What Is Your House Worth? Both Less and More than You Think

Sharon December 16th, 2008

Yesterday’s big news included the fact that Americans lost two trillion dollars in housing wealth last year.  That’s one heck of a big number – except that like most of the big numbers we actually see in the news these days, it radically understates the reality.

You see 2 trillion is just the amount that they claim you could have sold your house for in 2007 vs. 2008.  But that doesn’t really tell the whole story.  Because, of course, this assumes that most of us could access the value of our homes if we wanted to.  But for many people, that’s no longer possible at all.

For example, for many thousands of people who plan to stay in their homes and  would like to access the equity in their homes through home equity lines have seen them revoked.  Millions of people cannot sell their homes at any price, because they are now underwater, and the banks will not permit a short sale, or because they can’t afford to lose their downpayment, but can afford to keep paying the mortgage.  Still more simply could not sell their homes at any price they are willing to accept, because nothing at all is selling, and they cannot find a buyer who can get credit.  The functional value of many homes in the US is very low or negative – that is, the house will continue to cost you mortgage payments and taxes, but you cannot functionally extract any value from them.  Realistically, many, many trillions are now tied up in housing as functionally “lost” value.

For many aging folks who had relied on their housing as an “investment,” and for the many elderly who had most of their wealth tied up in their houses, they will find that not only can they not cash out, they may no longer be able to trade their housing for care in their old age – assisted living depends on high valuation of homes – right now, it seems that few companies wish to take this in trade.  

Is the whole story of home ownership unremittingly bleak, however?  If you are underwater, is that the end of home ownership for you?  My own take is that it isn’t, that there are several ways to shift the economic situation so that homes move from the debit column to the asset column. 

The first is to shift your thinking.  Until not too long ago, people rarely thought of their homes,  primarily as assets.  Your home is, well, your home.  Its value lies not in its potential sale price, or your ability to trade it for something, its value lies in its function.  Now only you can evaluate whether you will be paying too high a price for that home – and this is something we all need to think through.  But if your house is worth the price to you, too tight a focus on its “official” value distracts from the reality – one’s home is one’s home.

But that’s not all there is to it.  Right now most of us with mortgages are pouring money into our houses.  None of us can afford a money pit right now – we might as well at least pay rent, and receive basic services and allow others to take the economic risk and make the repairs if we are simply going to pay out (please do not mistake me, I don’t think renting is a bad idea, in fact – but this post my primary focus is on the present homeowning majority).  So your house has to not just shelter you, but either help you produce money or enable you to reduce other costs.

That means that you need to evaluate your home for what else it can do for you.  Can you grow a garden, and reduce food costs?  Plant fruit trees, nuts and berries?  Raise chickens, rabbits or bees to provide food and fertility?  Raise larger livestock?  Produce some of your home heating or cooking energy in the form of anything from coppiced firewood to twigs and dried grasses for a tiny hot rocket fire to stir fry over?

Could extra rooms in your home enable you to produce additional income or reduce total costs.  Could you rent out a room, make an apartment and rent that, or take in a housemate?  Could you consolidate with your family or with friends? Do you really need all the space you have?

Do you have a workshop that would enable you to do home repairs, fix your own appliances and otherwise cut back on new purchases and hired labor (you may have already done this, but if you don’t, it is time?). Do you have the equipment to mend and repair your own clothing, rather than replace it, or perhaps even make new? 

Could any of these things (or something else) be adapted into an income stream?  That is can you make, build, repair, mend, cook, tend or do something else that is needed in your neighborhood?   There are hundreds of small businesses that can be run from your home part time – everything from small scale programming to selling bulk foods, from daycare to mending and handyman work.  These have the dual effect of offering you an economic fallback position, making your home into an asset (and potentially reducing your tax burden in some cases), and also by engaging with the people immediately around you, improving local economies and communities.

Suburban and rural garages and barns offer the possibility of even more than cottage industry – a business that might eventually employ others in your neighborhood.  Think about what you depend on, and what will be needed in your community - is it possible that your garage might be the new general store?  That your small greenhouse operation might employ your neighbors eventually?  That yours might be the neighborhood bakery or restaurant?  Those of us who live in areas away from commerce might start thinking in terms of establishing local businesses – these may need to stay under the table until enforcement of restrictive regulations is reduced – that is, you might start baking for a couple of neighbors by barter, while also gradually working on finding the equipment to expand eventually.

What about community as an asset.  If you stay put in a place where you have ties (and this presumes we have done the work of making those ties), can they provide a measure of security, of safety, of assistance that we once relied on economic assets for – that is, the neighbors who watch out for you, who help out during illness, who will work with you, who send over a pot of soup when they have extras – those are assets of economic value as well, and must be considered in the calculation.  Staying put can enable us to keep those assets in place.

In many cases, if you are committed to keeping your home – because it is near your family, because it has an ideal yard to grow food in, because you are tied to your community – you will need several of these strategies.  And they may be hard to enact at first – for example, it may be hard to decided who gets to keep their house when the need for family consolidation comes up. Who moves in with who, and how do we protect the interests of those who don’t own?  How do we handle multiple parties working out of the same house?  How do we get used to less privacy and less personal space? 

The other calculation we need to make is the truly long term value of these homes.  Wealth in the US  is disproportionally concentrated in the hands of older people – high housing prices and rapidly inflating educational costs along with stagnant real wages mean that those who bought into markets decades ago got most of the actual wealth.  Older people and younger ones have a shared crisis – the elderly and aging baby boomers who relied on financial investments and housing to ensure security in their old age no longer can rely on either of those things.  Younger people who couldn’t get into the markets, or couldn’t do it without extortionate rates and minimal downpayments have either had no opportunity to own a house or will lose that option rapidly.  So we have older folks with houses, but with declining investment income and a declining number of years of employment, and younger people who can work, but who can’t get into the housing market, who can’t afford a mortgage and who soon, by defaulting on student loans and mortgages, won’t be able to for a long time.

You may not be able to trade a house for assisted living anymore, but you might be able to trade a future in your home for help in your old age – it might be as bluntly mercenary as that, but in most cases, it won’t be, it will be a familial relationship.   But aging baby boomers and the elderly in the US are facing an economic crisis – and they are going to have to start thinking of their homes as a long term asset to be passed down to children and grandchildren – and those children are going to have to start seeing themselves as stewards of a resource, the people who care for the family home, so that their own posterity can inherit it, and who in turn, care for their own parents and relations so that someone will do the same for them.

The shift of housing from a salable asset to something worth holding, a source of income and reduced costs, the place where you live out your life, and the place where your children grow up, come to adulthood, and come home to is going to be the great psychological and economic shift of our times, I suspect.  And any calculation of the value of our homes must begin from this complex question of what our homes are worth – as I say above, I think many of us will find that the answer is both less and more than we ever expected.

Sharon

42 Responses to “What Is Your House Worth? Both Less and More than You Think”

  1. Bobbion 16 Dec 2008 at 10:54 am

    Excellent ideas. My mom is in assisted living using money that we were lucky to get from selling her house last year. When the meltdown started I told my husband we could always move her in to our house, as hard as that would be in many ways, if things got really bad. Our oldest will graduate from college in 2010. She may need to move back home, as hard as that might be in many ways too! I bake bread and my neighbor has a plum tree. We’re turning our yard into a veggie/herb/fruit garden.

    You’re on to something. Though those of us in the distant suburbs of SoCal are really up a creek with gas, traffic, services and available jobs. I look around at my bedroom community and wonder how it could support anything except schools. This year has been a tipping point for sure for peak oil. I think we need to get to that point about community and the damage caused by the lonely suburbs before we start sharing and bartering.

  2. peter in Auston 16 Dec 2008 at 11:10 am

    Excellent idea ? I regard the issue as one of common sense. The home should never be seen as an investment for wealth but as a future for your offspring. Regards Peter.

  3. Hausfrauon 16 Dec 2008 at 11:23 am

    I like the idea of passing on the family home down through the generations. Although, I guess it is a matter of “Who inherits?” Some cultures had elaborate and traditional means of inheritance – first born son gets the estate, second born is the priest, third born is the soldier, or whatever. I wonder how we would decide now.

    Too bad so many of the homes during the boom were built with shoddy materials / design/ rushed labor that may not last 20 years. Crappy siding, homes not built to code, drafty homes with no insulation. Hopefully they can be retrofitted to serve our needs.

    I like the book Superbia! for some fun ideas on developing this kind of place in your own neighborhood. If you have a lot of elderly or disabled people in your area, they might be open to “loaning” you their land for gardening – and they get half the produce.

  4. Rosaon 16 Dec 2008 at 11:48 am

    I realized at Thanksgiving that my boyfriend’s parents house is, literally, big enough for three families – with each familiy having an entire level of the house and a bathroom. We stayed there for almost a week, six adults and 3 toddlers, and everyone got plenty of privacy. Plus it’s got a one-acre, sunny, well-drained yard.

    Of course, it’s nowhere near anywhere you can get a job. Unlike our one-bathroom Victorian monstrosity, which was built to house people who walked to work in downtown Minneapolis. I wonder how bad things would have to get before any of our relatives would be willing to live in my cold, under-electrified, “inner city” house?

    Do you run into that, Sharon? We’re totally willing to have housemates again, but the double whammy of the 58 degree heat and sharing a single bathroom with a potty-training 3 year old means nobody really wants to live with us.

  5. Meadowlarkon 16 Dec 2008 at 12:01 pm

    I think if went back and called these “home equity loans” and “home equity line of credit” what they really are: a SECOND MORTGAGE, people would have been more inclined to RUN AWAY as fast as they could. Oh well. During the boom (at one point we were the #1 fastest rising housing values) everyone suggested we use our equity for a trip or a boat or a… um, NO. We put in a furnace to back up the fireplaces. That’s it.

  6. [...] Casaubon’s Book » Blog Archive » What Is Your House Worth? Both Less and More than You Think Yesterday’s big news included the fact that Americans lost two trillion dollars in housing wealth last year. That’s one heck of a big number – except that like most of the big numbers we actually see in the news these days, it radically understates the reality. [...]

  7. [...] Casaubon’s Book » Blog Archive » What Is Your House Worth? Both Less and More than You Think Yesterday’s big news included the fact that Americans lost two trillion dollars in housing wealth last year. That’s one heck of a big number – except that like most of the big numbers we actually see in the news these days, it radically understates the reality. [...]

  8. Mary Campbellon 16 Dec 2008 at 12:29 pm

    We bought our house three years ago at the top of the market. But we sold our other houses at the same time, so we have a trivial mortgage at 5% 15 yr fixed. I’ve convinced Bill that the value of the house is pretend money–think of the brightly colored bills on the Monopoly board.
    The house is within walking distance of groceries, the farmers’ market, library, hardware, movies, and the Refugee Center where I teach. We’re two blocks from a bus that shuttles Bill to UMD. And our 1941 house came with a cold room. I wish we had more land for gardening. I’m grateful for the neighbors’ trees WRT summer comfort, but they make gardening less productive. My Mom gardened in neighbors’ yards (I spent my teens as an agricultural serf.) I worry about improving the soil and then having to move on.
    My biggest challenge is keeping Bill from buying things that won’t be useful much longer.Now is not when to plunk down big bucks for gas and electric systems. I believe I’m getting a solar oven for my birthday. (I’m 58 today, and I’ve inspected the package quite closely.) My second biggest challenge is letting him take credit for my good ideas. I sold my car in 1997 even though he said one wouldn’t be enough. Lately he’s been bragging at parties that we went one-car a decade ago and it hasn’t hurt a bit. Next, rain barrels.
    I know my neighbors. At the women’s book group last Sunday, Linda’s house was so warm that I did a trip tease of my outer two layers. Amid laughter, other women started removing layers. Linda said she’d happily turn the thermostat down to where they usually keep it. We got into comparing where we set the thermostat and what we wear to bed. Socks, mittens, hats. Alison–coldest house on the block at 62–says, yes, the kids complain but Mike laughs and tells them their kids won’t believe that they grew up in a house that was that hot.
    Diana’s Dad in Philly is 90 and keeps his thermostat at 55. He says he doesn’t want to be using more than his share. And doesn’t seem at all depressed. And should one up the temp for guests? Those who do report big spikes in the heating bill. Our house has rooms quilted off and is set for 64 days and 58 nights. Now we’re trying to keep up with the Smiths–I down it to 61 during the day when it’s me and the dogs.
    Book group also talked through several swaps for Xmas presents for our families. My colored pencils are going to a boy three houses down. Smiths are giving us the extra bed in the basement for ours–would be much cooler sleeping there in the summer. Etc.
    Per your advice, I did buy food for storage. Got 400# of beans and grains at the co-op last Saturday. Fear not, it’s stuff we’ve been eating for years, but this is probably a year’s worth. If you freeze stuff for 24 hours, it kills any bugs in residence.
    We also got married on Nov 1. It was not a $40,000 wedding. Friends and I decorated the church basement with my quilts and a couple I had quilted for my sister-in-law. No flowers, but we got many kinds of squash and pumpkins at the farmers’ market to decorate the tables. They’ve gone into the cold room. No cake, thus no cake for the freezer, but I’ve promised pumpkin bread for our anniversary. Fabulous sequined dress for $40 at the thrift shop, $200 for a certificate (we’re Quaker), $500 for food cooked by the church ladies and $100 for an outside server so they could all come upstairs for the ceremony. I’ve done wedding receptions for $125, but wanted a feast that didn’t rely on lentils and chick peas. $700 for the rehearsal dinner–Bill took all the out of town guests to a restaurant.
    I feel so much saner since a friend from meeting told me about your blog a couple weeks ago. I’d been working on self-sufficiency and community, but have felt very isolated. Thank you for blogging. Mary

  9. Elizabethon 16 Dec 2008 at 12:32 pm

    I also love the idea of living in a house that’s been passed down, but would have preferred it be the lovely home that was built by my dad’s family in the early 1800’s (and sold by his brother when their mom dies), rather than the uninsulated coal camp house that was passed down to my husband through his grandparents (and still has piles of trash from his grandparents, brother, and brother’s ex-wife, who left every pleather purse she’d ever owned in the attic). One thing about a family house: it never gets completely cleaned out. We want to sell, and are having to deal with trash (and I mean actual trash, not canning jars or kitchen tools or old clothes) from the 1940’s on up. Sometimes an inheritance can be a bit of a burden, too. If we were renting right now, we’d be able to run out our lease and move to our property. As it is, we’re tethered to this place (we inherited the mortgage, too, or rather DH’s mom did, we live in the house and pay the mortgage and insurance since she wouldn’t be able to).
    Man, I sound really ungrateful! I’m very happy to have a roof over our head and to live in a house that is meaningful to my husband. But if DH had not already moved into this house before we met, I would not choose to live there.

  10. Sharonon 16 Dec 2008 at 12:52 pm

    Elizabeth, I can sympathize – we lived with Eric’s grandparents – it will be four years since
    Eric’s grandmother went in April, and I’m *still* getting rid of stuff we inherited that we didn’t need. I really do understand the burden side of that.

    Mary, mazel tov on your wedding and happy birthday – today is my five year old’s birthday as well, definitely a good day to be born.

    Rosa, when the power went out here a few days ago, friends of mine lost their power. Their daughter was performing in the Nutcracker, so both sets of Grandparents had come to town to see her. Well, we have this huge house, so we offered to have them all come stay with us – but my friend’s Mom said “Absolutely not – I read her book, I know how cold her house is” and paid for a hotel for everyone. So yes, I do know what you mean.

    Sharon

  11. TheNormalMiddleon 16 Dec 2008 at 12:57 pm

    I think a good portion of our economic problems occured at that pivotal moment when a house became an “investment” and people began treating it as such.

    My grandmother is a millionaire several times over, but she lives in a tiny 3 bedroom 1 bath brick house that she and my grandfather moved into when the twins were born in 1950. They never moved; my grandpa passed in that house and my grandmother will die in that house.

    And it isn’t because they are stingy or frugal or what have you. It is their HOME.

    When did we get to the point where we “flip” homes for profit, move every 2-3 years, getting bigger and better every single time? That is when we started getting ourselves into some serious trouble.

    And I’m pointing the finger at myself. We built this house last year (lived in our previous house 8 years) because we needed more space. I’m now saddled with a very big mortgage but I do LOVE my house and plan to never move again. I have an acre of land to grow on, and we are out in the “boonies” where we can see stars and do not have streetlights. It is our personal little paradise, and I love it.

    The mortgage is worth it—let’s just hope we keep jobs so we can pay it.

  12. risa bon 16 Dec 2008 at 1:08 pm

    We found a beat-up house on an acre in ‘93, at $74,000. Paid it off in sixteen years. Now there is enough money to fix it up a little, but it will never look like a good “investment” to real estate people, county inspectors, and the like. There’s a current valuation of $225,000 and that just seems idiotic to me. The value here is that the soil grows things, and there seems to be enough water. And that our grown-up kids seem to know this. They say to keep it and pass it on.

  13. Shelleyon 16 Dec 2008 at 2:21 pm

    Thank you Sharon. You always have this ability to take the confusing and turn it into understandable practicality.
    I have watched my parents and father in law treat houses just as you say, as a place to live rather than an investment. The result is that both of them had paid off the home and sold them during the overvaluation period. Then they both bought small places just right for them outright with no mortgage and had plenty of money left over to put into savings.

    I read once that the best thing you can do to prepare for retirement is to own your home with no mortgage so you only have to pay taxes. I know that in some places those taxes can cripple a retiree, but generally, taxes are far less per month than a mortgage would be. Having the security of a place to live that can’t be foreclosed on is great in those golden years.

    So, for me in my 40’s with children, it means adapting in place in a home that is adequate and paying it off.

    What a great post, Sharon.

  14. Kevin Andersonon 16 Dec 2008 at 3:00 pm

    Good ideas, Sharon. The alternative of renting that many are counting on someday forgets the other side of the equation: someone to rent from. I worry about owners of apartment buildings being able to still own their buildings (as many of them are also mortgaged to own them as investments). I caught the tail end of a news item or story on NPR a few days ago about a growing number of renters now cast out on the street because the building owners are unable to make their own payments or pay for utilities.

    I see the reemergence of rooming houses, tended by someone who lives there and provides food. I also see a future of vacant suburban and now-abandoned apartment buildings, except for folks who will be squatting in them.

  15. MEAon 16 Dec 2008 at 3:43 pm

    More and more I’ve been looking at my house as our shelter from the stormy blast in more than that literal sense. As long as I can pay the taxes we have somewhere to live, somewhere to grow food, somewhere to collect water, somewhere to offer someone else a home.

    I vasilate between dreading which set of relatives I’ll have to cram in and fantasizing about how I could make room for a lodger and how I could find one who’d want to live my chaos as I have a feeling that cash to pay the taxes is going to get harder to come by, and that the taxes are going soar.

  16. SurvivalTopics.comon 16 Dec 2008 at 4:03 pm

    Let’s be honest – a good percentage of people bought homes with the idea they were investments. Sure, many live in these same homes, but they often bought just a little more than they really could afford thinking that within a couple years they could sell for a good killing. 15 or 20% per year returns brought out the investor mindset in many a home owner.

    I know this is true because a number of people I know who bought homes in the last 5 years told me they were doing it as “investments”. A whole generation has been told that buying a home is perhaps the best investment you can make.

    For millions, The home became not a place to live, but more of an “investment”.

    Suddenly, the rug is pulled out from under them. And they cry. Well, I do feel for them but at the same time if they had made a truck full of money – and before the bust many a family DID make a killing – they would have been laughing all the way to the bank.

    I was smart. I stayed away from what was obviously a bubble, as did many others.

    Now looked what happened. The big scheme of investors buying from investors to sell to investors fell apart. No surprise there. But they are taking everyone else down with them.

  17. Rosaon 16 Dec 2008 at 4:16 pm

    MEA, about the lodger – if you advertise, you’ll find someone.

    The question is, can you charge enough to make it worth it? For us, the amount of rent we can charge given the cold, drafty, small-closeted room(s) we have available, the fact that we have 3 cats and a toddler child, our general messiness and weirdness means that we couldn’t charge too much rent even when the rental market was tight – our last roomate paid $300/mo (which I think is fair), and having a roomate was *way* more than $300 worth of work, even when we had roomates that didn’t crank the heat every time our backs were turned, or short us on rent, or suddenly get deployed to active duty and promise the empty room to a needy cousin we’d never met before.

  18. Jennon 16 Dec 2008 at 4:23 pm

    I don’t own my own place – grad school funding and needing to find another position in a year or so do not lend themselves to ownership – but I am grateful that my parents have a place that is paid for, and with reasonable taxes, which I could move into if need be. the yard isn’t great for growing, but could be if the tree came out. There’s a workroom and a basement area that might be convertable to some kind of cold storage. And although it’s pipe would need to be replaced, there’s a woodstove (it pains me that they elected to take out the pipe, though.)

    Right now my folks aren’t that concerned about Peak Oil, so they’re not doing much in the way of preparation. I’m trying to what I can from here, especially in terms of things that will be easily transportable. So, I’m getting what I can that might be needed, and especially focusing on the things that they won’t be dealing with.

    It’s an odd position to be in, and in some ways I wish that I had the stability of a home that I could have been working on to make it a good place to be. But, I’m trying to make this flexibility work for me, and as much as possible I’m thinking of ways that I can work on preparedness in a place that I may not stay in, and with an eye to going someone else in a year or so.

  19. sealanderon 16 Dec 2008 at 6:02 pm

    Rosa, our usual system here is to charge a housemate rent (below market rate) and a share of power, phone, internet, food, and firewood bills. So if they crank up the heat, they will be paying their fair share of it. It can be inconvenient at times but the rent pays for my house insurance, property taxes and some of the yearly renovations (80 year old house) and dividing up our household bills is a big help financially.

  20. Shauntaon 16 Dec 2008 at 9:11 pm

    I’m not sure if this has been addressed…but when I read the many many articles being written about how people can keep their houses, why they should keep their houses, how they can adapt in place, etc…I keep thinking what about me? My family didn’t buy a house when things were spiraling out of control. We didn’t buy a house we couldn’t afford. Now we can’t get a loan. Sometimes it seems to me that the world is saying that if you didn’t buy a house when the buying was good, you’re screwed. Too bad for you. It’s more important to keep all the people who did buy what they couldn’t afford in their houses.

    Can you tell that this upsets me? For my family to own a home, apparently we’re going to have to just save, save, save for thirty years and then buy one outright.

  21. Tickmeisteron 16 Dec 2008 at 11:00 pm

    I built my house starting in 1980, moved in in 1984. No borrowed money, did the work myself, used almost all good recycled material except for the concrete, sheetrock, and carpets. Earth sheltered, solar and wood heat, one small window air conditioner. We suppliment the heating and cooling by a bit of shivering in winter and sweating in summer, but I think it is just fine to interact with the seasons in a small way.

    I’ll be here until it burns down, blows away, or they take me out in a box. A paid for, low operating expense house has allowed me a lot of freedom over the last couple of decades

    To paraphrase Thoreau, because I don’t want to look up the quote; “If all men were engaged in work as blameless as building their own house, perhaps the singing facility would be as universally developed in humans as it is in birds.”

  22. RCon 16 Dec 2008 at 11:26 pm

    I agree Sharon that there is no place like Home. But, some folks hit the wrong section of the financial cycle {I am not referring to the investor/speculators} and the best thing for them to do now would be to walk away. Some have criminally abusive types of mortgages and should do whatever they can to renegotiate them. Others were the liars in the liar loans. All kinds of things happened in the last 5 years that have led to millions in the US and many more millions around the world living in a ball and chain and not a Home. I used to sell Real Estate. I can’t tell you the number of times I had to lecture clients about mortgages. They thank me now. Again, I agree wholeheartedly with your sentiments and suggestions, but some houses are financial traps, not Homes.

  23. Susanon 16 Dec 2008 at 11:52 pm

    Our house is a double wide mobile home on a stemwall foundation, built in 1999, we bought it new and have lived in it every since. We couldn’t afford what were the going prices for already build homes but needed to live in the fire district we both were employed by.

    10 years later, we don’t work in the neighborhood anymore, we commute to our jobs, but I still think we live in a rather unique and good situation. First of all, our mortgage is cheap, and if it came down to letting the Prius get repossessed, or pay the mortgage, it’s an easy choice; our two other vehicles are paid for. (one is a chevy van that we only use for camping and truck type stuff)

    I just installed rain barrels, a deck for the front, and plan on hugely expanding my gardening area this spring; I also plan to put in fruit trees.

    I want to look into the possibility of blown in insulation as our walls are not well insulated even though we paid extra for the upgrade insulation.

    We have never looked at our house as an investment, it’s just our place to live. My father in law on the other hand, put up his house of 25 years on the market thinking he was going to rake in the bucks, and purchased another one thinking he was going to come out on top with the proceeds. Not so, he now has a mortgage and has trouble making ends meet even with still working. And the home is TERRIBLE in terms of land and layout! There is no space to grow much of anything, and granite boulders all over the place that are part of the natural landscape. DH always says he wants to move there when his dad passes it to us and I keep telling him to have a good life, I’ll visit now and then.

    I came from a family where your house was an investment in one’s family not future money. I just can’t understand that kind of thinking.

  24. Bettinaon 17 Dec 2008 at 2:57 am

    I love the house we live in. My grand-grand-father built it and my family always lived there. It has many assets, a very big garden, a big sunny, south-facing yard, an old walnut tree. 2 families could live there, and I hope my brother, who still “owns” some rooms up there will come back soon (we live in germany, my brother lives in Dublin to work there). I’m sure he will come back when things get tough.

    When my father was a child, different people had their workshops in our yard. There was a “Wagner” (making things from wood, wheels for example), a smith and my grand-grand father was not only a farmer, but also made wine, owned a big steamed thresing machine (a locomotive) that could be rented by other farmers, and he was a kind of “fine-smith” making things like ornaments and keys from iron.

    I would love to see things like this again. For sure, our house is too big for the three of us.

    Eventually we have to “pay out” our sister in the next years, which will be a hard thing. But who knows, perhaps she also will have to come back when the recession hits germany the next years.

    Best wishes to all of you
    Bettina

  25. conchscooteron 17 Dec 2008 at 6:13 am

    we put down 25% and are underwater to the tune of a couple hundred thousand US but we live off rainwater which we catch, and rarely use the aqueduct, so “too much water” is rarely a problem!. We have no heating because we don’t need it on our 800 square foot (75 sq meter home). We live on the bus line in a peaceful community on a canal with no streetlights and no malls within 100 miles. Key West is the ultimate intimate small town where everyone knows each other. Hurricanes? I prefer that risk to ice storms or forest fires or mud slides but that’s just me, sitting here typing with the moon shining through my open windows and me in my shorts.
    The only people who think renting is a good idea are the people who haven’t had a landlord in 20 years. I work for the police as a civilian and my wife has tenure as a teacher so we have as much job security as one can have in these parlous times and we can afford our mortgage and get health insurance too though perhaps that will be superfluous soon I hope. We bought a home and have no regrets especially since wells fargo wrote and offered to give us friendlier terms on our mortgage! weird times we live in.

  26. graceon 17 Dec 2008 at 8:25 am

    “…..it’s value lies in its function.”

    When I moved to this acre 13 years ago it was
    nothing but sand and a few weeds. Now there
    are 16 trees, several bushes, raised beds, a large corrugated “garage” and a growing community of native grasses. A 1970’s trailer house. Me, 4 dogs, a cat and a guinea hen.
    The acre is fenced, half with wooden privacy
    fence extending my “living space” (the 12×45
    trailer) by a half acre. It’s paid for. Taxes
    and utilities are minimal. 10 miles from a small town, 70 from Albuquerque. On two sides there are chili fields and horse pasture. There are no defacto restrictions/regulations.
    In Michigan, I used to live in another kind of
    world where your home identified “who you
    are”, as did your profession. I have learned
    a lot. Home is where you can keep yourself
    and your stuff dry and safe from the elements.
    It’s where you cook, where you sleep, the place
    you can keep coming back to every day. I think about all this a lot and feel that compared to many citizens of the planet I live in the lap of luxury. Running water. A wood stove. Space to grow food. No war on my road.
    “…it’s value lies in its function”. My home is
    priceless. It is my sanctuary.
    grace
    N M

  27. graceon 17 Dec 2008 at 8:39 am

    and Shaunta, no. You don’t have to save for
    30 years. This acre with available electric, a septic tank in place, available “city” water was
    $10,000. The trailer was $3000. It all depends
    on what you think you need, what your bottom
    line is.
    g
    NM

  28. [...] house prices in US and Europe continue to plummet, Sharon Astyk asks this question, with an inspiring and positive answer. The first is to shift your thinking. Until not too long [...]

  29. Sharonon 17 Dec 2008 at 11:34 am

    Shaunta, I know the situation isn’t fair – and I don’t frankly think that it is an either/or situation – my earlier “let’s just give away the houses, since the government effectively owns them anyway” would involve a 1 house per family policy, and even then, there are an awful lot of foreclosures – I don’t think most people will have to wait forever. In fact, I don’t think even at the peak of the market, they had to if they wanted it badly enough – that is, it is possible to buy with family or friends, or to move to a cheaper area – we did both. Even at peak market, for example, there are 1-3 acre properties with small, functional houses for undre 50K near me. In Detroit, it is possible get housing for well under 20K – often with surrounding lots that have been bulldozed and can be farmed.

    I’m not without sympathy – a whole lot of people who acted wisely are getting hosed – savers, renters, etc… and I think enabling renters who want to to be be able to own is going to be a key to keeping from just bulldozing housing. But I do think that dealing with the homeowner situation is also essential – no every idiot who bought a home at the peak of the market shouldn’t be saved – but that’s not the only people getting screwed here.

    Sharon

  30. Ponyon 17 Dec 2008 at 1:06 pm

    When I read that someone can’t buy a home because they haven’t a down payment or can’t get a loan, I think of Amy Dacyczyn’s classic Tightwad Gazette. http://www.context.org/ICLIB/IC26/Dacyczyn.htm . She did it with no debt and it’s fun to read. Most libraries have it.

    And Mary Hunt’s “Everyday Cheapskate” daily email bulletin and her blog: http://moneyrulesdebtstinks.com/ are full of good ideas too.

  31. Shauntaon 17 Dec 2008 at 1:08 pm

    I hate being unsympathetic. It’s so against my nature. It actually makes me feel horrible, but I’m struggling to stop being angry. Maybe because I don’t know anyone who is in trouble with their house who didn’t get there out of greed. Like my sister who has maybe $50,000 family income, five kids, and bought a $500,000 house before selling the $350,000 house (that she bought for $150,000 nearly ten years earlier, but had drawn every dollar of equity out of in order to buy SUVs and go on vacations.) Now she has both, they’ve both reset, and they can’t afford either. Or my parents-in-law who bought a house for $150,000 and have taken more than $100,000 of equity out of because “we’ve worked hard and deserve…” a new car, a cruise, etc. They might have been interested in buying a house with us where we live, or somewhere else, but can’t because they’re about $100,000 upside down in their mortgage. Now their next door neighbor’s house has been on the market for a year at $170,000 and they still insist that their’s is worth $300,000. I love these people. A lot. And I’m so angry that I have to just not think about it or else I’ll be burning bridges that I don’t want to burn.

    If I move to Detroit or somewhere else where land with a house is available for $20,000 or whatever, we’d be moving at the least 500 to 1000 miles away from all family. It might come to that, but I’m not certain that we’d be better off without our family.

    We don’t have grandparents who are living, and my parents own a small house that they love and that is far too small (800 square feet) to house my family of five as well as theirs. So we’ll keep renting and saving and wait and see. This is a mining town, and if the copper mine closes (it’s almost a certainty), then the housing market will plunge and I’m doing whatever I can to be ready. At that point I think there will be people who own their houses outright and will be interested in something that doesn’t include banks.

    Normally I’m not bitter, I know I’m coming across that way now. My only point is sure, help people, but while we’re talking about helping people who got snowed, or keeping Americans in their ‘homes’, I’d love to hear at least a mention of people in my situation.

  32. Sharonon 17 Dec 2008 at 2:11 pm

    Shaunta, I do understand your anger – but I know a lot of people who are in situations *not* of their own making. Moreover, helping homeowners helps renters too – lots of renters are being evicted right now, often with minimal notice, because their landlords can’t make payment on the house. It really isn’t an either/or situation.

    Sharon

  33. Shauntaon 17 Dec 2008 at 2:38 pm

    I know. I agree. I’m working on my anger :)

    And I love your blog. I didn’t mean to imply that you don’t understand about those of us who didn’t buy.

  34. Evelynon 17 Dec 2008 at 7:40 pm

    Shaunta, I understand you’re angry but if you have good credit and you have a little bit of money save you can get good houses for a good price. If I were you I will wait until 2010 when more or less the housing bubble hits is down and you will definitely get a good house. Two days ago my husband paid a bigger amount of money to the principal of our mortgage and the bank offered him an equity loan, so they are still lending. I check houses all the time for investment and we have seen good investments for less than 50K. This is the time to get ready save like a lot of people got rich after the recession of the 80’s. Even if this is another ball game but an inform person will always be ahead of the game.

  35. Tickmeisteron 17 Dec 2008 at 9:16 pm

    Thoreau’s passage is so much better than my paraphrase that I have to add it.

    “Who knows but if men constructed thier dwellings with their own hands, and provided food for themselves and families simply and honestly enough, the poetic faculty would be universally developed, as birds universally sing when they are so engaged? But alas! we do like cowbirds and cuckoos, which lay their eggs in nests which other birds have built…

  36. aurorabon 18 Dec 2008 at 6:30 am

    Shaunta, have you tried getting a loan from a credit union? Many credit unions have always been fiscally conservative and still have money to lend. At least that’s what they are advertising here (Upper Peninsula of Michigan).

    Banks are in business to make a profit; they were more inclined to make risky loans when all their peers were doing it and now they’re in big trouble. Credit unions are owned by their members; they are much more oriented toward service to their members than banks.

    Just a thought.

  37. Shauntaon 18 Dec 2008 at 9:49 am

    We aren’t ready to buy a house. Our town’s main industry is a copper mine. Copper is at about $1.30 today. (Three or four weeks ago it was at $1.80 and our newspaper was devoted to the mine people saying that everything was okay…copper’s at $1.80 and it can’t get much lower. Right.) If/when the mine closes, historically the price of houses plummets. Last time they fell by more than half, and so did the population. So we’re saving and waiting and hoping that when the time comes, with a big enough down payment, someone will give us a mortgage.

    The party line is that the mine has enough cash and contracts to last until June.

    I just wanted to point out that when we’re talking about bailing out homeowners, it would be nice to mention those people who didn’t buy when the buying was good and who now are stuck holding the bag.

  38. Joannaon 18 Dec 2008 at 2:50 pm

    We bought a 1920 farm-hut (originally less than 800sf) on 1.25 acres. It’s just enough for hens, a couple of steers, a giant garden, fruit tres, a blackberry patch and more. There we re no out buildings left when we moved in, so we built a 10×12 cedar shed that is prettier than many cabins I’ve rented. Now that we invested in a wonderful new garage/shop, we are turnign the shed into a real cabin. Now friends and family can come stay and get some provacy, and someday we hope to ernt it to people wanting a ‘farm vacation’ or to people who come to learn some of the skills we want to teach. There are a lot of folks who want to do more for themselves, but just don’t know how. I can teach canning and other food preservation, building, how to milk a cow, brewing, etc.

    I love how our tiny little house takes care of us, easy to heat with a small woodstove, built with care and love to maximize the microclimate, easy to paint and keep the roof in shape.
    I wouldn’t trade for the world.

    We’re hoping that by the time we want to move on, we can swap our turn-key micro farm for a cozy cottage and some occasional help. I have a lot of family, but we have a young family next door who are nearly kin, and I can see giving our place to them because I know they will understand how to use it fully.

  39. Ponyon 19 Dec 2008 at 12:01 am

    It may be too late to comment, but I’ll put it out anyway. I can remember when people who wanted to buy a house HAD TO put 20% down, could not get a loan for more than three times annual income, and the earnings of a woman of child-bearing age were not counted as reliable income. Restrictive, but safe.

    Relaxing those “rules”, in addition to all the easy money, must have had a great influence on the huge inflation in house prices, as well as the inability of people to keep up their payments if the least little thing went wrong.

  40. Jonathan Bentzon 22 Dec 2008 at 2:23 pm

    Sharon – you make some great points about the real “value” of a home, and not simply a piece of property to invest in.

    While everyone is concerned about their home values, keep in mind that if you bought your house before the “bubble,” then you are probably still in a spot where your home has more value than it did when you bought it. In fact, I just bought a house in November and, according to Trulia, it has already appreciated. For things like that, it totally depends on the region you live in.

    If I could recommend an article that does a great job providing tips on finding out the value of a house, I’d really appreciate it. Here’s the link:
    http://www.getmyhomesvalue.com/how-much-is-my-house-worth.

    Thanks for your insight on real “home value.”

  41. Bertieon 31 Dec 2008 at 9:10 pm

    I noticed that no one has brought up taxes on property that is passed down to family. Many people have to sell homes that they inherit because they aren’t able to pay the inheritance taxes and settle the estate without selling the property. If people are going to start passing homes on to their children, something will need to change with regards to the way that taxes on inheritances are figured.

  42. Артурon 18 Dec 2009 at 3:25 pm

    на самом деле удивили и даже порадовали :) Не поверил бы, что даже такое бывает :)

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