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How Does One Recover?

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February 13, 2008 – Comments (1)

Calculated Risk is report on the declining market in Southern Califormia.  So sales are down 44% and price is back to levels of 3 years earlier...

Say you were the one entering the market at the high and found yourself 17.8% down, an average of $80k.

I worked it out once that every extra dollar I was paying back today saved me a dollar of interest in the future, I did that by doing an amortization schedule and keeping the payment the same and taking off a lump sum and then seeing how much less interest I'd pay.  This varies with length of the loan and interest rate, but I suppose it is a rule of thumb that I use, so chance are that $160k will have to be paid to pay back the extra $80k.

I've been $40k under in my home investment and it sure didn't feel good, and that was a lot of lifestyle denied, but $80k down in under a year?

So, median price there is still $415k.  How much lower does it go?

Calculated Risk has another reference showing prices back to levels 4 years ago... You so don't expect to be under 4 years after owning your home, but then, I was after 5-6 years of owning a place.  Consider the time value of the money and it is under.

1 Comments – Post Your Own

#1) On February 13, 2008 at 10:48 PM, Imperial1964 (98.31) wrote:

If you're $80k in the hole, you recover by walking away.  Pure and simple.

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