What’s Your Plan B?
Readers suggested a topic on housing options. “Weekend topic suggestion: where should I move to after my wife finishes graduate school? Maybe a smallish type town in N.Georgia? I can’t wrap my mind around flat, hot, and no fall foliage for the rest of my life. I can’t imagine my kids missing out on these things, too. My original idea of being a teacher in Florida and traveling a lot has not panned out.”
“So, that’s my question for everybody: what’s your plan B now that the bubble is going sideways?”
A reply, “Unfortunately, I don’t have much of a Plan B as I bought a house and have a job I can’t give up. Even if I go underwater I’ll probably keep making payments as long as I keep my job. At this point I’m counting on long-term inflation and the job security of the US government. Neither has failed yet, over the longish term.”
“If you want seasons and rolling hills, the upper South/lower Midwest still has good land, adequate rainfall, and cheap housing. Outskirts of Appalachia like Cincinnati/Columbus, Greensboro or Charlotte, Southern Illinois, Lexington. College towns like Blacksburg VA or Knoxville… even south Jersey and Eastern Shore of Maryland are worth a look.”
“A lot will depend on how marketable the two of you are for jobs. Can you find a medium-sized city where you believe at least one of you can always bring in an income? Can you adjust your living to where you can live long-term on one income; i.e. if you both work it’s gravy but if one is laid off you can get by on one income? Would you be averse to living in a trailer park if you didn’t want to throw money away on rent but didn’t want to lose much if you need to move fast?”
“Stay away from DC. I heard that there are plenty of educated but underemployed spouses available to snap up skilled jobs, and every college offers night-class degrees to people hoping to advancing. It’s a high-octane metropolis where the name of the game is over-educated workers, over-scheduled kids, and overloaded arterial roads full of cars commuting to night classes, airports, jobs in the inner burbs, soccer games, and weekend warrior activities either down at the museums or out in the natural areas. I think you’d be better off in a less-educated area where your education makes you more unique.”
And another, “If the plan is for you to both work outside the home, then you need to carefully assess where both of your best opportunities lie, then find the geographic intersection. Ideally, one of you has a relatively broad range of geographic options, that will accommodate the spouse with more constrained job location choices. Such is the case in our household.”
“More challenging is the case where both of you have limited geographic options. A fellow who sat by me on the plane two months back is a good case in point: His wife is a professor at a reputable university in the Midwest, and he just landed a software engineering job at Amazon.com HQ. Either they have to live half a country apart, or else she has to find a professorship at a PNW university. Good luck!”
The Puget Sound Business Journal. “The condo my husband and I own in Maine (where we lived before moving to Seattle) is underwater. We are trying to get the bank to agree to a short sale, but so far we’ve been rejected. More than half of homeowners under 40 are underwater, which has serious implications for a generation of Americans. When I shared my story, I heard from people all over the country with similar experiences. Here are a few of their stories, reprinted with their permission.”
“Where’s the consumer bailout? My son purchased a house in 2006 in Massachusetts with the thought that it would be a starter home, one where they would build a little equity and then move in three to five years. It cost $254,000 and is now worth $180,000. Thank goodness, they didn’t listen to the mortgage broker who tried to lend them $1 million, with balloon terms that would see their payments rise at the three-year mark, claiming if they didn’t have the money to pay that mortgage they could always sell the place and make a few bucks over what they paid for the place.”
“When I hear the housing mess was caused by people who shouldn’t have bought houses, I could just scream. The housing crisis was caused by people like the broker who wanted to give my son a million-dollar mortgage. The financial wizards saw no need to be concerned about putting that type of money in the housing market because they never thought housing prices would fall. The seriousness of the damage being done to the economy is completely missed by certain politicians today and hence I don’t know if there’s anything that will cause a major change in the way people like you and my son will get out from under a horrible situation that none of you created. Without a ‘bailout’ for consumers like what went to the banks, this economy is never going to start really growing again.”
“Can’t even refinance. Where are the advocates for the consumers who are paying their bills on time and trying to do the right thing by not going into foreclosure? I am attempting to refinance. Last week, a professional appraiser valued my house at 40 percent less than when I bought it for five years ago! Being in North Georgia, I expected some drop in value. I did not expect the shock I received.”
“Refinancing itself has been difficult because the original bank (where I work, no less) saddled me with primary mortgage insurance, even though the appraisal at the time of sale was much more than the 20 percent financed. Fortunately, the current lien holder (the mortgage was later sold) is looking into refinancing under HARP (the federal Home Affordable Refinance Program). Your article clearly reflects the burdens of an underwater mortgage — the uncertainties of retirement (I am 50 years old), the feelings of entrapment and helplessness, and a disheartened view of the future.”
“Not paying my mortgage. I am in a similar situation with a home in Las Vegas. My wife and I lived there for nearly five years, in our home for which we paid $280,000. In December 2011, I accepted a job in San Francisco, and, after consulting attorneys, real estate agents and Bank of America, I was told either short sale or bankruptcy were my only options. Well, Bank of America wouldn’t … lower my interest rate to current market rates or negotiate a lower principal balance until I stopped paying the mortgage. I offered to keep the home and continue payments but they refused. Subsequently, our house was appraised at $126,000. Here I am almost 10 months later, and due to delays on Bank of America’s end (including claims that they lost my paperwork), still owning a home in Las Vegas. Mind you, I haven’t made a payment since January and they haven’t even threatened a foreclosure!”
“The ‘lost decade’. I read your article twice now and have already sent it around to a number of colleagues and industry leaders. I feel your pain and appreciate your willingness to use your platform to tell your personal story. As someone under 40 representing many others under 40, the long-term ramifications of the ‘lost decade’ are sweeping to say the least. Speaking with potential clients, 25 and under is particularly telling because purchasing isn’t even on many of their radars right now.”
“Not your parents’ home market. You’re beginning to understand what I tried to contact our senators here in Washington state about (four years ago) during the banking crisis, as they carelessly chose to pass the bailout package. Someone has to take the fall for the bailout, the bad banks, the derivatives, etc., sooner or later. And that’s you. The U.S. taxpayer and the millions like you. You are going to be literally hit from all sides.”
“You’re realizing what the big boys (government, the Fed, etc) don’t want you to fathom. They rely on you following what your parents told you. It’s imperative for them that you do. You are now personally ahead of the curve, and probably thinking within the new framework that 95 percent of Americans are either unable, or unwilling, to believe.”
