What would be dumber than buying a house today?
December 10, 2006
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A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
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125 comments:
Getting your realtors license.
not realizing that everything has a cost-- if you dont buy and pay off some sort of place to live, then you have to pay the monthly DEBT of RENT your whole life, which will probably gou up average 4-5% a year over time
so your 1500 dollar rent today will probably be around 3500 month in 15 years or about 7500 month in 30 years, while the guy who has a mortgage for 1500 is still paying 1500 a month for all this time,, while getting tax decutions for mortgage interest and taxes!!!!
after 30 years the responsible owner has no mortgage cost and your paying around 8000 month for rent
rent NEVER goes away
yea the owner has taxes and maintenance, but dont fool youselves, this is a wash as the landlord has these costs too and will merely pass them on in rental cost...
and this all assumes NO appreciation in the house over time- no your on cool aid if you feel that over 30 years the typicall fairly priced home wont be higher in value in 20 years ( not talking phoienix specualtion)- based on the higher rents and wages over time this is extremely likely too
everything has a price, its not "free" to not own a home,, you are simply paying the owner,,
and you dont have to buy in some area where mortgage payments (especially after taxes) are twice rent,, youre not doing your homework if you think places like CA are the whole story here
In the vast majority of cases (not talking the trust fund guy and extreme saver whos renting forever for flexibility0 the owner will be MUCH better off in terms off net worth , cash flow , and stability over time (again were not talking some silly flipping scheme in phoenix) then the renter will be,, and your delusional if you think otherwise in the vast majority of case over the country
PS of couse this assumes you buy something you can AFFORD, not some option arm on something you cant,, and of course the same goes with rent,, you must be able to afford there too so thats a wash...
hiring a realtor
the issue is that most owners who know this advantage over time (of owning)(responible owners that can afford their payments)-- were renters first when they were younger so have the experience of seeing both sides of the fence (renting and owning and have experienced the advantages of owning vs enting first hand)
on the other hand the majority of renters (note majority, not all) have only seen the renting side and are reading anecdotal stories in blogs like this about overpriced houses in California, of the option arm flipoper in scottsdale who losed their shirts and dont realize this isnt representative of 90% of peple who buy a place they can afford,, pay it off over tiem,, and dont have to worry about rent forever ( and the landlord raising this for profit and to cover HIS taxes and maintenance)
to the young people out there who are impressioned by the negative stories,, think for yourself,, if you polled a large pool of responsible homeowners (NOT johnny come lately investors or bubble buyers in phoenix for 1 o 2 years ) almost 100% of them would say they prefer this then renting and think it puts them in a better position over time..
dont belive the hype otherwise , think for yourself,, and look up the net worth and cash flow statistics and tax differences over time for the vast majority of the country---
this is not to knck renters who are simply super savers or have extreme liquidity that they dont mind paying the landlords profit for flexibility,, but this isnt the case with most renter who could afford a reasonably priced house in non speculative reasonable area... owners better off here over time..
Renting:
from an individual that has an ARM AND can not sell his flip because he owes more than it is worth, so he is renting out the house as a last resort, AND he can not afford to fix things (so code enforcement/HOA is hounding him), AND the cheap rent you pay for such an expensive home does not cover his rising ARM mortgage payment/taxes/insurance, AND he is getting foreclosed upon, but you do not know it.
Oh and he has anger management problems, but you did not administer a personality TEST when you signed the Rental Lease.
Dumb and Dumber
OR
Paying Full Price for a House and FULL PRICE For a Realtor. Lowball seller and realtrs, 1% to each when you buy so you do not have to rent from above Landlord.
SWF
Most on this board are former renters who sold at the peak and have cash (or gold) in the bank
Most on this board agree that housing is a great investment
Most on this board would agree that timing is everything. Why buy today when you can buy in a couple of years at a SIGNIFICANTLY discounted price? Why would any fool want to buy a house TODAY!? That's the question.
Man, realtors sure are trying hard, but they're either corrupt liars out to con people into making a bad decision so they can earn their commission and get off the ramen noodles, or they're just dumb, or both.
Emptying your 401K and depleting your life savings to buy a McMansion just to please a Sara Jessica Parker type.
Over all Keith, You are right.
"if you dont buy and pay off some sort of place to live, then you have to pay the monthly DEBT of RENT your whole life, which will probably gou up average 4-5% a year over time"
So in your logic it is always good time to buy no matter how high the price?
You haven't heard of opportunity costs? Sometimes it is better to rent for a while (5-10 years) and wait for the prices to drop to more affordable levels.
Well I purchased raw land to put this on (in):
http://tinyurl.com/y8uooy
Gets delivered next weekend.
When faced with the high likelihood of phoenix being allowed to burn like the LA Riots - no water - electricity - or food...this purchase was a no brainer.
The only question left is when to bug out.
Alfred E. Bush
Richard, I've been mulling something like that myself. You know it's bad when out of the blue you find yourself daydreaming about plans for a bunker.
Buzz - you are right - I feel sometimes like this is psycho behavior...5 years worth of food - tens of thousands of rounds....bunker- all physical gold and silver.
But with two young children - I would rather be psycho then wrong.
Being a Bush supporter and Republican apologist. Now these are stupids!
Skydiving without a chute......
voting for Hillary or Obama would be pretty dumb.
to the anon posting about how its always a good to buy.
here is a little edumication for ya.
http://en.wikipedia.org/wiki/Opportunity_cost
Dear Buzz Kill,
And you said my son Iceyfishies, and I were paranoid...jeez.
Well, In that regard, We (Richard, his two, Iceyfishies, you and me) could all be roommates.
Let us know when to "Bug Out" Richard.
SWF
(;
Casey serin was caught with a prostitiute in the midtown area of sacramento. His wife has cut him off, so evidently he is desperate for anything right now.
If you don't mind sleeping on one of these - send me a line.
http://tinyurl.com/yee5mw
roccman2003@yahoo.com
"voting for Hillary or Obama would be pretty dumb."
Hillary supports outsourcing tech jobs to India. She hates the middle class and black people. As bad as Bush is, please do not support her. Hopefully, the Democrats can find someone better in the next year.
FMW, I don't remember saying you were paranoid. Maybe your memory is better than mine. I recall the popular saying of the '80s: "Just because you're paranoid, doesn't mean they're not out to get you". ;-)
Iceyfishies?
Dear Buzz Kill,
Yea, when my 16 year old (iceyfishies, hp flamer) said he would not get his Driving License because of the draft? True enough, you were kidding around and said my paranoia had rubbed off on him.
No worries, wasn't that you?
Am I drunk?
Dumb is believing in the "American Dream", that you should get married, have a couple of kids, buy a house and work hard, keep your nose on the grindstone and cheer all that BS that goes with "USA #1" & "support the troops".
Following this path of the general "wisdom", you have condemned yourself to a life of anxiety, insecurity, financial weakness. loss of freedom and emotional distress and rage that results in family meltdown,(which starts the cycle again).
And that's the point. The elites and corporations need a docile, family-forming, wage-slave populace, manipulated into striving for home ownership,cars/trucks,Chinese goods,
vacations to "theme parks", the "best" medical care, huge amounts of food", the "best" education for their kids and on and on.
All this wanting and needing produces an avalanche of invoices generated by that amazing US corporate billing machine which enslaves the average American for most of his life as he sits there flipping channels on the 50" plasma, and who finally realizes:
Not only that this "American Dream" is nothing but an empty scam but there's nothing to watch on the TV!
But its too late. Keep working and keep paying as you're actually dead and sadly, deep dowm you know it.
Such wasted lives.
FMW, I don't recollect a conversation like that, but I guess it's possible. When was this? I need a time frame. Alas, now I'll be spending all day looking for it.
Dear Buzz Kill,
RE: Threadjack continues about Paronioia
http://tinyurl.com/y7t9td
Sorry, it was not you. It was Hon Jew.
Whew, don't be mad at me.
How could I mix you two up?
And my son, Hp flamer posts as netofishyguy, not his other handle, iceyfishies.
I guess I spiked my coffee this morning.
SWF
Letting Ted Kennedy drive you anywhere!
so your 1500 dollar rent today will probably be around 3500 month in 15 years or about 7500 month in 30 years, while the guy who has a mortgage for 1500 is still paying 1500 a month for all this time,, while getting tax decutions for mortgage interest and taxes!!!!
-----------------
My rent is 1000. If I were to buy a good home in a good neighborhood that I can stay in for 30 years (3+ beds) housing would cost me damn near 3000 breaking the bank.
There are people that are priced out of the market.
I am saving that 2000 and getting ready to low-ball in the summer.
Had I been dumb enough to buy a house in June in my neighborhood, I would have lost $60k in value ($10k per month). I base this on the drop of asking prices on comparable houses in the neighborhood. The prices are still high enough that since my rent is about half of what the corresponding mortgage payment would be, I have saved myself a total of $12k to $18k for investments in the last six months.
I plan to buy a house when conditions are favorable: when prices, inflation, and/or interest rates climb enough to eliminate the advantages I now enjoy. So please, save me the 'debt of rent' speech.
Sounds good Richard, I’m still working on the location. The backwoods of New Hampshire is my top pick so far. I found these links very interesting.
Free State Project
Free State Wyoming
So in your logic it is always good time to buy no matter how high the price?
---------------
Like buying 1 share of Yahoo at $250!
I remember during the tech bubble, while I was working at TD Waterhouse, Mutual Fund mgnrs were telling their clients that it was ok that they were churning YHOO/AOL/MSFT/AMZN, et al even at high values because guess what.......
'They are only going up!'
Sounds familiar???
I think these same people, after getting fired, became realtor. :-)
On a side note, I left TD Waterhouse to work a comfy city job, 6 months later my whole office was laid off! I had alot of agry phone calls wanting to know how the hell I knew to get out.
Anonymous said...
"voting for Hillary or Obama would be pretty dumb."
Hillary supports outsourcing tech jobs to India. She hates the middle class and black people. As bad as Bush is, please do not support her. Hopefully, the Democrats can find someone better in the next year.
Sunday, December 10, 2006 3:34:13 PM
------------------
YA, but Rupert Murdouch like her. Figure that one out.....
Not only that this "American Dream" is nothing but an empty scam but there's nothing to watch on the TV!
But its too late. Keep working and keep paying as you're actually dead and sadly, deep dowm you know it.
Such wasted lives.
------------------------
Ya! What he said! Man, I want to watch Fight Club now...
Nice luke.
My x continues to see life through rose colored glasses...you know -sweet retirement...same job and house for ever...She just spent a few thousand on boobs - kinda overkill if you ask me, but that's where her priorities are.
We share 50/50 - so unfortunately I may be going down with the ship if the shit happens before they turn 16/18 in a few years.
If the shit happens earlier - I may just be shacking her and her hubby up on some sweet cots (man I hope not) or alternatively - grabb'n and runn'n.
My chrystal ball has a slight crack in it so this level of detail is hard to see.
Swan Rake
Good one.
Spent 6 weeks this past fall criss-crossing entire state of Wyoming..nice place to visit for maybe 2 weeks at best..but the real best part was leaving. Would only live there for 3 years max if was gifted 3 million dollars tax free and not a penny less.
One word comes describes the whole state: Brutal.
(Some towns had a resemblance to conditions of 60's Appalachia).
"What would be dumber than buying a house today?"
how about not removing Bush and Cheney from office immediately?
Not watching the prices of ANY assets you hold / short sell and making regular adjustments in the light of the data. And being aware that touts, shysters exist in all assets on all sides. And this applies not just if you are bullish but also if you are bearish. Witness the gold action over the last 4 business days - From $650, its down to $626 ( www.kitco.com for spot prices).
Yeah yeah, its going up to $1500, $2000 etc.. I believe that too - but the passage to those lofty levels will be, as the old computer adventure game ( source code at http://www.inform-fiction.org/examples/Advent/Advent_2_com.html ) said:
"You are in a twisty maze of little passages, all different."
or even
"You are in a twisty little maze of passages, all different."
or even ...
"You are in a little maze of twisting passages, all different."
Your entry levels, pain levels, exit points may well not come into operation on this type of price action - but be careful out there.
-K
Ever notice how the pro-buy crowd on this site are generally the ones using profanity or ALL CAPITOLS?!!!! Touchy, thouchy you shouldn't leave your buttons so exposed. Have something to sell do you? ;-)
Suppose there is always a bargain out there, somewhere. It is usually true in no matter what market. I would say offer 50% to the seller, because someone will take it. This is not the dumbest thing, but I am not good at following directions.
I just finished selling my home in Vancouver, Canada due to a job transfer.
As much as I am dreading renting in my new town, I will not be putting a penny down on any over priced, Real Estate.
If Housing appreciated, in the last few years, at a normal pace then I would buy right now. But to see it double in two years makes me very uncomfortable buying back in right now at these prices.
Canada, especially Calgary, Vancouver & the Okanagan, has just gone through a major housing appreciation. We aren't seeing a "Pop" yet but slowing, Yes.
It is so interesting to see our RE professionals saying the exact same thing as they did in the USA. "It's different this time", "Housing can only go up". Even our CMHC is offering 10 Year no interest mortgages. Another classic line is, "What's happening in the US will not happen in Canada." Our housing doubled in two years, just like the US, so why won't it start depreciating, just like in the US?
I will be a "Bitter Renter" for the next couple years, as I wait for the "Soft Landing" in housing here in Western Canada.
What would be dumber than buying a house today?
How about buying a second house, with the intention of selling the first house later, and then discovering that you can't sell the first house?
Here's an EXAMPLE of how this is done.
Dude. Only 5% of the population can afford the houses in Southern California without a teaser rate ARM.
The payments on an 800,000 dollar house (That's cheap for Los Angeles) are 6400 dollars a month. Add in 1200 or more a month for property taxes and you get 7800 per month). You can rent a 2 bedroom apartment for 1500 month.
Take the different, um, 6300 dollars and invest that. In the end, the renter wins huge.
But that's nothing compared to THIS!
The house prices are declining now. That means, anyone buying LOSES right away. And though it's conjecture, if house prices revert to the trend, they will lose 50% of their value in the upcoming crash. So, throw away another 400,000 which is more money that some people make in an entire lifetime (losers granted).
Any questions?
Sorry, CMHC is offering "First 10 Years Interest only Mortgages". Then you have 25 Years to pay it off.
Hey, I said 1200 or MORE so the math isn't off.
Here's a great business idea for next year: Suicide revolvers for Southern California bubble house owners! They'd be cheap because you only have to give them one round of ammo.
So here you are with an 800,000 bubble house that is now worth 600,000 (a virtual certainty next year). Now you get a great job offer with a 20% raise in Silicon Valley. hey, nice, but wait, you can't sell your bubble without taking a 200k plus 7% selling expenses hit! Oh my, what are you going to do. I guess you are screwed. Maybe you can live in a hotel up there at 150 dollars a night (3000/month) but there goes all the raise money. Also your beautiful bubble wife is now ALL ALONE in Southern California during the week. She has a loser husband and is now looking for any opportunity to bail on this sinking ship.
Need I say more?
Oh man that's great. 10 years of interest only then 25 years to pay off the loan.
So, for 10 years you are paying MORE than a renter would and making NO equity gains. Then, right about time property values have completely tanked you now have to start paying off on the principal, i.e., you now just took out a 25 year loan on a house paying twice per month what the person down the street is paying for the exact same house bought when prices were sane.
Oh man, I think each family will want TWO suicide revolvers. After 10 years the beautiful Southern California bride will have lost her "value" and will have to stay with her loser husband.
Any questions?
+++++++++
Yes.
What about a House on the lowest end, say $150.000 today in a "bubble town"? It can not loose that much money. Will it loose fifty percent, just like the $800,000 homes, iyo?
Whaddaya Think? Seriously.
Hahaha. Right. Show me a house in Los Angeles for 150k and we'll discuss it.
Unfortunately for those in California it is only Available in Canada. Looks like I was wrong again....need a coffee. You have 25 years in total, including the 10 years interest only. So you have 15 years to pay off the principle.
Interest Only Homeownership Product
CMHC's interest only homeowner mortgage insurance product is designed to allow lenders to provide borrowers who have a strong history of responsibly managing their credit, with flexibility in repaying their mortgage loan. Similar to CMHC's existing Line of Credit product that has been in the marketplace since 2003, qualified borrowers will be able to pay interest only for the first 10 years of their mortgage. Following the interest only period, principal and interest payments will begin and will be sufficient to ensure the balance is paid in full within 25 years of the date the mortgage was originally initiated.
I mean in a nice Florida City, in a really nice neighborhood, just tiny. Do you have a opinion?
an opinion, rather. I can type.
RE:
What about a House on the lowest end, say $150.000 today in a "bubble town"? It can not loose ...
----------------------------
That's a really hard question. You can try to dissect the market and discern which has lost most value by now - but that assumes you know what fair value is - long term historic mean ?, long term mean + undershoot ?
When I bought my first house I used utility value. The rent for the lifestyle that I could afford and wanted to pay for cost me X, I found a property where the monthly payment + taxes + maintenance - tax boondoggle ( assumes you keep your job )was no more than X + a little bit for the value of not having a landlord prying in your affairs or moving you on at the end of the lease and bought.
Until you can find such a property keep renting ( and saving).
-K
Oh, I like this:
Land, they aren't making any more of it!
So what? Here's 93 acres for 92k, buildings included.
http://webhosts.cisdata.net/bin/rea.php?action=HOME_SEARCH&listing_id=REAGAD38015649&hs_action=VIEW_DETAIL&acnt=AR53359
being a liberal democrat would be dumb. Supporting progressive taxation, large entitlement programs, abortion, weak defense, and never really having the balls to do what has to be done (taking out Taliban and Saddam) is dumb. In other words, Keith and nearly all of the other morons on this blog are: dumb.
The Wall St. prop trader guy.
keep renting
+++++++++
Is it possible for rent to go down with housing, if the market falls low enough for a mortg payment to be lower than a rent payment?
Is that a dumb question?
Gee, I don't know, staying the course in Iraq?
Buying a Million Dollar Condo in October of 05.
Buying a house tomorrow?
I think I'll weigh in on the possibility that a $150k home within a bubble area would not experience the same price declines as the $800k house. My opinion is that the less expensive house would lose, approximately, in percentage terms, just as much as the $800k house.
It's all one big market. So if last years $800k house now sells for $400k then how much would you pay for the house that sold for $400k last year? You certainly wouldn't pay $400k anymore. Probably you would pay $200k since the house that once sold for 600 now sells for 300.
Your $150k house is now competing with bigger houses with more amenities in a more desireable area that used to cost $300k back when you bought your house for $150k.
Do you see what I'm saying?
Keep renting and saving. It is very likely that prices will decline to the point where your mortgage payment is about what you pay in rent. In that case, things may still fall further, but in that case you can rent it out and still cover your mortgage if need be. This is why the relationship of average rents to average home prices is a 'fundamental' of home price analysis.
Moving to Wyoming?
First the question: Dumber would be following Keith's advice on buying gold, silver, or shorting stocks. Of course you may not loose as much money because I doubt most people would dump $300,000 into his advice.
Back to annonymous, Wyoming? Why? There are lots of areas in Wyoming with cheap houses but no jobs and there are areas wit no jobs with expensive housing, or expensive housing and low wages.
Next, the question about buying a home in a low end market? If your mortgage can be covered if you rent it out, don't see a problem as price seems to be inline and as I've mentioned many times, prices go up and down but the constant curve is up, meaning inflation. I may have thought my first house payment of $535 PITI in 1982 was expensive but today that $535 PITI payment (and the house would almost be paid on a 30 year note) sounds awful cheap when you can't rent a small Class B 1 bedroom for that price.
The official effed buyer video clip of 2007?
Dumb is believing in the "American Dream", that you should get married, have a couple of kids, buy a house and work hard, keep your nose on the grindstone and cheer all that BS that goes with "USA #1" & "support the troops".
......................................
Could not agree more! Thank you!
Dumb is believing that there are two political parties. They just want everyone to think that there are because if you have a stupid populace with a "football team" mentality who are too busy fighting with each other, they get away with murder. Which is exactly what they did (9/11, et al.)
You all just don't see it do you? The inflation train has pulled out of the station and all of you renters and "bubble sitters" are on the landing cheering as it leaves you behind. House prices at the end of '07 will be 10%-20% higher than today, but unlike december '06, interest rates will be a couple of points higher too. Forget about picking up one of those "bargains" because there won't be any. Zero-down, I/O, & fixed-rate loans? Forget about them, they will be history.
By the time this plays out, the USD will be devalued by half, and the average cracker-box house will cost $600K. You can buy it with cash, or take out a variable rate mortgage at 25% with 30% down.
"House prices at the end of '07 will be 10%-20% higher than today"
Wanna bet? Man, that's the stupidest statement I've heard since Cheney said we'd be greeted as liberators
Foxwood - gold near it's high for the year, COP near it's all time high, housing crashing, US$ crashing
I'd say I'm hitting for the cycle right about now.
Yup.
The people here criticizing renting right now are themselves renting. They're renting cash from the bank, paying interest that's significantly higher than if they had just rented the house. While the value of the asset they're renting the cash for is plummeting.
Now that's dumb. Now there's a bitter renter.
pam anderson, not escaping!
So, Paul M,
the answers is yes, the percentage of decline is across the board, no matter the price of the place.
Well, I would reckon that rent would go down by the same percentage as the homestead, after the correction.
If today's $150,000 house goes down by half, to $75,000, the rent has to follow it down, because the current $1,000 monthy rent for the same condo would be way too much.
Keith,
While the value of the asset they're renting the cash for is plummeting.
++++++++++
Does't that lighten the debt in the case of a fixed mortgage? That is a good thing.
Admitting you voted for w.
Rents and house prices historically maintain a fairly stable ratio. Right now home price inflation has greatly exceeded any rent increases. That is one big reason why I believe that home prices are due for a downward correction. There is no reason why rents would come down with home prices.
In 2005, the overall price-to-rent ratio in the US was 38% above it's long-term average. In places like LA and SF it was like 75% above the average. See below.
So rents aren't due for a correction - prices are.
U.S. 1982.4-2005.2 38
U.S. 1970-2004 25 (approx.)
S.F. 1982.4-2005.2 79
L.A. 1982.4-2005.2 74
Cleveland 1982.4-2005.2 22
U.K. 1982.2-2004.2 59
Japan 1982.2-2004.2 -28
http://tinyurl.com/y3dmju
Oh. Thanks.
Builders are going to pop the bubble...
Then sub-prime borrowers will realize their screwed and panic sell or walk away...
Confidence will then be lost from the housing market and for that matter, confidence in the dollar...
Then the president, to divert attention from the problems at home, launches a pre-emptive strike at Mars...
Then the people, finally having had enough, vote the bum out...
Then the Republican party, realizing yet again they've screwed things up, changes it's name again...
The Democrats meet with little success trying to undo the Republican mess. This drrags on for several years...
Then the new-named Republicans offer up yet another ponzi scheme...
Rinse, wash, repeat...
again, and again...
Just don't "volunteer" for the army anytime soon. War with Mars is coming soon. Bush's poll numbers say so...
This certainly would be dump.
http://www.spokesmanreview.com/nation_world/story.asp?ID=163747
try this
http://tinyurl.com/yj97tn
It seems that rental listing abound with cheap, brand new, 3000+ sq ft housing. How could this force rents up? Large condo developments are not selling, and turing into rentals. Everywhere, housing stuck not selling is turning into rentals. Also, I think when prices are falling, such as housing, it is not called "inflation" -- the opposite, "recesssion."
"Emptying your 401K and depleting your life savings to buy a McMansion just to please a Sara Jessica Parker type."
Letting an SJP type (read: American chick) get her tentacles into you has to be #1 because it comes packaged with every other kind of folly - blood-covered diamonds, overpriced shitbox, alimony and child support. It's one-stop financial suicide.
Fortunately, SJP has also convinced them that they can put all this off until at least 40 (when a self-made millionaire will marry them), so those of us in the thirtysomething crowd have a few years yet.
stuckintheshity said...
"so your 1500 dollar rent today will probably be around 3500 month in 15 years or about 7500 month in 30 years, while the guy who has a mortgage for 1500 is still paying 1500 a month for all this time,, while getting tax decutions for mortgage interest and taxes!!!!"
If I could move to your parallel universe of financial sanity where people get fixed-rate mortgages and actually pay them off one day, I'd be there in a heartbeat.
China continuing to buy Dollar instead of Euro or Gold.
China's central bank confirmed Saturday it has told banks to buy US$20 billion in bonds in the government's latest effort to rein in a lending boom and cool off the sizzling economy, a state news agency reported.
To the anon that is making the case for buying.
You will find that most of the people on this blog are people who
A) Started looking for houses in 2004/2005 and realized how much houses went up in last 4-5 years and determined that it was very similar to the stock bubble
B) People who already owned a house, made nice gains, realized that these prices can't last, sold and are waiting for prices to drop to buy a house again.
I am renting for 1/2 of the total carrying costs of an average house in my county (1400 vs 2800).
If I pocket the 1400/month (16,800/year) and buy an average house next year by putting extra 16800 down, assuming that house prices and mortgages stay flat, I would be able to pay off my loan 5 years sooner, than if I bought a year earlier before I put the extra 16800 down. 5 years of no mortgage payments just because I delayed my purchse by 1 year.
On top of this, my county median price also dropped 50k yoy, so that would mean that by keeping the same payments as in 2005, I could pay off the house in 16 years, in half the time than I could if I bought at the peak of the bubble. 14 years of extra mortgage freedom, but delaying the purchase by 1 year.
This is why I and other visitors of this blog are delaying our house purchase.
Top-Level Insiders Selling Their Stock
PAUL THARP
NY Post
Friday, December 8, 2006
http://www.nypost. com/seven/ 12072006/ business/ top_level_ insiders_ selling_their_ stock_business_ paul_tharp. htm
America's corporate chiefs are unloading their own stocks at one of the boldest paces in 20 years.
Population 1995: 2.7 million
Listing per population 1995 1:63
Population adjusted record high inventory: 63,492
Off another site about Phoenix, which also showed the number of listings declining after having peaked at just under 55,000, so way off the peak of 1995.
Again, as I've mentioned, numbers and graphs, price, cost per sq ft, mean nothing if not compared with inflation adjustments, income adjustments, population adjustments.
So let's all step up and give real, meaningful, accurate facts and quite posting like realtors or to sell newpapers.
I think what's comical about this site is that everyone is worried about house prices. You can really gage a persons net worth by how worried they are about house prices or their claim that only idiots are buying houses right now. I would guess that the multi-millionaires are not too worried about house prices and could give a damn if housing busts. It's just funny to me, to know how many americans are really struggling day to day or even clinging to their 350K, why the damn rich are living nice and comfy without the worries of money.
Forgetting to pay Ground Rent.
Home seizures for failure to pay ground rent on the rise.
Increasing numbers of Baltimore homeowners are being taken to court for failure to pay ground rent - and many are losing their homes, an investigation by The (Baltimore) Sun has found.
Ground rents were established in 1632, when King Charles I of England gave Celilius Calvert, the second Lord Baltimore, all the land in what is now Maryland. Calvert then charged rent to colonists who wanted to build on his land.
Now these are some bitter renters.
It's just funny to me, to know how many americans are really struggling day to day
WHY is that funny to u?
hi all ,im the anon who made the case for buying vs renting long term for most people ..
read many responses
first want to say thanks for the civil response, that was cool
also, I hear what many of you are saying, that in your areas rent is SO much cheaper then mortgage that this makes sense for you short term
thats cool with me ,, but just want ed to open the discussion with the thought that there is more then one way to look at things,, and that many many areas have rents more in line with mortgage paymetns to begin with (especially considering tax breaks for owners)
so again thanks for the more thoughtful and civil response this time,, and I would say there is more then one way to look at this depending on your personal situation and area where you live
personally I would choose to live in a more reasonable area to begin with. pay the house of at a known payment, then put myself at risk of rising rent and no chance of equity over time-- but understand that many dont have this choice, or dont agree with it,, its all good...
Keith
I'm in escrow in salt lake city on a sfh. I purchased the house for 8% below asking price and realtor cut the fee. My payment will be around 550 plus 160 tax and insur on a 6.25 fixed 30. How is this bad. The house would rent for 1500 to 1700monthly. I did put alot down from a previous sell which now i'm down sizing but in a great area. low payment. Could have paid cash but will keep some money cash,stocks etc.
"I think what's comical about this site is that everyone is worried about house prices. You can really gage a persons net worth by how worried they are about house prices or their claim that only idiots are buying houses right now. I would guess that the multi-millionaires are not too worried about house prices and could give a damn if housing busts. It's just funny to me, to know how many americans are really struggling day to day or even clinging to their 350K, why the damn rich are living nice and comfy without the worries of money. "
So
...post something we don't know.
Rich people have money and poor people don't. Duh.
Dumbass post.
"Reading anything that Richard or Honica Jewinski posts and actually thinking it is intelligent. "
Know what I like about your posts Rhoid...I know they are from U.
Only a handful of "handled" posters here are dumbasses - besides "Thinker" - you are a runner up for the blue ribbon award.
I like Richards, Dick to Some's Posts.
SWF
"We were in a nearby town dropping my son off "
you procreated...
holy crap.
"So here's another dumber thing than buying a house right now....letting your woman bully you into buying more house than you can afford because she has unrealistic expectations of what you can really afford."
That's why you rent and don't buy (and no, I don't mean houses). If you're not willing to take on crushing debt so she can live like the last Tsarina, why then she can just take her pick of the chumps lining up for the privilege. In this asymmetric society you can either bend over and accept the yoke, or prepare for a lifetime of war with the endless bovine hordes of blue pills. Freedom is a tough road and it's no wonder so many give in.
http://www.ft. com/cms/s/ 277471c2- 8889-11db- b485-0000779e234 0.html
Oil producers shun dollar
By Haig Simonian in Zurich and Javier Blas and Carola Hoyos in London
Published: December 10 2006 20:11 | Last updated: December 10 2006 20:11
Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.
The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.
Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.
Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.
"You all just don't see it do you? The inflation train has pulled out of the station and all of you renters and "bubble sitters" are on the landing cheering as it leaves you behind. House prices at the end of '07 will be 10%-20% higher than today, but unlike december '06, interest rates will be a couple of points higher too. Forget about picking up one of those "bargains" because there won't be any. Zero-down, I/O, & fixed-rate loans? Forget about them, they will be history.
By the time this plays out, the USD will be devalued by half, and the average cracker-box house will cost $600K. You can buy it with cash, or take out a variable rate mortgage at 25% with 30% down."
You sure are dumb. Who do you think has $150,000 around for a down payment? If banks enforced a 25% down, that alone would make prices crash.
Calif. Exodus: More Residents Move Out Than In
http://www.nbc4.tv/news/10505308/detail.html?dl=headlineclick
SAN FRANCISCO -- For the first time in nearly a decade, more people moved out of California last year than into it.
California recorded a domestic net loss of about 29,000 people in 2005, and that's the first negative flow of residents since the mid-1990s, according to the state's finance department.
The most common destinations for the departing Californians are Arizona, Nevada, Texas, Washington and Oregon.
High housing cost probably drives most people away. The median home price statewide is more than $563,000.
"Foxwood - gold near it's high for the year, COP near it's all time high, housing crashing, US$ crashing
I'd say I'm hitting for the cycle right about now"
Not ture, a lie. Keith sucks as a trader. He was long gold, got stopped out, twice. He was too chicken sh*t to short housing stocks in the spring, they crapped out hard. He was worried about "manipulation". Oh, by the way, the Dow is at all time highs. Yeah Keith, you are hitting the cycle alright. You total loser.
Q:What would be dumber than buying a house today?
Ans:
Obsessing about it.
Overgeneralizing.
Hubris and presumptions of infallibility.
Failing to engage in a little healthy epicaricacy.
Not knowing was epicaricacy means, looking it up after the fact and pretending in subsequent replies to have known all along.
Lots of things worse. One thing that could be worse could be not buying a house that is a great deal and well suited to ones lifestyle and affordable.
Another excited critic of Keith above. Exposed buttons of the anti-HP crowd are certainly more effective these days. Wonder why?
Epicaricacy? I don't know WTF that is and won't pretend I do. Does it have anything to do with caricatures because there are a lot of those posting in this thread.
"You sure are dumb. Who do you think has $150,000 around for a down payment? If banks enforced a 25% down, that alone would make prices crash."
Still don't get it do you? If the inflation rate is running 50% a year, a 15% mortgage is a bargain. $150K is nothing when a loaf of bread costs $5. Inflation is how the federal government is going to solve this mess because it is the only way out. You guys praying for a repeat of the 1930s are fools if you think they will let it happen that way again.
I can remember when banks used to require 20% down. The only exceptions were VA and FHA loans. And don't forget about all those Asians holding our IOUs. You don't think they will be over here cashing them in at some point? When they start buying I expect they will evict many fat, lazy American renters.
If you have any sense you will buy a house in a non-bubble area with a fixed-rate mortgage. Ten years from now you will see it as the smartest thing you ever did.
"Off another site about Phoenix, which also showed the number of listings declining after having peaked at just under 55,000, so way off the peak of 1995."
Just wait a couple of months. To repeat ad nauseum: this is the bottom of the 1st inning and there is still a long way to go. Comparing an incredibly high 55K inventory figure to the last cycle bottom and saying on a population adjusted bases we're way off the inventory peak is disingenuous and is a misread of housing cycle dynamics. This is the kind of analysis that Diane Swonk is famous for.
It's fair to say that any current slide of inventory is seasonal and to be expected this time of year. I'm sure you're aware of all of the shadow inventory just waiting to come on for the "Spring Bounce", no?
At that point, another group of people will discover the REIC lie and realize that the Spring Bounce is not going to materialize. Inventory will build again (this time to horrific and HISTORIC levels on a pop adj. basis), prices will come down again, volume will pick up with the new lower prices and a fresh group of knife-catchers. Rinse and repeat this pattern for the next 3-4 years. This has been the pattern in the past and I have no reason to believe this time will be any different; albeit just a bigger bubble and thus a harder fall.
Remember, RE cycles take years to develop, to peak, turn and then to bottom and no bottom can be realistically called in any RE cycle until the foreclosures are at historically high levels and we're at least 3-4 years away from that point. Any buying now is simply knife-catching.
Unless you're trying to say that housing will level off and/or rise again from this point, in which case I'd say you REALLY need to hit the history and economics books because you don't understand housing cycles (or financial manias) at all.
Until you can find such a property keep renting ( and saving).
-K
Sunday, December 10, 2006 7:21:56 PM
------------
Or, adjust your lifestyle!
FlyingMonkeyWarrior said...
keep renting
+++++++++
Is it possible for rent to go down with housing, if the market falls low enough for a mortg payment to be lower than a rent payment?
Is that a dumb question?
Sunday, December 10, 2006 7:36:04 PM
----------------------
ANYTHING is possible. There are over 18,000 condos for sale in Chicago RIGHT NOW. IF you can't sell it, you'll have to rent it.
Or maybe that RTC thingie will come back.
By the time this plays out, the USD will be devalued by half, and the average cracker-box house will cost $600K. You can buy it with cash, or take out a variable rate mortgage at 25% with 30% down.
Sunday, December 10, 2006 8:59:34 PM
-----------------
This is the case in Chicago already. So what? I'm not buying it. If they don't want to sell it, they better be able to pay that note. Can you say foreclosure??
America's corporate chiefs are unloading their own stocks at one of the boldest paces in 20 years.
Sunday, December 10, 2006 11:49:55 PM
-------------------
Wasn't the Enron brass doing that right before their demise????
buzz saw said...
Now these are some bitter renters.
Monday, December 11, 2006 12:21:06 AM
------------------
Whatever, I've seen worse in the black ghettos in Chicago.
and that many many areas have rents more in line with mortgage paymetns to begin with (especially considering tax breaks for owners)
---------------
Good God! Where the hell is that so I stay far far away!!! What's the homeless reate there?? 75% of the pop???
Still don't get it do you? If the inflation rate is running 50% a year, a 15% mortgage is a bargain. $150K is nothing when a loaf of bread costs $5.
-------------------
Well, they better starting paying us better or there will be armed resistance. You can't squeeze people from every angle.
My rent is 1/2 of what owning the same property would be. To get a NICE place where I can live my life out, it would be 3x!
The G isn't going to just say "Hey all you renting assholes, buy some thing so the realtors can get their commissions, or we'll make your rent just as expensive!"
That will force WORKING people out on the street. Then tell them that they cant afford to eat also because of "inflationary issues"??
F U!
Instead of waisting your time here convincing me that the sky aint blue, talk your cliant to lower his asking price, pal.
Unfortunately, since houses are bought with dollars and most of the building materials come from within the U.S., the house prices will not escalate due to a falling dollar unless foreigners start buying residential property hand over fist. I bet they'll buy commercial property instead.
Sorry Charlie.
"The G isn't going to just say "Hey all you renting assholes, buy some thing so the realtors can get their commissions, or we'll make your rent just as expensive!"
You are either very young or just ignorant. Inflation raises prices and wages more or less equally over time. When we prepared proposals in 1978, there was always a built-in assumption that costs for materials and wages would increase 1% a month. Ask anyone who lived through that time and they will tell you how inflation became a part of everyday life.
Even moderate inflation of 8% a year will double prices in only a decade. I expect we'll have much higher rates in the coming collapse of the dollar, and that is why I see both house prices and rents doubling by 2010.
Go ahead and have your rent riots, I'm sure the police will have a lot of sympathy for your whiney ass as they haul you off to jail.
All the multi millionaires I know didn't get to be millionaires by making stupid decisions like buying assets that lose value.
However, the idiots who inherited their fortune or didn't work for it themselves are very quickly separated from their money. Inflated housing makes a very good hoover to redistribute stupid rich peoples' money.
"U.S., the house prices will not escalate due to a falling dollar unless foreigners start buying residential property hand over fist."
Sorry Charlie? I'm sorry you seem to know next to nothing about economics. A falling USD makes assets in the U.S. cheaper to foreign buyers holding a stronger currency. And since our economy depends heavily on imports, the falling dollar will put upward pressure on prices for energy and consumer goods. Those increases will result in demands for higher wages. Labor is a big part of the cost of construction, higher wages = higher selling prices.
Wyoming:
"One word comes describes the whole state: Brutal. (Some towns had a resemblance to conditions of 60's Appalachia)."
"If you hate people, it's a great place to escape them, if you can survive. Just don't try to raise kids there...horrible rate of attrition from hypothermia, overdoses, murder, and car wrecks. A full 10% of my graduating class died by one or the other during the last 2 years of high school...many didn't even make it that far."
It's Dick Cheney's Republicanland dream!
this land is my land,
it ain't your land
I got a shotgun
and you ain't got one,
if you don't get off
i'll blow your head off
this land is Dick's private property!
What would be dumber? A lot of things actually. The first and foremost that comes to my mind is: Trusting a blood-lusting cabal of jewish neo-cohens to run your country.
>>rent NEVER goes away<<
Neither do property taxes. ESPECIALLY in CA, where the State Government and Unions are trying to find a way to destroy Prop 13. Then the tax bill will become even more than ANY house note or rent....
Freakin Honica. Never disappoints. Hehe!
Having unprotected anal with a crack addict!
Receptively!
If they revoked Prop 13 in California, alot of real estate owned by retired, non-working people would appear on the market and drive down the prices real fast!
How do we do this? I'm bitter renter!
Go ahead and have your rent riots, I'm sure the police will have a lot of sympathy for your whiney ass as they haul you off to jail.
Monday, December 11, 2006 7:09:49 AM
--------------
the police aren't going to care, becasue they can't afford your house now either!
KEITH SAID:
Most on this board would agree that timing is everything. Why buy today when you can buy in a couple of years at a SIGNIFICANTLY discounted price? Why would any fool want to buy a house TODAY!? That's the question.
------------------------------------
Market timing is great assuming there are no transaction costs. Let's say I owned a home worth $500K last year and knew a crash was coming. So I sold. But from that $500K I had to pay $25K to a realor, $7.5K in closing costs, $5K to move, $3.5K in real estate transfer taxes so at the end of the day I have $459K or a loss of 8% right off the bat.
I rent a home just like the one I owned for the same amount I was paying mortage/tax/insurance/hoa. But I lose the tax deduction of $4K a year. Hmm so that $459 is down to $455K.
Now let's fast forward 2 years and that house is now available for $400K (the bears were right and a 20% correction occured).
Well, it's another 2 years of no tax deduction so that $455K I got for my home is down to $447K. My rent went up by $100 a month both years so the $447K is down to $445K.
I buy that home for $400K but I have to pay another $5K to move, another $7K in closing costs so it's actually $412K.
So great, I saved myself $33K by timing the market just right.
Is that worth it? For some maybe. But the point is that it's not as simple as saying sell now to avoid a $100K loss on our home. It's more like saying sell now to avoid a $35K loss on your home for which you will have to bear the agony of packing, unpacking and all the other crap that goes along with moving and buying/selling a home twice.
Personally I would rather just sit tight.
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