RadioBDC Logo
Seether | Veruca Salt Listen Live
 
 
< Back to front page Text size +

What would Markus do? A love story complicated by real estate

Posted by Rona Fischman February 9, 2010 01:57 PM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

This is a first-hand story sent to me by a reader of this blog. So these are facts, as told by the woman we’re calling Mary:

This is the story of a man we’ll call John. In 2002, John was recruited for a job about an hour and a half outside of Boston. In 2003, John, tired of the three-hour commute, gave up his Boston digs and bought a house near the new job. In 2004, fate was not kind to John. Corporate scandal rocked his company leading to the shuttering of most of its offices, including where John worked.
John found a new job back in Boston, and started commuting (in the other direction.) It’s still an hour and half, each way.

This is also the story of a lady we’ll call Mary. John and Mary fell in love and got married in 2006. They set up home in Mary’s place, which is in Boston. John’s far-away home is rented. Mary, you see, is a city girl -- that’s capital-C, CITY! She also worked too long a day to accommodate a three-hour commute.

As lovers often do, in 2007 they had a baby. Mary quit her job. Now the family currently lives in -- let’s say, “wedges themselves into” -- a rented house in Boston.

Should they stay in their too-small city dwelling? Should they sell the rural place? Or should they continue to rent it out? Should they move to the rural house?

Now that Mary isn’t working, she could forsake her city ways and move an hour and a half from her beloved Boston. Then John’s commute will make it so he doesn’t see his son all week; instead he’ll be seeing that three-hour commute, again. Are they better off living in their depreciating asset far out of Boston in a shaky job environment? Should they uproot all of the family's ties to Boston, their friends, activities, doctors... How will their lives together be if Mary is feeling like she is living the story line from Green Acres?

What would Markus do? Or Hung Wang? or Lance? Or Charles?

Here’s the money details:
In 2005, John rented out his house in Town X after an unsuccessful attempt to sell it. The rent (which is at or even slightly above market) is $600 less than the monthly mortgage payment. So, John is losing over $7000 per year on the house.
The current renters have expressed an interest in buying the house. It is now $60K to $90K underwater. The renters, however, are not in a hurry to buy and could continue renting there indefinitely.
Unlike many other homeowners, Mary and John actually have sufficient liquidity to cover their equity loss at closing. That would, however, drain their rainy day fund and non-retirement savings. Due to this liquidity and John's decent (but not lavish) salary, a short sale is improbable.

What would Markus do? Or Hung Wang? or Lance? Or Charles?

What is the right option for this young family? Should they accept a $7000 annual drain in hopes of a housing recovery? Should they cut their losses in one foul and painful closing? Should they disrupt their life together to save money by living in their depreciating asset? Should they wreck their credit and turn in their keys?

This question is for all of the readers, not just the regular, outspoken ones! John and Mary are not the only young couple facing this dilemma. Are you facing it too?

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

Latest interest rates

SPONSORED
RE by the Numbers
Mortgage Q&A: First Time Home Buyer in MA
Thinking about buying a home? Are you a first time home buyer? Or an owner that hasn’t been through the mortgage or buying process in...
archives