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(The Motley Fool)   Housing up 15.6%, just in time for Sequesterday   (fool.com) divider line 32
    More: Cool, Sequesterday, supply-side, Motley Fool, home construction, razors  
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778 clicks; posted to Business » on 27 Feb 2013 at 12:01 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-02-27 11:26:17 AM  
Now has  never been a better time to  invest. Get in on the ground floor opportunity to own your own home today! Prices have nowhere to go but up... etc, etc.

/ Pay no attention to NAR behind the curtain
 
2013-02-27 12:20:18 PM  
The sequester is so silly.  By Monday they'll have announced how they're calling the whole thing off.  They have to let it happen first though, so they can repeal it piecemeal.
 
2013-02-27 01:10:11 PM  
Incontinent_dog_and_monkey_rodeo: The sequester is so silly.  By Monday they'll have announced how they're calling the whole thing off delaying it until next month.  They have to let it happen first though, so they can repeal it piecemeal.

FTFY
 
2013-02-27 01:42:01 PM  
All the major indices seem to have gone up 1% or more as of right now;

on the news that the sequesterday* is still happening, I suppose

*great new word, +1
 
jgi
2013-02-27 01:42:25 PM  
While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.
 
2013-02-27 01:44:37 PM  
They will reach another deal where military spending isn't touched, and domestic programs are.   This is in line with past "deals" where your income tax rates didn't go up at all (but your payroll taxes did, you peasant labor person) leading to more cries from morons about what a lefty lib libby President Obama (R - In Practice) is.
 
2013-02-27 02:30:11 PM  

Rent Party: They will reach another deal where military spending isn't touched, and domestic programs are.   This is in line with past "deals" where your income tax rates didn't go up at all (but your payroll taxes did, you peasant labor person) leading to more cries from morons about what a lefty lib libby President Obama (R - In Practice) is.


Actually, I think a fair bit is about giving them cover to kill some really moronic military programs that just have too many votes otherwise.
 
2013-02-27 02:37:17 PM  

jgi: While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.


Real estate may drop in the next 5 years. We're only 1 quarter away from an official recession, so that may cause home prices to drop. Rising interest rates may cause home prices to drop too, but that may take a while to happen. Since this is a home to live in, however (as opposed to rental property), it may not be the best thing to try to time the market. That drop in price may not happen for a very long time.

Interest rates are extremely low at the moment. It may be worthwhile to do a cashflow comparison of buying vs. renting. On the buy side of the analysis, you should include the sale of the home at the end to make it a true apples-to-apples comparison. I do this from time to time for clients (I'm a CPA), and in most cases when looking at this from a purely financial standpoint, it makes more sense to buy than rent, especially if the time period of the analysis is longer than 10 years.

Not all debt is bad. Consumer debt is usually pretty bad because it generally doesn't provide any kind of return. Debt incurred that helps one build equity, however, can be a good thing.
 
2013-02-27 02:45:15 PM  

jgi: . I'm pretty much of the opinion now that all debt is bad for the individual.


Debt is only bad for the individual if they don't know what to do with it.

Step 1. Get debt
Step 2. (let Fark decide)
Step 3. Profit
 
2013-02-27 02:46:04 PM  

Incontinent_dog_and_monkey_rodeo: Rent Party: They will reach another deal where military spending isn't touched, and domestic programs are.   This is in line with past "deals" where your income tax rates didn't go up at all (but your payroll taxes did, you peasant labor person) leading to more cries from morons about what a lefty lib libby President Obama (R - In Practice) is.

Actually, I think a fair bit is about giving them cover to kill some really moronic military programs that just have too many votes otherwise.


I'd be perfectly OK with that, but what will end up happening is that those programs might get "killed" initially, those same votes will revive them again with a bunch of "emergency appropriations" riders restoring their funding.   Those (generally red) state reps will then go on and on about how they stood up to Lefty McPresident's hatred of the troops/jobs/'Murkuh!, and the prols will eat it up.

Meanwhile, grandma has to figure out how to pay for groceries because she just spent all her money on her medication, thanks to Medicare Part D.  You know, that easily fixed $800 billion dollar gift to big pharma that President McLefty hasn't said boo about?
 
2013-02-27 04:11:45 PM  

Rent Party: Meanwhile, grandma has to figure out how to pay for groceries because she just spent all her money on her medication, thanks to Medicare Part D. You know, that easily fixed $800 billion dollar gift to big pharma that President McLefty hasn't said boo about?


But old people told us to keep the government's hands off their Medicare...
 
2013-02-27 04:24:09 PM  
Currently in the process to buy a short-sale house about 30-minutes outside of Seattle for $70,000.

Put $25,000 down, put another $20,000 into fixing it up = $250 a month on a 30-yr 5% fixed (rates are higher for investment property). I'll rent it out for $800 a month.

/thinks it'll make a great rental property.
//it is a great time to buy; cheap houses & ridiculously low interest rates.
 
2013-02-27 05:06:36 PM  

Elzar: Now has  never been a better time to  invest. Get in on the ground floor opportunity to own your own home today! Prices have nowhere to go but up... etc, etc.

/ Pay no attention to NAR behind the curtain


Honestly, I think the reason these numbers are so large is due to the fact home prices are generally at their yearly lows December - Feb.  If I were an investor when would I buy?  When it is summer and prices are the highest or when it is winter and they are the lowest?  In the area I live pretty much all the houses between 110 - 120k are instantly scooped up.
 
2013-02-27 05:08:05 PM  

Guelph35: Rent Party: Meanwhile, grandma has to figure out how to pay for groceries because she just spent all her money on her medication, thanks to Medicare Part D. You know, that easily fixed $800 billion dollar gift to big pharma that President McLefty hasn't said boo about?

But old people told us to keep the government's hands off their Medicare...


Oddly enough, that is exactly what should happen here.   The Government hand that says "Thou shalt not negotiate better drug prices with big pharma but instead pay retail" should get off grandma's medicare.   It's almost like socialism or something (for big corporations...)
 
2013-02-27 06:39:22 PM  

jgi: While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.


You're looking in the wrong market. This one is just $1,999!

p.rdcpix.com

BRICK BUNGALOW WITH 5 BEDROOMS AND 1 AND A HALF BATHROOMS - UNFINISHED BASEMENT PERFECT FOR STORAGE - SPACIOUS LIVING ROOM WITH FIREPLACE - TONS OF SPACE!
 
2013-02-27 06:41:35 PM  
As someone who had a City of Heroes character named Sequester, I'm getting a kick out of these topics.

/force fields
 
2013-02-27 08:52:17 PM  
I just bought a house 4 months ago for 650k. Got a fixed rate of 3.75 . Now houses are selling for 750k to 820k. I really didn't expect a jump like that.
 
2013-02-27 09:42:26 PM  

Atomic Spunk: Rising interest rates may cause home prices to drop too, but that may take a while to happen.


Rates won't go up unless the economy heats up.  So rising rates alone probably won't make prices drop, but they could prevent them from increasing with anything resembling speed.
 
2013-02-27 10:13:17 PM  
We're in the process of buying our first home.  Got our Good Faith Estimate yesterday.  We'll have to write a check for $89,527.22 at closing.

I could cry...
 
2013-02-28 01:57:07 AM  
If I had a spare 100K lying around I absolutely would be buying but remember that saying about real estate...location, location, location
 
2013-02-28 02:41:22 AM  

Elzar: Now has  never been a better time to  invest. Get in on the ground floor opportunity to own your own home today! Prices have nowhere to go but up... etc, etc.

/ Pay no attention to NAR behind the curtain


I really love their commercials where they tell people that children who live in family-owned homes do much better in school.

Yeah... well... the kids were doing just fine in school until Dad lost his job to off-shoring and the family got kicked out of their house by a bank that was unwilling to work with them to get through the crisis. Now they're attending that D-rated school near the motel where they're staying.
 
2013-02-28 03:04:18 AM  

jgi: While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.


When you rent, you are buying a house. It's just that, when it's paid off, somebody else owns it.
 
2013-02-28 07:27:04 AM  

DrPainMD: jgi: While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.

When you rent, you are buying a house. It's just that, when it's paid off, somebody else owns it.


Yes. And in the time before someone else owns it, they get to pay the taxes, upkeep, insurance, and monthly rent to the bank, who actually owns it. Because paying on a mortgage does not make you an "owner" of anything except (responsible for) debt. It's great how banks have this set up.
 
2013-02-28 07:27:42 AM  
Real estate never goes down!
 
jgi
2013-02-28 07:52:24 AM  

DrPainMD: When you rent, you are buying a house. It's just that, when it's paid off, somebody else owns it.


A lot can happen in 30 years. How many years at the beginning of a mortgage does one pretty much only pay interest? If I got a mortgage for $500K, how much would I end up paying total at the end of 30 years -- interest and all? What is the real difference in just renting and saving, buying a house later in life with cash? The renter, it seems, is far more mobile which is becoming a boon in our economy.

I think the current generation of potential homebuyers got screwed and I don't see it worth buying a house until the prices fall even further. My boss lives in a condo near the lake that he bought in the late 70s for under $100K. It's worth far more than that now, probably 5 times as much. Does anybody really think that if you buy property now that it will jump in value 5 times over the course of your lifetime? Our economy is choking, people are in debt far more than ever, many people worry daily about whether they will be able to survive the next round of layoffs. To be honest, the more I see what's going on in our society the more I want to leave. Whatever the majority is doing, do the opposite. Obviously we're doing something wrong.
 
2013-02-28 12:31:13 PM  

HotIgneous Intruder: DrPainMD: jgi: While an emotional part of me wants to buy a place, the rational part of me just can't justify it. Prices for a condo in a shared 3 or 4 flat here in Chicago are $300-500K. If I'm going to spend that kind of money, I don't want to share a building with anybody. On top of that, going into debt for 15-30 years just seems... silly. I'm pretty much of the opinion now that all debt is bad for the individual. Currently, if I were to buy a place, it would cost me 33% more than I now pay in rent, plus if anything breaks I have to fix it myself.

I think my ideal situation would be to rent a living space in the city, and buy a cabin in the woods with cash. However, housing prices still seem to me far too inflated to consider it yet. I think we'll see another drop in the next 5 years or so.

When you rent, you are buying a house. It's just that, when it's paid off, somebody else owns it.

Yes. And in the time before someone else owns it, they get to pay the taxes, upkeep, insurance, and monthly rent to the bank, who actually owns it. Because paying on a mortgage does not make you an "owner" of anything except (responsible for) debt. It's great how banks have this set up.


No, when you buy a house, you are the legal owner of it. Just like anything else you buy on credit.
 
2013-02-28 01:44:18 PM  

jgi: Does anybody really think that if you buy property now that it will jump in value 5 times over the course of your lifetime?


I certainly do. And with 15-year mortgages being at a flat 3% these days, you'd be retarded not to buy (considering in the 80's mortgage interest rates were above 15%.)

With a $100k mortgage, I pay $690 a month. By adding $100 a month in payment, I pay it off in 12 years, and end up paying a hair above $20,000 in interest. I have the added benefit of being locked in at a set rate, whereas renters face increases in rent over the same period of time.

If I were a renter, paying $600 a month for 12-years, I'd pay $86,400 towards someone else's mortgage, and have jack shiat to show for it.
 
jgi
2013-02-28 02:08:57 PM  

MrSteve007: jgi: Does anybody really think that if you buy property now that it will jump in value 5 times over the course of your lifetime?

I certainly do. And with 15-year mortgages being at a flat 3% these days, you'd be retarded not to buy (considering in the 80's mortgage interest rates were above 15%.)

With a $100k mortgage, I pay $690 a month. By adding $100 a month in payment, I pay it off in 12 years, and end up paying a hair above $20,000 in interest. I have the added benefit of being locked in at a set rate, whereas renters face increases in rent over the same period of time.

If I were a renter, paying $600 a month for 12-years, I'd pay $86,400 towards someone else's mortgage, and have jack shiat to show for it.

---


It's unnecessary to use the word "retarded" to make your point.

If I could find a place for $100K where I want to live, I would buy it. I live in Chicago and I like it here. I don't want to live in the suburbs because they gross me out, to be honest. Nor do I want to live in the suburbs of Seattle. I like not having to depend on a car. I like being able to walk to get my groceries.

I've rented in my current space for 3 years and the landlord has never raised the rent. What we pay is fair. If he decides to raise it, I'll tell him we will go elsewhere and I'm sure he would reconsider. We are never late on rent, never bounce a check, and rarely bug him. Ideal renters. We could find something cheaper if we wanted with fewer amenities, but little sacrifice. I'm sure my landlord knows this.

I mentioned this upthread. To get something similar to what I have now, it would cost me $300-500K depending on the neighborhood. I do not believe that were I to buy a $500K condo in a shared building that it will be worth $2.5M in 40 years. That may happen, however, if we experience insane inflation which I admit is possible. But $2.5M wont sound like a lot if milk happens to be $20 a gallon.

I am in a different situation than you. It's far cheaper to rent in my current situation than buy. Eventually, I'll probably inherit two houses (both of which are currently paid for) though I would not like to live in either. But I am open to opinion. $100K sounds reasonable for a house. $500K for a condo does not.

What is your opinion?
 
2013-03-01 02:09:26 AM  

jgi: just renting and saving, buying a house later in life with cash


Consider yourself fortunate if you can do this.

With rents steadily increasing in a lot of metro areas, and interest rates at all-time lows, the only way to achieve what you're describing is by "buying" and saving, then _buying_ later with cash.
 
2013-03-01 05:32:06 PM  

Yankees Team Gynecologist: jgi: just renting and saving, buying a house later in life with cash

Consider yourself fortunate if you can do this.

With rents steadily increasing in a lot of metro areas, and interest rates at all-time lows, the only way to achieve what you're describing is by "buying" and saving, then _buying_ later with cash.


If I may contribute my own experience: I bought a condo a little over a year ago, albeit with less-than-stellar mortgage terms (I couldn't afford a full 20% down payment) and in that time the value of the condo went up so much that I was recently able to refinance to a much more favorable mortgage, with monthly payments that are comparable to renting.  And on top of all that, the mortgage interest deduction on my income taxes saves me over $3,000 each year.

Moral of the story: under the right circumstances, going into debt really does put you in a better long-term position than saving.
 
2013-03-01 07:30:45 PM  

jgi: I mentioned this upthread. To get something similar to what I have now, it would cost me $300-500K depending on the neighborhood. I do not believe that were I to buy a $500K condo in a shared building that it will be worth $2.5M in 40 years. That may happen, however, if we experience insane inflation which I admit is possible. But $2.5M wont sound like a lot if milk happens to be $20 a gallon.

I am in a different situation than you. It's far cheaper to rent in my current situation than buy. Eventually, I'll probably inherit two houses (both of which are currently paid for) though I would not like to live in either. But I am open to opinion. $100K sounds reasonable for a house. $500K for a condo does not.

What is your opinion?


I would bet good money that your place will be worth $2.5M in 40 years. My grandma bought her house in 1976 for $15,000. She sold it in 2006 for $220,000. That's nearly 15x's the original cost. Pretty much every property along the West Coast has seen similar growth in value. Even if you account for the current (recession) value of homes in the area, the same house is worth $160,000 today - 10x's what she paid for it.

$500k for a condo does sound pretty steep, and the problem with condos are that they are very dependent on the other owners paying their dues (and the units are occupied), which I'd say makes them quite a bit different than a single family home.

While it would take a little footwork to see the current condition, here's a 3 bed 2 bath ~1,900 sq.ft. house with a 1-car garagein a decent looking neighborhood near downtown Chicago for an estimated $438,000 (foreclosure estimate). Considering it sold 8-years ago for $700,000 - it looks like a pretty good deal for the area. If I were working in Chicago, I'd look for something like that. If you put $100k down, your monthly payments would be ~$1,700 a month on a 30-year fixed @ 3%.
 
2013-03-01 08:00:59 PM  

jgi: What is your opinion?


If you can afford it I would say buy.  If it would be a huge stretch every month then wait until you can afford it, there's no good reason to be house poor.  The only valid argument you made was mobility.  I don't have a crystal ball and if you think your job or circumstances may require you to move then it would be prudent to wait.  The 'that price is insane' argument is invalid.  Real estate prices and interest rates have already dropped as far as they are going to.

/Fark truncated the post half-way through so I cut it just to reply to your question.
 
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