I agree with you, Mirage. Some houses have been way over appraised, and the ripple effect is bulldozing the housing market as a whole.
When we bought this house 8 1/2 years ago, it was selling for $51,000. We took out an additional piggy-backed loan for needed repairs, as this place was empty for 2 years, a rental for over 20 years, and was unlivable. Our total loan was for $68,000 which was one heck of a bargain. We wanted to refinance back a couple of months ago. The mortgage company told us that the house was only worth about $60,000 even though we have rehabbed it, landscaped it, and made it one of the best looking houses in this neighborhood. The housing values here are the pits. Houses that were selling in the $90-$110,000 range just 5-6 years ago, are going for $1,000 at auction, or a regular sale for as low as $17,000-$30,000.
Looking at the house values, and seeing what the costs were to refinance, we liquidated some assets, payed the mortgage down to $38,000, which got rid of the PMI. At our current house payment, we will have this place paid off in 5-7 years. At that time, hopefully the housing market will have rebounded enough, so that we can realize a profit from our house, or at the least, break even. In 6 years my Honey can get his Social Security, and we plan on retiring. All the kids will be grown and gone by then, and we certainly will no longer have a need for a 10 room house.
I do not think that the housing values will ever be what they were before, but I hope there will at least be a happy medium.
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