August 02, 2008

HousingPANIC Stupid Question of the Day


Are you getting tired of renting?

Are you losing patience being a bubble sitter?

Are you thinking of renting money from a bank again?

Is 50% off low enough to start thinking about it?

Are you ready to play "catch the falling knife"?

42 comments:

Anonymous said...

50% off only accounts for a 100% rise in price. There was a 150% rise in price. But so many years have gone by, you have to allow for inflation.

And I'm seeing some motion, but in general no, things don't seem cheap or even reasonable, at least not for a single person.

blue room said...

The bailout is a real downer for bubble sitters. Someday I might like a house again, but don't have much taste for moving from the super-convenient apartment to a "starter home".

Not only does it need to be affordable, but also it has to be ample, well-constructed (slate and stone wouldn't hurt), in a pleasant neighborhood, not too far from civilization, and let's throw in a working fireplace, two-car garage, finished basement, and yard big enough for games and maybe a dog. Gonna do the house trip, might as well go all the way.

p.s. - flippers, I'll install my own countertops and ceiling fans, thank you very much.

Anonymous said...

Are you getting tired of renting?

No


Are you losing patience being a bubble sitter?

Somewhat


Are you thinking of renting money from a bank again?

No Need To, Have proceeds from 2005. Plan to buy and have plenty left.


Is 50% off low enough to start
thinking about it?

Yes, Thats what I'm observing now


Are you ready to play "catch the falling knife"?

Never play that game..

Anonymous said...

Renting was great. When I was 24. Then I grew up and bought a house. That was 12 years ago. After 2 refinances, my mortgage is now under $1000 for a 2800 sq ft house on 1/2 an acre. A nice 2 bedroom apartment in my area of town goes for $800 to $1000.

Hmmm, should I go rent or stick it out? Tough choice, but I think I'll say pass on renting for now.

Refuse to buy overpriced said...

anonymous 1:29 pm -

If I was as old as you, I would have bought in 1998 too. That was a great time to buy.

Unlike you, people who bought 2004-2007 got ripped off.

When inflation adjusted housing prices are back down to 1998 levels, then I'll buy.

Andrew said...

No, not sick of renting.

Bubble just beginning to pop in Canada, where I will need to relocate, so i will wait a few years more. It took 8 years to build up the bubble, it will take some time to deflate.

Everyone is asking me, "are you going to buy a house?"

Since when did whether I buy or rent become everyone's business?

Me thinks people do this to justify or validate their own decisions.

Anonymous said...

Man, Suzanne was hat. I'd tap that.

Anonymous said...

Yes, getting very tired of renting. Rented since age 18. Now 38. Total rent paid so far: $81000.

Absolutely infuriated at the bailout.

Landlord is raising my rent 7% in October. Prices in my area have not budged despite "for sale" signs everywhere and increasing foreclosures. Fear has not entered the equation yet.

Equivalent rent + taxes + etc is still above my ability to pay as single homeowner. Yet I have good credit and $70k in the bank at 2 @#&* %. Likely job cuts at my employer due to upcoming merger in the X-mas - new year 09 time frame.

I'd love to see 50% off. Reading HP since 2004. Believe price drops should happen, but the bailouts keep coming. Maybe after the election?

I feel like I'm catching the falling knives in the back as they're being thrown.

Stuck in So Pa said...

This Big Banker Bailout Bill has gotten me depressed, and infuriated.
Now that the government is propping up the built in "stickiness" in a housing decline, I don't know if we will EVER see the guilty get their just desserts!

I don't have to buy, sell, move, or borrow, but I sure do thirst for justice!

Randy said...

Anonymous said...
'Yes, getting very tired of renting. Rented since age 18. Now 38. Total rent paid so far: $81000'.

You seem to insinuate that you somehow wasted all that money on rent.
Have you calculated all the money you spent on food over the same period?
Or how much you spent on transportation, cars, fuel, plane and train fares, how about clothing and laundry etc.

Renting is not wasting money, you pay for a convenient service, living maintenance and tax free, with no long term commitment,.
So, if you think about it you did very well financially you spent approx. $81K in 20 years, had you bought a typical house you would have wasted all this money in the form of interest to a bank, on top paying principal, maintenance, school and land tax, insurance, and precious time messing around with things like mowing the lawn, plowing the driveway, putting up with the furnace mechanic etc.

Paul E. Math said...

Yes, tired of renting. But if I owned right now I would probably be tired of owning. Unless I had so much money that I didn't care about rising heating costs (included in my rent), property taxes, maintenance costs, etc.

So it's not so much that I'm tired of renting as I'm tired of not being rich. Owning a house isn't going to change that.

50% off is a meaningless datapoint. You are gauging the current price relative to unreal, unsustainable prices so the comparison should be discarded completely.

I'm not ready to play 'catch a falling knife'. My rent is cheap so I can sock away all my bonuses and then another $500 or so per month. My savings are invested in bearish investments so if the economy continues to tank I'll have a significant (20%+) down payment. If the economy doesn't tank then my income will be strong enough that the lower down payment won't matter. That's my plan.

Even if the knife hits the floor before 2012, there is no rush to pick it up since housing will lay there for decades before any significant price rises occur.

Anonymous said...

Bubble sitters look back and lament
Another bailout's wasted tax dollars spent

Anonymous said...

anon 4:39:

Finally a bitter renter coming clean on HP. All you fools talk about renting for pennies on the dollar. And about FBs. And about how renting is super duper fantastic. The truth is you people are in your 30s and 40s and living like a college kid in a run down 1 bedroom apartment and spending tens if not hundreds of thousands of dollars in rent that you will never see again.

I will have my house paid off in less than 10 years and then while you get 7% a year rent increases I'll be paying $100 a month in property taxes.

But you;re right, buying is stupid and renting is the way to go. Keep telling yourselves that if it makes you feel better.

Anonymous said...

I have never heard of anything so absurd as bailing out home buyers who either lied or bought to much house for their income . These were either stupid jerks or gamblers . The real estate and loan industry should be strung up for promoting a
fraud ridden ponzi-scheme. Have the politicians cleaned up the corrupt system?......No they haven't .

Just because the Feds have the power to set the interest rates and regulate lenders and give cheap money at the discount window ,doesn't mean that we as taxpayers should stand for them using public funds for bad loans to banks or bail-outs .
The politicians knew that polls said that 2 to 1 the public was not favoring bail-outs ,yet they proceeded with the corrupt Senators Dodds plans. Since when has a ex Wall Street guy like Paulson had this much power to pad the pockets of his ex-buddies .

The "acts" that are going on now will be looked at in the history books as the greatest corruption in American History .

Vote everyone out that voted for that Housing Bill .We aren't getting Justice folks .

Anonymous said...

Just bought for 61% less than same property sold for in '06. Actually got it for 13% less than it sold for in '89. Still only bought now because I want to live in it and won't mind spending the next 10-70 years there.

keyser soze said...

I enjoy being a renter.
If sanity once again prevails in a few years, I have decided I will only buy if I can pay cash.

Anonymous said...

Anon August 02, 2008 4:39 PM:

I know what you mean. We're the same age. Only I didn't average $337/mo rent payment over 20 years. After 5 years I added up my rent - $30K - and put a downpayment on a house at 23.

My taxes go up, sometimes. Other times they fall, due to elapsed referendums. When I bought 15 years ago, my taxes were $1100. Now they're $1400. My homeowner's insurance has stayed the same - increases in coverage levels have been offset by loyalty discounts. The mortgage payment is the same, so I pay $25/month more than I did when I started 15 years ago.

The only thing that has gone up in owning a home is maintenance and utilities. Gas and electric have doubled, roughly - $70/mo is now $140. Water has gone from $70 to $140 every three months. I used to spend $1K a year on maintenance - now I spend $1500.

You've got such low rent, why not ride it out? Even if you started this year, you'd be 68 when you paid off a 30-year mortgage. By then, you'll probably have paid $240K in rent. I'll have $3-400K into a house by that time.

You might be wondering why I don't rent then. My last apartment in 1993 was my final effort to control costs. I lived in one of the worst areas of town and paid $360 for a studio and a garage stall. I was happy to not pay $6-700/mo rent anymore, but couldn't in good conscience raise a family in a studio in a bad part of town.

Anonymous said...

"...I don't know if we will EVER see the guilty get their just desserts!..."

Patience, everybody.

I know that's easy to say, but FOR GOD'S SAKE, don't do it.

All the bailout does is worsen and prolong, and we are NOWHERE near the bottom.

Nor will it V-notch sharply upward; there will be time once it clearly has turned around.

Give up that year(or more) of gain trying to precisely time it(impossible), and you'll be real glad you didn't dive in at a sucker's bottom, which is what this socialism will create.

Save all you can towards a down, and execute at time of maximum fiunancial opportunity(or just past; a little safer.)

Tucson Collapse said...

My choices last year when I moved here: buy a brick dump in a crappy neighborhood(=90% of Tucson, despite the absurd prices) far from work for $300k (which means $1800/mo and my savings is wiped out with 20% down), or rent an ultra-swanky beautifully-renovated house close to work that was on the market for $550k but didn't sell...renting for $1500/mo. Well, fortunately I chose to rent. No maintenance to pay, no taxes, the interest in my accounts offsets any tax advantage I'd have as a buyer, and the house is a declining asset. I have spent $17k so far in rent, but those houses that were $300k a year ago are now around $220-240k, and they are STILL not selling. I don't deal with realtors, who are still trying to peddle flipped homes from '05 with 100% mark-up from bubble prices???!!?!?!?; I trust no one but do my own research (THANKS ZILLOW!!!) and have watched the market daily for 15 months. It's become a hobby of sorts, perhaps even some Schadenfreude (regarding agents and flippers, particularly). Median asking price 10x income here...median sale price over 7x. I am not interested until a house I love comes along that is a bargain, or at least until price/earnings equals out.

Anonymous said...

I've rented for 10 years and have lived in 4 different apartments in 4 different cities due to economic volatility as many HPers have.

It's not just the monthly nut... it's transaction costs associated with buying and selling. I spent around 65K on rent for those 10 years. If I'd bought and sold 4 houses I'd be about even but stuck in my current location with a rapidly depreciating house. Unlike homedebtors, I can easily move when the local economy goes to hell.

Anonymous said...

Yes - tired of renting. We sold our house in March 2006. First rental we were forced to move from last summer (owner foreclosed). We moved out of our current rental this past weekend. Owner way under - trying to sell - bought at 728k; comparable selling at 450k now. I think they will foreclose as well. We found purchasing new house was better deal than foreclosures or short sales. We are tired of moving but will do it one more time this December when the house is ready. BTW, rent = new house mortgage but we did put @0% down. House purchased is about 30% off high. Expecting another 10% drop, but interest rates make it a wash down the road...

Anonymous said...

Tired of renting?

You mean tired of still paying only 1/3 of what it would cost to "own" this 1BR "luxury condo"?

Absolutely not.

Losing patience being a bubblesitter?

No. Patience is a virtue.

Thinking of renting money from a bank again?

We'll see. Already been a loanowner. I kind of like the hassle free life of a renter.

50% off?

50% off is in the "subprime" areas. Feel free to move to some sort of hell-hole for your 50% off. The real hell holes are already 75% off and I wouldn't live in those places if you paid me and provided 24hr security.

Catch a falling knife?

So far, only paring knives and pocket knives have been falling as the subprime homes were usually the "cheaper" ones. When the Alt-A storm comes in full force it will be raining cleavers.

And no, I don't factor in "inflation" like most bubblehead idiots. Wage inflation is what matters.

Frank@Scottsdale-Sucks.com said...

No. A/C compressor blew out due to the stupid HOA's sprinkler shooting right into it. Almost $3,000 to replace, paid by the owner, not me.

Yet another reminder of how good I have it renting.

Massive home office tax deduction as a renter; if you try that as a "homeowner" you have to give the money back when you sell the house - my father learned that the hard way.

Prices really coming down hard here. A house I looked at three months ago and loved just dropped $800k in asking price.

The plan was to buy in 2009 but the bailout bill is really going to mess things up even more so I imagine prices will continue to plummet until at least 2010.

Nobody asks if I own or rent anymore. It's been at least a year since I've been asked that. I think the "homeowners" stopped playing that game when they finally realized they were the ones who got gamed all along.

Frank@Scottsdale-Sucks.com said...

The truth is you people are in your 30s and 40s and living like a college kid in a run down 1 bedroom apartment and spending tens if not hundreds of thousands of dollars in rent that you will never see again.

I will have my house paid off in less than 10 years and then while you get 7% a year rent increases I'll be paying $100 a month in property taxes.


I love these insecure homedebtors who come up with this stuff since they're so pissed off about getting gamed by the realtor and the bank. I live in a brand new (built in 2004) insane McMansion in Newport Coast CA for pennies on the dollar. My neighbor is the Angels 3rd baseman (unlike Scottsdale we really do have pro athletes here).

The kicker is that my rent dropped 15% from 2007 to 2008.

This guy is furious because he's living in some piece of sh*t run down shack that he's paying a big mortgage on and going broke doing repairs and maintenance and wasting his life away at Home Depot. Typical desperate homedebtor who can't swallow his pride and admit that he got gamed and made a bad decision.

Renting is not wasting money, you pay for a convenient service, living maintenance and tax free, with no long term commitment.

This is true but the notion that renting is 'throwing money away' has been shoved down everyone's throats by the NAR for so long that people actually believe it's true.

Look, building up home equity is no better than a savings account. In fact it's WORSE. And any decent financial planner will tell you that a savings account is a horrible choice of investment.

resisting husband said...

Are you getting tired of renting?

yeah


Are you losing patience being a bubble sitter?

its getting old


Are you thinking of renting money from a bank again?

haven't done so yet... i entered the typical "homebuying years" right when things started getting crazy in 2004, and only just now have the prices returned to 2004 prices. we got at least 2 more years here before the housing market and reality realign


Is 50% off low enough to start
thinking about it?

no because in my town everything went up 300%, so even at 50% percent off it is still an unprecedented price (excluding the last five years)


Are you ready to play "catch the falling knife"?

no, i am waiting for the roller coaster to pull back into the station, so that when i get in it can only go up and down, but never much lower than when i got on.

Lost Cause said...

I wish I could grow crops in my yard, to offset the high cost of food. Other than that, it is astonishing how fast and far the low end is falling, while the high end barely budges. I am tempted to scoop up an exurban mc mansion for pennies on the dollar to plant in the back yard, and make semi-mothly trips to harvest.

Lost Cause said...

It is my understanding that the bailout bill has so many impossible conditions for the average schmoe facing foreclosure that very, very few people will actually be helped. By the time people figure out the small print, the election will be over.

On the other hand, very few people are actually members of the super-rich banking club. They will get plenty of help.

Peter T said...

Actually renting feels better and better - yes, thank God, I avoided that homoaner trap. The other reason I wouldn't buy now is less positive: if the job market tanks and I'm out of work, I don't want to have such a heavy weight around my neck.

Anonymous said...

I have been a bitter renter for 22 years. At age 40 I have never even purchase a new car!

Making only an average salary and with only ~800,000 saved up and invested conservatively I am considering a home purchase.

I will not use all cash as I like the leverage of a mortgage long term.

The problem is that when I run the numbers it is still cheaper to rent in my town then to buy, even with a 5% yearly price increase!

I guess I will remain a bitter renter until another 30% correction and purchase a home or 3 once they are selling below trend in real terms.

ATE-UP said...

Sorry Keith, but that Frank dude is so full of himself. I am sure he thinks everyone is jealous of him, well that is far from the case, in my case. So, I understand the deletion. The idiot doesn't even know the compressor is a concealed unit, immune from water damage! Also, I am sure he has never played a sport in his life, except patting himself on the back, looking down at others, and running his BIG MOUTH!

Miss Goldbug said...

We're too damned scared to buy into this market right now. There are too many unknowns that could be financial devastating to us, so we prefer to rent...

I think prices are going to drop another 60%....

Recently, on our local news we heard that its better to rent based on price per income ratio, compared to buying.

I want to know, what took them so long to figure this out???

Anonymous said...

I feel pretty good about renting .Sold in 2005 and enjoy the convenient freedom of not having to worry about lawn and other issues that arise. If we do buy again it will be out of Florida to North Carolina or South Carolina so home prices our a bit cheaper and I will pay cash .

Anonymous said...

Anon said:"I will have my house paid off in less than 10 years and then while you get 7% a year rent increases I'll be paying $100 a month in property taxes."


Rents are not increasing 7% a year. Our rent went up 0 where we live now for the last two years. When I rented a nice apt back in 1989-1995 I paid $525 a month, and I never got a rent increase - ever. Landlords love dependable tenants who take care of their property, if a 'prospective' renter communicates this to a landlord - that renter will be treated like gold and never get a rent increase.

Furthermore....

Lower taxes dont justify owning. I know for a fact cities are currently scurring around trying to find ways to increase homeowner taxes to balance out their collapse of transfer taxes... lets see... dont forget the ever increasing property taxes, special assesment taxes, property maintainance, and the worst money sucker of all - Homeowner's Insurance, which by the way, keeps increasing due to mysterious spontanious combustion fires...

Realistically, renting is more ecconomical than owning.

Martin said...

I'm tired of renting also. The $7500 tax credit was the tipping point for me.

Anonymous said...

>> Well, fortunately I chose to rent. No maintenance to pay, no taxes, the interest in my accounts offsets any tax advantage I'd have as a buyer.

Good grief, you've got to be one of the dumbest people on this blog. Your "rent" includes the landlord's maintenance costs, taxes, mortgage interest, etc. The fact that you don't write separate checks for these items DOESN'T mean you're not paying for them!

>> ...and the house is a declining asset. I have spent $17k so far in rent, but those houses that were $300k a year ago are now around $220-240k, and they are STILL not selling.

Gee, maybe you should live somewhere where home values AREN'T falling.

>> I trust no one but do my own research (THANKS ZILLOW!!!)

Well, those basically cancel each other out - Zillow!?! Are you kidding?

Sorry, but you can't hide your stupidity with a well-worded blog post.

Happy Homedebtor said...

(Yawn)
Prices in my neighborhood stablized about 10% down from what we paid, which was about 12% down from peak, and they're rising now - more "SOLD!" lots every week, traffic @ the models is absurd. Fundamentals do matter:

1. Great location
2. Great schools
3. Low crime
4. Overzealous police/neighborhood watch (I got some teenagers thrown out of our park 'cuz they were there after dark, woot!)
5. REASONABLY sized homes
6. Cheapest/smallest house in the neighborhood

Etc etc

Just finished my MS, starting the MBA in 6 weeks, wife's salary roughly doubles next year and I'll be getting a 10-20% raise in the next 2-6 months, wheeee!

Man you guys are right, times are tough - keep waiting on that 66% correction. :P

With inflation the way it is, $500K for a house will be like $250K in a couple years - which is still irrelevant since by then I'll be able to write a check for the balance on my mortgage.

As for the guy who claims he got a place @ 13% below 1989 prices...sure, whatever. I'm sure you're doing some funny inflation-adjustment math just like everyone else who spins numnbers - but if you did congratz. ;)

Anonymous said...

Are you getting tired of renting?

No

Are you losing patience being a bubble sitter?

Yes as I keep moving to find the cheapest rent. I'm currently subletting a room in a 2700 sq ft house, 3 car garage, and pool. It isn't ideal (e.g. my gym is in the garage and I want it in the house) but it does satisfy my needs. And from a financial perspective it is hard to give up - I pay $600/month for rent and utils while saving $3200/month. All while house prices stay stagnant or drop.

Mark said...

I'm frustrated by the DC market. While it is declining -even in great locations- the prices are nowhere near what I think a place is worth. I looked at some great places last weekend at Union Row right near the U Street corridor. These are fantastic places made by a very find developer, PN Hoffman. Places that were going for $849 at the peak are now low-700's. There was even a place formerly at $1.2M going for $230k less than its peak price. These are beautiful places... I could definitely see -and feel- living in them.

My income puts me in the upper 5% of American households so I guess can "afford" most anything I'd want. But here is why I haven't and won't buy yet:

My worst-case scenario is my business dries up and I become a mid-to-upper GS-scale federal employee. That would make maybe $125k. On that income, you can't buy a 2-bed condo in this town that you'd want to live in. It would be just another undifferentiated blah sort of place. But that's not why you can't do it. It would take two incomes of that level to afford to buy such a place:

Taxes in DC are $.88/$100 dollars of assessed value. Condo fees are certainly $400-$550/month. Ballpark it at $1,000-1,100/month before your mortgage!

So here's what I'm doing:
I rent a dingy windowless apartment in a great neighborhood. It has dark wood paneling from the 60's. But it costs $500 less per month that anything else near it. I am banking no less than $15k month.

I've received three calls in the past two weeks from a FSBO seller.

What Will Get My Off My A$$ and Buy?

If anyone knows where I can get median DC income broken down by zip code, that would allow me to see if the asking price/median income figure is getting close to 2002 levels. I'd need to adjust for inflation I suppose. Anyway, there's plenty of time.

Megs said...

yes, I am tired of renting.. I am sick and tired of having beige walls and ants continually breaking into my damn house.

However, prices in Orlando are still too expensive. I want 03 prices where you can buy a nice 2500 SF with a decent lot, no HOA 2 story for under 200k.. that doesn't exist.

I want to own so I can have more energy efficient stuff and better control -- however at 1400 PM I can't afford not to rent right now as the market is too strange. Sprinkle in the f'd up job market and you have a perfect storm..

T

Anonymous said...

"The truth is you people are in your 30s and 40s and living like a college kid in a run down 1 bedroom apartment"

Sorry to burst your bubble, 2 bdrm/2bth for 50% of equivalent mortgage payment for a condo, not including taxes and condo fees.

Can move for a better job with a month's notice, while keeping the landlord's reference, and got enought socked away for a 2nd great depression (i.e. 5-7 years of expenses).

Mark said...

!!! GREAT NEWS: THERE IS NO HOUSING BUBBLE!!!

I lived in Japan for 2 years not long after there real estate bubble burst in 1990 and saw the beginning of their property bubble burst.

... fast-forward 18 years...

Now, in 2008, office space in Tokyo sells at a 99% discount to its peak price. Residential real estate has done spectacularly well by comparison: it has "only" dropped by 90%.

Keith, Please put up a poll: Can American "leaders" screw this up any worse than Japan's did during the lost decade?

Anonymous said...

"Can American "leaders" screw this up any worse than Japan's did during the lost decade?"

Actually yes, Japan, even after the lost decade, still has Sony, Mitsubishi, Toyota/Honda, NEC, and a slew of robotic firms making the world's top products next to South Korea. It's still a high end manufacturing power in the world as oppose to let's say the cheap toy maker of China and Indonesia.

In contrast, the USA is living in the memory of the Xerox-DEC-GE days of the 50s-to-80s where it was once the leader of science and engineering. And today, Google and the iPhone User Interface are suppose to be "IP heavy", how laughable is that for an advanced society?

There's even an article on Yahoo how an Ivy League "liberal arts" BA (with alumni connections) is more valuable than an engineering degree (sans the MBA/Law/MD, self-employed persons)? And since when were management consultant a/o analyst types (i.e. juniors at McKinsey, Carlisle, Kravis) a greater value to a society than its designers since that's pretty much what a majority of ivy leaguers get recruited to do outside of going to a law program?

You see, what could happen is that the US could very easily go towards the Brazil of the 70s/80s, with rampant crime and stagflation than a slumping east Asian manufacturing giant.