Buying and Selling a House in 2011

Two days after the real estate agent put a "For Sale" sign on our front lawn, the stomach churning panic is just starting to abate. 

I was worried that we would sell our house quickly and then not have any place to move. There are very few houses on the market right now. The only homes on the market are the duds that have been around for six months or more. The duds are sitting, because there is something extremely wrong with the house — oil tank leakage, busy street, proximity to an expanding hospital.

I check Realtor.Com ten times a day looking for new inventory, and there's nothing. People aren't putting their homes on the market because they're waiting for home values to bounce up. They are putting off that retirement to Florida for one more year. 

Well, the panic has abated, because nobody wants to buy our house. We're six houses away from the commuter train line. We never hear the train, because we are former New Yorkers who can sleep through a five alarm fire, but prospective buyers aren't convinced. 

I also think that prospective buyers aren't buying anything right now. They are sitting and waiting for prices to drop further. This is a high stake game of chicken. 

In three weeks, our school budget is going to get voted down for the second year in a row. I suspect that our home value will dip again after the votes are counted. 

As someone who bought at the near peak of the market, I have been permanently scarred. We're going to lose money. We're not going to lose as much as many people, but it's enough to sting. We'll never look at a home as an investment ever again. I'll never think that I'm adding value to my house, every time I spend a weekend peeling off old wallpaper and painting a bedroom. As much as I love quirky homes and neighborhoods, other people don't, so our next home will be modest, boring, and average. It will be in a town that never votes down its school budget. 

UPDATE: Megan noticed the same phenomenon in DC

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27 thoughts on “Buying and Selling a House in 2011

  1. Selling our last summer totally altered my perspective on housing. I’m quite happy being a renter, and sometimes wonder if I’ll ever want to buy again. Suppose so if rents start escalating. But right now, nope.
    Don’t lose faith already Laura, your house is great and only been on the market a short time. There are others who are going to see your house with the same eyes of houselove and lust that you did, and they will take the jump.

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  2. Do the boys start school in “new town” in September? What’s the rental market like? Can you rent your place out and then rent in “new town”? Then you are still in the market and living your life in “new town” while waiting for the market to recover.
    It’s hard because it isn’t just an investment that you can chalk up to bad luck or experience – it’s your home too.

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  3. Funny that people don’t want to be close to the train- I would have thought six houses away would be the perfect amount- you can leave 5 minutes before it, but would barely hear it, if at all. I would have made it an advertising point. Can they advertise it in NY?
    Two days also seems like a really short time to start worrying. And, I think you’re completely wrong about what type of house to look for, _especially_ if you are not thinking of it as an investment. If you’re going to _live_ there, you should want a house that you’ll feel good in. _That’s_ adding value to it. Think _does this make me enjoy the house more_? If so, that’s all you need to know.

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  4. My mom lives a mile from the train into NYC and 1/2 a mile from 95 and we can hear it. I can’t imagine it being a deterrent. People want that now. All my friends who have bought homes in CT wanted to be less then a mile from the train!
    We bought our house in Oct. 07. Talk about screwed. Altough, where we are things aren’t too bad because we are in the city vs. in the sprawl. A friend who bought a house in a fancy subdivision on a golf course in sprawl is down 30+%, we are just down 5-7%.
    We are hoping for a windfall from my in-laws so we can remortgage. We have to repaint the stupid thing, we have had a load of repairs/paint/etc on a 3.5 year old house. After this house I don’t know what I would do, but it wouldn’t ever be to buy my dream home again.

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  5. I’m in agreement about home owning. I hate it. It’s such a burden and responsibility. I don’t know that owning a home is really that great of an investment either. It took us a year to sell our house and we had to drop $23,000 from the original asking price. Tomorrow we are moving into a house that we thought was great, until we discovered the dampness in the crawlspace yesterday! If you go to my blog and look, you will see pictures of our new “boring” house. The three big pluses: good neighborhood, nice layout, across the street from my daughter’s school.

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  6. Home values are down here as well. My husband and I keep saying it will be ok because at this moment our timeline for selling is 5-11 years. Kind of sad when I type that out. At that point we will have owned our home for about 11 – 17 years. If I sell then for what I paid I think I will be a happy camper. Yeah, we’ve adjusted our expectations.
    I have a friend who just listed her house. She bought 20 months ago, and then her husband got his dream job out of state. I am worried for them because while home prices in our area have dropped over 10% since she bought, they actually listed their house for 2% higher than what they paid. I hope it works out for her, even when I can’t make the math work.
    Good luck – you only need 1 person to fall in love with your house. That’s what we have told ourselves each time we have listed a house to sell.

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  7. Another vote for “keep the faith” on your house right now. It’s early days. From what you’ve posted of it, I love it.
    That said, in our first house we made a similar mistake to you – we bought quirky and charming because we like quirky and charming. What happened to us was although we weren’t suffering a crash, our house’s value went up at a lesser rate than other homes, so even though we weren’t losing actual dollars, we were losing in real estate capital (the ability to buy a comparable home).
    It pains me, after 7 years of loving renovation every long weekend, etc., to say that we sold our first house to someone who ripped it and the barn (barn! in the city! studio space!) down and put two very standard houses on the lot.
    Our next house is a 1960s bungalow, inoffensive and standard. And it’s keeping pace nicely (we’re in Toronto so haven’t had the crash…yet). It’s just fine, but I don’t feel the same way about it as our first house. When we reno it will be standard kitchens and bathrooms and not beautiful tile patterns. That said, we pretty much intend to stay here forever. It’s just that I guess we want to be able to sell if things change.

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  8. I once lived right next to the tracks on which all the coal from Wyoming went to the power plants in the east. After three months, I didn’t even hear them, but I was 19 at the time. The trains did get in the way as sometimes they would sit on the siding and block my path to school.

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  9. “in a town that never votes down its school budget. ”
    We are being assured repeatedly that the recession was the fault of those fat-cat teacher unions.. that, plus the unthinking unreasoning abhorrence of the demon taxes, does not create a climate where school bond issues/budgets can pass. That town is in New Zealand..
    The house will sell, have faith. It took us six months of double mortgage payments, yoicks.. it’s tough doing the two-house dance. I calculated the costs of moving out, storing all our stuff in the meantime, and renting while looking for a new house: that came very close to the two-mortgage costs, so we bought first then sold. It was still a fraught time – six months of lowgrade panic, spiking to an occasional 2am frenzy..
    Agree with Matt – your house is where you live, make it somewhere you like to be. Historically real estate has never done better than keep pace with inflation: as for most bubbles, anyone paying attention knew housing was going to pop, but no-one knew when..

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  10. Keep the faith, Laura. I think 6 houses away from the commuter train is the perfect distance. Others will, too.
    I recently went through the nightmare of refinancing. Horror story upon horror story. We bought in Oct. 2007, lost 11% of our home’s value, had to fire one mortgage company for mismanaging our loan (which caused us to lose the great lock-in rate), had to bring thousands to closing, and despite our great credit, only ONE bank would let us refinance. I’ve never felt so financially insecure in my entire life.

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  11. Historically real estate has never done better than keep pace with inflation
    That’s actually a fairly good deal, assuming your mortgage payment (including taxes and insurance) is in line with the cost of a rental and you stay a while. That means all of your principle payments minus upkeep plus whatever you get from the tax deductions are “saved.”

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  12. “That means all of your principle payments minus upkeep plus whatever you get from the tax deductions are “saved.””
    But if you look at the amortization for a 30 yr. vs. a 15 year mortgage, it takes something like 20 years to pay off half the principal on a 30 year fixed mortgage, and initially, the 30 year mortgage barely amortizes. There’s going to be very little equity accrued in the early years on a 30 year loan. (Insert disclaimer here about opportunity cost of the extra money needed to pay off a 15 year fixed mortgage.)

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  13. There’s no two ways about it: until you have a solid offer, signed and delivered, selling is the most stressful experience in your life. Buying is stressful, but never quite so much as selling, I find.
    Moving, now? That’s in a whole new category by itself.
    I will keep my fingers crossed that someone who values the convenient location and would like the quirky charm will see your ad and want to buy.

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  14. Our house has officially been on the market for two days and nobody has come to check it out. The realtor took all sorts of lovely pictures. We put another 10 grand into the house, so it would sell quickly. I bought new throw pillows. The real estate agent predicted crowds and crowds would rush through our doors and nothing. It’s like I bought a pretty dress and nobody is asking me to the prom. Again.

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  15. “At least wait through the weekend until you panic. Are you having an open house?”
    Right. First wait for the weekend, then panic. If there are no visits at all, it’s probably the price. I’m not sure what the formula is for how soon and how much to start cutting, but definitely don’t let it go into the fall at the same price.

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  16. Yes, an open house on Sunday. I think everybody — buyers and sellers — are waiting. Nobody knows if the bottom is here or things are going to get worse. It will probably even out for us, since if we sell at a loss, we’ll buy a bargain. I just hope we can find a good house. I can’t believe that I’m even considering wrecks like this.
    There’s no way that we’re going into the fall with this house. We’ll either move by July or stay and throw money at the other problems.

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  17. “At least wait through the weekend until you panic.”
    I also agree. Buyers will often not bother their agents with setting up an appointment if they know an open house is scheduled.
    The market here in the Boston Metro West is doing alright thus far this spring. Prices are not increasing dramatically, but there is definitely a flurry of activity. The only part of the market still stuck is the high end.

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  18. “It will probably even out for us, since if we sell at a loss, we’ll buy a bargain.”
    Unfortunately, the nice areas fall last, so the timing may not work out quite so neatly, but it would be nice if it did!
    Timing is a beast. We have to be out of our rental house by early summer next year and the nice/convenient neighborhoods are just starting to soften up right now.

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  19. Another thing – we are hoping for gas prices to go through the roof because our house is in an awesome location (commute wise). You can hope that gas prices start rising this spring into the summer so that your location 6 houses away from the train becomes a feature to every home buyer in the area.

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  20. AmyP, I don’t understand why you seem so determined not to rent on the open market, between the time you are out of University housing and the time your dream house goes down to $47000 and you can buy it out of pin money.

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  21. My husband hates moving, and I’m not a big fan myself. You know the saying–three moves is as good as a fire. It seems to take at least a year to totally unpack. It’s also not that cheap to rent a house. Whenever I see a good rent on Craigslist, it’s either some sort of scam (like they don’t own the house) or it’s some sort of rent-to-own scheme.
    I think a lot of stuff is going to happen this year and next year price-wise and that there is a good chance of something turning up near campus in the right price range. This fall we offered $165k on a beautiful house near campus (in a real neighborhood!) that was listed at $219k and naturally didn’t get it. I’m kind of kicking myself over that one because it’s the only house there in the appropriate size that has been up for sale in something like the past 4 years. We’ve got one more year, though. A lot could happen in one year. On the bright side, my husband has taken on some extra administrative duties, and we’re going to be raking it in (relatively speaking). If we can resist lifestyle creep, we’ll be able to save like squirrels next year. And speaking of lifestyle creep, my price range has unfortunately been edging upwards as this drags on. Not to the extent that I’d seriously consider the 3000 sq. ft. house near campus that just went up for sale for $285k, but our price range has been drifting up from the low/mid 100s up to 200. We need to buy before my tastes get any more expensive.

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  22. Great article! If you ahven’t got a home to sell, and are looking to buy, there are some amazing deals to be had. Resort properties like Breckenridge have seen stabilisation of their markets and have real upward potential!

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