How much money has being right on housing and finance these past few years saved you?
Add it up:
The house you didn't buy
The house you sold at the peak that's now depreciated
The commissions, fees and taxes you didn't pay
Your rental costs versus what a mortgage would've run ya
The REIC stocks you shorted or stocks you didn't buy
Take your best shot. I've gotta believe for some of you the number is HUGE. It pays to not be a sheeple. It pays to not listen to realtors on commission.
February 13, 2008
HousingPANIC Stupid Question of the Day
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44 comments:
Ahh, you forgot one:
The money I used to start my business instead of wasting it as a down payment on a house.
My business gave me financial freedom. It hit me that I'm coming up on 5 years since I quit my last job for good.
If I'd sunk that money into a house instead, I'd still be a jerkoff with a job trying to keep up the mortgage payments and hating life. Oh yeah and still stuck in Phoenix.
Saving about $600 per month to rent a 1 bedroom vs. buy a 2 bedroom condo/townhome. Not sure what to do with that money since stocks are a bad deal now. I guess more drugs and hookers for me!
100K profit so far - cashed in - from put options on C,WM,IMB,CFC,HD,SBUX, and others. Now I've placed six figure bets (more put options) against CMG and IYR (CMG is not strictly REIC, but casual dining is being hit by the consumer led depression, which was triggered by falling property prices and the the end of HELOCs).
Bought in NoVa right after 9-11
Sold in '05 & put 300K in the Bank
Have been renting for past 1.5 years. Have saved roughly another 75-80K, and that's with a kid in an Ivy ( that ain't cheap, BTW!!)
Thank you housing bubble !! :)
Saw it coming from a million miles away - thanks Blogs! :)
Will probably buy back in, in 1-2 years or so, after the DC dead cat bounce this Spring
(yeah, there is one, lots of people buying New construction right now - "it's a good time to buy!")
Buying in 2003 and selling in 2007 made me about $175K after all costs are paid off.
Had I not sold when I did, I would have (so far) lost $55K or so of the profit.
I would have been a complete idiot to rent during that time. I would also have been an idiot had I not sold when I did.
Probably 150,000 over 15 years minimum. That's like working three years as a slave for me.
Feeding off the boom...
My service netted over $1 mil during past 5 years.
Without the boom, the number would have only been $200K to $300K.
- - - - - - -
Now with the bust, I'm looking at semi-retirement for years to come.
$202k since 2002, excluding $37k to charity and $57k for various on-book toys.
Nothing, house prices still going up here. No lie.
Well I didn't sell my house that I bought in '97, but I did move all my money that was in stock funds in September into treasury bond funds and I figure my net worth would be about $75,000 lower right now if I had not done that.
An overspent dollar is just a dollar. An "over-borrowed" dollar can transform itself into two, three, four or more dollars down the road. That is the danger in buying an overpriced asset using credit written over a long term contract. Leverage works going up and going down.
Smug Bastard
Bought in 2003 for $325,000, sold in 2005 for $550,000. Purchased gold at $400 with half the profits, the rest in CDs at 5% or so. Rent for $2000 less per month than it would cost to buy the past 3 years.
Geez, not sure the exact amount...gotta be closing in on half a mil. Thanks Housing Panic!
Despite having a combined income of 200K we really could not afford anything reasonable and within a reasonable commute into DC (this means within 1/2 hour by car or Metro), so it's not as if we were really in the running. Had we been able to take the plunge last year or at the peak in 2005, I would have to say we would be down about 100K and would be down about about 250-300K by the time everything is said and done - this thing ain't over till 2013 my friends - and then after that the boomers all start retiring and taking well needed dirt naps. Sucks being between their generation and their spoiled brat kids'.
Four years ago, I almost bought a house in Wilmington, ca (a suburb of LA near San Pedro). I had a mortgage at 4.25 and thought I better buy now or I will never afford to.
Wilmington like East LA is predominately Hispanic and everyone looks at you funny if you don't speak Spanish, but I wanted a house.
I made an offer on a house for 310K and the owner countered. That's when I woke up and realized I might end up living in this dump hole. I thank god, I came to my senses. Now my money is in the bank waiting for prices to drop in another state where speaking English is preferred.
Bought in Orange County in 1997 and sold in early 2007. I saved my financial ass. Took my stocks in my retirement account out of the market and am safely sitting on the sidelines. Life is looking pretty good from here.
$500,000.00
Purchased in early 2002, in the middle of winter, a few weeks after the recession and 9/11 market plunge had dropped interest rates.
Had saved $2000/month downpayment money for two years before, by living in a crappy 600sqft apartment, while reading everything I could find in books and on the internet about home/condo ownership and mortgage finances.
The condo was in a fixer-upper building but it gave me a walking commute, and the increase in value let me live there for FREE (on paper) in one of the most revered neighborhoods in Washington DC (even considering all the fees including hefty special assessments.)
Note: if you ever buy a condo, WATCH OUT for condo fees (NOT tax deductible) and special assessments (which can blow your budget with 1 month's notice.) I was lucky/smart--I asked the condo board and front desk staff a lot of questions before buying and I factored this in to my MANY different affordability calculations.
Sold above $500/sqft in May 2007 to move in with my girlfriend; we rented a larger, newer condo unit closer to the subway for both of us, in another nice neigborhood. Costs us TOGETHER only a little more than my place was costing me, and we're sharing costs.
So now I have $250K in the bank, earning $500+/month from cash and (so far) an average of nearly $2000/month from investment in gold, plus salting away $1000/month or so from salary. Avoided putting ANY of the money in stocks in May (and took some retirement money OUT of stocks), and so far I'm glad. Thought about shorting C and CFC after August--wish I had!
Now all I have to worry about is a U.S. dollar crash (unlikely, though it has dropped), a money market bank default (very unlikely) or my landlord selling/walking-away (very unlikely). Although I do also wonder about the buyers of my unit--I don't think prices have come down TOO much in that building since they bought, but I know I could NOT have bought that unit in 2007 if I hadn't had the financial gain I did since 2002! During that period it was actually true that a person could "miss their chance"--but in SO MANY areas in the country, those that did miss will get ANOTHER chance.
Telling my girlfriend we'll check in with the market every July and January, but MAYBE buy in 2009 or 2010--at $350-$400/sqft OR LESS, in downtown DC.
Only found the HP site (and others) after selling--but I browse in and grab the popcorn every day now!
We came close to buying a house for $310k in Orem, Utah a little over 2 years ago. That same house just came on the market (along with 3 others in the same neighborhood) for $279k. Of course the local Realtors groups are claiming things are great here and that we are one of the few states showing price appreciation.
did not buy in 2003 the 87,000 new 3/2/2 with pool when there were hundreds... and judging by the bidder-uppers with borrowed money trying to sell today, if they sell ive lost hundreds of thousands, and as usual, no inflation here...hahahaha
but over the same time the banks that loaned out my 87,000 i deposited there have paid me aout 20,000 in interest while they created about 1.6 m9illion of debt currency to bid up the prices higher and higher, no wonder the complicated liquidity crisis code named "nobody will lend at those rate of loss in purchace power so let (force) the government and taxpayers to,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
over 50k.
http://www.bizjournals.com/southflorida/stories/2008/02/11/daily22.html
"BankUnited blacklists 191 condo projects"
Next shoe to drop is major lenders who refuse to write loans in entire states. I can see the headline, "IndyMac pulls out of FL, CA, NV"
If I'd bought circa ~2000, no big deal. Afterwards, a nightmare and here's why... the good jobs were moving to cheaper locales, however, RE was going up w/o end.
So the fools at work, who'd survived headcount reductions of 8-10% per year, 2002 through 2005 (hint: no authentic economic recovery, just reticent firings), bought at ridiculous prices because they thought they could tap the equity during a downturn or layoff cycle. Now, all those clowns have gone silent.
So all and all, though I only saved ~$60K, for that interim period, that's plenty to start fresh in a new city when this job goes.
250k profit when i sold, plus another 50k from cd interest/stock market appretiation on that money since (stocks down about 10k) last few months though =(
Kieth,
did you read the article on MSN's homepage titled "Did terrorism cause the housing mess"?
Here we go again...
RayNLA
I was just out of school in late 2004 when things were getting absolutely insane in my town (Fresno, CA) I had $50k to put down, but the prices were goin bananas, so i decided to put it into an edumacation.
4 yrs later, and with a law degree under my belt (well..in about 2 months) the prices peaked out in early 06 in my town, and are back to about what they were when i went into school. of course i also spent $35k on rent those 4 years.
I guess the market stayed just a few steps ahead of me price wise this whole time, as my income was raising, but not as fast as home prices.
thankfully it was always out of my reach. i would have been totaly hosed. Even the incredibly conservative zillow shows my town losing 14% last year. really more like 20-25%. My wife always wants to get this house that was going for $550,000 stripped from the builders. now they are offering it for $480k with about 60k of extra incentives thrown in.
I cant wait for next year when its $420k with 100k of incentives thrown in.
It will also be nice to be out of law school and have my salary at least double.
I would say that if i had taken the kool aid when all my friends and family were pushin, i would be out at least $150k- (minus the rent savings) or 130k in a matter of 2 years.
Keith i love you. You were my shining star in what were times of great despair when my wife and i asked ourselves, would we be priced out forever?
Your site helped me conclude that in a twon where the average household income is 33k/yr there cannot be a sustained median home price of $320k. it just cant stay that way forever, especially with the money pumpers gone.
The only bad side of all of this is that a lot of my friends work in construction related industries, the fencer gets no jobs, the landscaper got laid off, and the motorcycle/jet-ski/toy shop owner doesn't ahve all those happy HELOCS running in to buy the latest and greatest. so much was built around housing, and so much will die without it.
In the end, i welcome the pain that will come, its payback for causing me so much stress.
The housing bubble is the best thing to happen for me in my lifetime.
What will follow the largest run up in housing prices will be the largest drop BELOW historical norms once the panic sets in. Probably in 2011 or 2012.
The best opportunity for home ownership and investment is on its way.
I have rented in the bay area for the last 5 years despite a 200K income. I know I've saved thousands. I do not spend a penny on my home. I do not pay outrageous california property taxes. I instead invest.
But prices still will drop at least another 30 to 50%, inflation adjusted. When that happens, I will swoop in and pay cash.
Bay Area California barely begun its adjustment. Man are people going to freak when the average Bay Area Home is back down around 400K (not taking into account 5% inflation x 5 years = another 25% lost)
Get ready. The anger, the crime, the misery has yet to happen.
In fact, I really don't want to buy because I enjoy the fact that I can pack my shotgun and get out of Dodge when the violence begins in California.
We rent a house in Laguna Beach for 3200/month that would cost about 15K/month if we bought(including taxes and insurance). Houses here are dropping 20K/month.
Oh yeah... We bought an investment property in Tucson in 2003. Sold in June 2005 for over 100% profit (six figures). Put a good portion of that profit in gold which has since nearly tripled. Housing bubbles are for suckers. I couldn't be more pleased with the fact that these idiot house pumpers are getting destroyed now. They have done nothing but harm society and make housing less affordable for people. The baby boomers are out to get us all. Watch out for them. How much do I save every month? More than 10K. About 7K of which we put into a bank account every month. Then we buy gold other and other non-cash assets every couple months from that money. Ha ha.
And for anyone who didn't see it coming... you are blind and are getting what you asked for. Ha again.
Well -
Here goes; the bonus is coming and while not up to some of your guys standards it's going to be 8k.
Do I pay off the 3k on a JPM-Chase Card and 3k to Discover; and become completely debt free. (They were college expenses. No, not books)
OR do I get a sweet home theater.
Posting as anonymously..OBVIOUSLY.
I saved 100k i had ready for a down payment a couple years ago by waiting and renting, then have made 30k on investments since. My down payment would already be gone had I bought a place i was thinking of at the price declines we've seen in SD.
Not to mention all I've saved by paying an avg of $1200/mo rent vs a 3k mortgage over that period....
Thanks HP!
Hey Keith how about this?
John Doe is a loser who LIED to his teeth and started the NO-Down-Cash-Back-Refinance ponzi scheme and like some old computer algorithm...did it over and over and over.
Guess what... he lucked out. Got all the money he could get (maybe sitting in some obscure investment) and now is DUMPINg it all.
.......sad but true!
"So all and all, though I only saved ~$60K"
you'll get 20k in unemployment, I think, so you have access to 80k.
since I spend less than $500 a month on rent, I could get by on unemployment for about a year and by that time, I'd have more interest in the bank that would take care of me for another 4 to 6 months.
as far as I'm concerned, people underestimate cash as a hedge...
I also have 401k's, IRA's, SEP's and ROTH's for hot action when it's around.
Who cares I'm getting rebate check in May wheeeeee!
I sold my house for $560K in November 2005. Final check to me after everything was $240K. It eventually became REO and sold for $370K in December 2007. I've also paid about $650 less in rent vs $2000 mortgage+taxes+insurance per month. And my current rental is a bigger SFH! 500 more sqft.
Saved $190K from the house price drop. Saved over $18K in monthly expenses. "Freed up" an additional $50K equity. Total is a favorable $258K at the banks' and landlords' expense.
Hubby and I toyed with buying two years ago in SF -- we didn't realize how bad the market was until we went to a few open houses. With our $100,000 downpayment, we were prepared to spend between $500-$600k on a house (15-20% down). That would have left us with a mortgage between 1.5-2x our combined gross earnings. We were comfortable with that.
After being 'encouraged' by everyone to grossly overbid and waive inspections on crappy, small, lipstick-on-pig properties in order to guarantee an accepted offer, we bowed out. We saved our downpayment and are renting a 1500 sq ft 2bd place for $2300/mo -- and we pick up the phone whenever anything needs fixing. The $100k was moved to Italy, where it appreciated 50% (euro vs. the dollar) and is waiting for us to move back and pick up a beachfront apartment somewhere sunny -- the crash-ravaged south of Spain, perhaps.
What have we saved? If one assumes the 30% haircut figures that some economists are expecting, $200k in lost house value (half of that in cash -- our downpayment), plus interest paid over the last two years, plus any maintenance. In the two years we've lived in our rental, the back porch has been rebuilt due to rot, the front hall light wiring needs to be replaced, the furnace died (not sure what they had to do to fix that) and the thermostat is on its last legs.
We're paying $27k a year in rent -- the house has more deferred maintenance than that, so call it a wash.
So we've saved maybe a quarter-mil, over the last two years? I kind of wish I'd been brave enough to buy into the frenzy and get out before the peak, but I've always been extremely conservative financially. Coming out of this bubble without having lost any money is fine with me. And we didn't get stuck with a run-down dry-rotten SF money pit, to boot.
-PM
HP-style thinking has saved me at least $50,000 in just cash money.
So, to paraphrase the commercial:
--Actual savings by not being suckered into buying too much house in the wrong town at the wrong time: at least $50,000
--Being able to sleep at night AND to relocate for a new job when the chance came: PRICELESS!
"you'll get 20k in unemployment, I think, so you have access to 80k."
For those savers, afraid of the big bad, white collar centered recession (even depression), relax, ~$80K will actually go a long way, provided you rein in your spending, live cheaply, and learn something (like the patent agent exam, tracker trailer/ATC, and such), you'll come out on the other side [ either working or self-employed ] without a scratch.
It's a whole lot different from those with either zero or negative equity where they can't pack up and move to a $500-600/month apartment, in a cheap area, and pay for effectively what... almost a decade's worth of rent while the depression works itself out?
And even if you're of that age, where changing fields isn't easy (usually above 48-50), there are ancillary health care areas where after two years at a community college, you can find work at a nearby clinic. I believe that Keynesian, socialized type of clinical/govt work won't only go for the young kids like corporate America.
Bought in January 2001 for $378K. Sold in June 2006 for $750K FSBO. Total costs to sell: $1,200 for attorney, $75 closing costs, $20 sign from Home Depot. Net profit $370,705.
Have been renting since June 2006. Want very much to buy but prices are still absurd.
I never bought in the mid 2000's as NJ was in a huge property bubble. I had no plan to jump in and HP just confirmed that for me. Instead I moved abroad in '06 and am now saving at least $200k a year after tax. Now waiting and watching.
-BC
no exaggeration-$150k in depreciation and inflated mortgage price over rent and the 50K in cash I still have left over from my sale
Sold house a year earlier than planned, cleared 50k more than I would have if I waited. Shorted home builders and banks, cleared $15k. Those are just the direct, financial gains.
"And even if you're of that age, where changing fields isn't easy (usually above 48-50), there are ancillary health care areas where after two years at a community college, you can find work at a nearby clinic."
This is a sad state of affairs when experienced 48 year olds are put out to pasture like that.
Hard to calculate exactly. I can tell you my net worth is about $800k more than most of my friends (who have similar incomes). A lot of that is due to seeing the housing bubble a mile away and renting for cheap instead of buying a money pit house, but not all of it.
On the other hand I cleared almost $30k (and counting) shorting stupid stocks like CFC and IMB.
So, depending how you count, somewhere between $30k and about $500k.
Wow, now that I see it in writing, that's a lot of freaking money. Conversely, what a stiff penalty people are paying for acting like herd animals.
anonymous said...
""Now I've placed six figure bets (more put options) against CMG and IYR (CMG is not strictly REIC,""
Looks like you made a good selection; CMG was down 10% today!
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