When I survey for rents, I always browse through Craigslist to see exactly what is out there. Wow! In higher grade neighborhoods of Los Angeles (i.e. Santa Monica), you can find a nicely appointed room out of someone's house for as little as 750 a month. All utilities included and fully furnished room in some instances. In middle grade neighborhoods, 500-600. I saw one room where the homeowner included everything from bedding to furniture and you just need to move in with a suitcase full of cloths and start living. In the lowest neighborhoods, 300-400!!! Now keep in mind, I have been tracking rents in the Los Angeles area for a great deal of time. In the mid-late 90s, you could not find a nice one-bedroom for anything less then $800. That was over ten years ago!!! Im wondering what new lows homeowners will be turning to next to save their homes. The smart ones are simply walking away and writing off their losses while the dumb ones do whatever they can to include rent to a stranger and turn their home into a boarding house.
Very interesting Port. The LA area is of interest to me although I do not live there. Are you a Los Angelean by chance. regards f9
How is is smart to get your home foreclosed on? I personally would do almost anything, short of turning to crime to keep my home. I think it's pretty sad and a little indicative of the state of our country that you are suggesting that "walking away" from your house is somehow higher ground than taking in a renter. Do you not have any personal pride?
Banks already took loses on it. It is 100% gain for the banks if home owner keeps paying mortgage. If one is 200K upside down on the house walking away in this situation is like making 200K instantly.
I have lived with roommates before in the distant past and could probably do it again if I was in my 20s. Quite honestly, having a roommate again would be a harrowing experience for myself. All my experiences with roommates have been bad memories and I think many readers of this thread can relate. I would not take personal pride in renting rooms out of my house to anyone. If I walked away from a house in California, then all they can do is mark up my credit report for 7 years. It would take just 3 years to re-establish credit. The foreclosure would go off the report in 7. That may seem like a lot of time for some, but I could be saving money and speculating with the extra cash during that time. Getting a foreclosure on your record is not that big of a deal. It all depends though... On a positive note, I have never seen such great deals for people in the rental market. If I was say 23-24, I would just rent a room out of a house for $500 and live high off the hog with the savings or simply just save and not worry too much. In turn, these rental rooms push down the rents for regular apartments too! You can now get a nice apartment in Pasadena, Sherman Oaks or Santa Monica for a lot cheaper then it was just a few years ago. Then again, Im not certain what jobs are left in places like Pasadena with Countrywide and Indymac laying off so many people. There used to be a lot of young people around here who turned into millionaires over the real estate market and working at places like IndyMac or New Century. Im not certain how much longer Indymac can have its doors open at this rate.
The Los Angeles (SoCal) area used to be easy money in regards to the real estate and mortgage financing market. So many young folks became very wealthy in a short time as a result. However, boom has now turned to bust. There are so many homes with signs up. All these are bank repos. These bank repos are the only ones selling right now because they are heavily discounted. Only problem is that most of these places have been sacked by the former owner and would probably need at least 20-30k in remodeling to turn the place into a livable house. Im not certain what will happen to this area, but I remember the 90s during the last fall. It took from about 1991 to 1997-1998 for folks to have broken even on their homes. 6 years is a long time. Im not certain what everyone is going to do around here now that those big financial companies are laying off nearly all of their workforce. Countrywide, Indymac and New Century used to be big names employing tens of thousands of people. It reminds me of the bay area during the tech boom. Companies like Excite had these huge buildings and everyone was well-paid. These well-paid people would generate a lot of business for local shops and businesses. Then one day it was over at Excite and the doors were shuddered at some point in 2001. The area went to pot real quick. Im sure that these houses on the street will become a screaming buy sometime in 2009-2010. That is when I plan on buying again... 2009 feels like a little early and so I would probably be more biased to buy in 2010. Im waiting until everyone is kicking, screaming and in the throws of mental depression...waiting until a few big name banks like Indymac go out of business. Usually when everyone is in total dispare is when its time to buy I sat down to dinner the other day at a birthday party where one young guy asked me when the credit crunch will be over. I shrugged my shoulders. This could go on for years, not months. Who knows when the issue will be flushed and its time not to worry. I told him, just go into the XLP and consumer staples for now Wise advice
What's wrong with running a boarding house? My grandfather died when my dad was very young, around 4 or 5, and my grandmother earned a living, and raised 3 children letting out rooms. She never rec'd any public assistance of any sort. Many could learn a thing or two from here game plan.
gracias Port, I was in LA for a while around Christmas and I was careful what I said because what I could see and what my Los Angelean amigos had to say were two entirely different things. I will be in LA for a month or two later in the year catching up with friends and I imagine the gap in our conversion will have closed. regards f9
What kind of person walks away when only 200k underwater? Seems self-defeating. Wreck your credit, incur a deficiency judgement (only if you have refinanced or taken a HELOC), displace yourself and your family? Thats messed up. Better to sell at current market and maybe have to kick in a few bucks to clean up your fucking mess. I can't believe the shit I read on ET.
IndyMac is going to make it through this housing crisis, trust me. By the way, over the past two years I rented a room out of a house in San Diego for $430 a month (plus my share of utilities) while I earned $40-45k a year. kept my living expenses low so that I could save, save, and save money for 1) going back to school to get that degree 2) having 23000 to trade with I wouldn't have been able to accomplish either with a $1500 apartment, LOL