Coffee heat rising

What’s that light at the end of the tunnel?

Earlier this week I spoke with Audra, the loan origination officer at the credit union who helped us refinance the so-called Investment {snark!} House at a very favorable rate. Called her because I’m beginning to feel a little frantic about the drop in value in that neighborhood, and because M’Hijito, who presently occupies the place with a roommate, has expressed interest in going to graduate school in another city.

Our Realtor came up with an estimate of the house’s current price, which I will not repeat here because M’Hijito reads this blog now and again. If he knew what the guy said, he’d keel right over and we’d be sending him to Bottimer’s Funeral Home instead of graduate school. Realtor Dude thinks we could rent it for about $300 a month less than the mortgage payments, which would be OK, I think, because that amount would post as a loss on our income tax. So I expect we would survive. At any rate, these are among those factoids that grow horns at night and flutter out of the Night Closet to haunt your moments of insomnia.

Audra said their appraisers’ experience is showing that homeowners who can hang onto a property for a while should not worry about comparables based on large numbers of nearby foreclosures. That in fact is exactly the situation: the bank-owned house directly behind ours is on the market for a handful of peanuts, and a house on the corner has been in foreclosure twice since we bought our place. La Maya and La Bethulia bought a doll of a house for their nieces a block away and paid under $200,000 for it. Audra reported that when a cluster of foreclosures occurs, property valuations based on comparables start to creep back up about nine months after the last foreclosure sale closes.

She added that she’s confident centrally located real estate, especially houses located fairly close to the new light-rail line, will increase in value. She believes the house will recover its value within five years, although she agreed it’s unlikely our losses in the stock market will recover in that time frame. She thinks real estate, especially in-town real estate in reasonably healthy neighborhoods, will recover faster than we pessimists expect.

Wait, she said, about nine months before believing any Realtor’s estimate of the house’s value.

Hope she’s right! It’s true that the value of my house, which cost about the same as the Investment House, is still higher than what I paid for it. Despite the foreclosure of the house across the street, we’ve had many fewer repossessions here than in M’Hijito’s neighborhood.

Meanwhile, though, she said that the credit union did not yet have guidelines for how to deal with the economic recovery legislation, but that she would call when she finds out anything. And she advised that if either of us loses our job, we should call her immediately and the credit union will make temporary changes in the loan terms so that we can hang onto the house.

Well… Since the kid is running a bit late in his graduate school applications and so probably can’t start a credible program in the fall, nine months would just about work out: we’ll have a better grasp of where we stand, and if he wants to go to Tucson, by then maybe unemployment will have dropped enough that people can afford to come up with the security deposits and rent payments we’ll need to extract. It’s an awfully cute house in a very convenient neighborhood, and so I expect we’d do OK renting it.
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Speaking of the foreclosure of Dave’s Used Car Lot, Marina, and Weed Arboretum, yesterday a Sears delivery truck pulled up in front of the place. What should be trundled out but a VAST, expensive-looking, stainless-steel side-by-side refrigerator.

This I take as proof positive that the new owners intend to live there and not rent the place out to another Biker Boob. BB’s absentee landlord tricked that house out with the cheapest, chintziest appliances he could get his hands on, as most of the the real estate “investors” around here do.

The former junk-heap is still vacant, but the owners are keeping it maintained—nary a weed in sight, and all the trees and ornamentals are green and happy.

7 thoughts on “What’s that light at the end of the tunnel?”

  1. You should also remember that, as long as you can rent it for close to your mortgage, there is an upside to low foreclosure sales: Your property tax will decrease, which may also help lower your monthly payments. Just a thought.

    I know it must be scary as someone with a second home, given the current environment. But if you can just hang onto it for awhile, my guess is that you’ll be glad you did. If your son is occupying it/going to school right now, then it’s probably a good investment. At least here in Seattle, anything even remotely close to a school is worthwhile investment property. There will always be students going to school, and chances are those numbers will always be increasing. The dorms, however, rarely increase proportionally. So housing is always desirable.

    Just a thought.

    Abby

  2. @ Simply Forties: Nope. Worse.

    One of my friends, a contributor to Arizona Highways when I worked there, lived about a half-mile from the Investment House. Late one night he was murdered by two young thugs who thought it would be fun to beat an elderly cripple to death and then run their car back and forth over his head a few times.

    It happens in the best of neighborhoods. The pair who murdered their business partner and dumped him in a garbage bin, the society matron who took a chainsaw to her husband’s corpse, the dude who shot his wife and kids and burned the house down around them and then disappeared into the desert: they lived in snooty Scottsdale. The couple whose house guest was dragged into a bedroom by home invaders and summarily shot lived in Sun City. No place in any large city is safe.

    Make that no human habitation is truly safe. Man is the most dangerous animal on the face of the planet.

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