June 06, 2007

HousingPANIC Stupid Question of the Day

Did you ever think you'd see the day that renting would be the American Dream?

Bubble Sitters - tell your story here

69 comments:

Anonymous said...

Well, one thing I can say about renting....when I'm ready to leave I can go!

max said...

I sold my house last fall. It has been a relief knowing that at the drop of a hat, I can take a job in any city or follow any opportunity that comes along no matter where it is.

Anonymous said...

Sold Scottsdale townhouse in December 2004 for 2.5 times the balance of my note - paid off my truck and my wife's car and took a trip to Spain, where I've always wanted to go. Renting in downtown PHX since. Even with the light rail construction, it's nice to be out of Scottsdale with a wad of cash that has appreciated far more than my old home has since (thanks, Steve Jobs!).

Frank@NeverColdCall.com said...

Or, to put it more bluntly, could you ever see the day when "owning" would become the American Nightmare?

Anonymous said...

I am a ramen eater.....bought an overpriced mansion, sold it $400,000 more overpriced 2 years later to some sucker. I rent in hawaii across from the beach now and schlep mortgages here and there while my money makes $40,000 a year....thanks mutual funds and sucker....

Anonymous said...

Renting's the right thing to do right now. I wouldn't say it's my dream.

As for your charts, I'm not sure what you are saying. Most cities are still showing a positive number.

Jay from NH said...

I am happy as a renter. I could have bought but after looking at the numbers I only pay 1/3 of the cost it would be if I had jumped in. I would rather eat better meals.. go out on the town... and never worry about cutting the giant lawn outside the 2 family house. Good deal for me I say!

Anonymous said...

Renting is freedom no more 30000 dollar signs in my yard. Every third house in my neighborhood is for sale it seems.

Even when prices come down I don't know that I would ever buy again. houses over time are just such a lousy investment. I also don't like the feeling of being a slave to a box even a nice one. I live in a very nice home now. However if I decide to slow down or if I lost my job I don't have to worry about a mortgage on a house I can't sell. Worse comes to worse I ride out my lease and down size. THAT IS FREEDOM!!!

I never realized all the advantages of renting till I did it. I always remember the dumps I lived in as a 20 something. Now I realise rent has a much lower ceiling than owning and you get alot more for your money on the high end. Most people who can afford high end rent would rather own a home I mean rent money instead.

Therefore it will take one hell of a deal to persuade me to buy again. Sorry Ramen eaters one less sucker.

sequoia512

Coffee is for Closers said...

I'm renting a large, modern waterfront house on the Potomac river in Maryland for 1/3 of what it would cost me to own it. Having recently moved in the neighbors have been making their rounds and popping the "did you buy it or are you renting it question?" You should see the shocked look of horror on their face when I tell them that "I'm renting it for pennies on the dollar of what it would cost me to own it, and that buying houses at these unrealistic prices is stupid!" One of them grumbled that "he could never rent his place for the amount of money that it is worth."

Happy European said...

"Screw the suckers or get screwed" seems to be the motto of the housing bubble.
Is this all that is left of the Amercian Dream? Get rich by making someone else poor? Gee, what an appaling image of a society on the decline. After ripping off the entire world (the dollar is our money but your problem), the Americans finally turn against each others. There will be blood on the streets.

Anonymous said...

I have both rented and owned a houses/aparments.

Both have pros and cons.

Cons of renting (that have happened to me)? @ssholes who stay up to 2 am making noise, unresponsive landlords that won't fix anything and keep your security deposit, idiots who burn down their apartments, waiting for the laundry machines, babies screaming at 3 AM, etc.

I could do the same with owning (cons)

Marky Mark

Anonymous said...

Got this in the mail last night from a helpful Remax broker mailing. In his rent vs. buy scenario and i guote:
"when you own a home:
- you will build equity
- you will increase your income tax refund
- you will have the freedom to buy and sell and not be bound to long term leases
- you will benefit from any appreciation your home gains"

Shoudl I call him and tell him he forgot the "Pride of ownership"?

Anonymous said...

I am a ramen eater.....bought an overpriced mansion, sold it $400,000 more overpriced 2 years later to some sucker. I rent in hawaii across from the beach now and schlep mortgages here and there while my money makes $40,000 a year....thanks mutual funds and sucker....


hmmm, sounds nice, but don't mutual funds invest in real estate mortgage tranches etc?....i would hope you are sufficiently hedged with physical gold and silver, while living on the beach? oh by the way, the ocean water levels are rising. what will this do to hawaii?

Bob Reno said...

Sold my house in a small town in Michigan last September, just as things were really starting to go downhill here. Jobs are hard to come by and the state is going bankrupt, so staying may not be an option much longer.
Found a nearly new McMansion to rent from a guy who is waiting "until a Democrat is elected in 2008" for the market to turn around. He tried to sell it for about 18 months (he's asking about $30k more than it's worth) then finally gave up and put it up for rent.
He's renting to us for about $600 a month below what we would pay for a 30 yr mortgage. My lease is up in January and it will probably be a good time to move out of state at that point. Several people I work with want to flee, but can't because they can't sell a house. One guy has even postponed his retirement because he can't sell.
Sad.

Sleepless in Manhattan said...

Got my rental lease renewal in the mail yesterday, and my rent is going up 25% (!). When will the housing crash hit Manhattan????

Anonymous said...

No, because here in DC the rents are so F*cking high that I am barely getting by and/or barel;y able to save anything- and I make 120K!

$2500/month for a sh*tfighting townhouse, WTF?

Anonymous said...

"when I'm ready to leave I can go!"

And when they're ready for you to leave, you will go.

Mammoth said...

More than one way to look at renting being the American Dream. $60 out-of-pocket each month plus the income from my rental house pays down the principal by ~$650 each month. In less than ten more years, that nest egg will be mine, providing a steady income.

Disclaimer: Bought in ’97.

Anonymous said...

http://tinyurl.com/yurkjh

68% viewed agents/brokers favorably in a poll. Same poll, says only 25% of people know hey can negotiate the 6%.

We have a long way to go to the bottom with idiocy like this rampant. As long as Suzanne researches it, that's all I need to know.

The Thinker said...

I must agree with Frank@nevercoldcall, it is not that renting is great, because its not, its that buying is worse. When you rent, you cannot customize your place to make it the way you want, you are subject to the landlord raising rents and your only option is to move out, and we all know how difficult, stressful and expensive moving can be.

Also, around these parts, apartments are leased with one-year terms. At the end of the year, the landlord tells you that you must either sign a new lease or move out. You cannot simply go month-to-month. Therefor, it may actually be harder to move out of an apartment than your own home because you may be able to sell your home in a few months, but you may have up to a full year left on your lease.

Let's not gloat about how good we have it, the fact is, as renters, we don't have it all that great. The fact that home debtors often have it far worse fails to make me feel any better about renting.

Anonymous said...

We have been renting for $2,500 monthly in so Cal since summer 2005 - sold our over-valued stucco box (Long Beach, Belmont shore area) between two busy streets for almost $1 million. We bought the home in 2001 for $515k. Married, filing jointly = tax-free gain of approx. $450k. I don't think I will ever make money that easily again!

At first, our new neighbors (we moved three blocks away) viewed us with pity - I am sure they all thought we sold the house due to financial hardship. Of course, living in so Cal means that three of our neighbors are realtors, and another neighbor is a part-time high-end flipper (sort of like being a "high-class escort," same line of work, just more $'s involved). Needless to say, I was not the biggest hit at block parties, especially after a few beers when I would quote Ivy Zellman and Robert Schiller.

In the last 6 months, there has been a sea change in attitudes amongst our peers (mid 30's, yuppies with puppies). To summarize:

1) Lots of "that was smart" or "your gonna get a great deal when you buy again."
2) A total lack of smarmy "we are considering an investment in Mammonh, or Palm Springs, or Cabo."
3) Nobody we talk to says "real estate only goes up" anymore. Now, they say with a nervous twitter "I can't imagine the housing market is gonna be as bad as the 90's." I just smile and nod.
4) We are the only couple we know of that has any mobility: most of our friends can not move form the over-priced homes for jobs, family reasons, or just to get the heck out of El Lay. I think the hb will have a huge long-term effect on company recruiting, and decisions on where to domicile operations. Why would any CEO want to run any type of operation in so Cal??
5) And what happened to the money from the house? Invested in blue-chip old economy stocks, tax-free bonds (short and intermediate term), and some foreign equity funds. I think those have done a wee bit better than housing in the last two years.

I can't wait to watch the next few years unfold! Cheers!

Mark in San Diego said...

From Boring Bens Blog this morning:

"“‘For Rent’ signs litter lawns in almost every Southwest Florida neighborhood. The apartment and home rental vacancy rate is at nearly 10 percent because of the mass exodus of construction and service sector workers from the area". . .

Ditto San Diego - I sold in early 2006, am renting, and recently moved to a much nicer place. . .Craigslist is so full of apartments and condos here in SD, that I had my choice of great places with views - also, with all the unemployed Mexican construction workers, I moved last time for less than $500. . .nice guys, good work. . .

Rordogma said...

Towards the end of 2005, I had enough for a decent downpayment on a house, which I wanted badly, but felt a correction was bound to come, eventually.

Instead of becoming tied to a particular piece of Earth via mortgage and soul-sucking job in a godforsaken pubicle, I decided to spend the entire sum on a year-long honeymoon around the world with my wife. It was a BLAST and well worth 3 years of saving our pennies!!!

Now I'm spending 2007 getting my nest egg back in shape, and renting a nice little townhome in Austin, tx for $700/month. By the time I have my down payment ready again (early 2008), I should be in a great position to purchase a home...and probably a better one then I would have been able to afford in 2005.

So I get to eat my cake and party around the world too!!!

Egosumabbas said...

Currently renting an awesome apartment in Chicago (2 bedrooms, den, separate living room and dinining room), that's larger than any shitbox condo I've been inside up to date (open houses are a fun exercise in futility). Even if I were to find that "dream" condo that's the same size as my apartment, all the associated taxes, fees, and payment would amount to about double my current rent. Given Japan and Germany as examples of housing deflation, a condo would not appreciate remarkably for years either, meaning I'd be stuck living in it. Given all this, there is NO justification in buying right now. Aside from the financials, I agree that renting gives you a certain sense of freedom. Keep in mind though that moving is still a large expense, there are always risks of losing a security deposit, and you can't move until your lease expires. I had to sublet once because I had to move before a lease was up, and I hemorrhaged about 250 a month because of it.

Anonymous said...

With the money I've saved saved by renting, I'll have my 2005 Toyota Camry paid off in a few months. Life is good and soon it will be even better with NO DEBT!

Brian said...

I'm always amazed at the people that bash renting. Right on anonymous! "when I'm ready to leave I can go."


Havens of Manhattan

Anonymous said...

Bought in Socal in 2000, sold Nov 2006 at huge profit. I am hoping to get an upgrade by timing the market but the sellers aren't cooperating by lowering their prices - yet. I continue to use every excuse I can think of to keep the wife from killing me. She comes after me with all the standard REIC arguments to buy, but I know they are wrong this time. I will hold out.

Anonymous said...

TURKS INVADE IRAQ!!!


Buy GOLD !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Anonymous said...

Last Update: 11:28 AM ET Jun 6, 2007

NEW YORK (MarketWatch) -- Prudential Financial is shuttering its stock research business and laying off about 420 staffers worldwide, the company said Wednesday.


more cuts can NOT be good for the economy. BUT the economy is great!!!

Anonymous said...

I paid off my mortgage in March and live free and clear in my humble 3800sq ft custome home on 3/4 acres in Glendale AZ.

Ya, I wanna sell it for half of what it is worth and go rent an apartment in South Phoenix so I can be closer to the gangstas and be able to move every 6 months. Then I can park my 2007 Tahoe and my wife's 2006 4Runner outside.

I can't wait to have the boat, the motorcycles and RV parked in a storage facility down on Van Buren.

It will be such a relif knowing I traded my paid off property for an opportunity to move to Oakland or St Louis.

Can't wait... Happy baby boomer in Glendale AZ.

Anonymous said...

I am going into the "rental matchmaking" business. For a small fee, I will find my renters the LEAST expensive lease (houses only) with the most amenities.

Lessors must supply a letter of endorsement from a bank, and write a letter to my clients as to why they should rent their particular house.

Enticements include: free swimming pool service, lawn service, maintenance, modest decorating allowance, allowing pets, and a "meet and greet" welcome party to the neighborhood. Waiving deposits is also a nice gesture along with moving fees.

All rents are chosen on a bid basis
from owners offers.

The emphasis of the service is "we've got rent money available to help you with your white elephant house... now just exactly why should we provide you with cash flow?"

Anonymous said...

Got this in the mail last night from a helpful Remax broker mailing. In his rent vs. buy scenario and i guote:
"when you own a home:
- you will increase your income tax refund

----------------------------------

Increase tax refund?? God almighty. I actually had a co-worker tell me once that he doesn't care about taxes since he pays no taxes. I said HUH? Well yea he said since he gets a refund he pays no taxes.

Anyone who gets a refund is a financial moron by giving the government an interets free loan for a year.

Anonymous said...

thinker where do you live? I have lived in many states and always have had leases that go month to month once the initial year is up.

I rented, owned, owned, rented, owned and now rent. All in all the pros/cons even out between the two IMO. All comes down to specific situation.

Saying renting is the end all and be all of options is as silly as saying real estate always goes up.

Anonymous said...

I live in TN and Im seeing so many people from Michigan moving here. Geessshh... I wish they would STAY in Michigan. They fucked up their own state, and now they are moving to my state. Thanks a lot dopes!

Anonymous said...

"...the fact is, as renters, we don't have it all that great."

Hey speak for YOURSELF chump. Im renting, and it's AWSOME! No noisy neighbors, very quiet, and my landlord LOWERED my rent this year. Plus, Im SAVING so much money these days and Im investing it, and making SO MUCH MORE.

Life is GREAT !

Anonymous said...

boomer in AZ:

You are aware that you can rent a home with a garage and plenty of storage for your toys right?

I rent a 2800 sq ft home for $1600 a month. It's got a little over an acre of land, a pool, a 3 car garage, hardwood floors, amazing kitchen, 2 A/C units, alarm system, and comes with membership to the tennis club and about as far from the ghetto as you get. Homes in the area range from $500K to $700K with property taxes running at $3K+ a year nd HOA fees of $900+ a year.

Tell me why I should buy again...

Anonymous said...

Anonymous said...
I live in TN and Im seeing so many people from Michigan moving here. Geessshh... I wish they would STAY in Michigan. They fucked up their own state, and now they are moving to my state. Thanks a lot dopes!

June 06, 2007 6:35 PM

-----------------------------------

I hear you brother. I lived in Las Vegas for 5 years and it was the same with Californians. They leave CA because of insane home prices, socialism, illegals, polution and traffic. They moved to Las Vegas and brought with them insane home prices, socialism, polution, traffic and illegals.

Anonymous said...

Rent for about 1/3 - 1/4 what it would cost to buy. Wife and I have an easy commute, nice town, nice neighbors. Did rent vs. buy and OMG I'll happily continue writing rent checks. No tax return on the mtg. interest but the interest on my savings covers that. Besides I would just blow it on siding, a new roof or windows or something. Saved enough to buy anytime, but what's the hurry? At today's prices, in my opinion, that would be foolish. Home ownership the American dream? That may be as long as it makes financial sense.

g said...

"mmm, sounds nice, but don't mutual funds invest in real estate mortgage tranches etc?...."

Nope. Mutual funds invest mostly in equities and high quality bonds. HEDGE FUNDS invest in mortgage backed securities (MBS), but most of them hedged against those collapsing with CDS's and similar instruments.

You know who is likely holding MBS junk with no hedge? A bunch of pension and retirement funds with clueless fund managers.

Time to find out exactly what YOUR retirement fund is holding!!!

turdly said...

Oddly, no realtors have said anything. Is the math that indisputable?

Of course things can change; rates go way down at the same time as prices do, etc, but let's talk about now and the past, not what someone speculates.

I'm an owner. Not particularly happy with it, but bought in 1998 [no refies ever, I live within my means] so I can't complain too much. Even though I own the home, I can never get the math to work in my favor [except as a forced savings account].

Mark in San Diego said...

Phoenix on Craigslist. . .

Just for the hell of it, I did a search on 2 bedroom minimum and $1000 a month maximum rent. . .got 3300 results from just TODAY!. . .nice houses for $895, 3 bedroom luxury condos with pools for $900. . .all over town. . .at those rates, we should send the San Diego homeless down there. . .two could pool thier beer money and rent a full house.

The Thinker said...

To Anonymous who asked, I live in the NYC metro area. In most of the places I've lived in, the landlord was unwilling to let us go month-to-month after our initial lease was up and instead made us re-up for another year. However, these places were all managed by professional property management agencies.

I know this is very location dependent. I used to live in the Bay Area, and there I went month-to-month after my lease expired.

X-NoVA said...

5) And what happened to the money from the house? Invested in blue-chip old economy stocks, tax-free bonds (short and intermediate term), and some foreign equity funds. I think those have done a wee bit better than housing in the last two years.
---------------------------------

I made this same play with my bubble profits (bought 2000 sold 2006 in NoVA)and its worked out great. I see a correction in the markets this year though. when the MSM spouts stuff like "biggest bull run since the great depression" --it makes me nervous

didnt rent after selling, kind of regret that, but at least I downsized into a smaller place which I can easily afford.

Lost Cause said...

Did I ever think that renting would be the American Dream? Yes I did. It was called the Reagan Years -- when the thought of buying a house was impossible, mainly due to high interest rates.

Am I ever going to vote for a Republican again? Probably not.

Anonymous said...

When Reagan came in office inflation was out of control moron. Interest rates had to be increased to sky high levels otherwise we'd be paying $500 for a gallon of milk today.

You socialists can't even comprehend that much.

Anonymous said...

I'm renting in the Sacramento, CA area for about $2,000/mo less than it would cost to buy right now and own a similar home. The capital gains on the sale of my home last year + the money I saved doing multiple refi's to lower rates + equity I had in my home now helps subsidize my rent. So total cost to rent for me right now is about $1,000/mo for a ~2000sq ft home. Buying a similar home with 20% down on a 30yr Fixed would cost in excess of $2,500/mo at today's Fixed rate of 6.574% + taxes/insurance/maintenance which could easily put home ownership in this scenario at $3,400/mo (-minus) the IRS pittance of a taxwrite off which seems to offset county taxes for us, so it would be about $3,000/mo for me to own.

My choice to rent instead of buy right now is based on financial sense, not emotions. Until the financials, or the inconveniences of renting become an issue, I'll continue to wait out this downcycle and see how low prices go. I'm estimating home prices to be 35-50% overpriced in the Sacramento region. I'm factoring in 3% inflation and waiting it out till falling prices get back to where they should be pre-bubble inflation adjusted.

Anonymous said...

"I rent a 2800 sq ft home for $1600 a month. It's got a little over an acre of land, a pool, a 3 car garage, hardwood floors, amazing kitchen, 2 A/C units, alarm system, and comes with membership to the tennis club and about as far from the ghetto as you get. Homes in the area range from $500K to $700K with property taxes running at $3K+ a year nd HOA fees of $900+ a year."

"Tell me why I should buy again... "

I live free and clear, I have no rent to pay. I have an Arrowhead Country Club membership with the house. I live in a gated community.

Tell me again why I should rent again?

g said...

"When Reagan came in office inflation was out of control moron. Interest rates had to be increased to sky high levels otherwise we'd be paying $500 for a gallon of milk today.

You socialists can't even comprehend that much."

Uhhh, the reason rates were raised so high to fight inflation was because Volcker who was appointed by Carter expressly for that purpose did. Reegan had nothing to do with it....moron.

Renter said...

For the record, I don't think anyone here is a perma-bear on home ownership: hell, if I could've bought in 1998, I would've done so, too. At the time, I just graduated medical school and was serving on the military, and the idea of having to own a home when I could be stationed overseas in a few years wasn't an attractive prospect to me. So while in the military from 1998-2002, it never worked out.

By the time I got out (2003), housing prices in California already had skyrocketed to levels that didn't really make sense, and I was more interested in finding a practice to buy, anyway. That involves time, and frankly I moved to many towns where I decided not to settle after a trial period.

By 2004, it was clear that buying a home amidst an expanding bubble was a completely foolish idea (unlike most buyers, I remember the 1980 cycle), and I'm so glad I DIDN'T buy at 2.5-3x over historic values. I didn't think the bubble would've lasted this long, but oh well....


Someone said:

When Reagan came in office inflation was out of control moron. Interest rates had to be increased to sky high levels otherwise we'd be paying $500 for a gallon of milk today.

You socialists can't even comprehend that much.


Sorry, I'm not a socialist.

But have you not heard the expression, "you can't squeeze water out of a turnip?" I guess not, if you think milk (or food) prices could be sustained at $500 per gallon! The more fitting limits on ALL prices, including food and rent, is "what the market can and will bear". That's more applicable to everything, EVEN real estate. Once housing prices got so out of whack with salaries (e.g. where affordability dropped to a record low of 14% in CA), something HAD to give. Either prices would drop, or employers would start giving everyone massive pay raises. Don't hold your breath for the latter....

Much like rents, there ARE limits to what people can pay (without resorting to "toxic" loans, that is), even when you're discussing the price of a gallon of milk.

Granted, we're testing the limits of what the market will bear for gasoline (at $4/gal), but I dare say you can thank Bush for allowing his Midland/Odessa big-oil friends to run amok! Soaring energy prices are going to have to be made up somewhere in the family budget, and you can bet people aren't going to be buying houses in the suburbs if they're worried about the cost of commuting!

turdly said...

anon 11:16

First, pompous ass, this about the 97% not your personal forum to spout. I feel so much worse now that I know about your situation. I guess I'll never meet my expectations of being just like you when I grow up, you have crushed me. Good for you. Maybe the ego boost you got will substitute for the Valium tonight.

Second, Anyone [gate guard that] can rent the place next to yours for less than 1/2 the monthly income at 5% interest that the cash equivelant of your mansion would bring. So THAT'S how it would be cheaper to rent than own your little bastion.

The problem is; I probably wouldn't like the neighbors. But hey, since I'm renting I can move if your ignorant dog barks all night. You're married to the joint. Did mommy leave you that money? Is the gate to keep you in or keep the world out? Is the country club because no one else will play with you? Do you see, anyone can be bashed. Even you. We just want the numbers, we'll do the math. It's obvious the home wasn't earned or you would of figured it all out. Show us the math you J/O.
I also own my home free and clear, and the house next to it as a guest home. The math fails for me, it'll fail for you.

Anonymous said...

Sold our house last fall, too. We're renting now because it's sensible, but we don't like it much. For one thing, our landlord turns out to be a textbook FB. Looks like he's going to lose the house we're renting, which means we will likely lose our deposit, have to find another rental and move again.

I know things could be a lot worse -- I'd rather be in our position than our landlord's -- but I do look forward to being able to unpack our junk one day and hang some art on the walls.

2009, maybe?

Turdly said...

Arrowhead...isn't that upper Redlands or something like that?

Anonymous said...

Anonymous said...

"I rent a 2800 sq ft home for $1600 a month. It's got a little over an acre of land, a pool, a 3 car garage, hardwood floors, amazing kitchen, 2 A/C units, alarm system, and comes with membership to the tennis club and about as far from the ghetto as you get. Homes in the area range from $500K to $700K with property taxes running at $3K+ a year nd HOA fees of $900+ a year."

"Tell me why I should buy again... "

I live free and clear, I have no rent to pay. I have an Arrowhead Country Club membership with the house. I live in a gated community.

Tell me again why I should rent again?

June 06, 2007 11:16 PM
-------------
No need for you to rent its part of you're compensation as on site grounds keeper at the country club. Why are you even looking at this blog?

Anonymous said...

I live free and clear, I have no rent to pay. I have an Arrowhead Country Club membership with the house. I live in a gated community.

Tell me again why I should rent again?

-----------------------------------
You don't live free and clear. You pay taxes, you pay HOA fees, you pay for repairs and maintenance, you are losing money on the value of your home and you are losing money on the interest you could be making by investing the value of your home in a simple 5.5% CD.

Assume a $500K home, that's $2291 a month right there your're losing out on by not investing the money. Add another $500 in HOA, tax and maintenance/repair costs and your "free and clear" is really a $2791 cost. And that isn't even counting the daily loss on your home's value. Assume a 5% drop in value this year there's another $2083 a month in cost to you.

You could rent a house just like yours in a gated community for $2500 a month. So your options are rent for $2500 or own for $4874. Hmm lemme think about that for a nanosecond.

I'm not one of these fools who claims renting is always better. That's ridiculous. Owning during times of appreciation is the smart thing to do. Today, especially in Phoenix owning is financially stupid. Anyone who takes 10 minutes to run numbers can figure it out.

Doesn't matter if you own a 500 sq ft condo or a 12,000 sq ft estate. In today's market you can rent either for significantly less than the cost of owning. This holds even if you own it so called "free and clear".

Some day in the future - maybe next year maybe in 5 years, who knows - owning will be smart again. Until then, renters will be the smart ones. Deep down you know this otherwise you wouldn't be here.

Anonymous said...

"Did I ever think that renting would be the American Dream? Yes I did. It was called the Reagan Years -- when the thought of buying a house was impossible, mainly due to high interest rates.

Am I ever going to vote for a Republican again? Probably not. "

It would probably be better if you just did not vote at all since your obviously do not understand the facts surrounding that time period. I am not a Republican, but neither Reagan nor Carter were to blame for the double-digit interest rates.

And by the way, the ultra low interest rates and lose lending standards of the last 6 years have out homes far more out of reach than the rates of the 70s and 80s.

Lost Cause said...

Inflation caused by profligate government spending triggered by a losing war. Enlighten me. Is that why Carter appointee Paul Volker had to jack up interest rates? Ummm...and this time it is different, right?

Anonymous said...

Granted, we're testing the limits of what the market will bear for gasoline (at $4/gal), but I dare say you can thank Bush for allowing his Midland/Odessa big-oil friends to run amok!

My advice to you is immediately stop reading dailykos and moveon.org. Your brain has turned to mush.

I'm surprised anyone is gullible enough to buy the "bush controls gas price" line. Earh to moron, the Democrats have been in power for 6 months. In those 6 months gas has increased by 40%. But I guess that doesn't get mentioned too often on dailykos huh?

I fear for the future I really do if this is the kind of people our publik skools are turning out. No understanding of world markets. No understanding of simple supply and demand. No ability to think critically. Gullible enough to believe what he reads on a blog.

Anonymous said...

You idiots bitch and complain about others moving from state to state(i.e. Mich to Tenn)......but the flood of Biblical proportions of illegals is only an inconvenience!

Anonymous said...

I smell so much hatred and jealousy, and hear tons of BS "yeah, I timed it right, I'm the man" stories. :) Prices are only going to fall 0-20% depending on the area (hence a "correction" just like the stock market, which is what it was treated like). With that said, the explosive spike in interest rates will erase this cost-differential and make it actually more expensive/more difficult to buy a home. Good job! I hope you saved enough cash to buy that house @ 80% of it's value outright. Me? Got 13% off and full closing covered, in addition to a 5.75% rate. Mortgages is less than 3x and our salaries are shooting up. Instead of whining, hedge your bets and cover all bases so you win no matter what.

Frank@NeverColdCall.com said...

The Thinker - I totally agree. I don't particularly enjoy renting. Can't do anything to the house, can't customize, always the possibility of not renewing the lease, and in this market, the fear that the owner will get foreclosed (especially when I'm renting a $1.2M house for $3,500/month).

However, given the alternatives, renting is definitely the way to go right now. Buying would be sheer financial stupidity. $8,000/month to "buy" the same house I'm living in for $3,500? No thanks. And pay for maintenance and upkeep on top of it? No way.

Sadly though, this world is full of insecure little people whose egos will not let them rent, and who think renting is somehow shameful and financial disaster is worth the cost of buying. Oh well. I'm glad to be out of Scottsdale AZ because it was full of little pricks who would belittle anyone who rented as being a 2nd class citizen or common criminal.

However though, in my neighborhood in Newport Beach, many people are renting these over-one-million-dollar McMansions, and even the owners in the community agree that we were smart for buying. People even congratulate us for being smart enough to rent vs. buy in this town ... which is a far cry from Scottsdale's "You rent? F**K off you loser."

Of course, the owners in our community bought pre-bubble and would never, ever buy one of these in today's market.

Anonymous said...

5:09 does have a point which is something I've been thinking about as well. Right now with the tax deduction that's a chance I'm willing to take. If my interest cost increases $500, after tax it's only $350 and given a 20% decline in prices I make that up and then some.

What I'm worried about is a Billary presidency with a Democrap congress that decides I make too much to qualify for the tax deduction in which case I'm indeed stuck renting forever.

Anonymous said...

"Assume a $500K home, that's $2291 a month right there your're losing out on by not investing the money. Add another $500 in HOA, tax and maintenance/repair costs and your "free and clear" is really a $2791 cost. And that isn't even counting the daily loss on your home's value. Assume a 5% drop in value this year there's another $2083 a month in cost to you."


I bought my home in 1998 in Glendale. I originally bought it as a flip, but it became my primary residence. I paid 160K when the other houses on the block were 320K

The property values in Phoenix since 1998 have tripled. The house across the street sold for 956K in April. After the so called crash.

I have remodeled the entire inside of the house as well as the pool, spa, landscaping and tennis court.

I general contracted the repairs and did most of the work myself so I upgraded the property without labor costs. I purchase supplies wholesale. I did pay a contractor for the new roof..13,500 last year. I did convert to SOLAR CELL electricity, but APS paid 53% of those costs and is buying excess production (32.00 last month) from me. I paid out over 27,000 and I got a 14310 rebate. The system will pay for itself in about 7 years, then I go positive on electricity. Try getting a rental deal like that.

My property taxes are 2785 a year.

So, I am not losing out by paying off my mortgage. I do not care if the value drops 5% a year because it would have to drop below 160K before I go negative. I do not intend to move.

I paid off my mortgage by flipping other houses using sub-prime loans and which I sold before Aug 2006, except the last one which sold in March 2007.

HOA is 160/Month.


My total monthly household outlay for this property after paying off the mortgage, including taxes, repairs insurance and HOA is less than 1000.00.


Try renting a home in this community. The HOA rules do not allow renters. Try buying a home with the Country Club membership in tact now. Arrowhead memberships no longer come with the house and have stopped grandfathering in old contracts. Try buying a new home made out of brick with a basement in Phoenix on 3/4 acre now. Good luck with that.

You renters can move all you want for all I care. I will be in my basement watching HDTV on my 60" screen with the BOSE system wafting in DOLBY while you are trying to get your brother to lend you the truck again to move down the block.

Happy Baby Boomer in Glendale AZ

Anonymous said...

never cut the lawn, drink dandelion wine, if you can keep the busybody pests noses out of your business. glendale, i remember saying no to your property at a third your price or 200 acres of potatoes, and knew assets like food was a sanity

Anonymous said...

moron inflation is out of control today only they changed the calculation method to exclude housing energy and taxes...........

Anonymous said...

insane rent costs ditto house costs

Anonymous said...

Happy European said...
"Screw the suckers or get screwed" seems to be the motto of the housing bubble.
Is this all that is left of the Amercian Dream? Get rich by making someone else poor? Gee, what an appaling image of a society on the decline. After ripping off the entire world (the dollar is our money but your problem), the Americans finally turn against each others. There will be blood on the streets.

June 06, 2007 1:02 PM

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Things will only get worse (a lot worse) if the treasonous amnesty for illegals bill makes it through Congress and is signed into law by the Chimperor.

Anonymous said...

'...Now, they say with a nervous twitter "I can't imagine the housing market is gonna be as bad as the 90's." I just smile and nod. ...'

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The early 90's will seem like the "good old days" before Southern Mexifornia hits bottom... if it ever hits bottom, that is. How are the house values in TJ?

1inchgroup said...

I sold my condo in Garbage Cove, California for way more than it was worth in January of 2006. I'm still waiting for people in Utah to pull their heads out of the clouds and lower their house prices. Meanwhile, my tidy little sum, which I walked away with tax free (3+ years in the condo), is sitting in a money market, generating enough interest income to pay my modest rent in Saint George.

Anonymous said...

The rent vs. buy argument makes sense in many cases, but not all. People tend to forget that real estate is nothing more complicated than simple supply and demand. It is indeed local. In large markets where rental homes are abundant due to a current imbalance in the supply/demand of homes for sale and/or declining prices, I would definitely be a renter as it is much cheaper than owning right now. In my market, renting does not make any sense.

Case in point: My monthly mortgage payment (P.I.T.I.) is $2,071, which is about $1,825 after the tax deduction (15% tax bracket). Nowhere in the U.S. are you going to rent a five-year old, 6,020 square foot log home with high-end fixtures and appliances, 7 bedrooms, 6 baths, 3-car garage, on 11 acres, 20 minutes from the employment center (downtown), with all utilities available at the property (high-speed internet, digital cable, natural gas, water, sewer). If I could rent something even remotely comparable (i.e., a more traditional construction 5-bedroom home with 2-car garage, 4,000 square feet even in a subdivision), for the same price ($1,825 or less), I would consider it. But, there is too much value in the home that I own relative to what I paid for it (sale price) and what my fixed monthly payment will be. I don't live in a bubble market (or the state of denial, for that matter), but my home has appreciated 23% in the past two years due to (1) buying low (distress sale), and (2) making improvements to the house and land ourselves.

A brief look at the rental market classifieds here shows that a 5 bedroom / 5.5 bath home with 2 car garage and pool on a 5 acre estate on the other side of town is being offered for (cough) $4,000 per month. It's the only somwehat comparable even on the rental market currently. Speculators have never taken an interest in our local market, so there is no excess supply of homes for sale. Without that oversupply, there are rarely any larger homes for rent at any given time here. With a need for a large home, renting simply isn't a viable/cost-effective option here.