Lately we have heard from friends who bought at the peak of the real estate market and now find themselves woefully upside-down on mortgages for properties that no longer suit their needs. This can be especially challenging for young families, and while Apartment Therapy is fiercely devoted to working with what you have and maximizing the potential of any given space, we understand that this can pose real challenges. Privacy and sleep issues, school districts, navigating walk-ups that are easy solo but brutal with babies in tow, these are just a few legitimate concerns among many. What's a homeowner to do?
The situation is sobering. Many sellers are bringing significant money to the closing table while others are opting for short sales. So what are the options, especially for young families?
- Work with what you have. We love this idea best in theory, but in practice it can be a mixed bag. We always get excited about thoughtful and creative use of space, and we have seen many families put up drywall or repurpose closets, hallways and other adaptable spaces. Bigger structural changes might mean sinking more cash into a home, but if it could make the house work in the long term then single family homeowners might consider putting in dormers or building an addition.
- Lose money on the sale but make up for it on the buy. If you can afford to sell and move to a place that's a better fit for you then take comfort in the knowledge that you will get a great deal on the buy side.
- Become a landlord. As cynical as it sounds, all of those people whose homes have gone to short sale or foreclosure need to live somewhere, so the rental market is booming. Renting your current home opens up the possibility of buying another if you qualify for a second mortgage or renting a place that better suits your needs.
- Look into a short sale and become a renter. For families who thought that they were crossing the threshold into homeownerville this can be a bitter pill, but it is a viable option for some. A short sale will lower credit scores for several years, impeding the seller's ability to purchase another home, but in a few years they can rebuild credit and save up while renting.
I realize that this can be a heated topic, but I wrote this post because I have several friends facing these difficult choices. I admire people who can make any space work but respect that each family has their own needs. When Maxwell launched AT I was single and subleasing a studio apartment in Berlin, just me and my little dog. It was a great fit at the time, but 2004 me could have never anticipated that 2011 me would have a family of five with both parents working from home (same little dog). I don't know what I would do if I was holding a mortgage on any of the truly small spaces that I inhabited before starting my family.
We want to know how readers are weathering and navigating the housing market. If you own a place that your family has outgrown what are you doing? Are the renters among us looking to take advantage of low housing prices and interest rates, or will you stick with renting?
(Image by Flickr member Bethan Phillips licensed for use under Creative Commons)