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If I had "pissed away rent money" before 2008 it would have saved me tens of thousands of dollars. Timing and luck is important.

bluGill 8y ago
Location is also important. Some places did much in the 2008 crash than others.
- josefresco 8y ago
  I bought a home in a very desirable location, assuming (like a dummy) that like the previous 30+ years the value would continue to rise. This desirable location meant I paid 25-30% more than a home about an hour away. My wife and I scrapped and saved for years to afford the down payment and then "poof" the value of that home dropped by 50%. The most important takeway/quote from that whole ordeal was "Markets can stay irrational longer than you can stay solvent"
  - rootusrootus 8y ago
    I think it's still good advice to never buy a house on terms you can't afford for the duration of the loan. Even if you plan not to be there 30 years. I watched the value of my home tank, then recover over the space of a few years, and it made exactly zero difference to me aside from delaying my next move. By the time I did move in 2012 I was way back into positive equity (and by coincidence it seems that I moved up to a newer, larger house right at the local minimum; accidental good timing).
    - josefresco 8y ago
      > delaying my next move We could absolutely afford the mortgage, even if we both lost our jobs and had to find lower pay replacements. We were conservative in every calculation. We put 20% down etc. Buying a new home is where we tripped up. Right when the economy was starting to crash we bought another house (wife was pregnant) and put our first home up for sale. At the time of course, no one new what was ahead of us "recession" wise. Obviously in hindsight it was a mistake, but at the time homes were selling like hotcakes and we didn't worry. Prices were also still climbing quickly and we worried that in a few years we'd be priced out of the market. However, it's worth noting that our first home's value has still not reached it's peak (what we paid) so if we stayed there, we'd still have negative equity. Luck, timing etc. etc.
      - rootusrootus 8y ago
        Yeah some places have really struggled to come back, I get that, and timing does make a huge difference. A friend of mine bought his house in 2006. There were some other factors as well, but that timing was definitely a factor in it taking nearly 10 years for him to get positive again so he could sell it.
        josefresco 8y ago
        Thanks for the chat. The region in question isn't struggling, it's just that the values were so inflated pre 2008 that "coming back to earth" has taken a long time. The takeaway for my wife and I was that it's better to be fiscally conservative, or enormously fiscally aggressive but nothing in between. We crossed that line every so slightly and paid a huge price.

bluGill 8y ago

Location is also important. Some places did much in the 2008 crash than others.

josefresco 8y ago
I bought a home in a very desirable location, assuming (like a dummy) that like the previous 30+ years the value would continue to rise. This desirable location meant I paid 25-30% more than a home about an hour away. My wife and I scrapped and saved for years to afford the down payment and then "poof" the value of that home dropped by 50%. The most important takeway/quote from that whole ordeal was "Markets can stay irrational longer than you can stay solvent"
- rootusrootus 8y ago
  I think it's still good advice to never buy a house on terms you can't afford for the duration of the loan. Even if you plan not to be there 30 years. I watched the value of my home tank, then recover over the space of a few years, and it made exactly zero difference to me aside from delaying my next move. By the time I did move in 2012 I was way back into positive equity (and by coincidence it seems that I moved up to a newer, larger house right at the local minimum; accidental good timing).
  - josefresco 8y ago
    > delaying my next move We could absolutely afford the mortgage, even if we both lost our jobs and had to find lower pay replacements. We were conservative in every calculation. We put 20% down etc. Buying a new home is where we tripped up. Right when the economy was starting to crash we bought another house (wife was pregnant) and put our first home up for sale. At the time of course, no one new what was ahead of us "recession" wise. Obviously in hindsight it was a mistake, but at the time homes were selling like hotcakes and we didn't worry. Prices were also still climbing quickly and we worried that in a few years we'd be priced out of the market. However, it's worth noting that our first home's value has still not reached it's peak (what we paid) so if we stayed there, we'd still have negative equity. Luck, timing etc. etc.
    - rootusrootus 8y ago
      Yeah some places have really struggled to come back, I get that, and timing does make a huge difference. A friend of mine bought his house in 2006. There were some other factors as well, but that timing was definitely a factor in it taking nearly 10 years for him to get positive again so he could sell it.
      - josefresco 8y ago
        Thanks for the chat. The region in question isn't struggling, it's just that the values were so inflated pre 2008 that "coming back to earth" has taken a long time. The takeaway for my wife and I was that it's better to be fiscally conservative, or enormously fiscally aggressive but nothing in between. We crossed that line every so slightly and paid a huge price.