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Real estate editor Maryann Haggerty and columnist Elizabeth Razzi respond to a question adapted from a recent online chat.
Q Upper Marlboro: We have about three foreclosures in our neighborhood of 63 homes and many, many renters. There are so many that we can't come up with the one-third of owners needed to make a quorum for the homeowners association meetings. A house similar to mine is being sold by the bank for $125,000 less than what I paid. I am seriously considering letting my townhouse go and buying a single-family home before my credit gets destroyed. This was supposed to be my starter house, but now it seems if I don't do something, I'll be stuck here for at least 15 years before I can sell it for what I bought it for. How are we to get out of this mess?
A E lizabeth Razzi: You're suffering the effects of other people's poor decisions and credit crises, and you're far from alone. The damage to your net worth and to your lifestyle are real, but panicking won't make it better. Take a deep breath, and take stock. Even if falling prices have wiped out all your equity, you won't realize that loss unless you actually sell. If you keep paying the mortgage and property taxes, you'll be okay, and your credit won't be harmed.
Maryann Haggerty: Nothing will hurt your credit as badly as walking away from your mortgage. And real estate markets are cyclical. Barring some unforeseen cataclysm, what's falling now will stabilize, even if it's impossible to predict when.
E.R.: While you live there, do what you can to support your community. Take the lead in setting up block parties, potlucks and cleanups of the common area. Organize neighbors to take turns mowing lawns at vacant homes. Get the renters involved. Participate in your association, and through it, demand that whoever owns the properties, whether absentee landlord or the bank, continues to pay the proper dues. Quality of life adds value to a neighborhood, which eventually will be reflected in dollars.
The next Real Estate Live chat will be at 1 p.m. Friday.
