Monday, January 26, 2009

News

Well, I said I'd probably have some big news today. I do.

We're selling the land in Delaware. We won't be building a house on Hopkins Prong.

The year 2008 was rough on a lot of people, Steve and me included. It began early, when we learned that Steve's company was reneging on policies in place when he was hired but changed without notice: his pension would be drastically reduced because of California state retirement programs they opted out of. We had no recourse, these programs were not part of any employment contract, just perks the company decided it could no longer afford.

OK. We could still make it on the new income, reduced as it would be. And we still had this little Arlington gold mine we're living in. We own it free and clear; a second mortgage against it was paying for the land in Delaware, but selling the house would clear that and build a dream house as well. If we had to take a little loan to make it work, maybe $50K, that would be OK. We continued with our plans and enjoyed our summer weekends in the trailer.

Then came the real estate crisis. DC and its close-in suburbs have taken hits with the rest of the country, but not as big. Well, at least in some places. It so happens in our Zip code, however, 50% of home sales over the past 12 months have been foreclosures. Fifty percent! Home appraisals are not supposed to be influenced by a nearby foreclosure or two, but at that rate, all home values are affected.

We were starting to sense clouds on the horizon but had heard that Arlington homes would lose only 2% of their assessed value "on average." We could live with that. But we turned out to be above average and lost 10%--a distinction we could definitely have lived without. (No, county assessments are not the be-all and end-all in pricing a house. But they play a role. Banks look at them when deciding on approving a loan. Your price can't be too far afield.) The new numbers made it clear that after paying the $330K second mortgage, we wouldn't be able to build a house we'd want to spend the rest of our lives in, and at that point, that beautiful scrap of land whose picture you see at the top of the page became a liability. Paying for it became the obstacle to building on it. As much as we love everything about the place, the debt was no longer a manageable inconvenience, but a monster. In order to do anything at all with the profit from this house, we would have to retire that second mortgage, and the only way to do that was to sell the land. But that had potential problems, too.

The prospects for getting what we needed for the land were by no means bright; its value has diminished by one-third since we purchased it. We knew that selling it on the open market would be useless, but we had one possible place to turn. Our neighbor, whose land adjoins ours, had always wanted our parcel. In fact, just before we made our purchase in 2004, he had made a cash offer to the previous owner. The owner accepted--until his daughter-in-law, a real estate agent, talked him into putting it on the open market. He did, for a few dollars more, and we bought it at that higher price. (We of course had no idea of these dealings at the time.) Our neighbor was disappointed, to say the least, and told us repeatedly over the years that if "anything ever happened," and we decided we wanted to sell, we should go to him first. We kept that in the back of our minds, but never really believed we'd have to take him up on his offers, and they gradually subsided as our building plans firmed up and we shared them with him. He seemed to be resigned to never having the land; we had no idea if he was still interested, or what he would offer if he was.

Well. He offered us $300,000. He originally said he had $280,000 in cash and didn't want to go into any more debt but then, as he spoke and we merely listened, he talked himself up. I was flabbergasted. This was what's called grace, an unexpected, undeserved gift. I'd say it was from heaven if I believed in such a place. We will never be able to thank that dear man enough.

Still, all is not roses here at the moment. Steve is still dealing with the shock of losing this dream. He is, after all, the one who has been absorbing sucker punches for over a year: the loss of a good pension and then a forced retirement because of the loss of his job. When the job ends, so will his medical insurance, except for COBRA, which is prohibitively expensive. If our dear Barack doesn't change the rules and allow federal retirees to include domestic partners in their health coverage, Steve will have to get some kind of job just for insurance, but he can't think about that now. He's working hard at the office at a job about to end, and then working hard here at home, too. From his standpoint, the future doesn't look very bright, and he is depressed. I can only pray that soon he will be able to see the silver lining that I do, which is:

In about two weeks we will be clearing the better part of our huge debt. We hope to be able to restructure the remainder to improve our cash flow as Steve's job ends in June and we begin to live at about half our current income. The plan, at least now, is to go ahead and put the house on the market and see what the offers are. If they're high enough, we'll proceed, take full profit, and start looking for new places. If we deem the offers too low, we can take a breather from all this and stick around for another year or so to see if conditions improve. We feel like Delaware residents by now and would love to stay there, but we're open to anyplace that has nice land or nice homes on the waterfront that we can afford. Stay tuned.

16 comments:

Mim said...

Wow Ralph.
That is a lot of change, and your beloved lot and all with the beautiful views.
Oh my is all I can say.
But now having no jobs between us here and suddenly paying our own insurance...I can't imagine how it will feel for the two of you, due to partners rules,etc vs. married persons.
And yes a very reduced income a big challenge.
I want to reread what you wrote but had to write at first read.
What a wknd you had.
And yes grace came with $$$$$ this time in that the neighbor could pay you.
Mim

Ralph said...

Hi, Mim. Yeah, things aren't so hot right now, but what goes down has to come back up, so there's always hope. One of the alternative places we'll be looking at is the "Inner Banks" of North Carolina, on the sounds between the mainland and the barrier islands. We have to keep looking at this at the opportunity it really is, not a setback.....

Thanks for checking in.

Peewit said...

It's nice to see that you remain optimistic and I hope that's enough to keep Steve going.

Certainly here in the UK the real estate market is in a similar tailspin. My wife would love to move to a bigger place but even though we have no mortgage the value of our house has decreased 20% making it even harder to trade up becuse although the larger houses have gone down in price they have only gone down between 5 and 10% and it was always going to be a stetch for us to make up the differential between the £350,000 we would sell this for and the £600,000 we would need for the type of house we would like. (£1 =$1.39 on today's rates. Sorry I 've had a long day at work and can't do the Math at this time of the evening here!)

Any way "chin up" as they say over here in Blighty. I'm sure you will find the retirement home of your dreams and I intend to stay tuned to the ongoing story

Ralph said...

Thanks, Peewit. It appears you know exactly of what I speak--declining values coupled with debt attached to the previous (higher) values. Pounds, euros, dollars, it puts us all in the same bind. Are we parties to our own despair or merely victims? I suspect a bit of both.

Linda - SE PA said...

Ralph,
Whew... what a read! First, I am so sorry that Delaware home is off the table. Yet, what a silver lining that you will be able to sell it.

I can only imagine how Steve feels. I remember being out as a breadwinner and now a complete turnaround as "the one at home". It is a challenge at times like this to be in either the drivers seat or the passengers seat. I imagine, that for you also, this has been a lot to absorb and deal with. Closure takes time and building up excitement for a new project takes its course as the first spark of interest or practical reality starts to form itself. Hang in there - that goes for you and Steve - something will come together in its "right time".

I know what you speak of when you say you feel at home in Delaware - I have the same level of comfort when in New Jersey. I, had to, give up the dream also, as I missed the small window that was open at the time. It takes time for new alternatives to become warm to a vision that has dissipated.

Nan said...

Talk about some days of transition. I can only imagine how disappointed you and Steve are, but I am certainly thankful your neighbor still wanted to buy the land, and how. I agree with the silver-lining thought. Keep your optimism!!! Thinking of you.

Ralph said...

Hi, Linda, and thanks. For some reason, I tend to see the handwriting on the wall in these situations before Steve does--something in life taught me to anticipate things, hope for the best but always be prepared for less. I'm ready to move on. He's still reeling, but I can sense a gradual thaw....

Ralph said...

Nan, I'm so glad yo9u gave me that "every day is a day of transition" tag. It makes whatever happens here appropriate! Thanks for your thoughts--life goes on and the only way is up....

Mary Godwin said...

Here is all kinds of love for you and Steve both. ... thoughts are whirling around in my head, and the only one that gets coherence is that had the adventure not begun, we would not have you here at "Days of Transition." ...proof that good things come from unexpected turns.

What others call optimism here, I find in the notion of faith. I am remember you, Ralph. -mg

Ralph said...

Mary, thank you so much for this warm message. You're right, had this whole house venture never begun, I'd have had no over-arching theme and may not have started this. And now I can't stop!

Optimism, faith, hope--they all boil down to the same thing, I guess: a reason to go on. We never know what may happen, but it will, for sure....

Nan said...

Hi Ralph,
I can see the masthead and profile photos when I view your blog via Firefox - but not from IE. However, I can see my photos on my blog on IE. That is strange. And those photos disappeared yesterday after I had commented on your post. They were there when I first read the post, but gone when I checked back. So strange.

Ralph said...

Nan, I can hear Twilight Zone music....

Zoey and Me said...

What a sad story. I wonder if that is what we will learn over time with more and more people adjusting to the new economy. I would never have believed that one President could have screwed up so much and got away with it. But here we are. I'm even taking on part time work to make ends meet the real estate market is that bad.
Bummer.

Ralph said...

Sorry to hear how this thing is affecting you, Z&M, but not surprised, I guess. Much as I'd love to blame it all on just one man, I can't, even though his name will be on it through history. I think the seeds were planted long before the Bushes came into office, we were all blinded by our own greed and the seeming inevitability of easy money and expanding values forever. In spite of history's lessons, all any of us really know is what we're living through at the moment. As you say, we're adjusting. We have to. Despite the current pain, that's a good thing.

Eclecticity said...

May many things turn around for you guys. And us guys too! And everybody else. Hell. We all need turnarounds these days!

Sorry to hear about your loss friend.

E.

Ralph said...

Thanks, E. Read for some balance, read today's (1/27) post....