HousingPANIC Stupid Question of the Day

October 08, 2007

HousingPANIC Stupid Question of the Day

Who do you think is more jealous today:

1) Bitter Renters of Homedebtors

2) Homedebtors of Bitter Renters

56 comments:

Anonymous said...: Home Debtors

'cuz they be a trapped in a big nasty bear trap, the only way out is to bite your limb off.; October 08, 2007 11:44 AM
Anonymous said...: Home Debtors... Those that know what is now unfolding anyways..; October 08, 2007 12:54 PM
Anonymous said...: Home debtors are more jealous. They are strapped to a sinking ship.; October 08, 2007 12:56 PM
Anonymous said...: HomeDebtors who are also REALTORS or mortgage have got to be REALLY jealous of renters today; October 08, 2007 1:09 PM
Paul E. Math said...: You are giving homedebtors too much credit. If they actually understood the situation they are in they would be unbearably jealous of us bitter renters.

But homedebtors still think they are living out the american dream. Right up to the last minute they believe someone is going to bail them out for their financial ignorance. To the extent that they realize they are in any jeopardy at all, they think it is someone else's fault and that someone else should come to their rescue.

Imagine if I took out a teaser rate car loan to buy a Hummer and then couldn't make the payments after the reset. And then I actually had the nerve to ask you for money to bail me out. "But, but I'm losing my car!" I would cry. How stupid would I have to be? Would you just slap me or would you kick me right in the balls?

That's how stupid homedebtors are.; October 08, 2007 1:19 PM
blogger said...: Since bitter renters are paying pennies on the dollar to rent vs. "own" and aren't suffering massive monthly equity losses, I'd say the only desperate homedebtors that aren't jealous are the ones firmly in denial, who believe home prices will start going up again in a few weeks

If you factor in price depreciation with the cost of ownership spread, an average home in the US is probably about 500% more per month to own than rent today

someone do the math. i'm too lazy today - too lazy to even capitalize my letters

it's the london weather. it does that to ya; October 08, 2007 1:31 PM
Anonymous said...: Bitter renters missed out on the opportunity of a lifetime. They live in disgusting apartments.

Bitter owners live in a home which will probably be worth less next year than today. If they don't have to move for a few years it will make no difference to them.; October 08, 2007 1:53 PM
Anonymous said...: Love the picture!

Everyone we know bought homes in the last 7 years. One couple, asks (everytime we see them) us when we are going to buy.

I can see their minds racing, but they dont say much except that housing has gone down slightly...

Property tax differences were not considered with the recent purchases, which by the way, is eating up all their disposible income.

At this point, it appears they feel more sorry than envious. But soemtime in the near future, it will be a different story.; October 08, 2007 2:02 PM
Anonymous said...: I agree with Paul E. Math - most are completely unaware of what's going to happen, still in blissful ignorance. They are just silent on the wonders of 'owning' a home. No more office/street talk of appreciation, early retirement, etc. - just switching to the cost of ownership (taxes, gas, electricity, shoddy construction). The tears are coming ...; October 08, 2007 2:19 PM
Anonymous said...: How about homebuyers who bought something very nice they could afford in the early 1990's and almost have it paid off...? And never took a HEL.

Marky Mark; October 08, 2007 2:30 PM
Anonymous said...: Obviously, bitter renters - at least HP ones. :)

You guys are funny because you think anyone who's bought in the last couple of years *had* to use an ARM (or was greedy/dumb and did so). Some of us could easily afford a fixed rate and thought long-term rather than $$. A home is just that - a home, not an investment or asset. You have to live somewhere, unless you're going to take your millions and live in a van DOWN BY THE RIVER! :D

As I've stated before, I'm +/- $200ish vs renting the same thing currently, and my ratio gets better and better every month because of rising rents. ;) So keep hatin' - I'm taking my holiday and going out to try and finish staining that damn fence finally. That way when the patio starts in a week, the back yard is all done for the year. ;); October 08, 2007 2:50 PM
Anonymous said...: "The average home in the US is probably 500% more per month to buy than rent today." You can take the payments for a couple of Phoenix lofts and say that that is "average," to "prove" your point that there was a housing bubble. But I can also look at a few investment properties in my market that will undoubtedly cash flow, and then I can "prove" that housing is still undervalued.; October 08, 2007 2:50 PM
Anonymous said...: Homedebtors who are forced to rent, at a loss, to bitter renters.; October 08, 2007 3:08 PM
Dino said...: Anonymous said...

"The average home in the US is probably 500% more per month to buy than rent today."

=======

So you are saying that a $2000 a month rental costs $10,000 to own?

Sir you need to get a clue.; October 08, 2007 3:09 PM
blogger said...: Homedebtors don't want to admit they've made a mistake so they project out to the world that renters are renting shag carpeting dumps instead of mansions and amazing condos (for a fraction of the cost of buying); October 08, 2007 3:11 PM
Anonymous said...: I'm actually torn on this one.

I owned and sold. I lived in the home for 3 years. After selling I walked away with 3 years' salary of tax-free profit.

Now I rent and see homes on the market for months and months but with no price drops.

So I am getting more and more bitter for having sold when I did instead of just staying put. After taking into account, buying costs, selling costs and the cost of moving twice, it will not have been worth it.

And keef where are these pennies on the dollar rentals? I am renting at pennies on the dollar too..75 to 80 pennies that is.; October 08, 2007 3:14 PM
Anonymous said...: keith said...

Homedebtors don't want to admit they've made a mistake so they project out to the world that renters are renting shag carpeting dumps instead of mansions and amazing condos (for a fraction of the cost of buying)

October 08, 2007 3:11 PM
------------
Eventually bitter renters will be living in substandard conditions but that is because the bitter homedebtor they are renting from refuses to properly maintain the property due to negative cash flow, i.e. stupidity.

I predict a significant rise in LL-Tenant cases in a few years as homedebtor/Floplords get pissed that tenants take from the rent the costs necessary to keep the place properly maintained. The negative cash flow is soo huge that even the most minor of subtractions in just a single month will be too much for the floplord to tolerate.; October 08, 2007 3:34 PM
Anonymous said...: Keith, it's still location, location, and location. If there is no bubble in your area, no price rises, and you didn't intend to sell anyway, it boils down to the simple fact that renters pay rent to a landlord, and owners (if they don't own outright,) pay mortgage payments to a lender. Everybody lives somewhere, everybody pays monthly, and each does or does not envy the other for his or her own reasons. No bubble here, no conscious idea of what goes on in the outside world, NO WORRY!; October 08, 2007 3:35 PM
Anonymous said...: "I'm +/- $200ish vs renting the same thing currently, and my ratio gets better and better every month because of rising rents. ;) So keep hatin'"

You're a douchebag as you obviously do not live in a bubble area and are not affected. In DC, for example, the monthly payment difference between buying and renting similar homes can easily be between 1.5-2K/month- and that does not include taxes and HOA fees, if any.; October 08, 2007 3:35 PM
Anonymous said...: How about homebuyers who bought something very nice they could afford in the early 1990's and almost have it paid off...? And never took a HEL.
-----------------------------

I resemble that remark. HAHAHAHA!; October 08, 2007 3:40 PM
Anonymous said...: i think the most bitter people are the people (mostly guys) who let their partners talk them into taking out too much mortgage to buy some McMansion they didn't really want anyway.
Now they know they should have listened to themselves.

(BTW, i don't blame women for any of these situations; if you don't have a good enough relationship with your wife to work this kind of stuff out, you don't belong together).

on another topic, was watching a video by Aaron Russo, www.freedomtomfascism.com , and one of the interviewees made the comment: "if you are an employee and you have a mortgage, almost all of your income is taken up by income tax or interest paid to banks. you are in effect paying the costs of your own slavery."; October 08, 2007 3:53 PM
Anonymous said...: "They live in disgusting apartments."

I currently rent a 3 bedroom 2 1/2 bathroom townhouse with a living room, dining room, den, garage, graniteel, jacuzzi tubs, washer and dryer and deck- built circa 2000. And, I am probably paying about 1,500 less per month than my neighbors who just bought in Fall 2006 and whose property value is currently dropping like a brick- all that on a townhome that looks good at first glance, but when you really scrutinize it, is built like sh*t- I would certainly never buy one. On top of that, the only maintenance I do is to replace the central air filters and the refrigerator water filter. Oh, I once fixed the toilet because it was something small and I did not want to bother with the landlord or a plumber. Finally, rents aren't going up here in the DC metro area because, as expected, all those condos that they built in the last few years and which they cannot sell, well, they are all being converted to apartments.

HA-HA, HA-HA-HA!!! How's that d*ck taste.; October 08, 2007 3:53 PM
Anonymous said...: it all depends on whent he homedebtors attained that status.

In my town, if you became a homedebtor before 2002 or so, you are laughing at renters who likely pay MORE than your monthly mortgage and carrying costs.

If you became a homedebtor in 2003 or later, especially if you have "creative financing" you absolutely despise renters.; October 08, 2007 4:08 PM
Anonymous said...: Jambu said...
Anonymous said...

"The average home in the US is probably 500% more per month to buy than rent today."

=======

So you are saying that a $2000 a month rental costs $10,000 to own?

Sir you need to get a clue.

Here in Los Angeles it costs about $7000.00 to $10,000 a month to buy a house that would rent for $2000 to $2500 a month.

On the outskirts of Death Valley it costs $400 a month to rent a house that would be $1300 a month to buy.; October 08, 2007 4:16 PM
Anonymous said...: Re Keith's 1-sided argument: And bitter renters imagine we all have option ARMs on houses @ 10x our income driving dual Lexuses.

This comforts them as they hope they are guessing right just as speculators hoped they were guessing right when they bought 5 houses. Maybe you'll time it better than most of them did?

Losses on paper are just that: on paper. With stocks, until you sell you're not rich. With housing, until you sell, you're not broke. ;)

Drop the hate and anger, let it flow out of you. Life is too short - especially with global warming. Enjoy while you can, but plan for the future...just in case. :D

And on that note, because of our rather excessively long season, BBQ @ our house 10/20 on the new patio! :D; October 08, 2007 4:17 PM
blogger said...: Like I said, too lazy to do the math, but here's a shot

Typical home in Phoenix, $300,000, dropping 20% in value this year (at least) or $60,000 loss (vs. if you would have sold 1/1/07)

You can rent this home for $1200 a month, or "own" it for $3000 a month (P&I, taxes, association fee, upkeep)

So this year you'll lose 60,000 in value and have ownership costs of 36,000, or $96,000 total

The renter will pay $14,400 for the same house.

14,400 / 96,000 = 15 cents on the dollar

Hope that helps! Play around with the numbers, don't take such a big loss, or assume (wrongly) you can get more than $1200 a month in rent, but bottom line is that homedebtors are getting destroyed and renters are sitting pretty

That day will change, and one day it'll be smart to own again, but that's where we are today; October 08, 2007 4:28 PM
Anonymous said...: People no longer ask when I will buy - They now say, "you are so lucky you rent." . . .my new Fidelity Rep here in SD was wondering why I had so much money in a "cash" account - I explained that I sold my home in early 2006 and banked the money. . .he said, "wow, you cashed out at the peak of the market, and I bought at the peak.". . .he was green with envy. . . conservative price drops here in SD are 14% from the 2005 highs - and many neighborhoods (except LaJolla of course) have lost 20% already.; October 08, 2007 4:29 PM
Anonymous said...: Anonymous said...

"I'm +/- $200ish vs renting the same thing currently, and my ratio gets better and better every month because of rising rents. ;) So keep hatin'"

You're a douchebag as you obviously do not live in a bubble area and are not affected. In DC, for example, the monthly payment difference between buying and renting similar homes can easily be between 1.5-2K/month- and that does not include taxes and HOA fees, if any.

October 08, 2007 3:35 PM
=============================
Baseless insults - the signs of someone who's realizing they're inferior. I do live in the DC area, and apparently you went to Baltimore or PG County schools, because your math skills appear to be lacking...the other alternative is that you're an idiot, but I will let you decide which. Let me break it down for ya!

Rent + principle (yeah yeah, mock it if you want, in a normal world, which we'll return to soon, principle means something) + extra $$ in my pocket due to tax deduction = roughly my mortgage payment, with $0 down. :P As your rent increases and my balance decreases, the ratio shifts more and more to me.

Just because you're not thriving on your career track, don't hate. Might I suggest moving to Cumberland and driving a Prius? Median price out there is about 1/4 - 1/3 of what it is here!; October 08, 2007 4:30 PM
Anonymous said...: Re rent ratio from Keith:

You REALLY like to skew the #s in your favor man...or you can't really count. You don't strike me as dumb, so we'll just go with purposely exaggerating.

It's roughly $7/$1K total on a house - not $10. So a $300K house is $2100.

So $1200/mo + $300-400/mo in principle (we're going long-term here) gives you 1500-1600. So we're down $500-600/mo to start off with.

After you do the tax-differential depending on how well he spins it, he's only down a good $200-300/mo. With rents rising 8-12% in most places, that gives you positive cash-flow in 2-3 years.

Figuring he never put $$ down in the first place, that means he's out about $10K at most and then he has positive cash flow for...well, ever. :) Overall not bad at all long-term.

If he's a moron and dumps it for a $60K loss, sure - then he lost $60K. There are always multiple choices - they just don't necessarily need a number-2 pencil!; October 08, 2007 4:48 PM
Anonymous said...: Having recently rented and now paying a fixed-rate mortgage for a very nice home that a f*cked-buyer-wannabe-flipper can't kick me out of, I vastly prefer NOT renting. Sorry if that rains on your little renting-is-paradise ideology.; October 08, 2007 5:00 PM
Anonymous said...: Here in Los Angeles it costs about $7000.00 to $10,000 a month to buy a house that would rent for $2000 to $2500 a month.

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

BULLSHIT. Show me some examples. You people are seriously deluded. On craigslist all I see for $2000 a shacks.

Here is what you get for $1950 in LA:

http://losangeles.craigslist.org/
sgv/apa/443226960.html

Yo telling me this is a $1M+house?; October 08, 2007 5:08 PM
Anonymous said...: 99% of people whether renters or owners don't think about this stuff. They rent, they own, life goes on one way or another.

It is the 1% on the fringe on HP and other blogs that focuses on home prices 24/7.; October 08, 2007 5:10 PM
Anonymous said...: Here are some more wonderful rentals in LA for $2000. I wish I was as lucky as you all to rent. Oh darn I'll just have to keep living in my home with a $1700 fixed loan that I got in 2002. So silly of me to have bought 5 years ago instead of renting all along.

http://losangeles.craigslist.org/l
ac/apa/442772076.html

http://losangeles.craigslist.org/sfv/apa/
442750112.html

http://losangeles.craigslist.org/sfv/apa/4
42623290.html; October 08, 2007 5:14 PM
Anonymous said...: It's complicated. I definitely have a screaming deal on rent...1100/month for a good sized house on 3 acres of knock your eyes out natural scenery, ridiculously valued somewhere between 800/900k. (Really worth somewhere around 350k). I live in the central coast of California, the bubbliest of the bubblies.

If I bought it, payments would be about 5600/month. Taxes another 700/month, for a total of 6300/month. Maintenance would be a nightmare, as the house is in pretty rough shape, but I'll just leave that out of the equation.

1100/6300 = 17.5 cents on the dollar, not counting depreciation (about 8% so far this year in the area) or maintenance.

On the other hand, renting sucks. I'd like to put in a recording studio and change the way the walls are laid out, put real siding on over this stucco, and a number of other things.

Debt sucks more though, and if I was paying more than 5 times what I pay now for debt service and tax, I wouldn't be able to do any of that stuff anyway.

We just had a psychologist in the area kill his wife and himself...and guess what...he was in foreclosure. Those guys make about 200 bucks an hour at the local nut house, too.

On the one hand, I feel like I dodged a bullet, on the other I'm pissed that I have to keep renting because of other peoples' rampant stupidity. I feel bad for people that got sucked into the vortex of stupid, but I wish they'd wake the hell up and take their medicine. Prices here are about 11x income.; October 08, 2007 5:18 PM
Mammoth said...: “Who do you think is more jealous today
1) Bitter Renters of Homedebtors 2) Homedebtors of Bitter Renters”

Last week the furnace quit. Had to call around to find a repairman, then set up an appointment and take half a day off work to be home when he showed upt, and finally pay over $300 for the repair.

Here's how a bitter renter would deal with the problem:
Pick up phone and call landlord.
“Hey, the furnace quit. Give me a call when it’s been fixed. Here is the number of the hotel where I’ll be staying, and I’ll just knock the hotel bill off next month’s rent. Got a problem with that? I didn’t think so.”

Bitter renter: $0
Mammoth: -$300+

This homedebtor says ouch!; October 08, 2007 5:33 PM
Anonymous said...: Just moved into a 3YO home last week - non-bubble area, although our seller got a job transfer, was in over their head, and was desperate, so we got a great deal. 10 year fixed mortgage, will have it paid off in 7. Substantial down, MUCH cheaper than the apartment we just left. Fantastic school system, QUIET street. Couldn't be happier.

Everyone's situation is different, so I'm not going to insult renters or owners. It's just what's best for us; October 08, 2007 5:41 PM
Anonymous said...: If you bought a home in the last couple of years for a investment,just cut and run.; October 08, 2007 5:55 PM
Anonymous said...: Wait, you left out a category:

The free and clear homeowner, who lives in a paid-off house with all the space and privacy they want, laughing at the renters and homedebtors who scramble to find and extra $300 a month to pay the mortgage, or who have to move every 6 months to "get a good rental deal".

We make up 33% of this country, and the rest of you either pay rent or mortgage interest to us. I guess this whole blog is about the other 2/3 bickering over the economic scraps.; October 08, 2007 6:02 PM
Frank R said...: This comforts them as they hope they are guessing right just as speculators hoped they were guessing right when they bought 5 houses. Maybe you'll time it better than most of them did?

Losses on paper are just that: on paper. With stocks, until you sell you're not rich. With housing, until you sell, you're not broke. ;)

Happy homedebtor, your post sums up the problem. You're talking about a house as though it's an investment vehicle, a lottery ticket, a way to make or lose money.

In the real world, however, a house is a place to live and not a lottery ticket. It is people like you who treat it as a lottery ticket who caused this whole mess. For me, my business is where I make money and focus on making money. A house is four walls and a roof. A place to live, sleep, and raise a family. Not an "investment vehicle."

I'd also like to know where all these skyrocketing rents are. They're dropping fast in So Cal. For example, the house I rent:

March '07: Asking price was $3,900, we negotiated down to $3,500. At the time around $3,750 was average.

Today, Oct '07: Average asking rent on this model McMansion in our community is running around $3,200. That's an 18% drop in a mere 7 months.

So, please show me where the skyrocketing rents are.

By the way, if I'd "bought" this house at the peak it would have cost around $1.2M, so my payment would be more than double what it is now to "own" it, for a house that is now worth around only $800k and will be below $600k within a year. And even at $600k, a 30-yr fixed at 7.5% will be over $4,000/month so I'm still getting a steal.

Before moving here I lived in a condo at Kierland in Scottsdale, AZ that sold for $600k (read: $4,000 mortgage payment) that I rented for $1,500. Most of the units around me were vacant, which in simple terms means dropping rents.

I agree with those who said the desperate homedebtors are so furious at renters that they have to strike back by making them out to be ghetto people in run down apartments. Let's not forget that it was vanity, ego, and the need for status that got almost all buyers from 2003-2006 into the hole they're in to begin with. Only insecure people who needed bragging rights bought during those years. People with brains held out and we're secure enough with ourselves to rent and not give a crap what some insecure status-seeking desperate homedebtor has to say about it.; October 08, 2007 7:03 PM
Anonymous said...: I think that bitter renters are jealous of home debtors that have owned for 10+ years.

Yes, my mortgage payment is less than your rent.

Yes, I get a tax credit.

Yes, I have 3 years left on my 15 year mortgage, before I own outright...with the exception of property tax.

Yes, I purchased within my then financial limits.

No, I never upgraded houses.

No, I never tapped my home's "equity." It doesn't exist until, and if, I ever sell.; October 08, 2007 7:04 PM
Anonymous said...: The Mexican...

Home Debtors that never made money on RE and Bitter Renters that never made money on RE.

I'm a home debtor and I'm hoping prices keep dropping so that I can buy a couple more. U see it's not home debtors vs bitter renters, it's people with capital vs people without.; October 08, 2007 7:42 PM
Anonymous said...: This is my view renting:
http://www.arlingtonvirginiausa.com/files/9922/_mnmts_1_page.jpg

I'm definitly not bitter especially on July 4th when I have opera box seat like views of the fireworks.; October 08, 2007 8:22 PM
Frank R said...: I think that bitter renters are jealous of home debtors that have owned for 10+ years.

Yes I am jealous of those owners; however I was in my early 20s then and didn't have the credit or money to buy, because 10+ years ago you actually had to have credit and a down payment unlike the "owners" of past years.; October 08, 2007 9:21 PM
Anonymous said...: 3br 2ba Single Family Home I'm renting in Santa Fe: $1,350/month

This home was listed for sale last December at $360,000. Assuming 20% down ($72,000), finance $288,000 at 6.5% for 30 years gives a PITI of $1,860/month. Add in $150/month for taxes and $75/month for insurance = $2,085/month.

So, already I'm up $735/month ($8,820/year) over owning and that doesn't include maintenance.

Now, the market is in the crapper right now. I figure that homes are down about 10% this year in Santa Fe. That's another $36,000/year on this home. Truthfully, this home won't sell at $324,000 either, so it's actual value is even lower than what I'm estimating.

That means, conservatively, I'm up $3,735/month over owning right now.

Oh yeah, I'm also earning about $500/month in interest off the equity I got when I sold my home last year.

I'm feeling better and better about this every day!

Jymkata; October 08, 2007 10:15 PM
Anonymous said...: Frank@NeverColdCall.com said...

I think that bitter renters are "jealous of home debtors that have owned for 10+ years.

Yes I am jealous of those owners; however I was in my early 20s then and didn't have the credit or money to buy, because 10+ years ago you actually had to have credit
and a down payment unlike the "owners" of past years.

so in 10 years you will be jealous of the people that bought now stupid.

ps a 1 million dollar home in Los Angeles Proper rents for 4200.00 and up apx 2800 or so less then owning.
but if you are making a real paycheck over 275k (or 600k + bonuses like me) the $2800 goes to uncle sam to waste on bullshit
pick your poison I would rather pay the bank call me stupid.
BY THE WAY
bought my home (my third) in early
2004 in Beverlywood proper for 1,450,000 I have two offers from
neighbors (house is not on the market) for $2,250,000 will sell if either step up to 2,400,000.
if I rented this home I would have dick.
BTW If I sell will will buy right away in Hancock Park or Brentwood for 3,000,000 to 4,000,000.
I think if you can afford it's a great time to buy in bubble areas
like pheonix
I wish there where deals in desirable areas of Los Angeles
but there aren't
so my point is bitter renters are just that bitter.
they would own if they could afford it or needed a tax deduction but they don't cause in reality they are.....................; October 08, 2007 10:17 PM
Anonymous said...: Frank@NeverColdCall.com said...

I think that bitter renters are jealous of home debtors that have owned for 10+ years.

Yes I am jealous of those owners; however I was in my early 20s then and didn't have the credit or money to buy, because 10+ years ago you actually had to have credit and a down payment unlike the "owners" of past years.

==============

Whatever dude. I bought my first home in 2001 at the ripe old age of 26. If you were in your early 20s 10 years ago, you were around 26 in 2001 as well.

I sold that house in 2006 for $400,000 more than I paid for it.

You could have made a killing as well. You chose not to. You listened to people like Keith and other doomsdayers.

You fucked up. Don't blame age for that.; October 08, 2007 10:30 PM
Anonymous said...: This home was listed for sale last December at $360,000. Assuming 20% down ($72,000), finance $288,000 at 6.5% for 30 years gives a PITI of $1,860/month. Add in $150/month for taxes and $75/month for insurance = $2,085/month.

So, already I'm up $735/month ($8,820/year) over owning and that doesn't include maintenance.

==========

You are leaving out a tax deduction of $500 a month and principle payback of $400 a month. Your $735 is gone and then some.; October 08, 2007 10:32 PM
Anonymous said...: We rent from a real estate agent who was so 'clever' two years ago to let us rent the dump of a house she owns.
BTW. we also have heat paid for by her directly and I assume by us the renter indirectly.
She is sooo bitter that she wanted a guy to come by and setup a regulator so we couldn't adjust the heat to our liking. She soon dropped that plan.
My only concern is that she ends up being foreclosed upon and I guess we end up being out of here.
FUNNOMINAL; October 08, 2007 10:52 PM
Anonymous said...: Whatever dude. I bought my first home in 2001 at the ripe old age of 26. If you were in your early 20s 10 years ago, you were around 26 in 2001 as well.

I sold that house in 2006 for $400,000 more than I paid for it.

You could have made a killing as well. You chose not to. You listened to people like Keith and other doomsdayers.

You fucked up. Don't blame age for that.

Can I blame that on age AND student loans then Mr. Arrogance?

But no, you are right. We are all stupid. We will forever be priced out of the market. Curses! The realtors were right. Buy now before its too late! Well, guess we have to rent for the rest of our lives then. I am curious who buys the homes in that scenario.

But it must be gratifying to live in your world, where you are smarter than the likes of Warren Buffett, George Soros, Robert Shiller and everyone else who made a living on statistical analysis and market savvy. Clearly, there is no bubble. Nope. You are 100% free and clear and housing appreciates 10% per year (or more) on a regular basis. No worries here.

One thing to add. I have been a reader of blogs such as Keiths and a few others (patrick.net) etc for several years now. I have posted a few times here and there. Yet to my knowledge, I have never found a need to post on boards who tout real estate or claim there is no bubble.

Now I wonder why it seems that trolls make it a mission to go out of their way to post on this and other boards, acting in a condescending fashion towards us "bitter renters" while we seem to not see the need to retort on their housing "Ra Ra" boards?

My answer to that paradox: we have nothing to lose in this situation except maybe a little time. However, for the home debtor or realtor, there is much at stake.

So with respect to the trolls who are trying to get us to bite by attempting to deride us, get this through your thick skull: the housing ponzi scheme is OVER. Remember the greater fool theory? Well guess what: that fool is YOU. And no matter how much you post and how condescending you will get, we will not budge. And 2-3 years from now, after countless Alt-A and prime loans have bought the farm, I wonder if you will still be around.

My suspicion is that our rolls will be somewhat reversed by then. We will be the home owners after purchasing at discounts while you will be the "bitter renter" after getting foreclosed upon and ruining your credit.

Oh, the irony.; October 08, 2007 11:58 PM
Anonymous said...: By and large I'd have to say that we're covetous and envious, if not jealous, of those in a better financial position.

Currently, some of the people who are in a better financial position than me own more real estate, and some own less real estate. People who paid too much for, and can't afford, the houses, cars, boats, or dotcom stocks they bought are in a bad situation. I've got a comfortably affordable mortgage on a home which has (if you believe statistics) gone up in value 26% in the past year. I live in a city with a 1.2 to 1.4 percent vacancy rate for rental accommodation, and there's been a 6 - 10% rental rise in the past year.

The problem here is that while the contention here is always that the housing bubble is global, the examples presented are always from the same five or six states in the US.

Plus, I'd say the common refrain here is that the happy renters are simply waiting to swoop in on the market, once prices crash to some predicted fraction of the current market. So the renters don't have a principled stance against house ownership per se, they're simply reacting to unsustainable pricing and waiting for more reductions.

If homeownership is the goal of many renters (even HPers), then discounting the people who simply got themselves into trouble, I'd say the answer is obvious.

Mike F; October 09, 2007 12:42 AM
Anonymous said...: No Lie...
I live in an apartment my mom owns while my last three houses earn just under 5% in worthless treasuries and real estate adjusts. Mom won't charge me rent and the place is walking distance from my 6 figure job, I have been there for 15 years. Sure I pay allot of taxes on the interest. Who cares, when my wife finishes medical school I guess I'll just do laundry and shopping in between fishing trips.; October 09, 2007 1:51 AM
Anonymous said...: Anonymous said...
This home was listed for sale last December at $360,000. Assuming 20% down ($72,000), finance $288,000 at 6.5% for 30 years gives a PITI of $1,860/month. Add in $150/month for taxes and $75/month for insurance = $2,085/month.

So, already I'm up $735/month ($8,820/year) over owning and that doesn't include maintenance.

==========

You are leaving out a tax deduction of $500 a month and principle payback of $400 a month. Your $735 is gone and then some.

October 08, 2007 10:32 PM
--------------
And your forgetting about depreciation & that the 72k could have been in another investment vehicle. The tax deduction is based upon the owner's tax rate. Neither of you are pegging a heard number to the upkeep, which could be huge. So I think its a close call and could go either way.; October 09, 2007 2:06 AM
Anonymous said...: Dear Frank,
You're incapable of independent thought, and very close-minded. Let me give you the short of it:

I bought it as a home. I treat it as a home. Keith and the rest of the tinfoil hat crowd speak of houses purely as investments and in pure $$ terms. The FBs who thought their homes were ATMs/lottery tickets are panicking, as they have no plan B now that the free-money has dried up.

Unlike either group that dominates this blog, I am an independent thinker - that is, I see the reality that is the national housing market along with my local, and I can also filter out the bullshit that is Keith and the other bitter renters' hoping to time it right.

I find the people like you all highly entertaining. You spout "fundamentals matter", etc etc - and then ignore basic fundamental investment advice in lieu of betting/gambling on foreign appreciation, commodities, and other non-mainstream/basic investments.

I know I'm full of shit - but I'd have to go with the house and bet that none of you know that you are. So overall, who's better off? Sleep on it.

For the record though, I hate my fence - I should've hired some illegals to stain it. But, only 10 more hours to finish it finally.; October 09, 2007 4:30 AM
Anonymous said...: You are leaving out a tax deduction of $500 a month and principle payback of $400 a month. Your $735 is gone and then some.

___________________________________
Here's my calculations on that

Of the monthly mortgage payment, $1,559/month is interest = $18,719/year

There's also $1,800/year in property taxes

So that's $20,519/year to put on my Schedule A. But, because I'm married, I already get $10,000 in a standard deduction. So the actual benefit is only $10,519/year.

In the 15% tax bracket that gives me a tax deduction of $1,577/year, or $131/month - not $500/month.

Likewise, the principal payment on the monthly mortgage payment is only $300/month, not $400.

So, subtracting $431/month from the mortgage payment, it is still $1,614 month out of pocket. That is $264/month ($3,168/year) more than the rental payment.

Oh, and I have no maintenance costs and there's that whole depreciation thing that I already talked about. I also forgot to talk about the opportunity costs of putting 20% down.

It's still a better deal to rent right now. I will buy when the numbers make more sense.

Jymkata; October 09, 2007 6:02 PM
bobn said...: I'm a home-owner/debtor, who bought an existing house in an established neighborhood in November 2005. Knowing what I know now, I wish I were still renting. For what it's worth, I put 5% down, first fixed at 6%, second fixed at 7%. (The mortgage broker tried to stuff some weird negative amortization thing in on the second, but I nixed that.) House price was 2.8 x my gross income. So other than buying in at the absolute uppermost top of the bubble, I'm not a complete moron. Not everybody who bought on the bubble was, even if it wasn't the right move.

But guess what - even though I know the value is gonna drop, I still like having a detached house. I like that there's no loud neighbors on the other side of the walls, which is what I had when renting. I like that people can't just demand to come in to "inspect" or whatever, which is what I had when renting. There are nice things about having your own place, even if the investment side of it sucks.; October 09, 2007 7:17 PM
Anonymous said...: Homedebtors Despise Content Renters
Why do some people equate apartments with disgusting?
We rent a nice spacious apartment near the beach in CA and people comment how large our living room is compared to most homes. My husband and I have bought unique art for the walls, I like to decorate (within our budget) and I am proud of where we live. It depends on the area, the building and the people who occupy the units. There are just as many single family dwellings that are uninhabitable and disgusting as apartments. We have homedebtor friends that can't afford any upgrades
because they are white nuckling it through this monstrous housing bubble. We are the last stress free holdouts in our social circle and proud of it.
Oh, and the social district we RENT in (the elementary school has an API score of 918 out of 1000. So buying for "the schools" as realtors push is a fallacy.; October 10, 2007 5:14 PM

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October 08, 2007

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