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.
"own" a home,
rent versus own
of course. homewonership should be the endgame for just about anybody. just waiting for home values to come back in line with income, rents, etc. May take a few years, maybe as many as 5.
Oh sure, we;ll buy again!If prices (in DC) drop back to pre 2000-2001 levels & we finish paying for the baby who just started at an Ivy League (uh, 60K per year!!!)may move back to the Midwest for a steal of a deal...who knows what will happen in 4-5- years. But I'll be ready & hopefully can pay cash & OWN it!
I will never buy a home again, at this point I'm seriously 1 step away from sleeping in my car. BTW I have no health insurance, have three AAS degrees and can only find contract jobs, isn't life just grand?
when the turmoil is over and prices have stabilized for over a year and I can buy a house for cheaper than renting like in a "traditional" market. I'm guessing we're still 5 years away in larger metro markets. I'm looking to move to the Seattle metro area within the year and since its one of the trailing bubble cities it might be closer to 5 years
There're plenty of regions where the market didn't get out of sync with fundamentals, like NC. Unfortunately I live in one of the bubble markets (Miami), so it would be financial suicide to buy any time soon. It will probably take years before things get back to normal around here.
I just sold my house in Buffalo, NY. It was one of the few markets that wasn't out of wack with what folks actually made or could ren for. However, job opportunity sucks.It will be a long long time before I own a house again.
i'll be renting for a while, until it becomes cheaper to own than it is to rent. having owned 3 different residences, i can say that the only advantages to owning are knowing that you don't have to move every year and the freedom to make improvements and renovations. if you don't care about those 2 things, and if you have enough self-esteem to not care what your so-called friends think of your accommodation status, then just go on renting. i will also only buy when i have more than 50% for down payment minimum.
OLD_SCHOOLER said... I will never buy a home again, at this point I'm seriously 1 step away from sleeping in my car. BTW I have no health insurance, have three AAS degrees and can only find contract jobs, isn't life just grand?=============Dude STFU PLEAZE!!Only find contract work? So what? I have been doing contract work for 3 years now and make between $12-14K a month doing so. I don't know about ever buying a house again, I sure as hell will never work for an employer again. As for insurance, you can buy basic health insurance for $150 a month.All you whiny bitches are so pathetic. Waaahhh wahhhh I have a hundred useless degrees and can't find work.
I will buy soon. I sold at the peak. I bought pre-bubble and made an absolute killing.To buy my old home back is now 20% less than what I sold for. Could prices fall more? Yeah maybe, maybe not. I don't really care. I have been renting for almost 2 years and am sick of it. Once my lease is up in February I hope to have found a house to move into meaning I will start seriously looking in November.Plus I am seeing concrete signs that the worst is over. HPers were right the crash did come, but you're wrong in thinking it will go on forever.
Probably will not buy a home because I enjoy renting for less. Thought renters were losers SORRY but having done both I prefer renting. No more 34543vdollar signs.Don't care if the school system tanks move. Neighborhood goes downhill buy buy. New job oppurtunity I'll take it.No job oppurtunities 1 month and I can downsize. Would buy if I can build for no more than 40 cents on the dollar. That may be feasible soon. Would still need to think about it though.
Anybody read Mike Morgan's articles? The man is hilarious and deals with what is going on at ground zero. Especially Miami realestate.
"If prices (in DC) drop back to pre 2000-2001 levels"Why would they drop to pre-2000 levels? If you wait for 1999 pricing, you'll literally be priced out forever.What you should look for is 2000 plus yearly inflation+1% appreciation.I know some of you wingnuts think inflation is 20% a year. For those of you a little more sane, use 5% a year, so 6% appreciation for housing which is historically what houses appreciate at.From 2000 to 2008 that would be 60%. So a $200K home in 2000 will sell for $320K.If you think it will sell for $195K, you really are delusional.
Sadly, the wife has found a house she would like to buy now.Gladly, we have 8 months left on our lease!Of course I will consider buying again, under the same parameters as I have always had:It is a good comparable price, I can afford the payment (if I have one), and I would be willing to live the rest of my life there if I had to.
These are the figures I worked out on the appreciation for my mom and dad's house.Purchased in 1964 for 40,000, sold in 2004 for 220,000. Profit after forty years, 180,000. or 4,500/yr or 11.25% of initial investment. OK! Take the 11.25% less an average 7% interest cost on the mortgage, which mom and dad increased every five years to extract 100% of the equity. Mom says taxes averaged 2%. 11.25% minus 7% minus 2% equals 2.25% and I am not including the cost of insurance and maintenance(not even mowing the lawn or painting). Seems like it really doesn't even keep up with inflation. Gallon of gas in 1964 is .25 cents/gallon, today it is 3.00 dollars/gallon an increase of 6.9%/year. And I would just like to add that in 1987 my mom and dad's house was worth 180,000. then in 1995 it was worth 120,000., so this example assumes a very well timed trade!!! After 40 years in real estate I think it is safe to say there is NO free lunch!!! As a renter all my life, I have alot of cash in the bank, I have moved and lived as I pleased, always had money and ever since I left my mom and dad's home, I have never, NEVER, again had to spend my weekends mowing the lawn or painting that damned wrought iron railing again. Praise the lord!!
A democratic president and Congress will se a return to sanity in real estate prices. When republicans rule elitism reigns so that even simple human needs like shelter become a game of oneupmanship. I saw the exact same thing in the 80s under that evil insane freak Reagan. Condos all over, elitlist attitudes in everything from housing to food. After that phase of the republican era things returned to normal.Ask someone who bought a condo in the mid 80s how things turned out for them- if they were ever even able to sell it.
Sure--1) When prices align more with rents2) When I'm sure I want to live there for the rest of my lifeBut certainly no earlier than 2009.
Keeping my eyes open for a piece of land somewhere in this area. West of Puget Sound5 or 10 acres would be ideal. Might build on it eventually...
I rent, but why would I be bitter? Oooh, I'm missing out on all the yard work and lawn mowing! That must be it. LOLI'm saving tons of money. Plowing it into PMs and foreign investments. I have an apartment, but I sleep well at night. No mortgage (death contract) hanging over my head.Home Debtors calling us Bitter Renters are projecting. THEY are the bitter ones.
I will buy when I am afraid to spend the money and no one wants real estate. This will probably coincide with high interest rates,and recession.
We would like to own a home again, in the future of 2-3 years. However, if property taxes and homeowner insurance rates go to the moon (due to mortgage fraud) we will probably hold off a few years longer. I could care less about updating, painting and yardwork. It's like a vacation since we sold our home. These prices are just to high to have the "privilege" of any wall color I wish.
A house is equal to the rental value of the dwelling for its useful life, discounted to present value. Picking the discount rate is tricky. You need to figure out what rental rates in the applicable market will be in the future.You also need to adjust for tax advantages (mortgage interest deduction, capital gains tax exemption) and disadvantages (property taxes). Then you need to figure in depreciation and maintenance costs somehow.I think that if you can buy a house for roughly what it costs to rent without putting more than 20% down, then you need to crunch some numbers to see if the house is an ok investment. The nice part about having a mortgage equal to the rental value of the house is that if you can’t sell the house, you can presumably always rent it out if the rental market is stable.In the current bubble market, though, the prices are so irrational that you don’t even really need to do the math.
I am seeing concrete signs that the worst is over. HPers were right the crash did come, but you're wrong in thinking it will go on forever.Caveat Emptor.....
I'll buy when they stop collecting property taxes at gunpoint.
Maybe, but not until prices return from the stratosphere, and if that's never, that's fine by me. The fact is, you never really "own" your place anyway, you are renting the land underneath you from the government at whatever they decide to charge in property taxes and extra assessments, and when the day comes that you can't pay it, or they decide it's more convenient to give the land to one of their campaign contributor buddies, you'll be out on your keister in a blink.
Only after bush is impeached or otherwise left the oval office, and America restored.Then I MIGHT look around, if I still have a job. Otherwise, renting works out perfect for me.I'm free to roam!
A democratic president and Congress will se a return to sanity in real estate prices. When republicans rule elitism reigns so that even simple human needs like shelter become a game of oneupmanship. I saw the exact same thing in the 80s under that evil insane freak Reagan. Condos all over, elitlist attitudes in everything from housing to food. After that phase of the republican era things returned to normal.-------------------------------Yes! Bring back the days of the wimpy pacifist socialist democrat rule! Those Carter years were the best! And Clinton! if it wasn't for those dang republicans that internet bubble would have gone on for ever, damn you bush!Seriously, dude, both parties suck.
Anon 3:12, your math is wrong because you are not accounting for compounding. From $40k to $220k in 40 years is a compound growth rate of 4.4% annually. Inflation might have been, say, 3%, so your parents are netting 1.4% real gain per year. If your parents got a fixed-rate mortgage in 1964 I'll bet it would be less than 6%, also the house would have been paid off in 1994. Also the 6% is only paid on the initial $40k. And, they got to deduct it from their taxes, so it's probably only around 4% net of taxes.Your parents would have done better not to keep extracting equity, but the fact is, they had equity to extract, and by pulling it out they stuck themselves with changing mortgage rates and lost the benefit of letting the equity compound tax-free. Had they not done this, they would have lived in the house for 30 years paying about $150/month on the mortgage during a time when inflation (and rents) kept going up, then had 10 years of no mortgage, and at the end had a $180k gain tax-free. Deal of a lifetime.
I rent in a highly desirable part of Chicago and have for the past 7 years. On a net basis I only need $1400 per month which includes everything. Discretionary spending and cash investments take up my additional cash flows. My guess is the time to buy in my part of the world is a few years away. There was a building boom and now the inventories have sky-rocketed. No substantial price depreciation that I can see. Inventory in the 550,000 to 2,000,000 is endless (no Jumbo Alt-A subprime investment no doc 100% money is probably the cause). I also forsee condo conversions becoming real poplular. Popular in converting condos to apartments that is.Good luck everyone. Should be fun to watch.
anon 3:12:How about factoring in the cost of rent for 40 years? Only a complete idiot would say that r/e has been a bad investment over the past 40 years....and that is insulting to idiots.
Anon 3:12 is the typical renter who thinks renting for 50 years is the way to go becaue he doesn't pay interest.OK you don't pay interest on your loan. You pay the interest on your landlord's loan. But guess wha, after a while that loan is paid off but you are still paying and have nothing to show for it.And your maoth is so off I don't even know where to start. Yyour parents bought for $40K. Assume they put down 20%, that is $8K.They sold for $220K, meaning their ROI on their downpayment was 2250% which works to about 22% a year.Had they kept a 30 year loan their payment woudl have been about $300 a month for 30 years followed by 10 years of living for free.Dude you really are a moron if you can't see how benefical that would have been.
"I know some of you wingnuts think inflation is 20% a year. For those of you a little more sane, use 5% a year, so 6% appreciation for housing which is historically what houses appreciate at."Sorry to burst your "bubble", but if you read Shillers indepth view on housing appreciation statistics, you will discover that housing has, historically, risen by 0.7% per year above inflation. And no, the historic inflation rate is not 5%. It is 3%. (You can verify this by reviewing the CPI statistics going back to the 30s on the Federal Reserve website)So in general, a home should at most appreciate by 4% a year.With regards to the original question posted by Keith, of course I will buy someday. I am not into this bi-polar war between renters and home owners and I take no sides. Both renting and owning have their pros and cons. It is simply a matter of degrees.From my perspective, where I live (northern California) it is substantially more logical to rent than to buy. Buying costs almost double the monthly cost of renting here. That has decreased somewhat as housing prices began to drop here, but it is still very diverged.My personal opinion (from my vantage point) is that I in a good location that is rent controlled. So I see no reason to enter the housing market until some normalcy is evident. But I seriously doubt I would purchase here in the Bay Area if and when I decide to buy a home. I would much rather bank my high salary for as long as possible and then move to a cheaper area and buy a home with cash. I have never been a fan of debt to begin with so a home bought outright would be ideal from my perspective.
.Fred Flinstone's rock was only about 600sqft on a 1/4 ac!But Oooh that Wilma!.
:But Oooh that Wilma!I envy Barney, a short tub with a scorching Betty! At least Freddie's an alpha male (frat type) with a beer gut.
Both sexes are biologically predisposed to controlling (these days called owning) property. Females: - nesting- safety- security Males:- territory- tangible symbol of strength- attract femalesPrehistoric and animal instincts still strongly influence (our) Homo Sapien behavior. For example:- territorialism => real estate ownership + living in same area most of our lives, marking territory with fences- live in villages => neighborhoods- herd behavior => buying high P/E stocks and real estate, fashion, manias- trophies to show strength => Hummers, ridiculously large homes, conspicuous consumption- Not overthrowing the tribal chief because dangerous to tribe survival => extreme reluctance to do anything about Bush (even by people who hate him)- packs of wolves at the cave entrance that want to eat your young => overblown fear of sexual predators (i.e., fact is more children die from asthma than 'stranger danger'), why congressmen politically exploit child safety at every turn to advance legislation
NOW is a GREAT time NOT to buy a house!-dcandout
I've given up on the concept of owning, outside of buying for a retirement home in upstate NY, Maine, Nova Scotia, etc.All the places of well paying white collar work: NY, LA, DC, Chicago are bubble zones and aren't worth it. I'd rather have that $75K abode, on the outshirts of a Halifax N.S., with a decent backyard/forest and polite neighbors for my golden years. And nowadays, with hi-speed internet, where one lives doesn't have to contribute to being "isolated" from the world just because the region's quiet and not a beeshive like Manhattan or an unfriendly suburbia like Philly's mainline burbs.
@Anonymous September 26, 2007 3:12 PMC'mon...on top of everything else, you seem to be saying that house prices move in more than one direction! Are kidding with us?
>> I will never buy a home again, at this point I'm seriously 1 step away from sleeping in my car. BTW I have no health insurance, have three AAS degrees and can only find contract jobs, isn't life just grand?Loser.
I have been renting for almost 2 years and am sick of it.______What really sucked for me was having a clueless f*cked homebuyer who was trying for all the world to appear like a "rich player" AS MY LANDLORD.If you can generate a good income and can easily cover your fixed-rate mortgage, why would you want to live in one of these properties that might be foreclosed on at any time, in which case you're out on your butt without having done anything wrong???
>> I saw the exact same thing in the 80s under that evil insane freak Reagan.Nice - here we go with THAT worn out old argument. STOP already! It carries about as much merit as saying Pres Clinton ran a budget surplus during his term...
Owners dont forget that if you want to move you have to sell. Selling right now is hell. Just wait till the homebuilders really start discounting their bloated inventory. Existing home prices will really go down.When renting, im 30 days away from going anywhere I want. Ive owned for the last 20 years, and think it will be a very long time before I buy again. Beside, interest on my home sale will cover most of my rent.
Maybe---For a permanent home base and estate.---When median prices return to historical trends. (4+ yrs?)---Puget Sound Area
When renting, im 30 days away from going anywhere I want. ================================That's bullshit. You have a lease like everyone else. You break the lease you lose your deposit, your credit is fucked and you may get sued.Sounds like fun.
Maybe homes are not as overpriced as we think. Shouldn't we track the price of homes vs. gold instead of the worthless dollar? KEITH, could you throw that chart up sometime?I know some Germans and Swedes who are buying in California because it's cheap to them. Price is relative. Home appreciation actually looks reasonable versus gold or the Euro or the Pound.Maybe the housing bubble is merely a reflection of the crashing dollar.Any thoughts?
Anonymous said... When renting, im 30 days away from going anywhere I want. ================================That's bullshit. You have a lease like everyone else. You break the lease you lose your deposit, your credit is fucked and you may get sued.Sounds like fun.________________________________Actually, many landlords are now including "early out" clauses in the lease (in part, because they have to to get someone to rent their empty former condos) that says you pay the equivalent of one month, you can leave before the end of the lease. So genius, if you know you're gonna leave in 60 days, you give notice, live there for 30 while you get ready to move and then take off. Try that with that McMansion you can't sell.
Committing to renting money from the bank (instead of renting shelter) needs:- some certainty that we stay where we are and keep our jobs- similar cost of renting money versus renting shelter, with real appreciation assumed zero
I will never buy a home again, at this point I'm seriously 1 step away from sleeping in my car. BTW I have no health insurance, have three AAS degrees and can only find contract jobs, isn't life just grand?________________________________What is AAS?American Astronomical Society?American Association of Suicidology?Association for Academic Surgery?Assyrian Academic Society?What???
Another criterie besides staying where we are and not paying much more than rent is a return of traditional lending criteria, AS IF the bank would have to keep the mortgage on their books. Bubbles are at often credit bubbles, and traditional lending would put a stop to speculating.
When renting, im 30 days away from going anywhere I want._____You can also get kicked out on short notice when you DON'T want.
Maybe the housing bubble is merely a reflection of the crashing dollar.Any thoughts?______I would say inflation, the crashing dollar, and the housing bubble are all symptomatic of a very sick economy that resulted from too much "money" being created out of nothing, then lent to too many people who would never be able to pay it back, then chopped up and packaged in the form of bonds that were for some reason AAA-rated, and were bought by financial professionals worldwide, and were then seen for what they are: WORTHLESS.Lots of people on all sides of this sick economy should have known better, yet they didn't. They have made huge mistakes and now the piper is in town, demanding payment.Wall Street is now starting to realize that the deep rate cuts by Bernanke really have not helped.You can almost hear the big collective "OH SH*T".
all the high priced areas are close to multiple hospitals and walking distance to shops and use less gasoline able???
after the 17 year average secular bear of being nickled and dimed downward and bled by taxes and assessments and fees, if i live that long....and buy at the bottom to average the loss I take on what I already have and break even..
i thing the biggest drawback of owning, even after prices go back to normal, is the lack of career options due to the lack of mobility. if your job starts to suck or you find a better incremental opportunity, as a renter you can jump on it. owners are often locked in to a smaller geographic area and must wait for something significantly better in order to make the move worth it.
I just "bought" a house using 100% financing after several years of renting. (It has yet to close and I can get out if I feel I need to - feel free to take this as a challenge to convince me.)Why on earth would I read HP regularly and then buy a house on a 100% mortgage? My own personal enjoyment. I don't think of a home as an investment or as a way of making money, I just enjoy the freedom to build new things and tinker. I'm an engineer by trade and I simply get a lot of enjoyment out of projects.I can afford the (fixed) payment indefinitely and I deliberately bought well below our means. I simply enjoy building fences and decks and wiring things and painting. I sit at a desk all day, and sometimes I just like doing good honest work with my hands.For me, I'm happy I bought.
Maybe homes are not as overpriced as we think. Shouldn't we track the price of homes vs. gold instead of the worthless dollar? KEITH, could you throw that chart up sometime?You bring up a good point. The purchasing power of our currency has devalued relative to gold.But ultimately, that has little to no bearing because our wages are tied to currency, not gold. And from a historical perspective, real estate (and rents) are always linked to wages which are denominated in US dollars. (Assuming you live here)So yes, if they were paying me in gold, I would have no problems buying a home.
Anonymous,OLD_SCHOOLER said...I will never buy a home again, at this point I'm seriously 1 step away from sleeping in my car. BTW I have no health insurance, have three AAS degrees and can only find contract jobs, isn't life just grand?=============Dude STFU PLEAZE!!Only find contract work? So what? I have been doing contract work for 3 years now and make between $12-14K a month doing so. I don't know about ever buying a house again, I sure as hell will never work for an employer again. As for insurance, you can buy basic health insurance for $150 a month.Where can you find "basic" health insurance for $150/mo. I am paying $1300/mo for a family plan and still have to pay co-pays and deductibles!
Go to Guam! It's american soil. The U.S. military is building up. Billions of dollars coming in to shore up the infrastructure for 8,000 marines. The U.S. gov pays big housing allowances to military members. Cons: distance, typhoons, snakes. Pros: cheap prices, high rents, very low inventory, trapped rental audience (military - they can love or hate Guam, either way they're trapped). Prices are what they were in the mid 90's because Guam just got out of a 15 year recession. Google Guam / marines and check it out. O.K. - rip this idea all apart now :)
I will never RENT either money or a house ever again...I am not trapped as a home owner for the following reasons: #1) Property tax on my entire 5 acre "Home Base" Estate is less than 2% of my net income. #2) Passive Income generated from quality fixed income assets, gives me the freedom to travel anywhere. #3) Travel is overrated. For example: The first time you take an ocean cruise... its exciting; But by the 3rd time its boaring and you're trapped in a steel tub and subjected to inspection at various ports of call. Travel by air is just as bad. #4) THERE IS NO PLACE LIKE HOME. The older you get the more you just want to stay in the comfort of your own home. #5) Copied from another poster...Females: - nesting- safety- security Males:- territory- tangible symbol of strength- attract females. . . . . .NOW, before all you bitter renters hate me and think that I'm just some a$$hole rich guy. I never completed college, I waited tables at Pizza Hut in the mid '80s, I could not keep a job more than 6 months throughout my entire 20s, At 30 years old I had to move back in with my mother and all my friends thought I was the biggest looser. BUT FROM THAT POINT FORWARD, I NEVER RENTED MONEY OR PROPERTY AGAIN. WORKED 2 JOBS AND SAVED 100% OF DISPOSABLE INCOME FOR 1.5 YEARS, THEN PAID CASH FOR A RUN DOWN (MAJOR FIXER-UPPER) IN A GOOD SUBBURB. CONTINUED WORKING 1 JOB AND FIXED UP THE PROP, THEN SOLD IT 5 YEARS LATER FOR A 110% GAIN ABOVE MY TOTAL COST. Kept working my day job and started buying gold mining shares in 2000. Bought 5 wooded acres 10 miles out of town dirt cheap- paid a few subcontractors to build a shell home of my design-- then completed the inside myself the to suit my own taste. In 15 years my net worth went from $2K (Starting the day I moved back in with my parents) to $1.6 million today.Moral of this story is that FREE WEALTHY FOLKS don't pay for MONEY.If you own a mortgaged home or rent your residence--- YOU ARE paying for MONEY.
Anon 11:40 congratulations on your new house! 100% financing eh? Well, it's less risk for you, though more for the lender, so perhaps you didn't get the best possible interest rate on the loan? Whatever the rate is, I hope it's fixed for the life of the loan. Good luck, dude.
I have always been a homeowner (since being a adult ).At times I did feel trapped ,and at times I felt like a slave to the house .In all the years that I have owned ,I never took equity out of the house .I think you can be more fear-based if your a homeowner because you feel you have something to protect .If your a renter ,you can just move easier. Right now I would rather be a renter in these troubled times . Some people would rather have a piece of the rock during troubled times .I have never bought a house I couldn't afford ,so I can't see buying a house unless it's affordable .
Sure. We'll buy again. 50%-off sounds great.
That is to say, 50%-off Real prices.
Just a comment to Bitterrenter:It won't matter who wins the election. All outcomes will be roughly the same (medical costs, inflation, home prices, banks,and domestic security).None of them know what's going to happen, or how to stop it, or fix it.
Where can you find "basic" health insurance for $150/mo. I am paying $1300/mo for a family plan and still have to pay co-pays and deductibles!September 27, 2007 1:37 AM=============You need to shop around then. You are being fucked up the ass with a 12" dildo at $1300 a month. I pay $93 a month for a $3000 deductible policy myself. You sound like the typical idiot liberal Democrat who thinks we need Nurse Hitlary to run things.
Now is the time to buy..Make Low Ball offers with short durations for the seller to make a decision..Look for a home that has been on the market for over 180 days..There are deals to be had,,Espically in the Atlanta area where that $70,000 house never went to 1 million over night..Its the areas of the county where WILD appreciation was occuring with the ponzi effect that are taking a hit..Atlanta has had some bad actors for sure, but nothing like the rest of the country....Go south young man..
To those migrant white collar workers:live in upstate NY (Buffalo, Syracuse, etc), Canada, etc at reduced homeownership rates but work (i.e. rent in DC, NYC, LA, etc) and use that mortgage to rent gap (2.5 to 1 ratio) to pay off your retirement pad.
"Anon 11:40 congratulations on your new house! 100% financing eh? Well, it's less risk for you, though more for the lender, so perhaps you didn't get the best possible interest rate on the loan? Whatever the rate is, I hope it's fixed for the life of the loan. Good luck, dude."Thank you :)Yes, the rate is fixed for the life of the loan.Additionally, we got the employee loan rate (my wife works at the bank we borrowed from) which is significantly below the market rate. (It would have been marginally less if we had a 20% downpayment, but I'm only a couple of years out of college (payed off all my debts elsewhere, including college) and I simply don't have 60-70k in cash at the moment.Additionally, our current rental area is going to hell and new rental properties cost almost as much as mortgage + taxes.Interesting times.
When the monthly payment to buy becomes less than the rent.
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