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(SFGate) Obvious Old and Busted: Shows telling people how to make mad money flipping houses. The New Hotness: Shows telling sellers they have to slash prices to move their overleveraged pile of crap   (sfgate.com) divider line 58
More: Obvious  

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dustman81 [TotalFark] 2009-07-04 04:52:27 PM  
As someone who is currently looking to buy his first home, I constantly run into homeowners who think their houses are worth what they were during the bubble.

I give them what I consider a fair offer on their house and they react like I insulted their mother. I just keep on looking and they keep holding on to something they can't sell.

The idea that housing prices could go down is something that sellers just can't come to grips with. Instead of lowering their prices to the demands of the market, they blame the buyers for trying to "lowball" them.

 
Hau Ruck [TotalFark] 2009-07-04 08:00:23 PM  
The wife and I realized this a couple of years ago before we moved (again). We dumped tons of money into a house, gutting and remodeling the kitchen and the main bathroom. When we sold the house we got an offer slightly more than what we paid for it (a good thing at the time). The $40K we poured into the remodels only allowed us to sell it faster than we thought. We were realistic about the value (and our selling price), we knew that we wouldn't recover what we dumped into the house. Those owners that don't get this will get to eat paying two mortgages for a long while.

Renting is now the more sensible option unless you can get a reasonable homeowner that knows what their property is worth.

 
Lost Thought 00 2009-07-04 08:29:17 PM  
dustman81: As someone who is currently looking to buy his first home, I constantly run into homeowners who think their houses are worth what they were during the bubble.

I give them what I consider a fair offer on their house and they react like I insulted their mother. I just keep on looking and they keep holding on to something they can't sell.

The idea that housing prices could go down is something that sellers just can't come to grips with. Instead of lowering their prices to the demands of the market, they blame the buyers for trying to "lowball" them.


To be fair to the homeowners, being completely unreasonable worked for Wall Street, so they figure if they just stamp their feet and yell load enough the government will eventually toss them free cash as well.

 
gadian [TotalFark] 2009-07-04 08:46:37 PM  
Yeah, your home is only worth that much to you because its your home. I don't give a damn about your memories or your remodeling - its not worth that much. Its only worth what someone like me will pay you for it.

 
Flogster 2009-07-04 08:47:27 PM  
These things take time, everyone believes they can 'ride it out' and they'll get that profit next year when prices go back up. I think people are under estimating how long this slow down is going to be.

A new world of savings is about open up. Retirees need to rebuild that nest egg, young families need to get out from under cripling debt. Buyers will be more patient and more deal savy. While our economy won't be sinking, it won't be rising either.

 
meerkat 2009-07-04 08:48:29 PM  
Just closed on a house on June 26th.

There were 3 houses I was serious about but the sellers wouldn't budge. In this area, houses are going for $80 to $110 a sq. foot. One couple had theirs listed at $171 a sq. foot. I think I got them down to about $123, but it was still overpriced for that home and they couldn't take it. They bought two and a half years ago and financed at more than 100% then pumped money in for home improvements. Yeah, they're so screwed and don't want to admit it.

Another, they wouldn't even show the house unless you agreed to pay their asking price. Hello? There's a reason your house has been on the market for almost a year and no one is looking.

Ended up paying $109.50 / sq. foot for this house and got a great rate. I'll be here for a while, so I'll have a lot of equity when I do sell and the market will come back.

/all moved.
//anyone wanna come help me unpack?

 
Crosshair [TotalFark] 2009-07-04 08:50:08 PM  
Hau Ruck: Renting is now the more sensible option unless you can get a reasonable homeowner that knows what their property is worth.

In many places, renting has been the smart option for years.

Equity this, Equity that, blah blah blah. When you can rent for a fraction of the price of buying it is a no brainer. It is also a sign that the property is greatly overpriced.

Equity is nice, but what if you have to turn around and sell that house? Breaking a lease is dirt cheap compered to trying to sell a house on short notice. For young people that is a real issue.

The sooner that real estate prices get back to reality, the better.

 
t3knomanser 2009-07-04 09:05:02 PM  
Crosshair: Equity is nice

It's not like it's hard to build equity while renting. "Equity" is just a fancy word for "monetary value". Your rent should be lower than a mortgage payment for your target property, so at the very least, you should be saving the difference between rent/mortgage.

For example, I'm willing to rent a 1BR apartment- because if I decide I want more space, I can leave it at any time. But if I were going to buy a house, I'd want at least 3BR- because I'm going to be there for awhile and need to plan for the future.

It's also easier to shop around for better rent than it is a better mortgage.

The idea that you need a house to build equity is a myth. You need a bank account to build equity.

 
jhva3 2009-07-04 09:10:53 PM  
Lost Thought 00: To be fair to the homeowners, being completely unreasonable worked for Wall Street, so they figure if they just stamp their feet and yell load enough the government will eventually toss them free cash as well.

Eventually? They are tossing buckets of it. Have you heard about the first-time homebuyer's credit? Up to 8k off your taxes. Act now before it is too late!

 
Crosshair [TotalFark] 2009-07-04 09:24:13 PM  
t3knomanser: It's not like it's hard to build equity while renting. "Equity" is just a fancy word for "monetary value". Your rent should be lower than a mortgage payment for your target property, so at the very least, you should be saving the difference between rent/mortgage.....

.....The idea that you need a house to build equity is a myth. You need a bank account to build equity.


I knew I was forgetting to mention something. Thank you for reminding me. You did a better job of saying it anyway than what I would have done.

 
waiting4godot 2009-07-04 09:40:56 PM  
I wonder if people are going to start to realize that buying a home is NOT a great investment.

Most people thing I bought the place for X and I sold it for Y, so as long as X is greater than Y, I made money, but this isn't the case.

For example, if you borrow $100,000 for 30 years at 6.5% interest, the total repayment will be around $227,545. Yes, more than two and a quarter times the original loan. That doesn't factor in any additions or improvements you made.. or even just the cost of replacing (not improving) appliances that break... repainting... and all of your time (time has a value, no?) mowing the lawn and whatnot.

Sure, renting is pissing money away too, but at least you aren't pretending you're making money.

And, sure.. the idea that I "own it" so I can do whatever the fark I want has some value, but is it really worth $127,000 on a a purchase price of $100,000?

 
NYZooMan 2009-07-04 10:13:11 PM  
HA!

Dropped my Manhattan apt ask by 12% 2 weeks after the financial crash and sold in 2 months while everyone else was refusing to give in and face reality.

Now they're fighting each other to get a buyer at 15-20% down from the highs.

Greedy suckers!~

/Why I left NYC.
// nothing but greedy money craving scumbags there anymore.

 
Nicholas Urfe 2009-07-04 10:26:53 PM  
waiting4godot: For example, if you borrow $100,000 for 30 years at 6.5% interest, the total repayment will be around $227,545.

Total cash paid over 30 years means nothing. You need to factor in inflation rates, the purchaser's discount rate (the rate of their alternative investments or borrowings), the tax impact, and the premium paid for renting housing rather than "renting" money.

A more simplified example: if I have the option to pay $30k cash up front for a car or finance that car at 1% for fifty years, which option costs me more? Realistically, the former.

 
t3knomanser 2009-07-04 10:40:25 PM  
waiting4godot: I wonder if people are going to start to realize that buying a home is NOT a great investment.

Of course it is- depending on your investment goal. The expectation that you'll put money into a house and turn it around and sell it for more money is a pipe dream. On average, the price of a home will track to inflation. But, if you view the house as an opportunity for a cost savings- well, it's a near thing, but you can make it work.

Ignoring the equity placed in the home, your losses are interest, maintenance, and taxes.

 
JohnnyJay 2009-07-04 11:16:23 PM  
waiting4godot: if you borrow $100,000 for 30 years at 6.5% interest, the total repayment will be around $227,545

Which really doesn't mean anything. If you rent for 30 years you will be far worse off then owning for 30 years.

A simple way of looking at the problem:
Take the amount of money that you spend on interest,insurance and maintenace call that X. If you can rent for less then X you should rent if not and you plan on staying in one place for longer than 5 years you should buy. This method ignores the effects of inflation which always favors buying.

 
t3knomanser 2009-07-04 11:27:03 PM  
JohnnyJay: Which really doesn't mean anything. If you rent for 30 years you will be far worse off then owning for 30 years.

Depends. Fark hates this link, so: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=2&oref=s login

The effects of inflation do not always favor buying. Running the numbers on my apartment, buying turns out to NEVER be better. But, of course, I'm renting a 1BR and I'd be buying a 3BR. But, for right now, and the near time horizon, a 1BR is just fine for me and my wife.

That's the big thing people always forget: when comparing renting vs. owning, you should not compare comparable properties. I'm willing to rent things I wouldn't pay to own. It's a small dribble of money and low commitment versus a potential for large outlays and a much more significant commitment.

There's the other thing to keep in mind: if you take $100,000 at 6.5% interest, and invest it in an index fund for 30 years, you're likely to see a return of 10-15% compounded- which blows buying a house out of the water (of course, the amount of risk is also significantly greater too).

"Always buy," is not the right answer. And even though, "buy, eventually," is probably a good strategy, that "eventually" could be a long way off.

 
wildcardjack 2009-07-04 11:33:47 PM  
dustman81: Instead of lowering their prices to the demands of the market, they blame the buyers for trying to "lowball" them.

I shall always lowball prices. A key to capitalism is being able to walk away from any deal that's not acceptable to you. If the buyer is priced way over what I wanna pay, make a low offer. The worst they can do is say no. The best I would have done at that point is shaken their confidence in their pricing.

 
JohnnyJay 2009-07-04 11:37:31 PM  
t3knomanser:when comparing renting vs. owning, you should not compare comparable properties.

By that reasoning I could prove pretty much anything. You have to compare a single property to make a decision.

That said there are times when renting is the better short term choice (recently and currently in some areas) but I really question the idea of renting for 30 years. I doubt there has ever been a time when that would work out in the renters favor.

 
spman [TotalFark] 2009-07-05 12:07:11 AM  
Renting is nice, but it depends on where you live. Here in Connecticut, unless you're on Section 8, renting is pretty silly. You'd be hard pressed to find a one bedroom project in a dangerous neighborhood for less than 600 a month, let alone trying to find someplace bigger, or in a location where you don't have to worry about being shot, stabbed and robbed. If you're going to pay 800+ a month to rent, what is another 200 or 300 more if you can get a mortgage and pay that? Obviously that would require having a substantial amount of capital to put down to begin with, but if you can do it, it makes sense to.

 
TheGreatGazoo 2009-07-05 12:13:04 AM  
If you are going to live somewhere more than 5 years then buy, otherwise rent.

The thing about comparing the 30 year mortgage to rent is that a fixed 30 year mortgage is just that. Fixed. Rent generally always goes up, sometimes pretty steeply. For instance, in Atlanta a lot of landlords kicked their tenants out during the Olympics because they fell for the $1000/day rent scams.

I bought my house 12 years ago as a relatively cheap fixer upper. I've done a lot of the fixing up myself, and it's paid for. Even if I sold it for what I have in it, then basically I've been living the last 12 years for free. The only reason I'm in this house is that I kicked my real estate agent out of her office and found it on her computer (back before MLS was on the internet as much).

 
wildcardjack 2009-07-05 12:18:51 AM  
spman: or in a location where you don't have to worry about being shot, stabbed and robbed.

Making the whole state look bad in one go. Not enough separation can be put in CT for peace of mind after that one.

 
hitmanric 2009-07-05 12:18:58 AM  
Whatever happened to buying a house without trying to use it as retirement fund, portfolio booster, or some eventual financial windfall? I've been looking for a house for a bit and all I look for is how it fits the needs of my family and what the price is for the market/location. Real estate futures are for pros, not Joe Schmuk who can't wait for traditional investment returns.

 
JohnnyJay 2009-07-05 12:33:12 AM  
TheGreatGazoo:The thing about comparing the 30 year mortgage to rent is that a fixed 30 year mortgage is just that. Fixed

That is the thing about inflation. If you are paying $1000 a month in rent today in 30 years you'll be paying over $2000 if inflation stays at 2.5% the entire time. If it follows the average over the last 50 years (4.1%) you are paying over $3200 a month while the guy with the mortgage is paid off.

 
mcreadyblue 2009-07-05 12:42:18 AM  
They had finally dropped the price by $20,000, but the market had gotten even worse, so they ended up deciding to rent out their house for a slight monthly loss and try to sell it in the future.

What a winning strategy. Absentee-landlords and losing money every month. These folk

 
xria 2009-07-05 01:13:13 AM  
mcreadyblue: They had finally dropped the price by $20,000, but the market had gotten even worse, so they ended up deciding to rent out their house for a slight monthly loss and try to sell it in the future.

What a winning strategy. Absentee-landlords and losing money every month. These folk


Renting out at a slight monthly loss is often a winning strategy. Because you are gaining equity in the house every month, so there is less mortgage to pay off when you sell it.

 
ToddMU03 2009-07-05 01:13:25 AM  
By moving from Baltimore to Philadelphia for job reasons did the mean to A) move away from the crime, B) move away from the STDS or C) move away from the city that has the ugliest residents?

Bonus question: If Baltimore residents are the ugliest in the nation, how do they get so many STDS?

 
MOONKNIGHT2010 2009-07-05 01:38:07 AM  
Flogster: These things take time, everyone believes they can 'ride it out' and they'll get that profit next year when prices go back up. I think people are under estimating how long this slow down is going to be.

A new world of savings is about open up. Retirees need to rebuild that nest egg, young families need to get out from under cripling debt. Buyers will be more patient and more deal savy. While our economy won't be sinking, it won't be rising either.


Sorry but the bad news isn't over yet .
The economy is still sinking as over 400 thousand people became unemployed in June.
Millions of other people have only a similar fate to look forward to as the economy continues to contract .
This means real estate will continue to drop in price ,which means banks & other financial companies will continue losing $$ money .
What the USA is facing is the Mother of all economic fark ups !

 
TacoBender 2009-07-05 02:48:52 AM  
I am re locating and have a condo for rent. It will be ready august 1st. Because I just want the thing rented, and have a ton of equity in the place so my payment isn't obnoxious. I put the thing on craigslist today for a reasonable rate, and had 6 serious offers on it already.

In these times, people cannot get loans very easily and they lack the funds for a down payment. If I had more cash on hand, I would have bought another one, and rented it out as well. There is a chance for some positive cash flow in this market. People need a place to live, and can't get loans to buy a house. There are some great opportunities, the downside is the market will be stagnate or lose 5-10% over the next 6 months.

 
Guntram Shatterhand 2009-07-05 02:58:56 AM  
One thing one should keep in mind right now is property tax. If you're in a state that has it, be aware that a lot of states are finishing in the red and jerking over people who are now locked into a property is a perfect way to recoup some losses.

 
Snake Vargas 2009-07-05 04:41:44 AM  
"Woooooooooooooow, and HOW MUCH do you think you'll save moving this giant piece of CRAP?"

"Not $10,000!"

"Not $20,000!"

"But IMAGINE moving this PIECE of crap for $200,000!"

"Subscribe NOW and you'll get our Moron to Moron kit FREE!"

"Call NOW!"

 
MrSteve007 2009-07-05 05:14:21 AM  
Crosshair: In many places, renting has been the smart option for years.

Equity this, Equity that, blah blah blah. When you can rent for a fraction of the price of buying it is a no brainer.


About 6 weeks ago, interest rates for 15 year mortgages were 4.3%, you'd be hard pressed to find *any* deals on rentals around the Seattle area that were cheaper than many houses.

I see some pretty nice places 40 minutes from Seattle going for $150k and a few fixers going for 120K. If you have good credit, and a couple thousand for a down payment, it's a pretty good market for buyers right now.

$149k - 1750 sq ft, 1924 Craftsman home (new window)

/refied 6 weeks ago for 4.3%, 15 year
//$700 mortgage - over $350 going towards principal a month now
///thinking about buying a 2nd property to rent out

 
missmarsha [TotalFark] 2009-07-05 06:46:50 AM  
I just have to vent for a second - I put in an offer yesterday of 135 then upped to 143,5 on a house listed at 149,9 and the seller won't move below 145. It's been on the market for 3 years! WT????

 
SuperTramp [TotalFark] 2009-07-05 06:54:21 AM  
missmarsha
I just have to vent for a second - I put in an offer yesterday of 135 then upped to 143,5 on a house listed at 149,9 and the seller won't move below 145. It's been on the market for 3 years! WT????

Yup, sounds like the article.

I'm in a small condo with a neighboring unit that has been on the market continuously for nearly a year, and they haven't dropped the price by a penny. My guess is that they can't without taking a bath -- they "over-improved" their unit.

 
castufari 2009-07-05 07:33:11 AM  
gadian: Yeah, your home is only worth that much to you because its your home. I don't give a damn about your memories or your remodeling - its not worth that much. Its only worth what someone like me will pay you for it.

Many people don't think that or if they do they think that it apples to everyone else but them.

When the folks from me tried to sell their house they used the "it's been in our family for generations" spiel. No big family name, it's not like someone important lived there. They did some mods that fit their lifestyle but nothing anyone would pay for. The hubby was a big 50s fan so their kitchen looked like Al's Diner. No one is going to pay for that.

The folks 3 down from me listed last fall. Asking is around 50k above everything else in the neighborhood, including 1 place that has history (oldest house in the west part of town) and another gem that's been in the family since it was build in the late 1800s and was owned by someone who's name is plastered all over town. Their place is simple, was a shelter for many years. They did mods but mods that not enough people care about. Just because you removed all of the trim in the house, removed the paint off of it then put it back doesn't mean I'm going to pay extra for it.

When my ex and I were making changes to our house (or trying to) she was caught up in the "if we spend 60k on a kitchen we'll get it back and then some". Er, no. Making a bathroom or a kitchen nicer is cool but as a buyer I'm not paying extra for marble from a certain part of Italy or cabinets made from trees in a certain part of NC. As as seller I really don't think saying "my daughter had her first bday party in this room" or "I busted my azz in this room" is going to make a difference.

 
bhcompy 2009-07-05 09:00:13 AM  
meerkat: Just closed on a house on June 26th.

There were 3 houses I was serious about but the sellers wouldn't budge. In this area, houses are going for $80 to $110 a sq. foot. One couple had theirs listed at $171 a sq. foot. I think I got them down to about $123, but it was still overpriced for that home and they couldn't take it. They bought two and a half years ago and financed at more than 100% then pumped money in for home improvements. Yeah, they're so screwed and don't want to admit it.

Another, they wouldn't even show the house unless you agreed to pay their asking price. Hello? There's a reason your house has been on the market for almost a year and no one is looking.

Ended up paying $109.50 / sq. foot for this house and got a great rate. I'll be here for a while, so I'll have a lot of equity when I do sell and the market will come back.

/all moved.
//anyone wanna come help me unpack?


I was supposed to close this month, but I lost my job. Buying at about 120/sqft, but it matches comps in the tract(though not the zip, but these homes are a bit nicer.. tile throughout, newer homes by 10 years, etc). Kind of pisses me off. Had a home last year for 105/sqft and the bank on the second loan(30k) decided they weren't getting enough of the pie. That house is still for sale and legal fees keep piling up for the bank. Oh well.

 
jso2897 2009-07-05 09:13:30 AM  
Here in SoCal, homes have to drop another 50% before they are in line with incomes. Here, the wailing, rending of garments, and gnashing of teeth has barely begun.

 
ChibiDebuHage 2009-07-05 09:34:34 AM  
bhcompy:
I was supposed to close this month, but I lost my job.
... Kind of pisses me off.


Hey, at least you didn't lose your job a month after buying the home. You'd be too busy crapping bricks to be pissed off.

Oh and y'all calculating whether it is better to buy or rent.. don't forget that in addition to all those expenses you lose 5% of the final selling value of the home..no matter how many years later you sell it.. to the Realtor. So the minute you buy a home you are out 5% of its value already, without yet having dropped a dime on the leaky plumbing, crappy roof, old electrical work, peeling paint, stinky carpet, mouldy bathroom tiles, bad landscaping, replacement hot water heater, etc, etc, etc.
Forget 5 years.. depending on the cirucmstances it probably isn't a good idea to buy a home unless you're planning to be there 10 years!

 
sirgrim [TotalFark] 2009-07-05 09:38:57 AM  
ChibiDebuHage: Oh and y'all calculating whether it is better to buy or rent.. don't forget that in addition to all those expenses you lose 5% of the final selling value of the home..no matter how many years later you sell it.. to the Realtor. So the minute you buy a home you are out 5% of its value already, without yet having dropped a dime on the leaky plumbing, crappy roof, old electrical work, peeling paint, stinky carpet, mouldy bathroom tiles, bad landscaping, replacement hot water heater, etc, etc, etc.
Forget 5 years.. depending on the cirucmstances it probably isn't a good idea to buy a home unless you're planning to be there 10 years!


If you lose 40% of your "investment" when you resell a house, it's still 100% more than you get back from renting.

 
bhcompy 2009-07-05 09:46:15 AM  
ChibiDebuHage: bhcompy:
I was supposed to close this month, but I lost my job.
... Kind of pisses me off.

Hey, at least you didn't lose your job a month after buying the home. You'd be too busy crapping bricks to be pissed off.

Oh and y'all calculating whether it is better to buy or rent.. don't forget that in addition to all those expenses you lose 5% of the final selling value of the home..no matter how many years later you sell it.. to the Realtor. So the minute you buy a home you are out 5% of its value already, without yet having dropped a dime on the leaky plumbing, crappy roof, old electrical work, peeling paint, stinky carpet, mouldy bathroom tiles, bad landscaping, replacement hot water heater, etc, etc, etc.
Forget 5 years.. depending on the cirucmstances it probably isn't a good idea to buy a home unless you're planning to be there 10 years!


That's why I was buying a home built this century by a reputable builder.

And I realize I averted disaster, but I should be in another job shortly and the home is gone unfortunately

 
jetzzfan [TotalFark] 2009-07-05 10:59:34 AM  
Hah, here in Rochester prices are going up. The downside is you have to live in the Rochester area.

 
xalres 2009-07-05 12:19:44 PM  
missmarsha: I just have to vent for a second - I put in an offer yesterday of 135 then upped to 143,5 on a house listed at 149,9 and the seller won't move below 145. It's been on the market for 3 years! WT????

We had a seller pull that crap. He wanted $10k over what we offered and wouldn't budge. Problem was the house barely appraised at what we offered so we just had to walk. On top of that we got the runaround more than once while waiting to hear back from them. It ran the gamut of bullshiat excuses; family emergency, visiting friends, wife got food poisoning, I half expected to hear someone had died. Oh, and the damn house was paid off. This was the original owner. He paid $20k for it and we were offering $370. The guy was 94, what the fark? why hold out on $10k when you won't even be around that much longer to enjoy it.

BAH! Sorry to vent. Just....ARGH!

/whatever, we're in escrow on a better place anyway.

 
xalres 2009-07-05 12:24:23 PM  
xalres: missmarsha: I just have to vent for a second - I put in an offer yesterday of 135 then upped to 143,5 on a house listed at 149,9 and the seller won't move below 145. It's been on the market for 3 years! WT????

We had a seller pull that crap. He wanted $10k over what we offered and wouldn't budge. Problem was the house barely appraised at what we offered so we just had to walk. On top of that we got the runaround more than once while waiting to hear back from them. It ran the gamut of bullshiat excuses; family emergency, visiting friends, wife got food poisoning, I half expected to hear someone had died. Oh, and the damn house was paid off. This was the original owner. He paid $20k for it and we were offering $370K. The guy was 94, what the fark? why hold out on $10k when you won't even be around that much longer to enjoy it.

BAH! Sorry to vent. Just....ARGH!

/whatever, we're in escrow on a better place anyway.


Ugh, I even previewed and everything.

 
wildcatfan82 2009-07-05 12:37:36 PM  
This is the good part of being in a market that's not really in demand. I live in Lexington, and prices here really didn't hit the highs or lows thanks to the bubble and it's subsequent burst.

I just bought my first home...I close on it tomorrow.

I'm paying about 5,000 more than the owner bought it for 7 years ago. I'm paying 7,000 less than she wanted for it last year.

 
HempHead 2009-07-05 01:06:15 PM  
xria: mcreadyblue: They had finally dropped the price by $20,000, but the market had gotten even worse, so they ended up deciding to rent out their house for a slight monthly loss and try to sell it in the future.

What a winning strategy. Absentee-landlords and losing money every month. These folk

Renting out at a slight monthly loss is often a winning strategy. Because you are gaining equity in the house every month, so there is less mortgage to pay off when you sell it.


Look at a mortgage table some time. Very little of the principle is paid off in the first 20 years of a mortgage.

They only way they can gain equity is for this immense housing bubble to magically re-inflate and all houses start going up 20% a year.

The only way that can happen is if inflation goes up like it did in the 70/80s. 10-15% per year inflation would inflate them out of their hole.

 
Linux_Yes [TotalFark] 2009-07-05 01:15:53 PM  
everyone knows the housing market is a Free and Open market where supply and demand meet.

NOT

 
HempHead 2009-07-05 01:20:56 PM  
JohnnyJay: TheGreatGazoo:The thing about comparing the 30 year mortgage to rent is that a fixed 30 year mortgage is just that. Fixed

That is the thing about inflation. If you are paying $1000 a month in rent today in 30 years you'll be paying over $2000 if inflation stays at 2.5% the entire time. If it follows the average over the last 50 years (4.1%) you are paying over $3200 a month while the guy with the mortgage is paid off.


Do not forget taxes and insurance. Those two can and will go up over the course of you 30 year loan.

Also remember, once you have the house paid off, you must still pay taxes and insurance every year.

 
jjorsett 2009-07-05 02:10:43 PM  
Regardless of the current situation, renting is soon going to be a bad idea compared to owning. When we get the big spike in inflation as a result of the government's policies, you're going to want to own hard assets.

 
Lawnchair 2009-07-05 04:22:33 PM  
HempHead: Look at a mortgage table some time. Very little of the principle is paid off in the first 20 years of a mortgage.

It does depend some on the interest rate. I'm fixed at 4.75%. 24% of the first payment went to principal, and more than half the principal would be paid at 20 years (assuming I don't prepay). At Reagan-era 10% rates, you're right. Only 5% of your first payment would go to principal, and you be less than a third paid off after 20 years.

 
beer4breakfast 2009-07-05 04:50:24 PM  
HempHead: Look at a mortgage table some time. Very little of the principle is paid off in the first 20 years of a mortgage.

Not with current interest rates. As an example a 30 year 300k mortgage at 5.5% after 20 years the balance remaining is $155,970.

 
ChibiDebuHage 2009-07-05 06:40:24 PM  
jjorsett said:
Regardless of the current situation, renting is soon going to be a bad idea compared to owning.... big spike in inflation... want to own hard assets.


NO. And Yes. Look at the early 80's when interest rates were sky-high.. around 20%. The overnight reaction of the real-estate market was for prices to drop up to 50% in some markets.
Why? At higher interest rates, buyers could only afford to borrow a much lower principal than before, and so the serious sellers had to drop their prices if they wanted to sell. AND, many people who had variable rate mortgages or were at a point or renegotiating their mortgages were suddenly facing a monstrous increase in monthly payments, and were forced to sell.

However... these high interest rates didn't last more than several months... But if had lasted several years my guess is that after an initial drop in house prices, eventually wages would catch up with the new higher interest rates and home prices would skyrocket.

So.. be ready to buy right after inflation skyrockets?

 
ChibiDebuHage 2009-07-05 06:46:34 PM  
sirgrim said: If you lose 40% of your "investment" when you resell a house, it's still 100% more than you get back from renting.

Umm..I don't percentages are what they think they are.

Let's see... Using your formula, let's say I buy a home for 100k, and "lose 40%" like you say. I'm left with 60k... which you say is "100% more than you get back from renting". So, I would get back 30k from renting?

Please tell me you are in the realty business..

 
MOONKNIGHT2010 2009-07-05 09:48:04 PM  
jjorsett: Regardless of the current situation, renting is soon going to be a bad idea compared to owning. When we get the big spike in inflation as a result of the government's policies, you're going to want to own hard assets.

ChibiDebuHage: jjorsett said:
Regardless of the current situation, renting is soon going to be a bad idea compared to owning.... big spike in inflation... want to own hard assets.


NO. And Yes. Look at the early 80's when interest rates were sky-high.. around 20%. The overnight reaction of the real-estate market was for prices to drop up to 50% in some markets.
Why? At higher interest rates, buyers could only afford to borrow a much lower principal than before, and so the serious sellers had to drop their prices if they wanted to sell. AND, many people who had variable rate mortgages or were at a point or renegotiating their mortgages were suddenly facing a monstrous increase in monthly payments, and were forced to sell.

However... these high interest rates didn't last more than several months... But if had lasted several years my guess is that after an initial drop in house prices, eventually wages would catch up with the new higher interest rates and home prices would skyrocket.

So.. be ready to buy right after inflation skyrockets?


Hyperinflation which is what the future holds in store for US citizens is going to be a nightmare .
Sorry but wages ,real estate ,stocks & bonds etc... aren't going to adjust with the incredible interest rates coming !

 
sirgrim [TotalFark] 2009-07-05 10:13:41 PM  
ChibiDebuHage: Umm..I don't percentages are what they think they are.

You are ware 100% = 1, right? Tell me you are just point out the word play of 'more than' in that phrase and don't actually lack the reading comprehension to figure this out.

 
finnished 2009-07-05 10:27:20 PM  
Owning real estate is a way to diversify your assets. It's not a substitute for having bank deposits, nor are bank deposits a substitute for real-estate.

Sure, you could own other real-estate, but since you need a home anyway, for many that's the most logical way to go.

You can't simply say that owning a home is always wrong, or that renting is always wrong. The answer simply is, it depends.

 
sonician [TotalFark] 2009-07-06 07:01:55 AM  
Its unlikely I'll ever buy a house given that the sq. foot price in Halifax is (on average) between $170-250 per square foot.

Insane.

 
stevetherobot 2009-07-06 11:01:33 AM  
xalres: xalres: missmarsha: I just have to vent for a second - I put in an offer yesterday of 135 then upped to 143,5 on a house listed at 149,9 and the seller won't move below 145. It's been on the market for 3 years! WT????

We had a seller pull that crap. He wanted $10k over what we offered and wouldn't budge. Problem was the house barely appraised at what we offered so we just had to walk. On top of that we got the runaround more than once while waiting to hear back from them. It ran the gamut of bullshiat excuses; family emergency, visiting friends, wife got food poisoning, I half expected to hear someone had died. Oh, and the damn house was paid off. This was the original owner. He paid $20k for it and we were offering $370K. The guy was 94, what the fark? why hold out on $10k when you won't even be around that much longer to enjoy it.

BAH! Sorry to vent. Just....ARGH!

/whatever, we're in escrow on a better place anyway.

Ugh, I even previewed and everything.


The house is paid for and he won't be around that much longer, so why should he care if it sells or not?

 
tiefling 2009-07-06 11:16:05 AM  
Real estate talk aside the show the article talks about is great. The homeowner last week was completely clueless and his poor wife had to sit there as this mouth breathing moron insisted his house was worth more. He wouldn't even tell the host how much they got an offer for because he was afraid it was going to fall through (which it did).

I'm usually kind compassionate for these people but I hope this guy loses his shirt for some reason....

 
tripperday 2009-07-06 04:24:55 PM  
sirgrim: ChibiDebuHage: Oh and y'all calculating whether it is better to buy or rent.. don't forget that in addition to all those expenses you lose 5% of the final selling value of the home..no matter how many years later you sell it.. to the Realtor. So the minute you buy a home you are out 5% of its value already, without yet having dropped a dime on the leaky plumbing, crappy roof, old electrical work, peeling paint, stinky carpet, mouldy bathroom tiles, bad landscaping, replacement hot water heater, etc, etc, etc.
Forget 5 years.. depending on the cirucmstances it probably isn't a good idea to buy a home unless you're planning to be there 10 years!

If you lose 40% of your "investment" when you resell a house, it's still 100% more than you get back from renting.


How do you get back all that money spent on interest, property taxes, repair bills, insurance, and utility bills? You'll also never get back the time you spend doing yard work.

It's a different situation if you're married with kids, but I'm single and it's absurd to imply that I would be better off financially to buy a house. I'm still thinking about getting one, but that's because I want to live walking distance from my gf, my declawed cat (wasn't me) needs a fenced in yard to run around in because he's getting fat, and I want a fancier kitchen. Finally, my entire house will be a man cave. I'm willing to pay extra for all that stuff, but I'm not about to try to fool myself into thinking I might retire sooner.

 
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