patrick.net

the problem is with 265K, you'll end up less than that after escrow and all the transaction fees that the buyer will demand you'll pick up, so you'll have to layer in that as well, then the bank will want to be made whole which may require you to bring a 50K check for a clean exit.

I mean, you'll need to explore all your options including renting. If your interest is sub 5%, your cash flow hit should not be too bad. If your AGI is around 100K, there is passive loss tax writeoff that can help your cash flow as well.

My best guess is 125 Patterson St.. I'll second what some folks say about having a baby and go one further; that half bath might not be a bad baby's room for awhile.
You may want to check to see what commission the developer is offering to buyer's agents; if they're offering 4%, that could explain why no one is coming to see your unit. Hat tip to FAB if this is the case...

20K is a lot of college money for an unborn child. If prices rebound and you can cover your position, s/he'll have a nice head start for college. If prices go down more and you can walk away, s/he'll have a nice heard start for college.If you realize that 20K loss right now, you have guaranteed that it won't be allowed to grow in a college fund.BTW I agree with the others about needing more space immediately after a newborn arrives: it is not needed.

I'd just stop paying the mortgage, put it in the bank instead, and wait to get evicted. Your lenders get the property back, you get out of your loans. No need to lose money on this. Big corporations let properties go back to the bank, so can you.

Getting another apartment in the area might be difficult, might not, dunno. Having tens of thousands of dollars in the bank helps tho.

FORECLOSURE
FA borrower whose previous principal residence or other real property was foreclosed or has given a deed-in-lieu of foreclosure within the previous three years is generally not eligible for a new FHA-insured mortgage

The HOA fee on that is insane. At 3.88% rates it's like adding another $100,000 in cost to the property.

OK... I haven't read the other advice above, so forgive me if I repeat what was already said.

Lets look at the options
1) Sell now at a loss
2) Keep it and be tight on space
3) Let it go completly
4) Rent it out

1) lets say you sell.... will you be able to find a 2 bdrm rental for less per month? How soon can you find one? What about the impact on your credit (if any) will that impact your ability to find a rental unit? All questions you should ask youself.
2) How much space do you have? You have arledy been living there two years... depending on how far along your wife is, it may be close to three years by the time the baby is born. That only means you are more than halfway there.
3) Let it go completly - not the best option, but an option nonetheless.
4) There's the "wrong" way to do it. Rent it out and don't tell anyone. Or the right way - call the office that adminstered the program, explain the situation - perhpas they would be willing to work with you.

IMHO 2 is best, but I don't know your full situation, nor the size of the condo.

1) Yes, a 2 bedroom rental is about $500/month less than what I pay now with HOA/property tax/etc, but obviously I'd have to change my tax writeoffs a bit so the savings won't be the full $500, probably closer to $200.

2) 800 square feet roughly, but there's a huge bathroom (which is nice, but kind of useless for my current situation) 1 bed, 1 bath. We can fit a crib in the bedroom, but once the kid gets to be about 12-18 months it'll be a bit tight. I can make it work for a year, but I'd rather not if I don't have to.

3) Not going to do it. I know you can walk away and buy a house in 7 years or something - but I'm not about to do that. I know it may be costing me money, but I guess I was always raised in the whole "if you gave your word, you stick by it" tradition. I told the bank I'd pay, and I will. It's my mistake, I'm not going to pass that cost onto a bank that had faith in me enough to give me the loan, even if everyone else is doing it.

4) I might be able to rent it out to my brother. He's about to graduate college, and as long as I still "own" it and rent it to him at a reasonable rate, it's better than taking the wash.

Thanks for the advice, guys.

You must get you rest to continue work and the baby care in yor free time. Four good nights of sleep a week. That half bath is your new second bedroom. Build a pattern for all three of you and soon you'll be able to give the wife some time in the "other" bed
room while you watch the baby.

Don't walk off. Pay your bills. Be happy.

ptiemann says

List it for 199k.

If it’s worth more you will get higher offers.

Nobody can force you to accept any offer. The market will tell you what you can sell for.

That's why I ALWAYS offer 10K less than they are listing them for. The people really interested in selling will at least counter my offer, and not cop out with... "Well... I bought it for...."
And if they have someone else they are considering, then by all means close your deal with them. I know how hard it is to find a decent house I want enough to make an offer on.
So if they are starting that crap before I've even got the first words of questioning them, out of my mouth. MY next words are, well good luck, I hope the five of you work something out.

Your mistake can be your child's opportunity. 20K seed money for college at birth, conservatively invested, is quite a "gift"

therapy says

4) I might be able to rent it out to my brother. He’s about to graduate college, and as long as I still “own” it and rent it to him at a reasonable rate, it’s better than taking the wash.
Thanks for the advice, guys.

As Eastcoastbubbleboy said, there's right way and wrong way. You'd better figure out what can be done with your 5 year occupancy rule you got from the government loan. "Owning" and "occupancy" sometimes is not the same, and the confusion b/w two can cost you dearly in the future if something goes wrong. So be careful with this option.

Tenouncetrout says

That’s why I ALWAYS offer 10K less than they are listing them for.

An offer 10K less than listing price could be an acceptable offer or a lowballing depends on the market situation. With 500K home or even 200K home, most sellers will consider it without too much hesitation, but with 100K home... you're gonna need some luck.

therapy says

Again, not sure that’s the actual best course of action.
I don’t want to stay in the place. I want to sell it and move on.
And I’d like to do it as responsibly as possible, without absolving my responsibilities.
EDIT:

SF Ace - the loan I got was based on down payment assistance from the City of San Jose for $30,000. This $30k is 0 payments until the property is either sold or the 30 years is up, at which time it is due in full. Because of this “sweet” deal I got from the city of san jose on a new and upcoming development in an area of the city they’re trying to gentrify, I had some stipulations to which I must abide. One of which is that it must be owner occupied for 5 years or I pay the loan in full. ($30k)

ok, so now you're at least 20K underwater on the loan, owe 30K upon selling to San Jose and probably owe 6% selling fee and a few thousand in transaction tax, and likely get squeezed by the buyer in this market, you're just not going to be able to get out of this cleanly now. You'll have to bring at least 80K-100K (depending on selling price) check to do it the responsible way. That option looks dead to me and i'm surprise your selling agent is even attempting this. If nothing else, your lender will not agree unless you can pay the difference, whatever small amount left after escrow and everyone takes a bite. You should also review carefully the terms of the San Jose agreement carefully as well and find out what happens to people that can't pay it back.

If that doesn't sound good, acquire a desire to earn money and you'll keep the condo as a rental and get the bigger house you want.

I think staying is the only viable decision now. One bedroom is not that small for a family with a newborn.

My best advice would be to lower your price, whatever it takes, and sell it ASAP. The longer you wait, the more you will loose. Prices are going down, much lower. If you think selling is hard now, just wait until a year from now. You'll think these were the easy times.

There was a report last week that loads of people in CA are trying to sell right now and can't. That is what's holding them in CA. They want to sell and get out of the state. If they can sell, CA will see a major drop in its economy. It's a loose loose situation. Not good. CA is in for a heap of trouble for years to come, decades, even if it can avoid defaulting on it's bonds.

Last week Arnold gave the order to cut 200,000 CA state employees wages to minimum wage. Treasurer Chiang is resisting, but it matters little, the train wreck is dead ahead. The bottom line is: people will have less money in the years ahead, and home prices will go down.

Now consider what happens when interest rates go up. Home prices get killed again. Now consider the babyboom demographics: in 10 years there will be 3 houses for sale for every 1 buyer. That's the math, and it cannot be changed. Home prices get killed again.

There are 51 million active mortgages in the US. Right now there are 19 million vacant homes, and 7 million in various foreclosures. That's 26 million distressed properties. That's 1/2 the size of the ENTIRE home market! Home construction is over for the next 20 years. What lies ahead is a sea of homes for sale. Prices will never be as high again in our lifetime.

"“if you gave your word, you stick by it”

The house is collateral. So if you don't pay the bank gets the house back. The bank is taking a risk as well. A lot of people have made bad bets (the government, banks, consumers) but some on this board are advocating that we should protect the oh so holy banks while the consumer gets screwed. I'd walk away in a heart beat. IF the government is dumb enough to allow me to put down 3.5% and I'm paying PMI I feel I can walk away in good conscious. If my credit is ruined in the process and I lose the house so be it. That's the risk I take being a home owner. As a tax payer I'm paying over 50% taxes to our overbloated government (who supports bank bailouts, fannie/freddie, needless wars, etc, etc). I don't feel the least bit guilty if I had to walk. Your tax dollars bailed out the banks, supported Fannie, Freddie, FDIC, etc. So you are willing to donate half of your pay check for these programs that support the banks and every other free loaders bad decisions but if you make a bad decision you still pay your taxes but let youself get screwed by going broke.

@ b8c0d50b

"There are 51 million active mortgages in the US. Right now there are 19 million vacant homes, and 7 million in various foreclosures. That’s 26 million distressed properties. That’s 1/2 the size of the ENTIRE home market! Home construction is over for the next 20 years. What lies ahead is a sea of homes for sale. Prices will never be as high again in our lifetime."

Those numbers are frightening. Can you quote a source?

Walking away sounds like the best answer. You will have 7 years of renting, possibly less, you are living in a condo right now so what really is the difference with an apartment? I can tell you from personal experience your baby will not care. Those that feel there is some moral obligation to pay are only really worried about their own house prices. Walk aways will increase the speed at which we will return to a true value for housing.

Your ethics are admirable,but they are resting on the assumption that the bank had "faith" in you to pay it back.

No, the bank had faith that they could get paid twice for the same loan, once on the origination and then selling the note to Wall Street.

You don't really "own" the condo, anyway. Effectively, you are renting from the bank at twice the price of renting from a landlord. If you stop paying, the bank gets their condo back. That's the deal. No need to feel guilty.

So you're renting money to live where you don't want to be. Doesn't make sense for your family.

As for San Jose, the city was stupidly giving money to developers through this get-citizens-into-debt scheme. Stupid gets as stupid does.

Stop renting the money. Get a lawyer and consider walking away.

I am with most everyone.. look at your mortgage, have an attorney review to see if you could be subject to collections action against the deficiency (and can the City of San Jose chase you as they may be a guarantor) ... and also have the attorney look at your HOA agreement... you may be there for 12 to 18 months paying nothing awaiting foreclosure and eviction... can the Condo Assn come after you (and they could have far more assertive collections actions coming at you for years). And walk away.

Since your credit will be creamed... if you need a new car, buy one now.

And as far as not being able to buy for 7 years... you will not lose any sleep as you watch prices continue to spiral down another 10 to as much as 50% in the Bay Area... so in 7 years as prices recover some you will be paying less for a home than you would now anyhow.

One general comment... condos nationally are tanking in value twice as fast as single family homes... one of the issues is that condo fees are far above what's reasonable... and another is that condos that looked like luxury in-town living a few years ago are perceived now as just basic apartments and nothing more... apartments with often restrictive rules and landlords that skip town leaving the surprised tenants with lost deposits, lost parking spaces and a sudden eviction.

Congratulations on your marriage and your new baby. We have a two-year-old that stays in her crib and can also sleep in a pack-and-play. Most kids will stay in their crib long after they are physically capable of getting themselves out, sometimes three years. The pack and play is used for as an alternate place to sleep, and can be assembled/disassembled in 30 seconds.

I personally would rather be cramped than stressed about money going into marriage, but you would all three have to be efficient sleepers to get along in one room. The baby might take a while to sleep through the night, especially if he/she is nursed back to sleep each time. Until then, you will both be sleep-deprived and cramped, regardless of the size of your condo.

I, too, own but want to upgrade to bigger house for my growing family. I look at the decline in real estate as a plus: whatever percentage my house drops in value reflects a roughly equal percentage in value of the larger future house, which will save me money.

--David from Savannah

It seems like there are people on here who have wildly divergent ideas.
- Some are 100% convinced that the mortgage rates should go up, and drive down home prices down to 50% of their values in the Bay Area.
- Some think we’ve hit the bottom and that both mortgage rates and home prices will go back up over the next year or two to 80-90% of their peak values in 2006/2007.

Regardless where rates go, prices will continue to fall. Never in the history of the region have prices skyrocketed 300-400%. We are way overvalued on RE prices.

No! not the bottom yet. Take where prices of homes were in mid 90s and compare what has happened over the past 10 years... whats changed to justify even 1998-2000 prices ?

We saw the tech bubble in 2000, and pretty much many understand that one, but not many want to bite on the 10 year long RE bubble in the Bay Area.
see chart...
http://www.housingbubblebust.com/OFHEO/Major/NorCal.html

BTW, congrats on you little one..

If you want to be patient, stop paying your mortgage and wait until you're forced out. Save the payment, take the hit and walk away. Rent a modest place that you actually want to live in. Housing prices, employment and home ownership will continue to decline for the next three to five years, and with a huge supply of empty houses, renters with jobs will have more options than hopeful buyers, despite their credit ratings. Credit is meaningless without a good job and 20% down. When homelessness becomes widespread, the bottom is in.

My real estate agent claims he’s bewildered and “has never seen anything like this” which is not comforting in the least.

LOL! welcome to what it feels like when you have a normal market as we did back inthe early 90s. Condos do get hit the hardest. Last weekend I drove past more than a few homes for Sale in Cupertino. Plenty of RE for sale with reduced priced on the market.

newhomebuyer7 says

“There are 51 million active mortgages in the US. Right now there are 19 million vacant homes, and 7 million in various foreclosures. That’s 26 million distressed properties. That’s 1/2 the size of the ENTIRE home market! Home construction is over for the next 20 years. What lies ahead is a sea of homes for sale. Prices will never be as high again in our lifetime.”

Yes. The same could be said regarding the Tech bubble back in 2000. Never to be seen again. How many are ticked that Yahoo stock isnt $350/share any longer ? Was that even close to "normal"?

Congratulations on the marriage and baby!

If you have your original mortage, and you walk, your liability is the condo only. If you refinance (or have refinanced), then the bank could come after you for the gap between the mortgage and the value. So if you have not refinanced already, I'd suggest not doing it now, just in case. I admire your desire to do the right thing.. but it may not be the right thing for your family. And if you have some financial trouble you may have no choice.

Probably cannot refi now anyhow due to decline in value, but even if you could I'd suggest that you not do it.

Good luck with everything. After the baby comes you will probably not worry about it so much, you'll have other things to occupy your mind. And the time savings of not having to take of a yard and such will be nice. You'll have a few more years before schools become an issue.

IMHO study history and you will see housing is NOT going back to anything of the past. That kind of thinking is pure fantasy island. There is in my view going to be a 50 per cent drop from where we are now ...that is my prediction because various factors now prove what they are saying to be true. Using statistical methods tells me in my research that is the only way things can go for American real estate since it has been unrealistic and detached from honest value since the late 70s. Value was not part of the equation against any reliable factors during the past ten years, and California (where I came of age) I believe is the worst of it all. On a responsibility front I personally would never walk from a loan, mortgage or financial responsibility. It is a character flaw as my theory is if a man bites the bullet and signs for a loan then you see your obligation though. There is no free ride and there shouldn't be either. I foresee tight enforcements coming against people who walk too as there should be, because people who walk or no longer like their deal and don't want to pay effects those of us who DO pay our bills (even for items we have had remorse for purchasing.) It is a sad reality but a valid one, being a man mean standing tall and DEALING with things both good and bad, not crying or running like a little girl.

commonsense says

There is in my view going to be a 50 per cent drop from where we are now …that is my prediction because various factors now prove what they are saying to be true. Using statistical methods tells me in my research that is the only way things can go for American real estate since it has been unrealistic and detached from honest value since the late 70s.

Could you elaborate on your statistical methods that predict a 50% drop nationwide for housing prices? Some data?

commonsense says

Value was not part of the equation against any reliable factors during the past ten years, and California (where I came of age) I believe is the worst of it all.

Spot on! Much of exhuberance, in the BA centered over the short years between 1998-2000. Many still beleive we will have a repeat of the tech bubble. It may take until 2015, but what happened back 10 years ago will fall into urban legends. It will be a slow decline from here on out as 2000 fades away from peoples memory.

therapy...oh man, you are in a tough spot. Of course, it was your own doing so, whatever you do, take your lumps like a man. Own up to your own greed, stupidity, entitlement, etc., etc....whatever it is that took you down this road. Also, be sure that, unless you can find a way to start bringing in a lot more income, this misstep probably will follow you financially for many years to come. That, for sure, is the huge bummer. Again, you brought it on yourself. Take responsibility for your decision.

While I understand those posters who advocate for walking away, I don't recommend that. Your ability to obtain a loan of any kind will be destroyed for the next several years, perhaps longer. Also, we don't know how the law regarding bankruptcy or lending will change in the years to come. Walking away could be financial suicide. Beyond obtaining loans, you many lose your ability to maintain or get credit cards, accounts with any kind of financial institution. Frankly, you will have trouble renting with a terrible credit rating. Just some things to keep in mind.

Instead of walking away, I would attempt to minimize your pain by renting out the unit. Yes, you say there is some kind of provision limiting your ability to rent. First, you need to clarify what that limitation is, if it even exists. Second, you need to contact who ever put that limitation in place. If it was the City of San Jose, you might want to contact your city counsel member to see what can be done. Others to speak with might be the developer...even the lender on your FHA loan. Who knows what the possibilities are. The reality is that you have some serious work ahead of you. Get to it.

-Hooch

The real problem here is there are a bunch of condos in downtown San Jose (except for the ones within a 2 block radius of San Jose State University) that are listed for $150k. I've been shopping around in that area. There are even some 2 bed room units listed for around $200kish.

If you're looking for close to $300k, your condo must be at at Paseo Plaza, or The 88.

I'm going to reiterate what sface said. You've got a baby on the way. Depending on where you're at, you're looking at say 6 months with "no baby" and then probably 18 months with a baby who will be in your room regardless. Since the child doesn't move that much, or need much room, the place will be sufficient for you.

You said "2 years ago", which means you've got 3 years to go. That means you've got roughly 4 years covered of the 5, 2 down and 2 more where your space will be adeqate. You could probably swing 1 more year.

At that point, you'll also start to understand what you need in a home. Not just "more space!"

short sale. it will probably ruin your credit, but you said your ready to cut your losses now, if need be the case... so cut them now, and in 5 years you'll be fine (maybe sooner). You'll have saved a LOT of money, renting a nicer bigger place for you and your family...

Congratulations on your marriage and new baby. Not everybody is going to be flattened by this "downturn" and perhaps you'll be in a charmed minority. However, various economic charts on the web illustrate horrors none of us have encountered before. That means typical responses and even deeply held values may need to be jettisoned by the time we're on the other side of this. If these charts are accurate, what we all have deemed essential and necessary for "lifestyle" is going to be ripped from our grasp. I'm reminded of famous presidential quotes which turned out to be famous lies: "I am not a crook" and "I did not have sexual relations with that woman" - and - "The American Way of Life is Not Negotiable". We need to wake up! How much is that lifestyle gone already?? The only chance for resistance is by getting ahead of the curve and trying to minimize the hit on our assets. If we hesitate, we'll end up losing it all and by then, resistance really will be futile. How many people held on to Pets.com all the way down? Only you can decide whether walking away makes sense, this being a non-recourse state, but I'd be very careful when you tie the decision to "values" that may be better suited to a by-gone era rather than basing the decision on numbers and the law. It sounds like you need to open your mind and consider alternatives thoroughly before you reject them out of hand. And not only the "walking away option". You also need to revisit your space requirements. How many families are finding themselves out on the street before they give up the idea they "require" x number of bedrooms and x number of square feet? They're clinging to this "value" and it's destroying their futures. It's one thing to think "it can't happen to me" when the odds are in your favor, but when they're not, it's stupidity.

My solution, which many will ridicule, especially here in this image-is-everything state, is an RV. Before you roll your eyes and consider me "trailer-trash", consider the most obvious advantages: contained expenses, mobility and flexibility to adapt to a changing economic environment, monthly costs that are a fraction of normal "rent". So, if we need to move to another state, we just roll on out, sell it, or put it in storage. While others watch their net worth decline with their houses, I see mine at least hold constant. The RV costs a fraction of a house and its depreciation even when it gets to zero is chump change compared to the 6 month depreciation of a house we looked at in Menlo Park.

And there have been unforeseen advantages: 1) Security. For the first time in my life, I can leave my "house" and feel secure. Previously, I always chose houses by location and always lived in pricey towns. But this also made them "targets". Although mine was never "hit", others were and I never left town without a nagging concern. One friend in Los Gatos actually hires house-sitters. Now, there are a hundred eyes behind tinted windows which see anyone even approach my vehicle and people really look out for us. 2) Community. Forward thinking and like-minded professionals are doing this as well as retirees and just starting out families. You might be surprised to find how many VPs at the major Silicon Valley tech companies are doing this - but of course, never broadcasting it. And young people with newborns who have intelligent people around who can help them. And plenty of dog-walkers. 3) No more moving companies! As I went from house to house or apartment to apartment, I was always having to deal with movers and bulky furniture. It's an expense that no one pays much attention to, but it really adds up. Plus, some moving companies are right out of the Sopranos. Now I control all of that.

Anyway, my point wasn't to argue for RV living but rather to encourage you to get creative and think outside of traditionally accepted alternatives. Focus on your bottom-line net worth and doing whatever is required (within the law) to keep it intact. You don't want to find yourself at the bottom of this cycle with nothing. Whatever you have then will set you up for the rest of your life.

Hi all,
We live in Orlando, Fl and most of you know the housing price now is about less than 50% from peak. We do not own any house now, but we consider to buy a townhouse (I mean real townhouse with small backyard).

The townhouse we focus on is 3/2/2 (1600sqft), HOA=200$/mo, asking price is about 150K. But you can get for 140K. The rent of such home is now about 1200$/mo. Tendency falling.

My unexperienced rough calculation shows that the cost of ownership will cost me about 1400$ (all included). Any correction about this # is well come.

The problem is, I am unemployed now and I do not want to make more then 40% down payment.

My questions are:
a) It is a good condition to buy now? (To beat the soon coming inflation).
b) It is possible to get reasonable financing, based on my unemployed situation?

Thanks

hooch-raider said: "you brought it on yourself. Take responsibility for your decision."
Making the best financial decision for himself and his family is "taking responsibility". "Walking away" from a secured loan - may - meet that criteria. (See a lawyer!) That's the point of a non-recourse loan and why bankers are trying to eliminate them.

"Also, we don’t know how the law regarding bankruptcy or lending will change in the years to come."
How does that affect a current contract? This could be an argument from getting out now before laws are changed. If he believes prices will continue down for some time to come, are you advising him to continue depleting his assets? This in some way makes him more of a "man"?

"Walking away could be financial suicide. Beyond obtaining loans, you many lose your ability to maintain or get credit cards, accounts with any kind of financial institution. Frankly, you will have trouble renting with a terrible credit rating."
These kinds of things tend to be affected by cycle. If banks want to lend, they'll overlook flaws, particularly if those flaws are common and widespread. Millions of people are losing their homes. As soon as this cycle changes or another government handout is made, banks are going to lend to them. If the cycle is such banks don't want to lend, you'll need to be so squeaky clean, you probably won't need or want to borrow.

Can you refi? You'll get a better interest rate - especially if you go for a 15 year loan - and all fees can be rolled into new loan. You can get 3.875% 15 year loans for 0 points. This will allow you to pay down the loan much quicker. You don't need a big place with a new born - you'll have a crib for the first 2 years before the little monkey figures out how to climb out. By then you're at 5 years and can rent it out, or sell it in an improved market. With a 15 year loan of 260k you pay $750 interest per month. You get one third back on taxes - so you are effectively renting for 500+350HOA = 850/month which is a good deal. Enjoy the new few years - it's a heap of fun - you bought the place for a good reason - money comes and goes and isn't the most important thing in life.

Father_of_two says

Hi all,
We live in Orlando, Fl and most of you know the housing price now is about less than 50% from peak. We do not own any house now, but we consider to buy a townhouse (I mean real townhouse with small backyard).
The townhouse we focus on is 3/2/2 (1600sqft), HOA=200$/mo, asking price is about 150K. But you can get for 140K. The rent of such home is now about 1200$/mo. Tendency falling.
My unexperienced rough calculation shows that the cost of ownership will cost me about 1400$ (all included). Any correction about this # is well come.
The problem is, I am unemployed now and I do not want to make more then 40% down payment.
My questions are:
a) It is a good condition to buy now? (To beat the soon coming inflation).
b) It is possible to get reasonable financing, based on my unemployed situation?
Thanks

You live in a relatively low cost RE market so the price to rent cap rate at $140K to $14,400 in annual rent is fairly well in line 9-10%... of course no telling how HOA fees will end up.

That all said, isn't your RE market still declining in value? And you do point out rents are falling. So what's the rush to buy? In many ways a townhome is just a glorified condo which is an apartment with a shorter name. And townhomes are a commodity, not much more. Check around also to see if many of the nearby units are owned by the dweller or a rental... this will impact re-sale value, if any, downstream.

Lastly you are unemployed and about to plunk down $60K+ plus transaction costs... what happens if your unemployment is quite extended... do you have a safety net of 6 months of full living expenses in the bank on top of the purchase price? And what if you need to take a job in another city and your equity is tied up in Orlando in a hard to sell commodity?

I realize that part of why you are interested in buying is a combination of stability for your family and, probably, lower monthly costs (5% 30 yr on, say, $90K is around $500 PI, add another $400 for TI and assn fees you are at $900/month).

But you will pay a price for that stability... trading current uncertainty for sleepless nights with your cash tied up in your home.

I recommend waiting until your work situation is settled.

And, in all honesty, you are going to have trouble finding a loan with no job... even with your large down payment.

Hold off so as to not get too disappointed downstream.

Just rent it out under the table. Who's going to know? After all, it will be worth $1 million dollars in just a few years. ;)

Father-or-two
You haven't given enough data to answer your question. 1) Do you have a down payment? 2)Is your line of work such that you're confident (like 100% sure) your income will shortly resume? 3) Have you met with a lender to see what you might qualify for in terms of a mortgage? If not, and your only concern is "to beat the coming inflation", I advise you to know the answers to the three questions above and spend a couple of weeks reading Mish's Global Economic Trend blog (Google it) before you make any decision. Mish may be wrong, but what if he isn't? Position yourself so it won't matter. Even though you're looking at a 50% off fire sale in Orlando right now, nothing says it can't go down further. What if it goes down another 20% and then flat lines for 10 years? Will you be happy you bought? What if more and more people keep foreclosing? Will your townhouse still be located in a safe place? Will your neighbors pay their HOA fees? How long can you go on if your own income doesn't materialize? And finally, what's the down side of not buying? You believe you will miss out on inflation and price appreciation? Millions of people are broke now because they heard that siren song.

krndmg says

hooch-raider said: “you brought it on yourself. Take responsibility for your decision.”

Making the best financial decision for himself and his family is “taking responsibility”. “Walking away” from a secured loan - may - meet that criteria. (See a lawyer!) That’s the point of a non-recourse loan and why bankers are trying to eliminate them.
“Also, we don’t know how the law regarding bankruptcy or lending will change in the years to come.”

How does that affect a current contract? This could be an argument from getting out now before laws are changed. If he believes prices will continue down for some time to come, are you advising him to continue depleting his assets? This in some way makes him more of a “man”?
“Walking away could be financial suicide. Beyond obtaining loans, you many lose your ability to maintain or get credit cards, accounts with any kind of financial institution. Frankly, you will have trouble renting with a terrible credit rating.”

These kinds of things tend to be affected by cycle. If banks want to lend, they’ll overlook flaws, particularly if those flaws are common and widespread. Millions of people are losing their homes. As soon as this cycle changes or another government handout is made, banks are going to lend to them. If the cycle is such banks don’t want to lend, you’ll need to be so squeaky clean, you probably won’t need or want to borrow.

krndmg,

Enjoyed your initial post. Can't argue with it, especially the lawyer part. As for your second, I think you are making some pretty big assumptions about cycles, etc. But hey, you could be right. Maybe nothing will change.

As for my "being a man comment", a man takes 100% responsibility for his actions. I read a lot of posters on this site and others that encourage others to "walk away" in some kind of effort to stick it to the banks, government, etc. I was simply encouraging my fellow married man with a child on the way to remember to be responsible. No one made him enter into the various loan agreements. He did that. Moreover, now is not the time for him or any other man with a family to do something high risk, whatever that may look like.

-Hooch

Congratulations and condolences,

As far as space goes, it's all relative. When my son was born 4.5 years ago we lived on a 30 ft sailboat. It worked out great for about 14 months. Babies don't need much stuff, a little basket of toys/books, a few piles of clothes. All that crap they sell at Baybees-R-Us is superfluous. If anything it was a great excuse for friends and family not to buy us any extra junk, "we don't have room for it!" We were even washing cotton diapers at the marina/laundromat, a hassle but it worked out. I hope you have a washer/drier in unit, even without cloth diapers, kids create a lot of dirty clothes.

Once my son started climbing up the companionway we decided it was over, sold the boat and got a 1 bedroom apartment which felt huge! Now with two kids we rent a large 2bd townhouse/condo and it works pretty well, we just wish we had a small yard and more garage space for projects.

The rent it out option sounds appealing too. I'll bet the City of SJ would rather you rent it out (especially to your brother) than walk away and:
1) create a deficiency they have to try to collect
2) create an empty housing unit that hurts the HOA and property values
Hopefully bureaucratic pig-headed-ness wouldn't get in the way of them working with you.

Take a serious look at the option of walking away though. It seems very possible that we are headed down a deflationary-spiral/depression. Free rent for a few years and big lump of cash in the bank would be a major benefit. I think 5+ years down the line will be a much better time to buy anyway. Come up with a really good accounting of the full costs of selling (fees, commissions, etc) at different price points and extend out a spreadsheet to estimate your future financial situation under different scenarios. Heck, if the stock market craters like the Elliot waver's are saying, it may be the buy-low opportunity of a lifetime (if you have cash).