12 ms·

May I ask what your savings were in that caused them to be be wiped out in 2008? I would have to guess retirement funds invested in mutual funds which were inve

by laotzu 11y ago

May I ask what your savings were in that caused them to be be wiped out in 2008? I would have to guess retirement funds invested in mutual funds which were invested in the housing bubble?

Scarblac 11y ago
We bought a house for 300k, about 60k of it our savings and 240k mortgage. In the next two years, the value of the house went down by 60k. To be honest that wasn't _all_ our savings, and they were already spent on the house of course, but it was a financial loss equal to most of our original savings.
- esteth 11y ago
  If the house was your primary residence, and not an investment instrument, you didn't really "lose" anything - other property is now also cheaper, and you always need somewhere to live. Sure, you're paying more than you would have if you waited, but you were happy to pay XXXXUSD per month to have somewhere to live, and your relative mobility has actually increased if we assume that the housing market fell by a flat percentage.
  - Scarblac 11y ago
    Assuming that I will always move on to another own house, and not a rented one.
    - logfromblammo 11y ago
      I'm never buying again. If they want me to sink 30 years of my life into monthly payments, I'm going to need a job that will last for at least 30 years of steady paychecks. And I don't believe those actually exist any more. Also, I no longer trust the justice system to protect my rights as a property owner. Having been primed by software-based DRM to not want to buy something unless I can truly own it, I find that land property in the US is often heavily encumbered with covenants, regulations, local ordinances, mortgage terms, and recurring taxes, to the point where it feels like paying rent and signing a lease feels less restrictive.
      - JoeAltmaier 11y ago
        Takes all kinds. I bought my place after 20 years of payments, on a dozen different jobs. Had savings, so 'between jobs' didn't impact mortgage payments. And I'm out in the county, where if they have zoning rules, there sure as heck aren't any inspectors. So I do as I please. Feels pretty unencumbered to me!
        logfromblammo 11y ago
        I have been burnt twice on home ownership, and didn't enjoy the pain. Other people will have different experiences. I do know for certain that I will never sign another mortgage for as long as I live. Those lenders can go FOADIAF.
      - Scarblac 11y ago
        > I'm never buying again. If they want me to sink 30 years of my life into monthly payments, I'm going to need a job that will last for at least 30 years of steady paychecks. I don't get this. If you rent instead, you'll just be sinking monthly payments into that (maybe more, maybe less than with buying). And there's no need for a job that lasts 30 years, you just need to keep the ability to make the payment every month. But that is also true when renting.
        logfromblammo 11y ago
        You don't understand, because you have probably just done the math on paper, rather than lived it. Anecdotally, I have realized more value per dollar spent on rented homes than on purchased homes. If I had never purchased a home in the past, renting instead, I believe without a shred of doubt that I would have a greater net worth today. I cannot make a rational case for home purchase now, because I cannot guarantee so many years of steady paychecks within an acceptable commuting radius of any home I could buy. Look back 30 years before now, to 1985. How many jobs existed then in the U.S. that no longer exist now? Do you think you can predict what the job market will look like in 2045? If your job was to make buggy whips, would you feel safe making a 30-year financial commitment in 1890? Perhaps, but the Ford Model T came in 1908. Technology develops faster now. I get the impression that jobs that don't even exist this year may become obsolete before 30 years elapse, and yet employers still routinely hire based on specific experience rather than aptitude or trainability. Perhaps it would have been more accurate to say that I will never take on debt to buy a home again, and I don't expect to ever be able to afford to buy anything without doing so.
  - esaym 11y ago
    I think the problem is when you finally do need to move, and you owe 200k still but will only be able sell the house for 150k. You'll still be making mortgage payments on a house you won't even have then.
    - at-fates-hands 11y ago
      Real estate markets are a fickle beast. After the 2008 crash, I was planning on moving, but abruptly changed my plans when I lost close to a 80K on the value of my home. Fast forward 6 years and suddenly the market was showing signs of rebounding. I had always been in contact with my real estate agent, but I was considering a large scale remodel and staying put where I was. My agent offered to start looking for something that I might like. A year later the process went shockingly fast. I was assuming the house would sit for a while since the market was still pretty soft. I cleaned and de-cluttered my house and it went on the market. Within hours I had two listings for the next day - which ballooned to four the morning of. When I got back, I had two offers. The house was on the market less than two days. I credit the ability to sell my house and make a few grand on it to my agent. It was priced and marketed really well by him and his company. This is the second house he's sold for me. The other house was on the market at the height of the housing boom and sold in less than a week.
  - jellicle 11y ago
    Just because the loss hasn't been realized yet doesn't mean it isn't real. Among other things, prior commenter can't move to a different house because s/he no longer has a downpayment and won't be able to refinance to take advantage of lower rates. An increase in housing values is real, and so is a decrease, and it's real even before those losses/gains have been realized by selling (for instance, a HELOC can get the gains out before selling).
    - Scarblac 11y ago
      In particular my wife has no job now and mortgage lending rules are much stricter now. So although we can make the payments on our current 240k mortgage each month on my income, the maximum mortgage we could get now is something like 180k.
  - cpursley 11y ago
    Exactly, we're all naturally short housing. https://thezikomoletter.wordpress.com/2012/12/10/you-are-naturally-short-housing/ https://thezikomoletter.wordpress.com/2012/12/10/you-are-nat...
beachstartup 11y ago
simply owning a recently-purchased house in an affected real estate market could have caused that. if you couldn't cover mortgage due to job loss or a rate hike, you were forced out and lost the money. doubly so if you were also invested in financial markets. a lot of people lost a lot of money. meanwhile, parents' mortgage is from the 1980s or 1990s and easily affordable in today's money, even if their nominal market value takes a slump, the mortgage is easily covered and the rebound in values 3-4 years later will put you far ahead again. if you were smart enough to hold steady or even double-down when the financial markets were down, well then you're even richer today. it was essentially a transfer of wealth from one generation to well-positioned members of the previous generation, and of course bankers/traders. but it wasn't a conspiracy... some people are just better positioned for and better able to see a massive market shift like that. i personally lost some (not that much) money during that time, and my parents gained money. ultimately their money is my money so i'm fortunate in that regard, but the same exact thing happened to me. i did everything 'right', including saving and investing, and still got somewhat shafted personally due to a combination of extrinsic market forces and personal decisions.

by laotzu 11y ago

May I ask what your savings were in that caused them to be be wiped out in 2008? I would have to guess retirement funds invested in mutual funds which were invested in the housing bubble?

Scarblac 11y ago

We bought a house for 300k, about 60k of it our savings and 240k mortgage. In the next two years, the value of the house went down by 60k. To be honest that wasn't _all_ our savings, and they were already spent on the house of course, but it was a financial loss equal to most of our original savings.

esteth 11y ago
If the house was your primary residence, and not an investment instrument, you didn't really "lose" anything - other property is now also cheaper, and you always need somewhere to live. Sure, you're paying more than you would have if you waited, but you were happy to pay XXXXUSD per month to have somewhere to live, and your relative mobility has actually increased if we assume that the housing market fell by a flat percentage.
- Scarblac 11y ago
  Assuming that I will always move on to another own house, and not a rented one.
  - logfromblammo 11y ago
    I'm never buying again. If they want me to sink 30 years of my life into monthly payments, I'm going to need a job that will last for at least 30 years of steady paychecks. And I don't believe those actually exist any more. Also, I no longer trust the justice system to protect my rights as a property owner. Having been primed by software-based DRM to not want to buy something unless I can truly own it, I find that land property in the US is often heavily encumbered with covenants, regulations, local ordinances, mortgage terms, and recurring taxes, to the point where it feels like paying rent and signing a lease feels less restrictive.
    - JoeAltmaier 11y ago
      Takes all kinds. I bought my place after 20 years of payments, on a dozen different jobs. Had savings, so 'between jobs' didn't impact mortgage payments. And I'm out in the county, where if they have zoning rules, there sure as heck aren't any inspectors. So I do as I please. Feels pretty unencumbered to me!
      - logfromblammo 11y ago
        I have been burnt twice on home ownership, and didn't enjoy the pain. Other people will have different experiences. I do know for certain that I will never sign another mortgage for as long as I live. Those lenders can go FOADIAF.
    - Scarblac 11y ago
      > I'm never buying again. If they want me to sink 30 years of my life into monthly payments, I'm going to need a job that will last for at least 30 years of steady paychecks. I don't get this. If you rent instead, you'll just be sinking monthly payments into that (maybe more, maybe less than with buying). And there's no need for a job that lasts 30 years, you just need to keep the ability to make the payment every month. But that is also true when renting.
      - logfromblammo 11y ago
        You don't understand, because you have probably just done the math on paper, rather than lived it. Anecdotally, I have realized more value per dollar spent on rented homes than on purchased homes. If I had never purchased a home in the past, renting instead, I believe without a shred of doubt that I would have a greater net worth today. I cannot make a rational case for home purchase now, because I cannot guarantee so many years of steady paychecks within an acceptable commuting radius of any home I could buy. Look back 30 years before now, to 1985. How many jobs existed then in the U.S. that no longer exist now? Do you think you can predict what the job market will look like in 2045? If your job was to make buggy whips, would you feel safe making a 30-year financial commitment in 1890? Perhaps, but the Ford Model T came in 1908. Technology develops faster now. I get the impression that jobs that don't even exist this year may become obsolete before 30 years elapse, and yet employers still routinely hire based on specific experience rather than aptitude or trainability. Perhaps it would have been more accurate to say that I will never take on debt to buy a home again, and I don't expect to ever be able to afford to buy anything without doing so.
- esaym 11y ago
  I think the problem is when you finally do need to move, and you owe 200k still but will only be able sell the house for 150k. You'll still be making mortgage payments on a house you won't even have then.
  - at-fates-hands 11y ago
    Real estate markets are a fickle beast. After the 2008 crash, I was planning on moving, but abruptly changed my plans when I lost close to a 80K on the value of my home. Fast forward 6 years and suddenly the market was showing signs of rebounding. I had always been in contact with my real estate agent, but I was considering a large scale remodel and staying put where I was. My agent offered to start looking for something that I might like. A year later the process went shockingly fast. I was assuming the house would sit for a while since the market was still pretty soft. I cleaned and de-cluttered my house and it went on the market. Within hours I had two listings for the next day - which ballooned to four the morning of. When I got back, I had two offers. The house was on the market less than two days. I credit the ability to sell my house and make a few grand on it to my agent. It was priced and marketed really well by him and his company. This is the second house he's sold for me. The other house was on the market at the height of the housing boom and sold in less than a week.
- jellicle 11y ago
  Just because the loss hasn't been realized yet doesn't mean it isn't real. Among other things, prior commenter can't move to a different house because s/he no longer has a downpayment and won't be able to refinance to take advantage of lower rates. An increase in housing values is real, and so is a decrease, and it's real even before those losses/gains have been realized by selling (for instance, a HELOC can get the gains out before selling).
  - Scarblac 11y ago
    In particular my wife has no job now and mortgage lending rules are much stricter now. So although we can make the payments on our current 240k mortgage each month on my income, the maximum mortgage we could get now is something like 180k.
- cpursley 11y ago
  Exactly, we're all naturally short housing. https://thezikomoletter.wordpress.com/2012/12/10/you-are-naturally-short-housing/ https://thezikomoletter.wordpress.com/2012/12/10/you-are-nat...

beachstartup 11y ago

simply owning a recently-purchased house in an affected real estate market could have caused that. if you couldn't cover mortgage due to job loss or a rate hike, you were forced out and lost the money. doubly so if you were also invested in financial markets. a lot of people lost a lot of money. meanwhile, parents' mortgage is from the 1980s or 1990s and easily affordable in today's money, even if their nominal market value takes a slump, the mortgage is easily covered and the rebound in values 3-4 years later will put you far ahead again. if you were smart enough to hold steady or even double-down when the financial markets were down, well then you're even richer today. it was essentially a transfer of wealth from one generation to well-positioned members of the previous generation, and of course bankers/traders. but it wasn't a conspiracy... some people are just better positioned for and better able to see a massive market shift like that. i personally lost some (not that much) money during that time, and my parents gained money. ultimately their money is my money so i'm fortunate in that regard, but the same exact thing happened to me. i did everything 'right', including saving and investing, and still got somewhat shafted personally due to a combination of extrinsic market forces and personal decisions.