Distressed Sales to Sandbag Housing Revival

Bought a 'distressed' house for $65k in the country minus the $8k credit. House went into wife's name since she never owned a house. 5 acres, 4 bedrooms, good sized barn to storage a boat in, pond, etc. I put $25k into rehabbing the house. Original value when built in 1997 was $195K. Our house in the city is up for sale at $135K. 4 years ago it would have been $155K. Ever since paying off my house in 2003, we made "house payments" into an investment account. Without having any credit card or car or housing debts, we simply wrote a check for $65K. I also have a HELOC on the house that I could have wrote checks for up to $125K but I did not want to go into debt to buy the "new" house and we wanted to be able to sell my old house.

I had many bank offers to "refinance" my house at 0% down, 150% of value, etc for a 5 year ARM. Told the bankers to get lost. I also closed my accounts at that bank since if they were willing to lend at 150% of value, they must be idiots. Unfortunately many other people loved the nothing down, don't worry, you can always refinance later loans. Until they found out they couldn't.

Thank You "Dave Ramsey" for re-enforcing my ideas about being debt free and paying in cash. It means you have an additional 25% every month that you are NOT sending to the banks as interest.

I think the foreclosed houses will be coming on the market for a long time and it will be depressed. But for those people that saved, did not take on credit card or car debt, and now have lots of cash, this will be a buyers market for them for a long while.

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huangxiaohan of MT 3:06PM July 02, 2010

Don't expect a real estate recovery. In most markets it won't happen for at least a decade, likely longer. Houses are still expensive relative to income so expect a bit more decline, although the worst is past us. Once they hit bottom they will track inflation until people have once again forgotten that home prices just as easily fall as climb.

This is however a good thing. For every forclosure there is a new buyer who was priced out of the market five years ago and was responsible enough not to get in over his head. He is now being rewarded for his intelligent behavior.

Glmory of CA 1:29AM July 02, 2010