In 2007, I sold my condo and we bought the house of our dreams. We wanted something that we would be able to start a family in, and the house has served us very well in that regard.
The condo I sold was my first real place, and I left it with great sadness. Still, I knew that while it was a good bachelor pad, it wasn’t any place to start a family.
The condo was built around 1990. I think the ‘original’ price was in the neighborhood of $70,000 or thereabouts. It sold in the early 1990’s for around $80-85k if memory serves.
I bought it in the spring of 1999. It was listed for $104,900 and I put a full price offer. There was a second offer, equal to mine, but the seller chose my offer because I was not moving out of another house, therefore I didn’t have another sale in the way of closing.
Everything went without a hitch and I took ownership in March. Within the first year, I replaced all of the carpeting and re-painted virtually every room.
In 2003, I re-financed from a 30-year 6.875% mortgage to a 15-year 5.25% mortgage. These rates look high compared to today, but both at the time were pretty good rates.
Based on similar units sold, the condo appreciated pretty well, though nowhere near the crazy levels that were seen elsewhere. I figure at its peak value around 2005 or 2006, it probably could have fetched $140,000. It was an end unit, pretty well maintained, and the neighbors were, for the most part, quiet and courteous.
The market had already started to slip, at least in the Detroit area. Sales had pretty much come to a standstill, so when I met with the real estate agent to help me sell the unit (the same agent who had represented me as a buyer back in 1999), he set the expectation that it could be awhile. This was in the winter of 2007. He suggested I paint again and do a few other things, which I did.
We listed the condo for $135,000. Within a few days, another unit went for sale in my building around $132,000, so even though it had only been a few days, we lowered the price to match.
People looked but things were slow. It could go a few days between viewings.
After about a month and a half, the realtor indicated that there seemed to be a pretty promising looker. Sure enough, it was on a Saturday that he told me that we’d received an offer.
At the time, I felt the offer was far below and was actually a little insulted. Still, after talking it over with my realtor, he advised that I accept it. The offer was for around $122,000. I asked him to counter with $124,900, which he did, and it was accepted. I would also have to pay around $5,000 at closing, so it was really around $120,000.
This still represented quite a bit of equity, but after seeing the values fall around $20k from it’s peak, I was disappointed. You have to realize that I had no idea of what was really about to come. I felt we ‘made it up’ on the purchase of our house, as we got the house at $50k less than what the owners had paid for it in 2003 (which I thought was the ‘bottom’, though it went down another $50k or more after we bought it…but back to the condo).
The day of the scheduled closing came and we were told there was a delay. This was a nightmare for us because we were doing both closings on the same day, selling my condo and buying our house. We were nervous about losing the house, but we had no choice to delay the week or so that the buyer’s lender (Countrywide, if that tells you anything) needed.
The new closing date came and another wrinkle came up. Turns out that there were some limitations on what we could ‘give back’ to the buyer at closing as part of the transaction. I want to say it was limited to around $1,000. My realtor had been in contact with the buyer and asked that we cut her a check during the closing for the difference.
I knew that if I said no, she could just cancel the sale. But, I also knew that we had leverage, so I offered to split the difference.
She accepted, so we ended up a couple of thousand ahead of where we had planned. Not too bad.
At closing, I was a little horrified to find out that she would be financing the entire transaction, with a primary and second mortgage taken at the same time, both by Countrywide. We all know how that turned out, but at the time, if you banked on the values going back up, this didn’t seem so bad.
As it so happens, it was within a couple of weeks of closing that Countrywide problems really began to emerge, and they stopped those type of loans. So, we beat it under the buzzer.
After seeing the values continue to drop, I was curious as to what would happen with the condo. I noted in 2008 that the condo was on the market, though it was for rent. By that time, the buyer was definitely underwater. I found out from an old neighbor that I kept in contact with, that she ended up moving out of state with an ex-boyfriend.
Tax records for that city are kept online and are available for public viewing. The summer and winter taxes were paid a couple of times, and then they weren’t.
By this time, values had dropped even more, and I figured that she was giving up the condo.
Over the summer, we had dinner nearby and I wanted to drive by. The place was definitely in foreclosure as the notices that are common were posted in the windows. Looking in, the place looked pretty good. The neighbor that I had mentioned earlier happened to see us, and said that, yes, she had given it up, but that the bank had just put it back on the market.
So I searched and found the listing, and I was floored when I saw what the asking price was:
In 2011, that was 30% lower than it had originally sold for twenty one years prior. And while it was dated (appliances were all original, linoleum and fixtures were all original), it wasn’t destroyed like other foreclosures, all the wiring and plumbing were intact. From the listing, you could tell that even the washer and dryer that I had to leave as part of the sale were still there.
It ended up selling pretty quick. For more than the asking price.
How much more?
That’s right, the property tax records showed that it sold for $50,000.
I simply couldn’t believe it.
I knew condo owners took a bigger hit. But, not only was the eventual decline more than what our house went down ($75k for the condo vs. $50k for our house), the percentage differeace was huge (62% for the condo, where it was less than a third of that for the house).
As much as I hated seeing our house decline in value, it will take a lot longer for the condo to recover value than it will for the house, at least in term of percentage.
Not only that, but you have to figure at those deflated prices, that you might have had people buying condos that might not otherwise be able to afford them, and that they might not take as good of care of them given the low prices. This could further keep the prices down.
That was shocking to me.
What have the trends been in terms of houses vs. condos where you live?