If you refi and take fake equity out of your house, you're an idiot
If you use a realtor to buy or sell a house, you're an idiot
If you think we've "hit bottom" or believe in "soft landings", you're an idiot
If you take out a 125% LTV mortgage, or a 57-year loan, you're an idiot
If you're a realtor who thinks you have a future in your career, you're an idiot.
If you believe the NAR or REIC, you're an idiot
If you believe the official government housing data, you're an idiot
Is that clear enough? Or are you an idiot?
32 comments:
Your an idiot to believe that everything you say is 100% true.
Are you an idiot if you buy a house today in America?
Depends on lots of factors so you can't just state that buying is bad period.
First, value. How much did you pay a sq foot and what is the cost in today's dollars and similar materials to build new. I believe if you can buy a descent house for $80-104 a sq ft new in a a good location with descent upgrades that isn't a bad buy.
Second, cost. How much would you pay to rent the same property. If you can't rent if for less than your mortgage plus taxes and insurance after tax deductions and it isn't more than 30% of your gross income then your not an idiot to buy.
Location. If you pay a little more to live close to your work where you spend less on gas, time driving, maybe don't need a second car and the above rules still apply, good buy.
If you don't buy in Miami, Las Vegas, Phoenix, Boston, DC, Seattle, Portland, SF, SJ, SB, SD, Monterey or other bubblicious areas that charge $150-1,000 a sq ft, you'r okay as long as you have a good, stable job and the costs don't exceed 30% of your income.
Don't buy a house in London.
Don't buy a house in Paris.
Don't buy a house in Sydney.
Don't buy a house in Tokyo.
Don't buy a house in Madrid.
Don't buy a house in Rome.
Don't take out equity once you buy. If you need the cash then you can't afford the house. Sell.
Buy a house as shelter and a home, not as a "get rich now" scam.
Follow those rules and it is always a good time to buy.
"Follow those rules and it is always a good time to buy. "
Bull. Being upside-down on a mortgage for a decade or more is paralyzing. You can't move, change jobs or get canned when the economy tanks... everything has to go "just right" or you lose your house and your credit rating
By that logic purchasing Lucent in 2000 would be OK for the "long term". BTW Lucent closed at $2.50 today
Foxwoodlief-
RE is going to crash in every nook and cranny of this country.
The ONLY person out there who's not an idiot buying now is the one that pays CASH at 1992 prices- And then goes STRAIGHT to the county tax assessor to get their property tax down to former levels.
Everyone else is an idiot. Period.
Watch the MSNBC video.... a must
Housing sector getting worse, executives say
At a major builder conference, executives say there is really no end in sight to the downturn and inventories are too high. CNBC's Diana Olick reports.
http://www.msnbc.msn.com/id/8874568/
Anonymous said...
Bull. Being upside-down on a mortgage for a decade or more is paralyzing. You can't move, change jobs or get canned when the economy tanks... everything has to go "just right" or you lose your house and your credit rating.
Hello?
Did you not read what I said? If you think $80-104 a sq ft in 2006 dollars is a bad buy then you'll never own a house. At those prices in major cities you can't rent for that price. I've seen homes cheaper, $45-65 a sq ft say in small towns in the middle of nowhere with few high paying jobs (unless you are in medicine or government). Homes cost more than that that you'd live in in third world countries.
Also if you put 20% down, keep the payment within the normal guidlines of 30% or less, have no debt, how is that unaffordable or outside the historic norm? If you can't buy under those situations you'll never buy.
And to "everything, there is a season"
"RE is going to crash in every nook and cranny of this country."
Only if there is a world wide depression. Apparently you are young and haven't even experience a recession. We're a long way off from both. Maybe recession next year, maybe 2008, maybe a depression 2010, who knows, but if you want to live in fear and stop living, go ahead. If the sky falls then all of us, renters or homeowners will get crushed...oh, but even during the Great Depression when unemployment was 30% that meant 70% worked....so not everyone suffered equally. People still had jobs, homes, bought cars, houses, back then. Go study your history lessons.
And if you want cheap, go to those nooks and crannies you mentioned and buy, you don't have to wait for a crash. I can give you a very long list of places where homes are CHEAP. In small rural towns in Texas, Al, Miss, Georgia, NY, Northern Maine, ND, SD, Nebraska, Iowa, Kansas, Arkansas, lots of inner cities in Indiana,Ohio. A nurse I worked with moved from Kansas and took two years to sell her house on five acres for $23,000. You need to get out, travel, see what it is like in the real world outside "bubble-land." Why are many places bubbles? Because people are moving there and they are considered more desirable than say five acres of praire in Kansas in a town of 300 people three hours from a mid-size city.
"The ONLY person out there who's not an idiot buying now is the one that pays CASH at 1992 prices- And then goes STRAIGHT to the county tax assessor to get their property tax down to former levels."
Hello? 1992 prices? In which city? In Phoenix in 1992 I bought a foreclosure at $63 a sq ft which in 2006 dollars would be $85 and that was for a home in fair condition and for which the bank wrote-off the new pool loan of $20,000. In 1982 our first house was right after the interest rates were coming down from 16% (I think they had been 18% a year earlier) and we paid around $43 a sq ft for a new home with minimal upgrades (you know first home-formica counters, linoleum etc) which would be $87 a sq ft in 2005 dollars. Those were both periods of price depressions and bargain buys. So how do you think that $80-100 a sq ft in 2006 is not based on the mean average? And today in Austin 100 a sq ft gets you a nice neighborhood, new built, granite counters,etc where I bought and I'm 9 miles from downtown in the Hills (SW).
My parent's paid $18 a sq ft in 1962 for a new ranch, starter home, chickenwire and stucco, 1 1/4 bath, basic home. Inflation adjusted that is $111 a sq ft in 2005.
So again, based on my advice, if you can't find or buy a house on the terms mentioned then you couldn't buy a house in 1962, 1982, 1992 so I guess you'll never buy one.
"Everyone else is an idiot. Period."
Your above comment indicates you are young and don't have a clue about the cost of owning or buying a house and you deserve to rent. I hope you enjoy renting when you are 50, have three kids, and still have no money.
Keith just wants to tell everyone
what to think....he's enamored of
himself, and sure he can never be
wrong. Everyone else is NOT an idiot,
'to everything...'
You might find yourself upside down in spite of paying 20% down on an overpriced asset. Happens with cars all the time, and can happen with houses too.
Better to wait until next year when the results of $1T in ARM resets has its way with the flippers and other under-financed homeowners.
Then you might find some excellent value on a lot of houses in a lot of places.
lot of haters showing up on HP. I take that as a great sign that it's getting really bad out there now for the REIC.
Getting hungry?
Report: Foreclosures up 17 percent nationwide
Foreclosure activity is up in most U.S. cities, real-estate data firm RealtyTrac reported today.
The Irvine, Calif.-based firm said that 318,355 properties in the United States entered some stage of foreclosure in the third quarter, a 17 percent increase over the prior quarter.
http://tinyurl.com/y66y2x
I have been pulling my hair out trying to talk my brother inlaw & sister into refing his IO/ARM and he just blows it off and says, ehh! ill take care of it next year..I tell hime next year your house is not going to value in,
he says "this cycle happens all the time"..Im like no it is different this time..please listin to me..
no avail $2100 hundred a month now, come Sept 07 I figure between $3600 and $3800 on the first ajustment for him..6.4% with 5.75% libor 2%cap..my math may be off but it dont look good for him and my sister...denial is still the phase in these parts I guess. & they have a new baby on the way..:(
Dear Keith,
No, come on. Tell us what you really think.
This is classic HP with attitude.
So funny I can't drink my coffee.
You sound (or should I say read) like Jeff Foxworthy's you might Be a Red Neck if.......jokes.
Borka,
I have been doing the same thing with my friend. Her investor consultant told her that interest was going to go back down!!! She has put her money into Bonds, because her “expert” told her to, whilst her HELOC has doubled and she refuses to refi at a fixed rate, so, I know how you feel. So aggravating.
The only thing I disagree with is realtors not having a future. The American public is way too lazy and stupid to even make a list of possible houses they may like to purchase.
Are you an idiot if you buy a house today in America?
YES, you would be considered an idiot.
Also if you put 20% down, keep the payment within the normal guidlines of 30% or less, have no debt, how is that unaffordable or outside the historic norm? If you can't buy under those situations you'll never buy.
Ya, good luck finding that person to sell to. IF they exist in reality, they are probably smarter than you and have decided to WAIT for the PRICE to come DOWN.
Foxwoodlief, are you from Austin?
I'm moving to Austin, TX next month. Planning to buy a house few months after. I know that it is not a good time to buy a house but looks like Austin didn't experience this huge real-estate bubble, house prices are still reasonable and what surprises me they are still going up.
I'm looking at Steiner Ranch community (Cedar Park). You can buy 2900 sq ft house for 350K from the builder in that area.
Can you give an insight on local real estate market?
Also, what would be the best strategy - pay in cash or just put 20% downpayment and get 15yrs fixed mortgage while deducting mortgage interest from income tax and keep cash in the bank? I'm moving from Canada and not very familiar with US tax system.
Thanks in advance
Money is still cheap. I would put the 20% down, do 15 yr fixed and spread the rest around in gold/silver options.
Anonymous said...
Looking for an advice.
I'm moving to Austin, TX next month. Planning to buy a house few months after. I know that it is not a good time to buy a house but looks like Austin didn't experience this huge real-estate bubble, house prices are still reasonable and what surprises me they are still going up.
Is there anybody from that area to give an insight on local real estate market?
Also, what would be the best strategy - pay in cash or just put 20% downpayment and get 15yrs fixed mortgage while deducting mortgage interest from income tax and keep cash in the bank? I'm moving from Canada and not very familiar with US tax system.
Thanks in advance
Well buying and paying cash depends on your status and if you will be working or retired. An accountant would better advise on that investment strategy. Of course many would rather have the cash in the bank for emergencies or other investments if you get a low, fixed rate loan. Some of the builders are offering 5 1/2% fixed for 30 years.
As far as Austin, Texas is like some New England states, VERY HIGH property tax rates. In the city expect to pay 3% of assessed value, outside as low as 2.5%. Also location: If you want urban funk you'll pay for it. Expect to pay $250,000 and up for a small 2/1 downtown in Tarrytown, Travis Heights, Frenchman's place, South Congress, to mention a few areas. The tax rate is skewed now since no one knows how the new legislation will lower property taxes. You also will get (after one year) a 20% homestead exemption which will save you some of that 3% tax rate.
Prices are all over the map. There are some VERY good buys in parts of town and other areas because of the high tax rate are not as much of a bargain. You can as a rule of thumb add $50,000 to 100,000 to the price to compensate for the property tax rate on a lot of houses since an assessed value of $150,000 can easily charge you $3600 a year in property tax after homestead so that extra $300 a month would pay for a $50,000 loan at 6%.
Of course every place has a property tax and there is no state income tax so if you work and make a very good income you may be better off on that point but for retired folk, people who pay cash and maybe buy a larger house than they normally could afford and get a medium paying job might find the tax burden excessive since it is regressive toward the working class.
In Oakhill area (SW) in the hills close to Freescale and AMD you can find homes from $100,000 for a small 1300 sq ft and older homes for $250,000 on one plus acres about 2500 sq ft. New homes will run you $250,000 and up. If you go out east or SE you can find new homes for $150,000 that are 2500 sq ft or if you drive south toward Buda/Kyle even larger for that amount but then you have a long drive to the city.
In the NW expect to pay $250,000 for a small fixer and up. NW Hills is very desired and prices may seem low for similar homes say in the Hollywood Hills but in California they have Prop 13 freezing taxes so if you have owned for eternity you can havae a million dollar house that would have a tax rate as low as 700 a year (My parent's in the Bay area fall in that category since they bought in 1962 and their taxes are under a $1,000 for a million dollar home. I'd rather pay 1% tax on a $500,000 house than 3% on a $300,000 house. But then Californa has a high personal income tax.
So you have a lot to chew on. Renting first is smart as it will give you a chance to explore and find sleeper neighborhoods your realtor probably won't show you or know. I used a realtor for the first time in my life buying a home in Austin and as good as she was (and three weeks looking) I'd had been better to just drive neighborhoods all day until I found a place. I like my house, my neighborhood, but I've discovered areas I love just as much for $100,000 less (but older and after you update that would make for less of a savings than brand new but at least your assessed value would start at that lower rate).
Texas and Austin are very tricky markets. People who buy here as an investment or to flip can easily get burned. The market is very schizophrenic and you really have to know the local market not to get burned. If you are buying to live and can afford the taxes then it really doesn't matter where you buy.
Rents are also expensive. If you are single then you have a lot of affordable options. Rents here are higher than they were in Phoenix. Depending on location rents can actually be higher than if you bought. Friends bought a rental in Lakeway and have a mortgage of $1300 and rent it out for $2100 (the average rental price in their area is $1800 but goes up to $4000). In very desired areas you can easily pay $1 a sq ft and up. In average areas .75cents to $1 a sq ft.
Hope that helps.
Saturday, November 11, 2006 4:52:08 PM
Annonymous replied,
Ya, good luck finding that person to sell to. IF they exist in reality, they are probably smarter than you and have decided to WAIT for the PRICE to come DOWN.
Who says I'd sell? If you don't like commitement (you probaly are single or divorced) why would you buy a house? A lot of HPers whine about affordability and then when shown the path they still cry "To expensive".
Well you remind me of the niece of a friend in Tampa. She was on welfare and was offered a 3/1 apartment in a section 8 building with rent of $28 a month our of her $230 a month income. You know what she said? Frick, why should I have to pay $28 a month when I'm poor? Her aunt threw her out on the street to be homeless with disgust. She wanted her money for drugs and booze. The state took her kid after that.
The vast majority buy houses to be homes and intend to live in them for awhile. As I've shown many times there are lots of places where inflation adjusted costs are very similar to prices in 1962, 1972, 1982, 1992, 2002. If you buy what you can afford, stay within traditional guidelines for downpayment, fixed loan, stay out of debt, then buying a home isn't STUPID. As I said, even during the Great depression people bought homes. Even when interest rates were over 16%, people bought homes. As long as a buyer percieved the value to be acceptable and the cost affordable they'll buy.
Quit whining about lack of affordability when you are not willing to do anything about it. You want affordable? Move to a place that is. Quit being like that chick in Tampa I knew who wants everything for FREE. As I said, if you don't even think paying per sq ft what your grandparents and parents paid is fair then you don't deserve a house. If you'd rather pay the same in rent than own the place, go for it, lots of home investors will love to rent to you.
Inflation is not going to go away anytime soon. I'm sure my parent's thought $17 a sq foot was fortune in 1962 (it was since it was equal to about $111 today) but they've lived there ever since and that orginal payment of $116 a month PITI they paid for 30 years wasn't so affordable in 1962 but by 1972 it seemed reasonable and by 1982 sounded down right cheap. Do you think the rent for the same homes stayed at 1962 prices?
I remember growing up in the bay area and in the mid-70s all our neighbors seemed awful rich with thier $90-120 a month mortgages and homes that had increased in value some five fold and I though who could ever afford those $75,000 houses! Now they are a mil and most of the owners are still living in them and retired and between 72-85 years old and most couldn't afford to live anywhere else if they had to rent.
Be responsible for your choices and stop expecting a free dime.
Hi Foxwoodlief,
Thanks for the detailed reply. I guess i can give more info about me,
Family of 4, kids are 5 and 8 yrs old, I'm in the mid-30. I'm looking at Steiner Ranch (Cedar Park) community. Do you know any pros/cons about that area?
Our priorities are good neighbourhood and exemplary school. Willing to pay no more than 350K, better under 300K
My job is in Arboretum area, hi-tech related. Let's say gross income is about 100K/yr. Wife is going to stay at home for a while.
Need to decide quickly. Company pays for my relocation and 2 mth of rental in Austin. Is it reasonable to expect find a home, go through purchase process and move in at the end of 2 mth period or I'm too aggressive?
Thanks a lot. Sorry, don't have any friends there yet to ask all this...
Money is still cheap. I would put the 20% down, do 15 yr fixed and spread the rest around in gold/silver options.
-------
beg to differ money is not cheap. I went to the grocery store this morning, 2 weeks ago ceral was, 2 for $5.00, today it was 2 for $7.00, money is not only cheap, but becoming worthless..paper anyway...man we are in for it, and to think this is only the light stage of things..wait till the Demos take
the helm.
Yeah Bork, it is becoming worth less, that is for sure. But, it is still cheap to borrow, and if you do that as opposed to dumping what you have into a house (don't know what the market is like in Austin, bubble or not, still real appreciation is not likely in the next few years) and instead, dump it into gold/silver (depending on what stage you are in in life, leveraged gold/silver) you could effectively shelter yourself from the coming new jew ruined weimar republic here in the U.S.A.
Yeah Bork, it is becoming worth less, that is for sure. But, it is still cheap to borrow, and if you do that as opposed to dumping what you have into a house (don't know what the market is like in Austin, bubble or not, still real appreciation is not likely in the next few years) and instead, dump it into gold/silver (depending on what stage you are in in life, leveraged gold/silver) you could effectively shelter yourself from the coming new jew ruined weimar republic here in the U.S.A.
"Your an idiot to believe that everything you say is 100% true."
"Follow those rules and it is always a good time to buy."
Hmm... okay. I didn't know you could put "your" before an article. Silly me.
To the Anonymous from Canada who has been asking advice from Foxwoodlief:
I have been reading HP for quite a while, and I always seek out Foxwoodlief's posts because I live in Austin, too. There is nothing wrong with his advice, but I would be glad to give you much more info about Austin, if you want it, but that would not be appropriate for this blog. I have lived here since 1980, and I am married to one of that rarest of species, a native Austinite, so we have a lot of experience with the area. You can send me your email address by clicking the Motobi motorcycle on this page: http://www.e-tabitha.com/Tiddlerosis.htm
To the Anonymous from Canada who has been asking advice from Foxwoodlief:
I have been reading HP for quite a while, and I always seek out Foxwoodlief's posts because I live in Austin, too. There is nothing wrong with his advice, but I would be glad to give you much more info about Austin, if you want it, but that would not be appropriate for this blog. I have lived here since 1980, and I am married to one of that rarest of species, a native Austinite, so we have a lot of experience with the area. You can send me your email address by clicking the Motobi motorcycle on this page: http://www.e-tabitha.com/Tiddlerosis.htm
anonymous, Cedar Park is good. Arboretium area is in the NW. Steiner Ranch is not good. Master planned and lots of competition if you ever have to sell your house. Only one way in and out of this massive developement. In a real pretty area by the lake and by the river in the hills. Kind of out of the way to get to shops and traffic is heavy since everyone is heading the same direction to and from work.
Cedar Park, Round Rock, not much enamoured by those areas. Not sure if you want an ordinary subdivision, but a lot of those areas are very cookie cutter. NW Hills and Cat Mountain are older but have very nice homes but prices range in the 300-500,000 and many need updating but close to where you may be working. Most of the High tech areas are up there. Look at a map. Hwy 360 is the N/S corridor between the Arbor area and South Austin. Anything off that is pretty easy drive, very pretty as in the hills, by Lake Austin, close to downtown, and resale area is good.
How far do you want to drive? The real growth is in SW Austin. Lower prices, less congested, still convinient to get around since Austin metro is about 1.2 million.
Rob Roy is very nice in between 2222 and SW Parkway. There is a nice older neighborhood of the Capital of Texas drive off SW Parkway and close to HWY 1 interchange and 360 interchange that is in the hills, very wooded, lots of streets with oak trees canopied over them and you can get in there around $250,000. Rob Roy start in the $350,000 range, but very very upscale.
Lantana Ridge is off SW Parkway by the new AMD and Freescale off William Cannon in SW, new homes there start in the low 300s. About a 30 minute drive to aboretium depending on traffic. Anything off 2222 (Old Bee cave) is nice as is Lakeway (Very nice). Lakeway is about ten minutes further south of Steiner Ranch. Very nice, very upscale, on Lake Travis, positioned very well for location. You can get into Austin off 620 and over to 2222, 2244, etc, or go east off Hwy 71. They are building the new Galleria there which will be the most upscale shopping mall in Austin (and there are really no malls here).
Old lakeway is very nice and mature. Some good buys in there. You can buy a 3000 sq ft on the side of a hill with decks and views for under $325,000 if you shop well. Also very close to Oakhill and access to the hill country is very good there. Views from Lakeway are awesome.
You can buy homes for less than $300,000. Our friends from Phoenix bought a rental there, 2500 sq ft, custom brick one story built in 1988 on a 1/3 acre lot for $267,000. Very nice house on a street where homes go up to one million. Price is determined by if you have a lake view.
If you are going to live as far out as Steiner then you might as well consider Lakeway.
My wife is originally from Vancouver and all her family now lives in Edmonton. In our neighborhood you can still buy a pretty nice home brand new for between $320,000 and up. The community is small, almost built out, in Oakhill between the Y (hwy 71/290) and very convinient location. Older homes near us range from the mid-100s for smaller and up. Just outside our neighborhood I looked a ranch house on a little over an acre fully remodeled, nice, 2800 sq ft for $245,000 so bargains can be found.
Also next to Oakhill is Dripping Springs, very good schools and much lower priced homes in the hill country but the drive might be too much for you. South Austin in Circle C is very nice and a straight shot up hwy 1 to 360 and over to Arboretum (either way) during rush hour you may have a 40 minute commute if traffic is backed up, very much nicer than Round Rock or Pflugerville etc.
I'd say if you like the Steiner ranch area then definitely Lakeway would be a better location with very good schools, a lower tax rate (I think around 2.7%) not a cookie cutter area since most of the homes were custom built and prices are very similar to Steiner Ranch. The extra ten minute drive would be money well spent.
We really like it here. People are pretty friendly and polite. Still judging weather as this has been an unseasonably warm summer/fall. Yesterday was 91F and should have been 73F, though today in the 60s. Really love the hill country. If you can live in the hills it really makes a difference for Texas. The best I can say is that Austin is very much like Edmonton, but with more edge.
Hope that helps.
I got your newest idiot right here.
Just out of curiosity what is your occupation?
LOL GOOD PIC!!!!
Now, where did I see it (the picture) before?
Oh yes, now I remember...
It's a scene from the polticial pissing contest. The only difference, they got all high tech and used the radio, TV, and internet blogs.
Yes I do Whitetower. I've never owned a house that my mortgage wasn't much less than if I rented the same residence. If you've followed any of my post over the past year you'd see I always consider VALUE when I buy or sell. I've never paid more than the historic norm price per sq ft over the past 50 years in inflation adjusted terms. I never buy if the cost is more than 25% of my take home pay (not gross). The lowest my mortgage cost were was 10% of net and the highest was 20%.
The highest prices I've ever paid per sq ft was to RENT. I've never had a mortgage that cost me more than 70 cents a sq ft (my current house and most of that is because Texas has high property taxes) and the lowest I paid to own was 7 cents, yes, 7 cents. That was a boarded up house I bought in Central Tampa in 1989 built in 1905, 3000 sq ft for $21,000. For rent the highest I paid was $1.13 a sq ft and that was because it was a short-term rental-less than 7 months so had to pay a premium, and all other places I ever rented cost about 90 cents a sq ft with the least expensive was in Germany in 1987 when I got 3 marks to the dollar so because of the exchange rate I only paid $300 a month for a five bedroom 3 bath, three story home on 1/2 acre in the Moselle river valley by the air base but by the time I left in 1988 I was paying $700 due to the exchange rate.
So in my experience it has always been better for me to own than rent and that doesn't take into account any tax advange for owning, just based on cost per sq ft.
I'm sure I'm not the only one to experience these kind of costs but I don't live in Boston, NY City, SF, SJ etc. I've lived in Homestead (actually the most expensive for me as that as 1976 and I only earned $360 a month after taxes and the small 500 sq ft apartment I rented outside the base cost me $175 a month and it was a dump, Tampa (four times), and Phoenix (twice) and Vancouver BC-where I lived in a rent controlled highrise, 1bdrm 600sqft for $325 a month (1978).
RE right now is overpriced in every state and county.
If you are looking to buy in an area that you *think* is cheap, please do a little homework on how much that areas' prices have inflated in the past 6 years.
You may be surprised to find that the "cheap" 4 bedroom at 250K was 80K a few years back.
Do not compare prices to the expensive area you moved from. Unless you can afford that 250K gem going back to 80K.
I live in STeiner Ranch and
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