> Whats the issue with your home not being worth the debt you took on?
Good point. The problem would arise if I lost my job, had to broaden the cities I apply to jobs for and I had to sell my house to move to a new city.
Presumably, the market would contract forcing employers to downsize. My employer would downsize and I would get caught up in it. I would then have to choose to keep the house but limit my job prospects or cast a wider net by applying in other cities. At that point, I would have to realize a loss on my house, potentially tapping into my already constrained finances.
However; best case scenario I wouldn't lose my job and I get to weather a deleveraging in the house I just bought.
Last crash was before AirBnB that’s one. Second you could always rent the whole unit just to cover the cost of mortage. I seen friends houses going from 180,000 to 30,000 during crash, only to get back to 170,000 some 8 years later. So so long as you can get hired as McDonald burger flipper, you should be able to withstand next crisis, even if it chops off 80% of your home value.
Second you could always rent the whole unit just to cover the cost of mortage.
That’s not always possible. A great example is Vancouver right now. A 2 bedroom condo is around $600k. That’s almost $5000k when you include mortgage, insurance, property taxes and opportunity cost of your down payment.
If we enter an economic correction strong enough to drop housing prices by 20% nationwide, AirBnB activity will tank. Travel is a discretionary expense, and people cut back on those in a downturn.
If you need a frame of reference, check what happened to marriott during the 2008 crash (fell by almost 2/3).
Good point. The problem would arise if I lost my job, had to broaden the cities I apply to jobs for and I had to sell my house to move to a new city.
Presumably, the market would contract forcing employers to downsize. My employer would downsize and I would get caught up in it. I would then have to choose to keep the house but limit my job prospects or cast a wider net by applying in other cities. At that point, I would have to realize a loss on my house, potentially tapping into my already constrained finances.
However; best case scenario I wouldn't lose my job and I get to weather a deleveraging in the house I just bought.