Thursday, October 9, 2008

WSJ: "Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water'"

According to a recent article in the Wall Street Journal (thanks, BitchPhd), 16% of U.S. homeowners owe more on a mortgage than the home is worth.

I am totally one of those people.

However, with the combination of my TA stipend, book royalties, my happy-to-have-still-have-it job with my company in California, and rental income from the lovely tenant in said home, I am able just about to break even each month—or only get myself a couple hundred bucks in the hole. I consider that a win.

Just for the sake of presenting some real life numbers, here's my particular part of the housing crisis story.

* Bought my condo in San Jose, CA in April 2002 for 205K. My mortgage was for 211K because I had no money to put down. Yes, I was one of those people.
* In 2004 I refinanced to get a slightly lower interest rate and also to move around some debt. The new mortgage was for 250K, basically.
* By late 2006, condos in my complex/zip code were selling around 300-325K. I thought I was in a good position to be able to sell it when I came up to Pullman in Summer 2007.
* Between Feb 2007 and January 2008, exactly two condos sold in my complex/zip code, and they were short sales for something like 250K. The entire market froze.
* I got a renter. My renter pays 40% of my monthly mortgage + HOA dues.
* I pay property taxes in the amount of 2900/yr. The value of my property according to Santa Clara County is 233K.
* Listings in my complex/zip code have condos like mine going for 185-195K, which is 10K less than I paid six years ago and 125K less than some condos sold for just eighteen months ago.
* I owe 243K.

I can make the payments, now. I can write off some of the loss on my taxes. What I can't do is refinance because technically now it's a rental property and the LTV is all messed up. Thankfully I am in a better position than many many many people in similar "under water" situations. But it's still painful.