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- BuyEqualsRent
- Contributions:1491
In most places, if you wait, falling prices will pay for your rent in the meantime. Rates have been very very low for the past 4 years, a few percent doesn't mean much. Almost everybody who wanted to buy in the past few years has already bought. We're heavily oversupplied in most markets. And now lenders are tightening standards and forcing more and more people to the sidelines. If you are a qualified buyer today and figure to still be qualified in 6 months, then 6 months from now you'll be competing with far fewer potential buyers as lending standards continue to tighten. No compelling arguments for jumping in right now...
- Nathan Wolf, "natewolf"
- Contributions:1825
I would disagree. A client that was qualified last month with a 658 Credit Score has now been told he does not qualify unless he has a 700 Credit Score. So the time is now for some buyers.
And the rates will not be much lower than they are right now. And sellers can only lose so much on the sale of their home before they decide to not sell. So, low prices, low rates = BUY NOW.
And the rates will not be much lower than they are right now. And sellers can only lose so much on the sale of their home before they decide to not sell. So, low prices, low rates = BUY NOW.
- klarek the realist
- Contributions:7044
Just like a year ago, right? I'm sure that was your exact song then: BUY NOW!
But I didn't listen to your ilk because I knew better. I'm no less qualified right now than I was then, but prices in my area are down by over 25%. So guess what I'm going to do? Wait even more. We're no where near the end of this "correction", so I would be a complete idiot to follow your horrible advice.
And no, the media's doom didn't scare me away. Stop making them the bad guy in this mess. Were you giving them credit for the market's upswing during the boom?
But I didn't listen to your ilk because I knew better. I'm no less qualified right now than I was then, but prices in my area are down by over 25%. So guess what I'm going to do? Wait even more. We're no where near the end of this "correction", so I would be a complete idiot to follow your horrible advice.
And no, the media's doom didn't scare me away. Stop making them the bad guy in this mess. Were you giving them credit for the market's upswing during the boom?
- mbondiett
- Contributions:4
Don't fret Nathan, you will always be able to sell your clients home later for less money.
If realtors can't figure it out, how do you expect homeowners with no research into matter understand how the market works.
If you don't get it, you just don't get it.
What else can be said.
Merry Christmas All!
If realtors can't figure it out, how do you expect homeowners with no research into matter understand how the market works.
If you don't get it, you just don't get it.
What else can be said.
Merry Christmas All!
- klarek the realist
- Contributions:7044
Nathan, your argument makes no sense whatsoever. You're basically saying buy "just because", which is the same stupid message that got millions of people to buy houses they could never afford. But I think I'm speaking at a level above your pay grade.
My credit score is high enough that I don't have to worry. And in the case you outlined, your friend will become eligible to buy when he gets his credit score up. By then, houses will be much cheaper.
Now is the WORST TIME TO BUY.
My credit score is high enough that I don't have to worry. And in the case you outlined, your friend will become eligible to buy when he gets his credit score up. By then, houses will be much cheaper.
Now is the WORST TIME TO BUY.
In phoenix prices are dropping at 2% a month. The same can be said of many markets... Foreclosures keep increasing, supply/demand are out of whack, (a years supply, normal is six months) and now we have job losses, which will be a death spike in the market all next year. (no job = no buy home, or quit paying mortgage)
wolfman, what is keeping many buyers from buying, is that they are clearly a bit smarter than you when it comes to economics/real estate markets.
wolfman, what is keeping many buyers from buying, is that they are clearly a bit smarter than you when it comes to economics/real estate markets.
I would tend to believe that in specific rural settings it is moving towards a good time to buy, but even then it has to be a specific product in a specific market.
If we speak in generalities about the market or focus on the majority in the major urban corridors, I would say it is still not the time to buy.
1) Because property values will continue to decline because (extremely high inventory, access to capital is becoming constricted, many lost jobs, etc.)
2) low interest rates in the near future will continue to be lower. As rates rise this will also decrease property values further.
Basically the Buyer has become more cautious and smarter. If you will not qualify for a loan in 6 months because lending standards have tightened, that might be a sign that maybe you shouldn't be buying a home or maybe you should be buying a lot less home.
- mrfnuts
- Contributions:1386
If you're renting, or have considered purchasing, is it simply because you hear the media talk about the doom and gloom?
Why is it that every drive by realtor seems to come up with this asinine remark.
1) The media is always the LAST to report on anything. Literally right up until the subprime melt down they were parroting bubble-mania.
Check out this freak'n Time Magazine Cover:
Is this a media spreading perpetual 'doom and gloom'??
2) Those of us who haven't bought, were the same ones who DID NOT buy in 2004, 2005, 2006... Again, this is when the media was all 'ga ga' over real estate -- again, see above Time Magazine cover.
To try and make the insinuation that we are somehow 'sheeple' to the media because we refuse to buy now is factually inaccurate. If anything we are clearly independent thinkers and refused to take god awful advice from both the media, and the likes of you. There is no reason to change our mind and act on your god awful advice simply because the media is just now starting to report a burst bubble.
Why is it that every drive by realtor seems to come up with this asinine remark.
1) The media is always the LAST to report on anything. Literally right up until the subprime melt down they were parroting bubble-mania.
Check out this freak'n Time Magazine Cover:
Is this a media spreading perpetual 'doom and gloom'??
2) Those of us who haven't bought, were the same ones who DID NOT buy in 2004, 2005, 2006... Again, this is when the media was all 'ga ga' over real estate -- again, see above Time Magazine cover.
To try and make the insinuation that we are somehow 'sheeple' to the media because we refuse to buy now is factually inaccurate. If anything we are clearly independent thinkers and refused to take god awful advice from both the media, and the likes of you. There is no reason to change our mind and act on your god awful advice simply because the media is just now starting to report a burst bubble.
- mrfnuts
- Contributions:1386
3) The bubble is OVER! Get over it! We will buy when the prices make sense. Why on earth for example would I buy my house and drop 20% down (over $90K of lost opportunity money), and then enjoy a mortgage over $2450 monthly, taxes over $7000 yearly, and the general maintenance and up keep, when I can simply rent the place for $1600? Please... explain this to me. Does this sound like we're being brainwashed by media 'doom and gloom' as you call it? These are the damn numbers! When the numbers make sense, then we'll buy. Simple. ...
...And funny thing is... when drive by realtors were telling us to 'buy now or be priced out forever' about a year ago... the damn down payment would have been closer to $120K, and the mortgage getting close to $3250 -- and the rent was still $1600 at that time as well.
With 'investment geniuses' like you guys, no wonder the typical American is without any savings account, and is generally living month to month -- i.e. broke!
On the bright side, In the not to distant future, many of these Realtors that got their licenses between 2003 and 2007 will go back to flipping burgers or stacking boxes at Walmart.
...And funny thing is... when drive by realtors were telling us to 'buy now or be priced out forever' about a year ago... the damn down payment would have been closer to $120K, and the mortgage getting close to $3250 -- and the rent was still $1600 at that time as well.
With 'investment geniuses' like you guys, no wonder the typical American is without any savings account, and is generally living month to month -- i.e. broke!
On the bright side, In the not to distant future, many of these Realtors that got their licenses between 2003 and 2007 will go back to flipping burgers or stacking boxes at Walmart.
- Space_Truss
- Contributions:177
Another hungry agent or mortgage broker ?
[content removed by moderator for being a personal insult] to tell people that it is a good time to buy.
Why am I so excited? Everytime I hear a commision hungry cute smart agent, I remember the mistake I was about to do in 2007 . Here at Zillow they were singing the same song BUY NOOOW!!!!! Best Time! Rates are still historic low (was 6.5). I am wondering how they are feeling now ? Stupid? Ashamed? Shameful? All the posts are still here, go find.
I am not buying now because I learned to do simple math in grammar school - and, in my area at least, prices are still falling like a rock despite the Fed's most recent dramatic attempt to stop the avalanche.
I have already "saved" approx. 125k by waiting to buy since July 2007 - that nets me about 100k after my rent payments (taking into account the other obligations to ownership that I have avoided, like RE taxes, insurance and HOA).
The media has nothing to do with my decision. It is based simply on keeping myself informed about my local RE market by watching listings in my area of interest daily, and the fact that I am skeptical of the opinions of RE agents since their livelihood depends on my buying no matter what the conditions truly are.
I have already "saved" approx. 125k by waiting to buy since July 2007 - that nets me about 100k after my rent payments (taking into account the other obligations to ownership that I have avoided, like RE taxes, insurance and HOA).
The media has nothing to do with my decision. It is based simply on keeping myself informed about my local RE market by watching listings in my area of interest daily, and the fact that I am skeptical of the opinions of RE agents since their livelihood depends on my buying no matter what the conditions truly are.
- Laura Karambelas, "Karambelas"
- Contributions:748
Nathan-
I am not a buyer but an agent. I have many buyers sitting on the fence and I don't think the lower interest rates are going to necessarily get them to buy. When I talk with them, many of them aren't buying because in some areas prices are continuing to fall, many of them are afraid of losing their jobs in the near future and there is no consumer confidence. People listen to the poor economic news that comes out daily and are worried about their own situations....and, rightfully so.
I think once the economy starts turning around, prices bottom out&there is a sense of consumer confidence again, people will start thinking about buying a home. This is just my $.02 and what I've learned from listening to my clients.
I am not a buyer but an agent. I have many buyers sitting on the fence and I don't think the lower interest rates are going to necessarily get them to buy. When I talk with them, many of them aren't buying because in some areas prices are continuing to fall, many of them are afraid of losing their jobs in the near future and there is no consumer confidence. People listen to the poor economic news that comes out daily and are worried about their own situations....and, rightfully so.
I think once the economy starts turning around, prices bottom out&there is a sense of consumer confidence again, people will start thinking about buying a home. This is just my $.02 and what I've learned from listening to my clients.
- jal74
- Contributions:1077
House for rent
Nathan. Explain to me why buying this house is better than renting. This house will appraise for well in excess in of $1 mm. It's in a great suburb of chicago, some of the best schools in the state, with great public transportation into the city nearby. Property taxes here will be in excess of 2% of assessed valuation, which by the way, in the current market is actually in excess of FMV. So, you have a house that will cost over $6,000 per month in P&I, close to $2,000 per month in taxes.
TELL ME FRICKIN WHY I SHOULD BUY THIS HOUSE INSTEAD OF RENTING IT?
WHEN YOU CAN FIGURE THIS OUT PLEASE LET ME KNOW
OTHERWISE SHUTUP AND SIT DOWN
- jamhie
- Contributions:42
Unemployment just from GM alone is gonna be huge.
Home Price are still too high.
they should be in the 2001 price range.
- Nathan Wolf, "natewolf"
- Contributions:1825
Okay, so personal attacks are not warranted and telling me to "shut up and sit down" is completely inappropriate.
With that said, I am asking a valid question. If in your specific market the prices are dumping and it's better to rent than to buy, then by all mean RENT.
I just found out last week that a brand new home worth $1.4M a year ago is being dumped WAY below even the current market by a bank. They are auctioning it for about $350,000. This house could not even be rebuilt for that. The land value alone is nearly $300,000. And using the "SWIFTS" guide for construction cost valuation, the build cost would be almost $500,000 at the least. So, if base on RAW COST TO BUILD, why wouldn't someone want to BUY NOW if you can get Half-priced a "Million dollar home" on a 2-acre gated community lot, in the Highest Nationally Rated School District in North Carolina.
Sure, you can always find properties which are still not a deal, or as the example from Chicago shows, would not be wise, but there are plenty of good reasons like the one I've shown which could never be rented. There are limited rentals in some areas. They are nearly non-existant in High End Residential / Single Family Homes in the South.
- mbondiett
- Contributions:4
There ARE buyers left.
The RE market has just happen to run out of suckers that have been buying on hype with total lack of any market due dilligence on their own part.
NOW... the RE agents are more likely to have to deal with more educated buyers that can't be hyped by "what someone claims" the build cost was.
Agents nationwide are now left with overbuilt markets where increasingly more expensive homes have been built that 98% of the population could not qualify for under normal circumstances. ie. 20% dn, 38% of income etc.
On top of that problem, while everone was swimming in credit money the general contractors were padding their margins as well as every sub contractor that was hired from the footings to the finish work and on and on.
How much of the "claimed build cost" for expensive homes especially is due to profits, padded margins, inflated building permit cost, added to the cost of construction.
Also, to RE agents; part of being in business is to understand the market that you are in. If you can't read the tea leaves you may end up greeting at WalMart. If you can qualify.
The RE market has just happen to run out of suckers that have been buying on hype with total lack of any market due dilligence on their own part.
NOW... the RE agents are more likely to have to deal with more educated buyers that can't be hyped by "what someone claims" the build cost was.
Agents nationwide are now left with overbuilt markets where increasingly more expensive homes have been built that 98% of the population could not qualify for under normal circumstances. ie. 20% dn, 38% of income etc.
On top of that problem, while everone was swimming in credit money the general contractors were padding their margins as well as every sub contractor that was hired from the footings to the finish work and on and on.
How much of the "claimed build cost" for expensive homes especially is due to profits, padded margins, inflated building permit cost, added to the cost of construction.
Also, to RE agents; part of being in business is to understand the market that you are in. If you can't read the tea leaves you may end up greeting at WalMart. If you can qualify.
- klarek the realist
- Contributions:7044
Nathan, were you calling them deals last year as well? Same song then?
- Nathan Wolf, "natewolf"
- Contributions:1825
When one looks at raw costs to construct, even taking any value out of the land. There are fees and expenses related to developing a lot. And there are raw costs of materials, not even including the labor costs.
If you cannot purchase the raw materials to re-construct a building (see the Swifts Guide for prices which is used nationwide by Banks and Appraisers), and you can buy a home at or below these costs, then that is definitely a deal.Â
As for labor issues and unemployment, the fact is that there are still sectors that continue to grow, and I'm not telling anyone that is unemployed to go buy a home. But in terms of buy vs. rent, everyone needs a place to live. And part of the longterm advantage of buying vs. renting is a stable over time cost to house and in most cases an increase over time in the value.Â
Part of all of the problems I see is this: Buy and Move. Buy and Move. Buy and Move. And people wonder why they don't have equity or are losing money. Hasn't anyone seen that commercial of the guy at the auction who buys a painting and then stands back up to re-auction it? Same concept. RENTING definitely makes sense for some people and in some markets. I rent an apartment in NYC because my landlord bought it 30 years ago. And he's renting it to me for less than it would cost me to get a loan and pay a mortgage on. But if he wants to raise my rent next year, guess what, I'll have to find a new apartment and probably will have to pay more.
If you cannot purchase the raw materials to re-construct a building (see the Swifts Guide for prices which is used nationwide by Banks and Appraisers), and you can buy a home at or below these costs, then that is definitely a deal.Â
As for labor issues and unemployment, the fact is that there are still sectors that continue to grow, and I'm not telling anyone that is unemployed to go buy a home. But in terms of buy vs. rent, everyone needs a place to live. And part of the longterm advantage of buying vs. renting is a stable over time cost to house and in most cases an increase over time in the value.Â
Part of all of the problems I see is this: Buy and Move. Buy and Move. Buy and Move. And people wonder why they don't have equity or are losing money. Hasn't anyone seen that commercial of the guy at the auction who buys a painting and then stands back up to re-auction it? Same concept. RENTING definitely makes sense for some people and in some markets. I rent an apartment in NYC because my landlord bought it 30 years ago. And he's renting it to me for less than it would cost me to get a loan and pay a mortgage on. But if he wants to raise my rent next year, guess what, I'll have to find a new apartment and probably will have to pay more.
- klarek the realist
- Contributions:7044
I'll take that non-answer as a "yes, klarek, I was telling people the exact same thing last year and the year before: now's the time to buy"
- jal74
- Contributions:1077
I rent an apartment in NYC because my landlord bought it 30 years ago. And he's renting it to me for less than it would cost me to get a loan and pay a mortgage on.
Why was none of this analysis in any part of your original argument? Why people are not buying houses is because of exactly this argument - in 90% of america its still cheaper to rent than buy. It will be even cheaper over the next 12 months.
I LOVE THIS. A REA AGENT WHO RENTS BUT IS BEGGING PEOPLE TO DO EXACTLY WHAT HE WON'T BECAUSE IT DOESN'T MAKE ECONOMIC SENSE.
CAN YOU SAY USED HOUSE SALESMAN?
Why was none of this analysis in any part of your original argument? Why people are not buying houses is because of exactly this argument - in 90% of america its still cheaper to rent than buy. It will be even cheaper over the next 12 months.
I LOVE THIS. A REA AGENT WHO RENTS BUT IS BEGGING PEOPLE TO DO EXACTLY WHAT HE WON'T BECAUSE IT DOESN'T MAKE ECONOMIC SENSE.
CAN YOU SAY USED HOUSE SALESMAN?
- Tiffany Bond, "TiffanyBond"
- Contributions:3010
It isn't a deal when you are buying for less than construction costs if it still is above market price, it means the builder is following a poor business model and probably should consider a career in the fine fast food industry.
- interested_observer
- Contributions:517
"I just found out last week that a brand new home worth $1.4M a year ago is being dumped WAY below even the current market by a bank. They are auctioning it for about $350,000."
More details please. When you say it was worth 1.4M a year ago, does that mean similar homes in the area actually sold for 1.4M?
More details please. When you say it was worth 1.4M a year ago, does that mean similar homes in the area actually sold for 1.4M?
- Nathan Wolf, "natewolf"
- Contributions:1825
Market price remains in the million-dollar range. The bank is truly "dumping" the property as it was a construction loan, the builder paid significant cash out of pocket, and also put the land up against his construction loan. The bank is taking a loss but so is the builder who is likely at the drive-thru at Wendy's.
- Nathan Wolf, "natewolf"
- Contributions:1825
Yes, homes in the area sold for even higher than that. Up to $2.2M in the neighborhood. On the worst day, that home would be worth $750,000 -- the bank was only in the property for the actual construction cost. The builder had paid out much of the building in cash and also put his landup against the construction loan.
- interested_observer
- Contributions:517
"The bank is truly "dumping" the property"
If the property is still on the market, I'd be interested in a link to additional information. I'm also curious about why you're not buying it if it's such a screaming deal.
If the property is still on the market, I'd be interested in a link to additional information. I'm also curious about why you're not buying it if it's such a screaming deal.
- klarek the realist
- Contributions:7044
Say it Nathan: "yes, klarek, I was telling people the exact same thing last year and the year before: now's the time to buy"
- Nathan Wolf, "natewolf"
- Contributions:1825
No, last year I was saying to clients, now is the time to change gears because the market it changing. It has been changing for several years.
I've told numerous high-end builders to stop building McMansions, focus on first-time home buyers, focus on green building, focus on move-down / empty nesters, focus on retirees, and focus on building homes that fall within FHA or Conforming Loan Limits, which in my area are below $313,000 and below $417,000 respectively.
One such client is Camelot Homes. I have helped them go from building Million-dollar-plus / 6,000 to 12,000 square foot luxury homes, to focus on multi-family and smaller homes which fall within these guidelines. They have developed two new spin-off companies, one for these new pricepoints and one to do renovations since many homeowners are chosing not to sell and buy a new home, and would rather renovate what they have.
And I've also been helping certain developers and subdivision HOAs to redraft their convenants and restrictions to fall within what can be built, bought and sold in the marketplace.
I've told numerous high-end builders to stop building McMansions, focus on first-time home buyers, focus on green building, focus on move-down / empty nesters, focus on retirees, and focus on building homes that fall within FHA or Conforming Loan Limits, which in my area are below $313,000 and below $417,000 respectively.
One such client is Camelot Homes. I have helped them go from building Million-dollar-plus / 6,000 to 12,000 square foot luxury homes, to focus on multi-family and smaller homes which fall within these guidelines. They have developed two new spin-off companies, one for these new pricepoints and one to do renovations since many homeowners are chosing not to sell and buy a new home, and would rather renovate what they have.
And I've also been helping certain developers and subdivision HOAs to redraft their convenants and restrictions to fall within what can be built, bought and sold in the marketplace.
- Nathan Wolf, "natewolf"
- Contributions:1825
I've also just helped renegotiate the restrictions of a development for an "Extreme Home Makeover" builder-- name withheld by request -- who built 5 spec homes in a neighborhood with restrictions of a minimum square foot to build of 3500 sf. The new restrictions are for homes with a minimum of 2800 sf, which will allow them to severely drop the pricepoint of the neighborhood, without dropping the quality of the homes to be built.
- Pasadenan
- Contributions:21450
Nate -
I believe I already answered your question, I have no hesitation to buy right now; I just can't find what I'm looking for. Tell you what; if you can find what I'm looking for, you can represent me as my agent.
I certainly don't have any difficulty with credit; my scores are well above 800 with all the rating agencies.
But as for a place to live? I already have one, and the only expenses are utilites, $2k annual property tax, $1k annual insurance, and some minimal annual maintenance. No money to any lenders or sellers or other owners...
Now, for what I'm looking for.... In the $100k price range, 640 acres, 3500 sqft two story house, property taxes less than 2%, temperatures between 40F and 105F year round with average daytime temp about 75F; plenty of quality water, energy sources available; shopping within 30 miles (english speaking), and ambient outdoor sound level not exceeding 40dB.
Let me know when you find it for me. Though I won't be able to move for at least 2 more years, I don't mind buying earlier if what I want shows up.
I believe I already answered your question, I have no hesitation to buy right now; I just can't find what I'm looking for. Tell you what; if you can find what I'm looking for, you can represent me as my agent.
I certainly don't have any difficulty with credit; my scores are well above 800 with all the rating agencies.
But as for a place to live? I already have one, and the only expenses are utilites, $2k annual property tax, $1k annual insurance, and some minimal annual maintenance. No money to any lenders or sellers or other owners...
Now, for what I'm looking for.... In the $100k price range, 640 acres, 3500 sqft two story house, property taxes less than 2%, temperatures between 40F and 105F year round with average daytime temp about 75F; plenty of quality water, energy sources available; shopping within 30 miles (english speaking), and ambient outdoor sound level not exceeding 40dB.
Let me know when you find it for me. Though I won't be able to move for at least 2 more years, I don't mind buying earlier if what I want shows up.
- klarek the realist
- Contributions:7044
"No, last year I was saying to clients, now is the time to change gears because the market it changing."
What does that mean?
What does that mean?
BUYERS: What's your biggest obstacle/hesitation to buying right now? Rates are so low!
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- 5.0/5.0
- (1 review)
Contributions:1825But most buyers will qualify for an FHA Loan, which is a low-rate Government Backed home loan. In my local market of Charlotte, NC you can qualify for up to a $313,000 mortgage -- depending on your income, with very little down payment. And down payment assistance is often available!
If you're renting, or have considered purchasing, is it simply because you hear the media talk about the doom and gloom? Or is it some other reason? Everyone needs a place to live. And at the current rates you could wind up paying less than rent!
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