Isn't this illegal? Don't they have to say "Advertisement" on this somewhere?
Plus encouraging renters to buy now, post-peak, is morally wrong I believe. But then again, mortgage bankers really don't have morals, do they?
Inspiring 10 million people over the next three years to build wealth through homeownership -- that's what I aim to do with The Great American Homeowner Challenge™. This is a massive new financial literacy program that Wells Fargo Home Mortgage and I will be launching next month, in conjunction with the publication of my new book, "The Automatic Millionaire Homeowner".
If you're a renter, this program is meant to give you the motivation as well as the tools to make the dream of homeownership a reality. If you already own a home, it will teach you how to make it the foundation on which a lifetime of financial security can be built.
In the next few weeks, we will be launching a special new Web site with Yahoo! that will share even more about "The Automatic Millionaire Homeowner" and The Great American Homeowner Challenge. Together, the book and the program aim to demystify the process of home buying and provide you with a common-sense way of looking at a real estate market that often seems crazy.
February 14, 2006
Wells Fargo Home Mortgage gets onto yahoo finance homepage via a "columnist"
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23 comments:
His credibility will be gone by the average consumer in 3 years.
This partnership would have been great 8 years ago. Now is not the right time for him to making this partnership.
Kiyosaki is doing the right thing. He proclaimed investing in Real Estate until last year.
People who are honest have sustainable businesses.
Ie- Kiyosaki, Tony Robbins, Jim Rohn. etc.
It's the ones that look to pull things over on the public that have the businesses fail.
What a joke. This book sounds like "The 36,000 DOW".
http://www.amazon.com/gp/product/0609806998/sr=8-1/qid=1139929276/ref=pd_bbs_1/102-8284338-3840946?%5Fencoding=UTF8
Well, U.S. real estate values have been going up steadily for nearly four decades -- an average of 6.3% a year since 1968, which is when the National Association of Realtors first started keeping track
Dr. Robert Shiller says housing rises at 4.7% rate, which is 1.7% greater than the rate of inflation. Whose numbers do you trust? A noted economist or the NAR?
My view is that the American dream of building a nest egg by owning a home is no fantasy. Homeowners have been getting rich off their real estate for years, and they will continue to do so in the future.
Traditionally a house has been an expense that is minimalized through appreciation and tax breaks. Only recently has it been thought of as an ATM and this crowd has RUINED the so-called American dream for a large number of people.
I read a bit from DOW 36,000 on the Amazon link in my earlier post. This statement really stood out:
At the heart of Glassman and Hassett's argument is the idea that stocks have been undervalued for decades and that, for the next few years, investors can expect a dramatic one-time upward adjustment in stock prices. Why? While Wall Street has focused on valuation measures such as P/E ratios, it has virtually ignored how stocks can work as cash engines (the good ones, at least).
Sounds similar to what people are saying about houses today, no?
His article is stupid. The decision to rent/buy is not an automatically 'buy' every time.
What about: Not living in your house for more than a few years? Since so much of your mortgage is interest payments in the first years, the only way for you to realize any capital gain is through appreciation, which is not a guarantee.
The fact that homeowners are 34 times wealthier than renters is a stupid arguement. It is faulty logic to believe the reason why these folks are 34 times richer has anything to do with buying a home vs. renting. Maybe they own homes because they have:
1. More income.
2. More wealth.
3. (insert any reason here) like 'My poopies floated today.'
Statistics like those are stupid anyway. Everyone should use medians, not averages. Did you know the average starting salary of a UNC geography graduate in 1984 was $250k a year? Yeah. Micheal Jordon kinda skewed that statistic.
His example of leverage is wrong. To sell your now $220k house, you pay 7% in realtor fees. So your $20k gain on $40k investment is now a $4.6k on a $40k investment which works out to 11.5% not 50% 'over a year or two'.
I think that buying a house can be a good thing, even with today's prices. But the argument to do has to be laid out better than what this guy is doing. What he is doing is only offering a very one-sided, optomistic, rosy argument, which is irresponsible.
Anon in Austin, TX
Here's another reason why Google is mopping the floor with Yahoo. Yahoo should take greater caution not to f*ck its customers with f*cked up financial advice; otherwise they will just drive more people to the big G in the years to come.
I just read it. While some people are more optimistic about housing than others, it's unusual to see such cheerleading about the housing market right now.
The wierdest part of his analysis is where he compares renting for $1500 with buying for $200K. He covers by recognizing that the spread varies in different markets, but this is just way, way off. In SF, you'd have to shell out at least 500K (probably considerably more) to buy what you can rent for $1500.
Anyway, over the long, long term (like, 15-30 years), he's right about owning vs. renting. But that's completely obvious, and buying at a short-term peak can still be devastating.
As I commented on Ben's Blog, Mr Bach doesn't disclose any of the downsides very clearly. Four that I know of:
1) leveraged losses are even more painful: it can zero out your equity or end up with negative equity. [Much like the margin call of the dot com era.] When we lost $50K last year, at least we didn’t have to bring a check to the closing table — but a loss is a loss. If you paid cash (stocks or homes), at least your losses would be limited to what you put in.
2) tax payments will go up. Even if appraisals go down, don’t be surprised if your tax rates go up even higher — that’s what they did here in Austin, TX after the dot com bust.
3) insurance payments will go up, too. As external risks (like hurricane) and internal risks (like mold) get factored into the premiums, you can bet the rates will go up.
4) And if you lose money on real estate (at least on the primary residence), you can’t deduct it from your taxes (unlike other capital losses). See the details at: http://www.irs.gov/publications/p523/ar02.html
[I was a bit surprised to find this out. No realtor told me about this bomb in the tax code.]
This is the dark side of that too-good-to-be-true gains exclusion: you can never write off the losses of your homes! Dotcomers can at least lick their wounds with that 1.5k (or, for married couples, 3k if filing jointly) per year deduction...
Well, the west is stacked with inventory in all cities.
http://bubbletracking.blogspot.com/
Well, the west is stacked with inventory in all cities.
http://bubbletracking.blogspot.com/
Hi Philip John -
You make some fair points, but I'd caution you against claiming that housing bears can't see the facts rationally. While nobody can look in a crystal ball and predict the future, rational arguments can be made for further appreciation, stagnation, or a drop in prices.
I would tend to agree with your second point - that homeowners are more fiscally responsible than renters - up until 2003 or so. Prior to 2003 (and especially prior to 2000), you really needed a good income and a down payment to buy a house. That guaranteed that homeowners were 1) capable of saving, and 2) capable of earning.
The massive rise of interest-only arms, zero down payment loans, and "no-doc" loans changed all that. Owning a home no longer guaranteed fiscal responsibility.
I was skeptical of the bh's until about 2003 - roughly the last third of this boom. The first third was driven by economic activity during the tech boom. The second was the drop in interest rates. The third has been the relaxing of lending standards.
The third is the one that could unravel most easily. A minor downturn could turn into a rout.
My thought is that in high priced markets rent vs. owning over the long haul is a wash. Rents generally do not rise an average of 5% per year. If looking at long term past performance is any indication, the stock market has outperformed housing. A renter investing the difference from ownership costs in the stock market would come out at least even if not ahead of an owner. (I have done so since my 1st full time job in the early 1980s) My stock portfolio is a very tidy sum. I could buy a median house in any US market and have lots left over. I did not hit it big with any blockbuster stock like Microsoft or Google but just invested in moderate risk broadbased market indexes. Also I never lived in anything bigger than a 1 bedroom - Not possible for many people. That said for a lot people owning is phychologically comforting / satisfying which is a main reason there has been excessive price increases.
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