The old standard of owning a property for at least 7 years to make a profit had faded. The new standard seemed to be that anyone with any smarts (just smarts, since during the peak you did not even need money) invested in property. Housing prices only go up. They are not making any more land. No job, no assets, no down payment? No problem! There was always a mortgage broker that could find a loan out there for you.
These were the bubble standards. They made real estate seem like the best investment out there. And for a short time it was true. Those that got in during the big build-up and got out before the great fall did great. Just like with the previous dot com bubble. But the rest of us got stuck holding worthless pets.com stocks or the real estate equivalent.
While the money made was great, the losses are even bigger. Between draining life savings and ruining of credit and families, we will be cleaning up the residue from the bubble for a long, long time. Which brings us to todays example of someone who jumped in just as the bubble was falling and lost a heft amount of their own savings. Lets take a look -
Here is the property -
The stainless steel with what looks like granite countertops -
And the family room -
Here is the property info -
And here are the financials -
- The property was purchased in May 2006 for $550,000.
- The first mortgage on the same day of purchase was for $440,000 with World Savings Bank.
- The property is currently for sale with a realtor for $539,900.
The $42,494 loss equates to losing just over $1400 per month. Add in insurance, taxes, and utilities plus other closing expenses and this owner would have done better just renting. Plus his money and credit would not be tied up with this property albatross.
We wonder if there will be a backlash against ownership society ideology from the next generation? If not, there should be.