Originally posted by midnight Target
I've lost over 100k in equity on my house in CA. I can't give that **** away.
If you can afford to keep it another few years, you'll make it back. CA home values will most likely keep going up, because the real demand on the land will keep going up while the price of building materials is skyrocketing.
If you're buying top of the market or obvious boom properties (like 2000 sq ft houses in silicon valley that went for $3 mil back in 2000) then yea you're an idiot, but other "normal" houses in CA are going to go up in value.
The key of course is to never ever ever buy a house with the understanding that you MUST sell it in the near future (inside 5 years) to keep from going bankrupt. If you buy a house and the payments plus expenses (taxes, maintenance, etc) fit within your cash flow, then you're pretty much protected from property value downturns because even if your house loses it's resale value *this year*, you can keep making payments on it until the value goes back up. There are very few places in CA where that is not true.
My parents bought "overpriced" houses in San Diego 25 and 15 years ago, and although the value of the houses have fluctuated by up to 50%, over time there is a very clear upward trend. Yea if they'd been forced to sell because they were retards and couldn't afford some goofy interest only variable rate loan, then there were periods of up to a few years where they'd been in trouble. But they bought within their cash flow and kept the houses for a long time. Guess what - one house is STILL valued at 4x the purchase price and the other one is a whopping 8x the purchase price after 25 years. That's not too shabby...
The trick is not over-extending with the original purchase. Never buy a house you can't afford to keep through market downturns.
