I remember the day in 2004 when my wife and I bought our home — the one Wachovia will soon hold title to either via a deed in lieu deal or through foreclosure — and thinking that, at $146,000, it was too expensive. But I also knew that if we didn’t buy then, every month we delayed meant we’d pay more because real estate prices would keep rising faster than our ability to save. I knew this because lots and lots of top economic experts told me so. I was more than a little leery of their reasoning, but I still figured paying less than $150K for an okay house in a commercial zone, and spending $40K or so fixing it up was a safe bet. I was wrong. And so were all the experts.

We didn’t buy this place as an investment. We bought it to live in, and we chose the Village of the Arts because we knew and liked many people who lived here, and also because my wife wanted to open a small gallery where she’d sell her own paintings and other artwork, along with imported crafts and jewelry. Yes, we would be half a mile out of the Village of the Arts mainstream, which centers on the corner of 12th St. and 12th Ave. West, but we had looked at the city’s 2003 plan for the Village and how it would bring new sidewalks and other Village of the Arts amenities (including signage on nearby major roads) to this area.

Unfortunately, along about 2005 the city changed its plans for the small neighborhood bounded by 13th Ave. W., 17th Ave. W., 9th St. W., and 14th St. W. The only “improvement” they decided to pursue around here, besides a few low-budget sidewalk renovations, was building a “Homeless Service Center” near the corner of 17th Ave. W. and 9th St. W.

If you want to kill a neighborhood, bringing in a large indigent population is a great way to do it.

Still, renovated houses in this area were being put on the market with asking prices between $180,000 and $250,000. The only thing was, nobody bought them. Most of them are still for sale or have been turned into rentals “while we wait for the market to come back,” as one speculator explained to me.

So here we were, in a neighborhood whose prospects had dimmed, paying about $1200 per month on a mortgage plus property taxes plus homeowners insurance — and getting homeowners insurance in Florida on a house built in 1950 is an expensive and irritating proposition all by itself.

One not-funny thing about the homeowners insurance situation here is that we were assured that taking “wind mitigation” measures would substantially lower our insurance bill. So we spent thousands of dollars constructing shutters to cover our windows in case of a hurricane, along with structural repairs insurance agents assured us would help save us enough money on our insurance that they’d pay for themselves after just a few years of lowered premiums. But what really happened is that our homeowners insurance carrier canceled us despite our expensive efforts to qualify for discounts, and we were thrown on the mercy of state-owned Citizens Insurance. Instead of saving money, our insurance bill went up by over $100 a month.

As is the case with many older homes, one round of renovations was not enough. This house still needs another $30,000 or so spent on it for kitchen and bathroom updates in order to attract middle-class homebuyers. But in today’s market that level of new investment seems unwise. According to comps — recent sales prices for similar properties in this part of town — our house is now worth barely over $100,000. And maybe it’s not worth even that much. We have it listed with a Realtor who specializes in short sales, and we’ll see.

We might have hung on here and hoped the city would change its mind about fixing up this part of town, but my job loss meant we would have to pay that mortgage purely out of our small savings until or unless I found another job or managed to build up our little video business to the point where it would support us. As it is, I see our prospects are dim once we include an $848 monthly health insurance premium in our budget. Basically, if we pay for health insurance <i>and</i> try to keep up with our mortgage, we will go broke unless some sort of major miracle happens.

So we’re giving up our home and losing everything we’ve invested in it. Our new home is a small house trailer which we will own free and clear. I’m sure Wachovia — our mortgage holder — will be angry that we invested our precious cash in a new place instead of using it to pay on our mortgage. Sorry, but staving off an inevitable foreclosure for another year or two doesn’t seem like a wise move, especially since Wachovia (now owned by Wells Fargo) is getting billions in government bailout money, and we aren’t.

We didn’t misuse credit. We obtained a 30 year fixed-rate mortgage at a reasonable interest rate. We have a small second mortgage, really a private loan, from a relative who lives with us, that we poured into renovations along with our own money.

But no job means we can no longer afford this house, even though it is a very modest place by modern middle-class housing standards.

If I had lost my job but housing prices around here hadn’t dropped so radically, we’d be fine. We’d simply sell the place for more than we owed on it. Or if housing prices had dropped but I hadn’t lost my job, we’d be able to make payments and wait out the current real estate debacle.

Sadly, real estate prices here didn’t stabilize or even go down just a little, but have dropped by 40% or so over the last two years, and may still be going down.

At the time we bought, and even a year or two later, “experts” were still convinced that Florida real estate would keep going up because millions of baby boomers were nearing retirement age and would want to move here, and maybe we’d have a small and temporary market “correction” but not to worry; the long-term trend was up, up, up.

The experts were wrong. We — and everyone else who listened to them — were wrong, too.

And it now looks like those millions of baby boomers aren’t going to be able to afford to retire, and even if they can they won’t be able to sell their houses “up north” for enough to buy into the upscale suburban communities that have covered former fields and groves all over this area.

Maybe some of those baby boomers will still want to move to Florida. If so, I suspect a lot of them will end up in low-maintenance, sub-$50,000 house trailers like the one we’re moving to.

Fine with me.

In fact, let me be the first to say, “Welcome, new neighbor.”

This entry was posted on Sunday, January 4th, 2009 at 12:17 pm and is filed under Bradenton/local, Business. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.