in a place I thought was gaining in desirability and as such even during the downswing my house didn't lose much if any value. Now it is worth much more and has almost but not quite doubled in value.
Additionally mortgage rates are very low still 2.5 to 3.5%
It is likely that inflation alone might be over that over the next several years let alone investments.
Its so funny that most people do not think like this...

Lets say rent is $1,000 a month for a house. Which is really really cheap in most areas. But even at that price.
If you bought a home for $300k, and sold it 5 years later for $270k, yes on paper and for some they may see it as a $30k loss.
But you had to live somewhere... Rent alone for those 5 yrs would have been $60k! So you really didn't lose anything. You lived there for 5 yrs at half price rent!
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JoeRetire »

barberakb wrote: Thu Feb 17, 2022 12:45 pm
CaptainT wrote: Thu Feb 17, 2022 3:17 am The alternative to owning is renting. If you rent you pay an amount to live somewhere for a time. That may be hundreds or even thousands of dollars a month. If you have a loss in a house one can think about it as rent all at once.
I bought in 2007. I purposefully bought in a place I thought was gaining in desirability and as such even during the downswing my house didn't lose much if any value. Now it is worth much more and has almost but not quite doubled in value.
Additionally mortgage rates are very low still 2.5 to 3.5%
It is likely that inflation alone might be over that over the next several years let alone investments.
Its so funny that most people do not think like this...

Lets say rent is $1,000 a month for a house. Which is really really cheap in most areas. But even at that price.
If you bought a home for $300k, and sold it 5 years later for $270k, yes on paper and for some they may see it as a $30k loss.
But you had to live somewhere... Rent alone for those 5 yrs would have been $60k! So you really didn't lose anything. You lived there for 5 yrs at half price rent!
Some say the glass is half full.
Some say the glass is half empty.
Others say the glass is twice as big as it needs to be.
This isn't just my wallet. It's an organizer, a memory and an old friend.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by exodusNH »

barberakb wrote: Thu Feb 17, 2022 12:45 pm
CaptainT wrote: Thu Feb 17, 2022 3:17 am The alternative to owning is renting. If you rent you pay an amount to live somewhere for a time. That may be hundreds or even thousands of dollars a month. If you have a loss in a house one can think about it as rent all at once.
I bought in 2007. I purposefully bought in a place I thought was gaining in desirability and as such even during the downswing my house didn't lose much if any value. Now it is worth much more and has almost but not quite doubled in value.
Additionally mortgage rates are very low still 2.5 to 3.5%
It is likely that inflation alone might be over that over the next several years let alone investments.
Its so funny that most people do not think like this...

Lets say rent is $1,000 a month for a house. Which is really really cheap in most areas. But even at that price.
If you bought a home for $300k, and sold it 5 years later for $270k, yes on paper and for some they may see it as a $30k loss.
But you had to live somewhere... Rent alone for those 5 yrs would have been $60k! So you really didn't lose anything. You lived there for 5 yrs at half price rent!
This is true, to some extent. You'd also need to take into account the opportunity costs of your down payment and the transaction costs. Plus, whatever improvements / repairs you did to the house. (And the extra utilities and frustrations of finding people to do work you cannot do yourself.)

At any particular point in time and space, you can calculate whether it's better to rent or own. Over the course of your life, it's going to switch between the two several times. I don't think you can predict for yourself what would have been more favorable until your deathbed.

I think you should own a house if you want to be a home owner. I don't think you should own a house because "it's better" or because you or other people perceive it as a sign of success.

Personally, I am at war with myself. I am definitely one of those people who shouldn't own a home, but also someone who doesn't want to share walls or be under the thumb of a HOA. Owning a home is the best of my options!
BruinBones
Posts: 272
Joined: Sun Apr 22, 2018 5:39 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by BruinBones »

tsohg wrote: Thu Feb 17, 2022 8:30 am We bought in 2007 right before everything tanked. It was a little frustrating, only because I knew I could have gotten a bigger/nicer house for the same amount of money.

How I coped: I focused on why I bought the house in the first place, I knew I wasn't planning on selling for at least 5 years, and I never considered my home an investment anyway. Finally, I didn't look at comps or estimates on its price. In other words, you bought the home for a reason-- to live in-- tune out the noise.
+1. Agree with this.
The best home to buy now to live in may not be the best investment home, and vice versa.
Engaging in sloth
Posts: 145
Joined: Sun Aug 11, 2019 5:38 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Engaging in sloth »

Chadnudj wrote: Wed Feb 16, 2022 4:47 pm There is almost zero in common between the real estate market now and the real estate market in 2008. Lending practices are better/tighter, most borrowers have equity in the home thanks to a down payment and fixed rate mortgages, mortgage payments are generally more affordable thanks to still near historically-low interest rates, the economy is stronger, and housing supply stock is at all-time lows even as the large millennial/GenZ generations are beginning to enter the market.

In other words, I would have very little worry about your home losing value, and certainly wouldn't peg the odds at anything even approaching 33% due to macroeconomic factors (now, if a meatpacking plant opens up in your backyard or they re-route a highway outside your front door, all bets are off).
I know a few people who bought and/or are buying currently with less than 5% down...seems like lending practices aren't as strict as we were lead to believe
User avatar
Lee_WSP
Posts: 10346
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Lee_WSP »

It was actually 2009 when the housing market really started tanking. 2010 when it hit bottom in my part of the country.

You just kept paying the bills and had a roof over your head. What else is there to do?
User avatar
rocket354
Posts: 678
Joined: Mon Dec 14, 2015 11:31 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by rocket354 »

I bought at the absolute peak (2006) in the peakiest of markets. My home value dropped by over 60% by the end of 2011. It didn't come back to what I paid for it in nominal terms until 2020, and even after this current boom the house is still worth less than I paid for it in real terms, by about 10%.

The GFC impacted me financially, as well, so that was not a fun time for me. To focus on how I coped just from a real estate perspective, I kept the house much longer than I had originally planned, including renting out a spare bedroom for many of those years. When I finally did decide to move in 2015 (at which point the house was still down > 30% nominally, and I still owed more than it was worth) I kept the house as a rental property, which has turned out to be a very good decision. I still own the house today, with a long-term tenant in place, and >50% equity.

A couple thoughts:

1) Just because there are three options does not mean each option is equally likely. Otherwise, it's 50/50 that I win the lottery--either I win or I don't! While I can't see home prices increasing at anywhere near the same rate they have for the past year+, because of stricter lending standards I would be quite shocked if we saw anything more than a very mild decline. I would not be at all surprised to see the market effectively stagnate for a number of years, at least price-wise.

2) Do not rush to buy a house because you are afraid of getting "priced out" or because the market is booming and you think you will make a quick buck. Only buy a house when it's correct for you (you are *very* confident you will be staying in it for 5+ years) and buy the smallest/least-expensive house that fits your lifestyle needs.
proudowner333
Posts: 90
Joined: Sun Jan 16, 2022 6:50 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by proudowner333 »

I am a first time buyer too and heard so many scary stories like this before.
Can someone help me to understand how to budget for your home. I read different articles such as you should not put more than 25% of your pre-tax income towards monthly mortgage. Also read about 30-35%, obviously it depends on each individual but what is our Bogleheads suggestion.
What is the max amount you can put towards your mortgage (pre or post take away income (as a couple)?

Thanks
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by exodusNH »

proudowner333 wrote: Thu Feb 17, 2022 4:51 pm I am a first time buyer too and heard so many scary stories like this before.
Can someone help me to understand how to budget for your home. I read different articles such as you should not put more than 25% of your pre-tax income towards monthly mortgage. Also read about 30-35%, obviously it depends on each individual but what is our Bogleheads suggestion.
What is the max amount you can put towards your mortgage (pre or post take away income (as a couple)?

Thanks
It depends on your other expenses, what you have for assets, and how secure your job is.

If you can pay all of your other bills, maintain a 12 month emergency fund, put away 15% for retirement, and manage to afford fun, then you're not spending too much.

There's an argument to be made to stretch on your first house, since you have a lot of human capital remaining, but that's also when compounding really has an amazing effect.

A 22 year old who puts away money for 10 years and then stops will beat out someone who starts at 32 and puts the same amount of money per month for 30 years.

This isn't the exact example I was looking for, but illustrates a similar point:

https://www.moneyunder30.com/power-of-compound-interest
barberakb
Posts: 622
Joined: Fri Apr 21, 2017 11:14 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by barberakb »

proudowner333 wrote: Thu Feb 17, 2022 4:51 pm I am a first time buyer too and heard so many scary stories like this before.
Can someone help me to understand how to budget for your home. I read different articles such as you should not put more than 25% of your pre-tax income towards monthly mortgage. Also read about 30-35%, obviously it depends on each individual but what is our Bogleheads suggestion.
What is the max amount you can put towards your mortgage (pre or post take away income (as a couple)?

Thanks
I don't use a % but definitely quite a bit lower than the bank will approve you for. Maybe 20-30% lower than your max loan approval.
But it really depends on a lot of factors.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

proudowner333 wrote: Thu Feb 17, 2022 4:51 pm I am a first time buyer too and heard so many scary stories like this before.
Can someone help me to understand how to budget for your home. I read different articles such as you should not put more than 25% of your pre-tax income towards monthly mortgage. Also read about 30-35%, obviously it depends on each individual but what is our Bogleheads suggestion.
What is the max amount you can put towards your mortgage (pre or post take away income (as a couple)?

Thanks
I would say a "comfortable" number and what most Bogleheads would suggest is no more than 30% of take home pay. I obviously exceeded that and my mortgage, property tax, and home owners insurance is roughly 50% of my take home pay. Again pretty much no Boglehead would approve of that by that was the max number I am comfortable with. Also I have 50k in cash +100k in retirement money I can withdrawn without tax penalty. I also get standard raises every two years plus colas every year. So in short my budget will be tight for 3-5 years and I am hoping I don't have more than 50k in emergency expenses during that time. If I make it the first 5 years it will get a lot easier after that.
Casper
Posts: 311
Joined: Tue Oct 15, 2013 8:32 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Casper »

Bought our current house in 11/2007, so pretty much right at the top. Pre-approved for $400k (with no proof of income!) but bought for $275k. Made me a little worried to see the prior owner had bought it in 2000 for just $136k, but they also made a lot of good renovations (and some not so good).

I'm sure the house went down in value over the next few years, but we were too busy living life to notice. House is now worth double what we paid. We obviously noticed the housing market collapse but basically ignored it because we were living in the house and had no intent to sell anyway. Also made a difference that we didn't pay at the top of our budget, it was a very comfortable mortgage that we paid off two years ago.

I'd just be careful not to overreach in this market. If you can buy something comfortably, do it, but if you're stretching and the market crashes (which could affect income, investments, and other things), it could be difficult.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

exodusNH wrote: Thu Feb 17, 2022 5:06 pm
A 22 year old who puts away money for 10 years and then stops will beat out someone who starts at 32 and puts the same amount of money per month for 30 years.
To be frank I will end up doing something similar to that. Saved aggressive for retirement my first 11 years of working (I have 600k in retirement assets currently) but I will significantly scale back now down to just 10% of pay (my 5% contribution and companies 5% match) related to buying the house. I am hopeful to ramp up my retire contributions again after 5 years or so but there will definitely be a decent pause on the heavy contributions.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

rocket354 wrote: Thu Feb 17, 2022 4:29 pm
2) Do not rush to buy a house because you are afraid of getting "priced out" or because the market is booming and you think you will make a quick buck. Only buy a house when it's correct for you (you are *very* confident you will be staying in it for 5+ years) and buy the smallest/least-expensive house that fits your lifestyle needs.
I realize it might not be the right move but fear of being priced out is a key factor in me buying. It is not the only factor but it is top 5. A decent reason I am moving is to be able to afford a house. Where I am currently living if I would have went all in 5 years ago I would have just been able to afford a house that would met my needs. Now those same houses cost 50% more and are out of reach to me. So I got priced out of my current area and I am somewhat concerned about getting priced out of where I am moving to. Again the house I bought just checks all my boxes and it is at the top of my budget. Even a modest interest or price increase would lead to me not being able to check all my boxes and need to start making some sacrifices. And honestly I think I might have a harder time coping if I waited to buy and was priced out than my current situation of potentially buying at a peak (which again no one really knows if this is the peak or not).
User avatar
whodidntante
Posts: 13088
Joined: Thu Jan 21, 2016 10:11 pm
Location: outside the echo chamber

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by whodidntante »

Generally, land appreciates, but structures depreciate. In any market it is sensible to purchase a house sufficient for your needs, but not much more than that.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

whodidntante wrote: Thu Feb 17, 2022 5:47 pm Generally, land appreciates, but structures depreciate. In any market it is sensible to purchase a house sufficient for your needs, but not much more than that.
Which is a large reason why a sought out a good location with a large lot and great views. Price wise I figure 2/3rd of the cost was for the land/views/area and only 1/3rd for the actual home. My assumption is the lot with always be worth a decent amount and new developments in the area tend to have smaller lots (as you can clearly fit more houses in an area with smaller lots). I am banking on in 25-50 years when I sell the area will continue to grow population wise and the large lots will be a rarer thing/more sought after. Honestly I would imagine the person I sell to would just buy it for the lot and tear down the house. As the house is currently 44 years so by the time I sell it will be 69-94 years old.
JBTX
Posts: 11205
Joined: Wed Jul 26, 2017 12:46 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JBTX »

If you feel like you will be there long term it doesn’t matter much. The main thing is to don’t overfinance to a point a housing downturn leaves you upside down and/or you can’t afford it due to economic circumstances. I’m assuming this is your first house. If you choose to move and prices fall, yes you lose money on this house but your next house will probably be cheaper than it would otherwise have been. The only way you really lose is if you have to sell at a loss, and you don’t have the means to buy another house.
BarbBrooklyn
Posts: 1715
Joined: Fri Aug 24, 2018 9:33 am
Location: NYC

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by BarbBrooklyn »

Haven't read the other posts.

My daughter bought a coop in Brooklyn in 2007 at the "top", knowing that she was going to stay for at least 10 years.

Bought at 500K, sold recently for 850K, bought a forever house a block away for 1.6M.

The real estate you are going to live in long term isn't an investment, it's a place to live.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

JBTX wrote: Thu Feb 17, 2022 6:38 pm If you feel like you will be there long term it doesn’t matter much. The main thing is to don’t overfinance to a point a housing downturn leaves you upside down and/or you can’t afford it due to economic circumstances. I’m assuming this is your first house. If you choose to move and prices fall, yes you lose money on this house but your next house will probably be cheaper than it would otherwise have been. The only way you really lose is if you have to sell at a loss, and you don’t have the means to buy another house.
On a 0-100 scale my job is probably about 97 (with 100 being most secure). For my position an economic downturn would mean more work as they would cut staff but just not hiring vacant positions. But it would take an actual depression (not just a recession) for me to have any worry about actually be laid off. Even in an actual depression I still don't think I would be laid off I just think they would leave even more open jobs vacant.
JBTX
Posts: 11205
Joined: Wed Jul 26, 2017 12:46 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JBTX »

Paul78 wrote: Thu Feb 17, 2022 6:49 pm
JBTX wrote: Thu Feb 17, 2022 6:38 pm If you feel like you will be there long term it doesn’t matter much. The main thing is to don’t overfinance to a point a housing downturn leaves you upside down and/or you can’t afford it due to economic circumstances. I’m assuming this is your first house. If you choose to move and prices fall, yes you lose money on this house but your next house will probably be cheaper than it would otherwise have been. The only way you really lose is if you have to sell at a loss, and you don’t have the means to buy another house.
On a 0-100 scale my job is probably about 97 (with 100 being most secure). For my position an economic downturn would mean more work as they would cut staff but just not hiring vacant positions. But it would take an actual depression (not just a recession) for me to have any worry about actually be laid off. Even in an actual depression I still don't think I would be laid off I just think they would leave even more open jobs vacant.
As long as you can afford your house, and you have enough reserves to keep your house for a reasonable period of (unlikely) unemployment you should be fine. Trying to wait around for house prices to fall is likely to fail. This is probably not going to be like 2007 because supply is much more constrained. Perhaps prices stop appreciating for years, but don’t fall much. Also you could wait around an me interest / mortgage rates go up.
ddbtoth
Posts: 194
Joined: Sun Oct 03, 2021 3:18 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by ddbtoth »

The house I bought in 2008 I’m still in. Did I pay to much? Probably. Can I sell right now and make $75k, yes. Will I? No.
My wife will sell it after I die to fund her whatever, I don’t care really, I’ll be dead. And she will be taken care of regardless. Maybe it’s like timing the market. If you need to do it, buy it.
vinhodoporto
Posts: 296
Joined: Tue Dec 24, 2019 9:14 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by vinhodoporto »

We bought at the previous market peak…

1) Before we bought we made sure we could afford the mortgage in various bad situations. Probably more importantly we made sure we were in a good location etc that would sell or rent easily even in a bad market

2) When we needed to move to a different city for a new job in early 2009 we rented the house out. The rent didn’t fully cover our expenses but was close enough that we could make up the gap of a few hundred bucks a month

3) We eventually sold our house to the renters. We wrote a decent sized check to the bank when we sold. That really sucked

4) We bought a new house in our new location at the bottom of the market. Very happy with the appreciation since then :sharebeer :sharebeer
redrum
Posts: 45
Joined: Sat Dec 28, 2013 11:39 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by redrum »

JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
rich126
Posts: 4453
Joined: Thu Mar 01, 2018 3:56 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by rich126 »

I bought a place in AZ in mid 2003 and saw it double in price only to drop 50%+. Some places in AZ lost 70% in price. There were blocks not far from work where the majority of the block were foreclosures. I knew one lady that bought a very over priced house way out and she just walked away from it. Most places didn't get back to the peak prices until the last year or two so they would have had to wait ~12+ years to "break even".

For those that had no need (i.e., family, job, finances) to sell, they are ok. My biggest observation from that area was that if you bought in desirable more pricey areas, the houses kept more of their value (I guess I should say price) and rebounded better. The ones that got toasted were houses in bad areas and way out of town.

If you are buying for the long term (decades) it may hurt but it isn't terrible but if you have to sell it then it can be painful. Sometimes you can instead rent it out but that would depend on the mortgage.
----------------------------- | If you think something is important and it doesn't involve the health of someone, think again. Life goes too fast, enjoy it and be nice.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JoeRetire »

redrum wrote: Thu Feb 17, 2022 11:27 pm
JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
They chose bankruptcy, I believe on the advice of a lawyer. I don't know if they considered other alternatives. It was sad and it was a long time ago.
They were good people. They made some bad choices.
This isn't just my wallet. It's an organizer, a memory and an old friend.
redrum
Posts: 45
Joined: Sat Dec 28, 2013 11:39 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by redrum »

JoeRetire wrote: Fri Feb 18, 2022 5:52 am
redrum wrote: Thu Feb 17, 2022 11:27 pm
JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
They chose bankruptcy, I believe on the advice of a lawyer. I don't know if they considered other alternatives. It was sad and it was a long time ago.
They were good people. They made some bad choices.
That is unfortunate indeed. It is one of my nightmare scenarios.
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by JoeRetire »

redrum wrote: Fri Feb 18, 2022 7:09 am
JoeRetire wrote: Fri Feb 18, 2022 5:52 am
redrum wrote: Thu Feb 17, 2022 11:27 pm
JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
They chose bankruptcy, I believe on the advice of a lawyer. I don't know if they considered other alternatives. It was sad and it was a long time ago.
They were good people. They made some bad choices.
That is unfortunate indeed. It is one of my nightmare scenarios.
Just don't make yourself house poor.

They bought significantly more house than they really needed, right up to the very limit of what they could get a mortgage for. My wife and I were shocked that they would buy such a big house. It seemed clear that they could just barely afford it on two salaries. They always seemed to live paycheck to paycheck.

If everything went perfectly, I suppose they could have gotten by. But things went far from perfectly.
This isn't just my wallet. It's an organizer, a memory and an old friend.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by exodusNH »

redrum wrote: Fri Feb 18, 2022 7:09 am
JoeRetire wrote: Fri Feb 18, 2022 5:52 am
redrum wrote: Thu Feb 17, 2022 11:27 pm
JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
They chose bankruptcy, I believe on the advice of a lawyer. I don't know if they considered other alternatives. It was sad and it was a long time ago.
They were good people. They made some bad choices.
That is unfortunate indeed. It is one of my nightmare scenarios.
One of the reasons banks issued these mortgages is that they know people do everything they can to make the mortgage payments. This usually involves credit card payments for everything that will accept them and, cash advances on those cards for the places that won't take credit cards.

When I went to college in 96, I got a secured credit card from my bank. It was something like a $250 deposit to get $500 of credit. After a year, it transitioned to a real credit card. My bank sold off all their credit cards to another bank which were then sold to another. Every few months they upped my limit.

By the peak of the craziness, that limit was almost 25% of my salary. They issued me another credit card with about half of the limit. All told, I had nearly 40% of my gross salary available on those two credit cards.

I could have kept plates spinning for a long time with those limits. I can easily see how someone would have gotten themselves to the point of bankruptcy.

I still have that first card, since it's now my oldest account at 25+ years. The limit has never since been raised. I will likely keep that card until the end, for nostalgia if nothing else. I find it amusing that it started as secured credit card, with a limit I had exceeded on one or two occasions in the before times on dinner and drinks.
bltn
Posts: 1843
Joined: Mon Feb 20, 2017 8:32 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by bltn »

redrum wrote: Fri Feb 18, 2022 7:09 am
JoeRetire wrote: Fri Feb 18, 2022 5:52 am
redrum wrote: Thu Feb 17, 2022 11:27 pm
JoeRetire wrote: Wed Feb 16, 2022 3:43 pm Be careful. Just because the real estate market is hot now, you don't want to become house poor.

I had friends who bought a McMansion that they could barely afford on two salaries. Wife unexpectedly got pregnant and wasn't able to work. Then they got divorced. Then he got laid off. Bankruptcy.
Good advice, sobering example. We just bought a house, and I'm on tenterhooks expecting a crash everyday.
Curious, how would your friends situation lead to bankruptcy? Wouldn't they simply lose their home if they didn't make payments?
They chose bankruptcy, I believe on the advice of a lawyer. I don't know if they considered other alternatives. It was sad and it was a long time ago.
They were good people. They made some bad choices.
That is unfortunate indeed. It is one of my nightmare scenarios.
I think an important part of Joe s post is his friends buying a house they could BARELY afford. Buying a house like that is risky, as there is no allowance for any financial hiccup.

I agree with the other posters that a house you buy that you can afford is a place to live, not an investment. One shouldn't be affected by downturns in the housing market if one plans to keep his house for a long time.

We started building a house in 2006 that was finished in spring of 2008. There were delays in the building process back then, just as there are today, due to shortages. I ran into my builder in 2010, and he told me that using the same subcontractors and same materials, my house which was completed in 2008, could be built in 2010 for about 75% of what I paid during the boom. I hated hearing that, but I was keeping the house, so the sale price in 2010 didn't t really matter to me. Now, with the real estate market boom, and the good location of our house, Zillow appraises it for more than 3 times what it cost us. We re still planning to keep the house into the foreseeable future.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

exodusNH wrote: Fri Feb 18, 2022 7:40 am
By the peak of the craziness, that limit was almost 25% of my salary. They issued me another credit card with about half of the limit. All told, I had nearly 40% of my gross salary available on those two credit cards.
Credit cards are a different animal. I mean my total credit limit is equal to my gross salary. That is way too high. I get separate banks are issuing the cards but they still know my total credit limit. The card with the highest limit is 20% of my gross salary. I have several credit cards as I played the points/rewards game for a few years a while back. So got up to 11 cards at one point one closed to inactivity and another is about to close to inactivity. I am fine with those two closing (even with the very minor credit hit) as I only had one card with each of those companies. I will keep the other 9 active though as it is spread across 3 companies and it is really as simple as buying a $1 gift card once a year at amazon with the 7 cards I don't use for normal purchases. At least from my experience they only close you account if you literally have zero transactions for years.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by exodusNH »

Paul78 wrote: Fri Feb 18, 2022 8:15 am
exodusNH wrote: Fri Feb 18, 2022 7:40 am
By the peak of the craziness, that limit was almost 25% of my salary. They issued me another credit card with about half of the limit. All told, I had nearly 40% of my gross salary available on those two credit cards.
Credit cards are a different animal. I mean my total credit limit is equal to my gross salary. That is way too high. I get separate banks are issuing the cards but they still know my total credit limit. The card with the highest limit is 20% of my gross salary. I have several credit cards as I played the points/rewards game for a few years a while back. So got up to 11 cards at one point one closed to inactivity and another is about to close to inactivity. I am fine with those two closing (even with the very minor credit hit) as I only had one card with each of those companies. I will keep the other 9 active though as it is spread across 3 companies and it is really as simple as buying a $1 gift card once a year at amazon with the 7 cards I don't use for normal purchases. At least from my experience they only close you account if you literally have zero transactions for years.
Credit limits have come down a lot since 2007. While you can still get crazy ones, the banks do seem much more cautious.

My point in relation to the McMansion story was that they got a stretch mortgage and probably charged themselves into bankruptcy rather than walking away from the house, which is a behavior the banks essentially encouraged since they know people will do almost anything to avoid losing their home.
chrismj
Posts: 129
Joined: Thu Feb 09, 2017 1:12 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by chrismj »

proudowner333 wrote: Thu Feb 17, 2022 4:51 pm I am a first time buyer too and heard so many scary stories like this before.
Can someone help me to understand how to budget for your home. I read different articles such as you should not put more than 25% of your pre-tax income towards monthly mortgage. Also read about 30-35%, obviously it depends on each individual but what is our Bogleheads suggestion.
What is the max amount you can put towards your mortgage (pre or post take away income (as a couple)?

Thanks
Like most answers it depends. Our mortgage is 9% of our pre-tax income but we have a high dual income ($180k) in a low/medium cost of living area ($215k home). Our house is 100 years old but well taken care of, it's big enough for a family of four, and in a decent neighborhood. We could definitely afford a house 2-3x as big or in a "better" school district but what for. This is our second house bought in 2018 (sold the first to move here).

The first place we bought was a $330k condo in a high cost area in 2014. Our income then was about $160k so the mortgage+HOA was about 15%. We sold for $485k.

We were approved by the bank for double or triple what we ended up buying each time. I don't even think we were/are living below our means, just living normally.

I suggest working backwards from your income. Take your combined income and subtract your pre-tax retirement contributions, then subtract other debt payments, then your monthly fixed expenditures like food and utilities. Whatever is leftover would be split between mortgage, travel, entertainment, etc. Something has to give. Some people are fine only spending money on their dream home and not traveling or going out to eat. Don't forget about upkeep of the home. That can be thousands of dollars a year.

Another way to lower the monthly percentage is focus on the numerator by finding an undervalued home. Don't get tunnel vision on the neighborhood, town, or school. I looked at the school rating where I went to high school 20 years ago and it's a 3 out of 10! What does that even mean? It was a good school, we had honors/AP/college course and tech/shop classes and languages. My son's school currently is a 3/10. He's four years old and knows how to read and write and loves his teacher and classmates. Gasp! a lot of them have black and brown skin and if that worries you you can move 1 mile away to the 10 out of 10 schools where the houses are almost double.
barberakb
Posts: 622
Joined: Fri Apr 21, 2017 11:14 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by barberakb »

Paul78 wrote: Fri Feb 18, 2022 8:15 am
exodusNH wrote: Fri Feb 18, 2022 7:40 am
By the peak of the craziness, that limit was almost 25% of my salary. They issued me another credit card with about half of the limit. All told, I had nearly 40% of my gross salary available on those two credit cards.
Credit cards are a different animal. I mean my total credit limit is equal to my gross salary. That is way too high. I get separate banks are issuing the cards but they still know my total credit limit. The card with the highest limit is 20% of my gross salary. I have several credit cards as I played the points/rewards game for a few years a while back. So got up to 11 cards at one point one closed to inactivity and another is about to close to inactivity. I am fine with those two closing (even with the very minor credit hit) as I only had one card with each of those companies. I will keep the other 9 active though as it is spread across 3 companies and it is really as simple as buying a $1 gift card once a year at amazon with the 7 cards I don't use for normal purchases. At least from my experience they only close you account if you literally have zero transactions for years.
Interesting, Ive never had an account closed unless I closed it. I have some cards that I don't use at all. Some going on about 5 years.
aristotelian
Posts: 12262
Joined: Wed Jan 11, 2017 7:05 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by aristotelian »

We bought in February 2008. We bought because we thought ownership would be more beneficial than renting long term. I had a stable job and we were committed to the area for 10+ years. We did not buy it as a short term investment. I never lost money because we are still in the house today.
Topic Author
Paul78
Posts: 436
Joined: Sat Dec 12, 2009 10:17 am

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Paul78 »

barberakb wrote: Fri Feb 18, 2022 10:17 am
Interesting, Ive never had an account closed unless I closed it. I have some cards that I don't use at all. Some going on about 5 years.
Maybe it because I only used those two cards for like a 2 month period (to get the sign up bonus) then never used again. Cause yes my first credit card (opened in 2007) I have not used that for years but I have gotten no letter about it getting closed if not used. However that card was my only card from 07-10 so there is a lot more history of use/statements. Also I believe since with each company I only had one card that played a role. With my other low usage cards I have other cards with the company that I do use. So it is probably more of a customer service thing that they won't close your account unless requested because you are still an active user of that companies credit cards.
tonyclifton
Posts: 990
Joined: Sat Feb 08, 2020 4:25 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by tonyclifton »

We bought a house in the summer of 2007. Our home’s value has doubled since then. We are still in that house and refinanced twice to take advantage of interest rate reductions. At the time it was one of the more expensive home sales within a few streets and now it is paltry compared to what people are paying for homes currently available. We had a fixed rate mortgage from the beginning.
Carefreeap
Posts: 3881
Joined: Tue Jan 13, 2015 6:36 pm
Location: SF Bay Area

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Carefreeap »

rich126 wrote: Fri Feb 18, 2022 4:11 am I bought a place in AZ in mid 2003 and saw it double in price only to drop 50%+. Some places in AZ lost 70% in price. There were blocks not far from work where the majority of the block were foreclosures. I knew one lady that bought a very over priced house way out and she just walked away from it. Most places didn't get back to the peak prices until the last year or two so they would have had to wait ~12+ years to "break even".

For those that had no need (i.e., family, job, finances) to sell, they are ok. My biggest observation from that area was that if you bought in desirable more pricey areas, the houses kept more of their value (I guess I should say price) and rebounded better. The ones that got toasted were houses in bad areas and way out of town.

If you are buying for the long term (decades) it may hurt but it isn't terrible but if you have to sell it then it can be painful. Sometimes you can instead rent it out but that would depend on the mortgage.
Just about our experience too although prices up here are truly nuts for the average state income. The lot across the street from our AZ house sold for $625k in Nov. The new owners advised us they are building a single story 4k house including a casita. Given the prices of contractors and labor I bet they are going to building a $2M home. :shock:

We relocated overseas in 2009. It took a while to rent out the house because so many investors were snapping up foreclosures and flooding the market with rentals. I didn't expect that!

ETA: When I go on Realtor.com now I'm seeing several price reductions and contingent sales in my AZ zip code. That would indicate some cooling.
Every day I can hike is a good day.
Independent George
Posts: 1590
Joined: Wed Feb 17, 2016 11:13 am
Location: Chicago, IL, USA

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by Independent George »

I bought my condo in June 2007 for $260k on a $210k loan. When the crash hit, it was suddenly worth $140k, putting me $60k underwater; combined with my investment accounts dropping by 50%, I went from a net worth of roughly $100k to roughly -15k.

While it hurt, my #1 concern at the time wasn't my negative net worth, but my job/income. I had no plans to sell either my investments or my home, so the current price, while worrying, hardly affected my day-to-day life. Losing my job, though, would be devastating. I made the decision that if I lost my job, I would file for bankruptcy.

As it turned out, while I did take a pay cut, I kept my job, and am still living in the condo today. It's only worth about $200k now, but my balance (after multiple refinances) is down to $136k. Ironically, I'd probably be better off today if I did declare bankruptcy and cleared the mortgage from my balance sheet, but I weathered the storm and am still in pretty good shape today.
rich126
Posts: 4453
Joined: Thu Mar 01, 2018 3:56 pm

Re: For those of you that bought right before the 2008 housing crash how did you cope?

Post by rich126 »

Carefreeap wrote: Fri Feb 18, 2022 12:26 pm
rich126 wrote: Fri Feb 18, 2022 4:11 am I bought a place in AZ in mid 2003 and saw it double in price only to drop 50%+. Some places in AZ lost 70% in price. There were blocks not far from work where the majority of the block were foreclosures. I knew one lady that bought a very over priced house way out and she just walked away from it. Most places didn't get back to the peak prices until the last year or two so they would have had to wait ~12+ years to "break even".

For those that had no need (i.e., family, job, finances) to sell, they are ok. My biggest observation from that area was that if you bought in desirable more pricey areas, the houses kept more of their value (I guess I should say price) and rebounded better. The ones that got toasted were houses in bad areas and way out of town.

If you are buying for the long term (decades) it may hurt but it isn't terrible but if you have to sell it then it can be painful. Sometimes you can instead rent it out but that would depend on the mortgage.
Just about our experience too although prices up here are truly nuts for the average state income. The lot across the street from our AZ house sold for $625k in Nov. The new owners advised us they are building a single story 4k house including a casita. Given the prices of contractors and labor I bet they are going to building a $2M home. :shock:

We relocated overseas in 2009. It took a while to rent out the house because so many investors were snapping up foreclosures and flooding the market with rentals. I didn't expect that!

ETA: When I go on Realtor.com now I'm seeing several price reductions and contingent sales in my AZ zip code. That would indicate some cooling.
Just about our experience too although prices up here are truly nuts for the average state income.


Yup, absolutely. A lot of tourism jobs which don't support the housing prices. Not everyone has a $150K WFH job. I think there is a ton of speculators and flippers.

When I sold my house (obviously too soon) in later 2020 I had a guy contact my agent before it was actually listed and he wanted a 7 day settlement. My agent said he probably wanted to find another buyer and flip it immediately after settlement and if he couldn't find someone else to buy it in the 7 days may have pulled out of the settlement. I had no interest in such a short time frame (needed a good month to pack/move) so it was an easy no.

People are going to say it is different this time but I doubt it. Of course it could continue for a while.
----------------------------- | If you think something is important and it doesn't involve the health of someone, think again. Life goes too fast, enjoy it and be nice.
Post Reply