For the past 7 years, we have stayed in our Florida home even though we thought it would be a starter home that would help us break into the real estate "game." However, the housing bubble turned the tables on us as novice real estate investors. Looking back on the last 7 years, I can think of at least 5 ways our home purchase has surprised and frustrated us. If we knew now what we didn't know 7 years ago, we would have delayed our home purchase.
Failing to time the market
I never thought about timing the real estate market. However, it turned out we bought when prices were inflated. We bought our home for $183,000. Even though a recent article by Bloomberg states that home prices are going up in many cities, the prices have not completely recovered. Our home is now worth $123,000, which is still $60,000 less than what we paid. I am disappointed that we didn't wait until home such as ours were selling at a bottom of about $110,000.
Playing cat and mouse
I felt as though we have played cat and mouse for the past 7 years in that we can't seem to get back to having 20 percent equity in our home in order to refinance at a lower rate. We couldn't pay our mortgage down fast enough because the value quickly plummeted. Even after 7 years of paying extra on our mortgage, we are not able to refinance without paying PMI (private mortgage insurance). In about 6 months, once we have paid our mortgage down by another $5,000, we should be able to refinance unless the value of our house goes back down.
Watching the neighborhood change
Another reason I'm disappointed with our home purchase is because the subdivision has changed. When we purchased our home, the majority of homes were owner occupied. Now it seems almost half the homes are being used as rental properties. Although there is nothing wrong with renters, it seems as though there is a greater turnover of people. It's more difficult to establish relationships with neighbors who are only staying for one or two years.
Putting up with foreclosures
It's also frustrating to see so many homes remain vacant as banks take a long time to fix up and sell foreclosures in my Florida neighborhood. The home across the street from me has finally been put on the market. Even homes that have been sold seem to take at least a couple months before settlement. Between the short sales and foreclosures, we have several homes that still represent eyesores.
Paying hidden costs
Our home purchase also came with some hidden costs that we did not accurately estimate. We didn't think about the fact that our Home Owner's Association fees may go up to cover the increasing costs of maintenance. We also didn't realize that our property taxes would fluctuate depending on home values. We have had to deal with rising property insurance costs that we never expected.
Overall, I'd say we became homeowners for the wrong reasons at the wrong time. We really thought we could purchase our home for $183,000 and live in it for two years before selling it for a profit. We never expected that our starter home would one day turn into our retirement home. But, at this point, we plan to stay put. We have invested so much of our money in our house that it would be foolish to sell at a loss and become renters.
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