Lots of chatter about the housing crash, crushing debt and St. Joseph statues over christmas dinner?
Or was everyone on their best behavior?
Happy boxing day everyone!
December 26, 2006
HousingPanic Stupid Question of the Day
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22 comments:
My friends and I are renters and we just laughed!
Dude...knife is backwards!!!
Discussion focused on X-Mas shopping activity and the mindless consumer frenzy exhibited at Wal-Mart.
A huge white underclass buying cheap Chinese crap and thinking its the "good life" in America.
Has a nice gathering of friends over on Christmas Eve. Thomas, who is probably the highest-paid guy in our group - made the comment, “Something is really wrong with the ‘system,’ when a person with my income can not find an affordable house.”
The guy is just looking for an ordinary 3 BR, 2 BA w/garage, which is in the ~mid-300K range in this area, and is not willing to participate in any of today’s “creative” financing.
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Devestment, your comment above brings back memories of last year’s Christmas dinner, when I was in Amarillo (no housing bubble there!) visiting my mother & sister, who moved there for I dunno why.
Just as dinner was being served, one obviously flu-infected guest - a friend of my mothers - had a massive coughing fit at the table, trying her best to stifle it with both hands over her mouth.
Immediately afterwards, she then proceeded to pick up a cluster of bread rolls and break it apart with those same hands, offering everybody at the table a roll. The mammoth declined the offer…
A 91 YUGO? Now there’s a car destined for rare classic status! No, Really! They're not making any more YUGO'S!
Nobody talked about anything except about how good the meal was. Too busy stuffing faces. The little woman, as usual, did an outstanding job.
My holiday conversation went something like this.
"So, I hear 2007 will likely see a record number of forclosures..."
Crickets chirping in the background.
Cooked the dinner, while waiting for the turkey to roast, got involved with the neighbors 2 kids and built a snowman - a Calvin Hobbes "Jaws" style snowman. Pity that their mom didn't find it disturbing but found it funny.
Lit the brandy soaked Crosse & Blackwell ( no Fortnum & Mason this year sadly) Christmas pudding.
Settled down to watch a Christmas movie - Monty Python's "Life of Brian".
-K
Lumpen leisure, watching overweight relatives overindulge. None of them could walk half a mile without resting. Parents rant about working overtime, high stress levels, women talk about their meds. Emo kids listening to trash music programming them for a life of failure.
HP? Not a topic.
I sat down at the dinner table with David Lereah. I decided to carve him up instead. He was a bit dry...tasted like gristle.
richard said:
"dude...knife is backwards."
that's right, because it represents our system that is backwards and precisely the reason why we're in this mess.
HAPPY BOXING DAY!!!!!
boiled a prime rib, almost an insanity and sacralige(spellcheckfailure), spent it alone scroogish?
You must have some low paid friends/family members if that is the case. 4 years ago, at the ripe old age of 28 I bought a home for $302,000. My salary at the time was $63,000 a year, with a $5K a year bonus, so call it $70K a year. And no, I did not use an FHA, negative option 50 year ARM...regular old conventional 30 yr fixed with 10% down. I paid PMI for about a year, had the home reappraised, PMI went away.
"Thomas, who is probably the highest-paid guy in our group - made the comment, “Something is really wrong with the ‘system,’ when a person with my income can not find an affordable house.”
The guy is just looking for an ordinary 3 BR, 2 BA w/garage, which is in the ~mid-300K range "
Good for you, Anon. Please enlighten us as to what interest rate you are paying and what your monthly payment (including tax & insurance) is.
What percent of your take-home pay is your house payment?
Obviously Thomas worked through all the numbers and concluded that purchasing in the ~mid-300K range at this time is not the most prudent financial decision.
And no, this guy's salary is not a pittance.
If you must and since I am bored:
Mortgage: $272,000.
Interest rate: 5.65%
Monthly paymen: $1570
I pay tax and insurance myself yearly as I prefer not to give my lender an interest free loan. But if you had to do it monthly it was $2200 in 2002 ($1800 tax, $400 insurance). Today it is $2900 ($2200 tax, $500 insurance. Monthly in 2002 was $183. Today it is $241.
HOA is $70 a month today. It was $55 in 2002
Total PITI(and HOA) today: $1881
Total PITI(and HOA) in 2002: $1808
Ratio of PITI(and HOA) to gross salary:
23% in 2002.
Assuming I had a 0% raise for 4 years ratio today would be 24.6%
My take home back then would have been about 70% of gross I'd say. I live in a state with no income tax and 10% into a 401(k). So then ratio of PITI(and HOA) to net pay in 2002 would have been 29.6%.
Not exactly having to decide between eating and paying the mortgage huh?
damn messed up the numbers there
2002 should be 30.9% of gross and 44.7% of net
You must have some low paid friends/family members if that is the case. 4 years ago, at the ripe old age of 28 I bought a home for $302,000. My salary at the time was $63,000 a year, with a $5K a year bonus, so call it $70K a year. And no, I did not use an FHA, negative option 50 year ARM...regular old conventional 30 yr fixed with 10% down. I paid PMI for about a year, had the home reappraised, PMI went away.
"Thomas, who is probably the highest-paid guy in our group - made the comment, “Something is really wrong with the ‘system,’ when a person with my income can not find an affordable house.”
The guy is just looking for an ordinary 3 BR, 2 BA w/garage, which is in the ~mid-300K range "
44.7% of net huh. Sorry to asay it, you over paid. I save 44% of my net, as it should be. Sorry, but you over paid. Just from the 5-1 price to income ratios I can tell you you paid twice what it's worth. I make $80k and wouldn't pay that much for a house. Bought my house 10 years ago on $43k income and financed $88.5k. That's the proper ratio.
Standard lending (pre-bubble) says you shouldn't pay any more than 3 times salary, should be more like 2.5 or less. On $70k you should have been paying about no more than $170k or so. Even that's uncomfortable. I know when I made $70k I wouldn't want a mortgage that size.
What you wingnuts fail to take into account are three essential points.
1. Since 2002 my salary has increased substantially, yet my housing costs have not. That same 44% ratio in 2002 is at 29% today and decreasing every year. Had I rented the same home my ratio although lower to begin with would be higher than 29% since rent would have increased over 4 years. I know in blogger world nobody's rent ever increases, but in the real world they do by an average of 3% a year. In 5 years my ratio will hopefully be under 20%. That's the beauty of the mortgage that renters refuse to aknowledge...to paraphrase the Matthew McConaughey character in "Dazed and Confused"...that's what I love about these mortgage payments, I get older and make more money, yet they stay the same.
2. Maybe my ratio was high by some arbitrary 2.5 salary standard. But aside from my mortgage at the time I had no other debt. No student loans, no car loans, no credit card debt, nothing. I made $4000 a month after taxes and 401(k). I paid $1800 in housing costs, maybe $400 a month on utilities and car insurance, $150 on goceries and the rest was play money. I was actually being rather conservative as I could have bought much more house but quite honestly didn't need a 5 bedroom 4000 sq ft McMansion which was the next level up.
3. Aside from loons like the bloggers here and elsewhere, no sane person thinks this housing downturn will be chop more than 20% and that is the high end of estimates. Assuming a 20% fall in prices by 2009 the home will still be worth more than I paid for it. Even a 30% fall and I'm ahead, barely. I realize in bizarro housing bubble blog world a 60% crash is guaranteed, but in the real world it's quite unlikely.
Anon, I think you did well on your purchase in 2002. Looks like you also put down a substantial down payment at the age of 28. Congrats. I think you are a very rare animal though. Lots of others don't bring a dime and use an exotic mortgage. This bubble will correct.
You know I keep hearing how all these people got exotic mortgages. I'm not saying this is not the case, but who are these people?
I personally don't know anyone who has either an interest only or a negative option. I know a couple of dudes who got 3 or 5 year ARMs but that's about as exotic a mortgage as I have personally come in countact with. And as far as I know ARMs only adjust 1 or 2% a year at the most with a cap. On a $250K mortgage 2% is $200 a month after tax deduction. Given their income, $200 a month will barely be noticed.
And I don't know anyone who has foreclosed. Granted if someone does foreclose they won't send out an announcement in the mail. But nobody close to me has moved recently so I am assuming that means no foreclosures.
Am I just an anomaly here? Did the exotic mortgage just miss my circle of friends and family?
If you lived in SOcal where I live you would be in toxic loan land.
ALmost everyon I know who recently bought has a TOXIC loan. Mostly Option ARMS. Or as my douchebag brother in law LOON-OIFFER tried to sell to me as a 'pick your payment' loan. Even La Familia has ben sucked in. Were toast in 1 year.
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