More Personal Anecdotes
Here are a few real estate related anecdotes I have come across in the last few weeks. I'm not relating them to make any particular point, they're just all of the real estate happenings that I've personally encountered recently.
A coworker of mine recently moved from the Northgate area up to Bothell. Commuting across the 520 bridge every day just finally got to be too much for him. So of course he's selling his 2-story, 4-bedroom, 2.75 bath house (on ~1/5 acre) in Northgate. His original asking price on this home that he purchased in 1997 for $170,000 was $475,000. After a few weeks with no bites he has lowered the asking price to just under $450,000. As far as I know he still has no serious offers on the table.
Other friends of mine bought a house up in Lynnwood in early 2004 for around $240,000 using a good helping of creative financing—no money down, one loan for 80%, another (interest-only adjustable) for 20%, that sort of thing. Since interest rates have been going up and the interest-only period is rapidly drawing to a close, they have decided that now is a good time to refinance. Now, I haven't claimed to be anything other than mostly ignorant when it comes to all the ins and outs of home financing and crazy mortgage rules, but their strategy still surprised me. According to my friend, since the home has "appreciated nearly $100,000" they are now able to find a mortgage lender that will roll their two loans into one and give them a good rate, since the amount of the loan (~$240,000) is now less than 80% of the "value" of the house. For all I know this is a common tactic, but it was new to me.
Lastly, remember the condo complex down the street from me, where one unit sold in October for $280,000 and another in December for $300,000? Well yet another neighbor decided it was a good time to cash out, and they listed their unit a few weeks ago for $285,000. I picked up one of the fliers a week ago, and the sign is still posted on the street (sans any "pending" or "sold" slap-ons), but oddly I can't find it listed on Windermere's (or anyone else's) site. Have they given up on selling it already?
3 comments:
I know 2 people who have bought properties in he past couple of years who cannot afford to live in them!
Not only that, the rent they collect does not quite cover the mortgage payment, let alone taxes, insurance and upkeep.
They're juggling all these balls on the off chance of further wild appreciation I guess. Stupid.
Do the math people!
What your friends with the 80/20 did is pretty common now. I did it, though in my case I had an actual down payment (80/15) and no IO loans. I think lots of folks who bought a couple of years ago and want to stay put are doing it.
I refinanced back in September, getting out of an 80/20 and going to a 30 year fixed. The "value" of my house --which I purchased for $255k in 2004--had increased to $300k on paper. So, I managed to get into a 30 year fixed without ever having to shell out any money down. The ridiculous notion that the house we purchased in June of 2004 could appreciate 15% in a year certainly speaks volumes to me--as does the fact that I got the loan with no payment of points, and without having to come up with a downpayment--and this from an extremely reputable lender (one that typically is known for giving student loans) speaks volumes to me about the state of the market. Even more interesting, about a day after the refinancing was complete, my loanholder sold my mortgage to another company, thereby avoiding any risk.
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