The dark cloud that hung over the housing market in Phoenix is drifting away.
I should know. The townhouse I bought in 2005 was once $82,000 underwater. That means my home was worth a lot less than my mortgage. The mountain of debt left me confused and scared. It put a strain on my relationships.
But for the first time in years, as I watch Phoenix home prices surge again, those feelings have lifted just a bit.
My Father's Loan
This story about debt is complicated by the fact that my father, Pete O'Dowd Sr., originated my loan. Back in 2005, he drew up the loan docs that put me in a Central Phoenix townhouse with white linoleum floors and outdated florescent kitchen lighting. I had just started my first job as a newspaper reporter, making $13 an hour. The housing market was on fire, and it felt like if I didn't buy at that very moment, I would be forever priced out.
"I wish you would have calmed down a little," my dad told me. It's not normal to interview your father like this, so I was drinking a beer to ease my nerves when he said it. "You were like a pain in the neck."
The only mortgage he could put me in wouldn't fly these days. It was interest-only with an adjustable rate after 10 years. My old man drafted the papers and I signed for $115,000. Of course, you know what's coming next. A few years later, with the worst crisis in memory churning through the city's housing stock, my neighbors stopped paying their bills. The property went back to the bank, and it were sold at auction for what seemed like pennies. A few went for something like $30,000.
The community pools were drained and there was no money to fill them back up. I began to panic.
"No one could have predicted how far down we went," Pete Sr. said.
I asked my dad if he ever thought about my house and the loan attached to it as the market began its nosedive. I asked him if he worried about me defaulting on the mortgage. I'd been wondering this for years.
"Oh, yeah," he said. "I would have been horrified. Luckily you didn't. It would have been a professional embarrassment for me."
Though I had never heard him say that, part of me had known all along. The fear of disappointing my dad was the biggest reason I didn't walk away.
Underwater, But Not Alone
Let's be honest. Lots of people in Phoenix are still dealing with the side effects of negative equity. At the peak of the crisis in 2009, Core Logic reported that almost 60 percent of all mortgages in Metro Phoenix were underwater. Now that number is down to about 40 percent.
"There was one point at the low that I realized pretty much everyone I had sold a home to in my entire career was underwater," said Doug Nystrom, the realtor who helped find my house. "My entire client base I had built was more or less gone, so it was hard to see the light at the end of the tunnel at that point."
Doug works with his wife, Becca. They returned to my house for the first time in eight years, and as we sat at the kitchen table Becca tried to make sense of the pain her clients felt during the worst of the crisis.
"You begin to second guess. Could I have protected my clients more? But the reality is, it's cyclical," she said.
By now the market has changed again. Since late 2011, median home prices in Phoenix have surged 35 percent, according to Arizona State University's W.P. Carey School of Business. Becca listed a house in August that got 20 offers. The property sold for $15,000 in cash above the asking price. Foreclosures in Phoenix have dropped off, so cheap housing is in short supply. That's driving prices up, and Becca said people forced into a short sale years ago are eager to buy again. So yes, it's cyclical. The way she said it sounded familiar: "People are afraid if they don't buy now, they're going to miss out on getting a good deal."
Becca's visit yielded even better news. She gave me a document that showed a unit in my complex sold in December for $85,000. That means in another year or so I may be out from underneath my mortgage.
'The Complex Has Come to Life'
I was talking to my wife, Katelyn Parady, about this as we made dinner recently. The onions sizzled in a kitchen that has finally been remodeled.
"If that had been me, there's no way in hell I would have bought a house," Katelyn said.
Clearly, she did not grow up in a family that thought about real estate the way mine did. "I wouldn't have even bought a car," she said.
In fact, when Katelyn moved in three years ago, I had this feeling she resented the place because the mortgage had us trapped. And come to find out, she did hate it.
"And you must have known that," she told me. "I don't think I understood why that was so extraordinarily stressful for you."
When I heard Katelyn's complaints in those early days of our relatoinship, the resentment of our home began to build. Every stain on the carpet stirred a sense of dread. Every quirk of aging 1960s complex, which was starting to feel abandoned, gave me anxiety. Even Katelyn felt it. That first summer she worked alone from home, and it became quickly apparent that she really was alone. She said: "On our strip, it was me and maybe one or two other people out of eight units and it was really creepy."
But my stress over the property shrinks a little each day. I can just feel things are turning around. We've paid down the mortgage by $21,000. We've refinanced, through Pete Sr., and this time our interest rate is low, and locked in for the long term. This house is not a dream come true. But the pools have water again, and it's starting to feel like home.
Katelyn put the transformation this way: "The whole complex has really come to life. We have neighbors and there are kids who play outside and the units are full again. That brings me a lot of happiness."
My wife, my dad and my realtors have all tried to make this point. They say if I've been lucky enough to hang onto a house through all this, I shouldn't worry so much about what it's worth.
Just live in it.