First Person: Home Values Are Rising, but Not Ours

Yahoo Contributor Network

According to a report on Kiplinger.com, "For the year ended September 30, home prices nationwide rose by 4.9%, and the median price for existing homes jumped by almost $14,000, to $185,000, according to Clear Capital, a provider of real estate data and analysis."

Meanwhile, the past year has brought only declines for our home. Even though we bought our condo in an upscale area, thinking that this would bring better appreciation, we've found our Zillow-estimated value declining, and it's declining rapidly. In the past year, our home's value has dropped by about 20 percent, falling from $140,000 to just under $112,000.

However, we're not giving up on our home just yet.

Staying put in the near term

To combat stagnating values in our area in the short term, we've decided to stay put for a while. If we can stabilize our home value, the longer we can stay put, the more we can make our current living situation pay off. Since we've managed to buy our property outright, we've cut housing-related costs down to just property taxes, utilities, and our association fee. We've forecasted that if we can stay put for another three years, it will have made our home experience -- even with our lower home value -- cheaper than renting a similar two-bedroom, one bathroom apartment in our area.

Keeping options open for buying opportunities

When we downsized our previous single-family home to our current condo, we took a loss. Yet even with this loss, we were able to utilize our home equity to buy our current, smaller property for cash.

We would like to continue this mortgage-free trend. And even though our property's value is dropping, so are other properties. So if we continue to downsize our costs -- whether it's through lower property taxes, getting more property for our dollar, or other benefit -- we could actually make up for our value loss through a property with lower expenses or purchase price.

Decreasing losses by decreasing expenses

Of course there is the brighter side of our situation in which we can decrease our overall losses through our minimized expenses. By downsizing our situation from our previous home, and ditching our mortgage in the process, we eliminated the costs of paying a bank interest on a loan. Depending on the rate and timeframe of the loan, and add in fees and charges to obtain the mortgage, and this could end up saving us close to $90,000 over the course of the mortgage term. Therefore, by eliminating such a cost, our home can decline in value over time and we could still end up paying less on it than if we had taken on a mortgage.

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Disclaimer:

The author is not a licensed financial or real estate professional. Calculations have not been verified by a professional. The information provided in this article is for informational purposes only and does not constitute legal, financial or real estate advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.

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