This is my column for this week from the Arizona Republic (permanent link).
If selling is not a viable option, you need to fall in love with your house all over again
The foreclosure market dominates the news, but it remains that good old-fashioned American homeowners occupy the overwhelming majority of Phoenix-area homes. That’s the good news.
And here’s some even better news: If you have significant equity in your home, you can probably refinance right now, reducing your monthly payment.
But here’s the bad news: Unless you absolutely have to, you probably won’t be moving for at least five years.
Don’t believe the number you see on that refi appraisal. At most, your house is worth the same amount as a comparable lender-owned home, plus the net cost to bring that home up to the livability of yours.
Swallow hard. You may have read in the paper that Americans lost $2 trillion in real estate equity in 2008. That’s a specious number. Money is the stuff you can fold up and spend. The equity in your home is unrealized money. You weren’t rich when your home was worth a lot, and you’re not poor now that it isn’t.
But what you are is stuck, practically speaking.
You don’t want to sell your house for what it can bring right now. If you do, you will lose money. But, refi or not, you’re making your payments.
If your home really was purely an investment, like a stock, it might be wise to dump it, take your lumps and move on.
But your home is not only where your heart is, it is very probably where most if not all of your savings are. You need to wait for the market to turn so you can sell at a profit.
So what should you do?
My advice: Paint.
Patch that stucco and paint it. Caulk the wood at the eaves and the trim and paint it. Clean out the house one room at a time and patch and paint the walls, repairing and painting the molding.
You’re stuck in your house for the next five years. It’s time to fall in love with it all over again. When there’s nothing you can do to improve the real estate market — paint.
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Jeff Ellis says:
Isnt this the truth! It seems so many people are “running with the herd” when they hear about market conditions or statistics. The truth is that what they are hearing is extrememly speculative and stats can be made to appear one way when they are really another. Bottom line is that you fell in love with your house once, why not do it again. When the market does come back you will be far better off than selling now and throwing your money away for the next 5 years.
January 5, 2009 — 9:59 am