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Answers (21)
- Pasadenan
- Contributions:21388
By the way, YES, I know that "profit" is a "misnomer" in the illustration I gave. That $32.1k "return on investment" can hardly be considered "profit" when you spent $429.6k on principal and interest ALONE!
That means that $397.5k was "lost", thrown away, never to be seen again. Add to that loss the property tax, insurance and maintenance; and one MIGHT see this was not a good "deal".
Not saying one shouldn't buy; but one should not buy when one knows they can rent the equivalent for substantually less, NOR should one buy when it is obvious the values are rapidly dropping. There will be plenty of opportunities to buy later. Do no rush into such a huge money loosing proposition.
(Of course I bought, and of course I own, and of course I already paid the loan off... But I didn't buy near the peak of the market, nor did I buy when it was obvious that values were quickly dropping.)
For everything there is a season, and a time for every purpose under the sky.
If one doesn't know the signs of the times, one is wearing blinders.
"You discern the face of the sky (for the weather), but cannot see the signs of the times?" (Mt 16.3).
That means that $397.5k was "lost", thrown away, never to be seen again. Add to that loss the property tax, insurance and maintenance; and one MIGHT see this was not a good "deal".
Not saying one shouldn't buy; but one should not buy when one knows they can rent the equivalent for substantually less, NOR should one buy when it is obvious the values are rapidly dropping. There will be plenty of opportunities to buy later. Do no rush into such a huge money loosing proposition.
(Of course I bought, and of course I own, and of course I already paid the loan off... But I didn't buy near the peak of the market, nor did I buy when it was obvious that values were quickly dropping.)
For everything there is a season, and a time for every purpose under the sky.
If one doesn't know the signs of the times, one is wearing blinders.
"You discern the face of the sky (for the weather), but cannot see the signs of the times?" (Mt 16.3).
To answer the OP. You would not buy a house to lose money in the next 3 or so years unless the property had a higher or better use then just an SFR home or you knew of some future improvement nearby that would change the current market dynamics of the homes value. Even then there is risk that none of those things would happen, but that is a reason why you would buy now.
You would also buy now, because there is product that will not lose money in the next 3 years. These property are in the minority nationwide, but there are such property.
You would also buy now, because there is product that will not lose money in the next 3 years. These property are in the minority nationwide, but there are such property.
- Pasadenan
- Contributions:21388
Oh, and Valorie, for that $629k house example that you gave, if you got a 30 year fixed rate mortgage for that, at 100% Loan to Value Ratio, 5.5% fixed interest, in 10 years you would have spend $429.6k on payments alone, and would still owe $519.2k. And then you have property tax, maintenance, insurance, an numerous other expenses on top of that.
Meanwhile you could have been renting the equivalent for $1.6k per month, gotten the "renters credit" on your income tax, and possibly the owner would have thrown in the utililtes at no extra cost.
So, even if you sold in 10 years at $629k (which is extremely optomistic for the present ecconomy), you would still have to pay the 6% commission, leaving only 591.3k But then you have all the termite inspection, and buyer noted "corrections" to close the deal... So, about $40k less, leaving $551.3k. Subtract out what you owe your mortgage company, and you have $32.1k "profit". But that $32.1k is only worth less than $16k in present dollars.
So, wouldn't you have been better renting and investing that EXTRA $2k per month in a CD that returned 5% ? Then you would have $310.6k at the end of that 10 years instead!
Meanwhile you could have been renting the equivalent for $1.6k per month, gotten the "renters credit" on your income tax, and possibly the owner would have thrown in the utililtes at no extra cost.
So, even if you sold in 10 years at $629k (which is extremely optomistic for the present ecconomy), you would still have to pay the 6% commission, leaving only 591.3k But then you have all the termite inspection, and buyer noted "corrections" to close the deal... So, about $40k less, leaving $551.3k. Subtract out what you owe your mortgage company, and you have $32.1k "profit". But that $32.1k is only worth less than $16k in present dollars.
So, wouldn't you have been better renting and investing that EXTRA $2k per month in a CD that returned 5% ? Then you would have $310.6k at the end of that 10 years instead!
- NTETS, "Mr Caveat"
- Contributions:6436
why would you pay someone 6 grand to tell you "now is the best time to buy" and then believe a word coming out of their mouth?
used home salesman, tell your friend to remember that when 15 years from now he is no longer upside down
used home salesman, tell your friend to remember that when 15 years from now he is no longer upside down
- klarek the realist
- Contributions:7044
There is not the slightest indication that the market is anywhere near bottoming out. Nothing. Not a thing. Every month, the Year-over-Year price declines are more and more steep. So Val, don't you lecture any of us on what we don't know. These very simple yet ominous facts should penetrate the thick skulls of you market lemmings. It's unfortunate that the real estate industry can still function with such a large contingent of its minions not knowing the first darned thing about the market. It's scary, I feel bad for your clients.
- Pasadenan
- Contributions:21388
Valorie,
I'm so GLAD that you would spend $629k, for the first house you ever bought in 2006!!!
What a BARGAIN! THAT'S what I'm saying ALL Real Estate AGENTS need to do! Put their money where their mouth is, and sell that same house at $340k, less than 2 years later!
You own it to your BUYER to let them have the house for $289k less than you paid, and you own it to the person that you bought it from to pay them twice what any normal person would pay 2 years later!
For the GOOD TIMES! BUY HIGH, SELL LOW; it is the only way to be generous! And you know as well as I do that house will not be worth $629k again for at least a decade, and by that time that $629k will only be worth $312k in present day dollars.
It is so nice to know there are still generous people out there like you ready to give away $300k in just a few days to someone you never met before just because someone asked!
I certainly hope you are as generous with your church and give them at least $300k per year as well!
I'm so GLAD that you would spend $629k, for the first house you ever bought in 2006!!!
What a BARGAIN! THAT'S what I'm saying ALL Real Estate AGENTS need to do! Put their money where their mouth is, and sell that same house at $340k, less than 2 years later!
You own it to your BUYER to let them have the house for $289k less than you paid, and you own it to the person that you bought it from to pay them twice what any normal person would pay 2 years later!
For the GOOD TIMES! BUY HIGH, SELL LOW; it is the only way to be generous! And you know as well as I do that house will not be worth $629k again for at least a decade, and by that time that $629k will only be worth $312k in present day dollars.
It is so nice to know there are still generous people out there like you ready to give away $300k in just a few days to someone you never met before just because someone asked!
I certainly hope you are as generous with your church and give them at least $300k per year as well!
valorie, you miss one simple to others point: which way housing prices are going right now, is not a mystery to most of us. Increasing foreclosures and job losses make 2009 quite easy to predict: down with a vengeance.
So I don't need to know when the bottom will be, I just know it isn't now, and so do most of the fairly well educated zillow crowd.
So I don't need to know when the bottom will be, I just know it isn't now, and so do most of the fairly well educated zillow crowd.
- Valorie Stover, "QUALITY REALTOR"
- Contributions:170
There are buyer and there are seller. You don't want to be one then don't at this time if you don't want to.
The market will go up again. Do I know when? no. Do you know when? No! I don't have to lie to my clients, I tell them just what I told you!
I DO NOT KNOW WHEN THE MARKET WILL TURN!
Bough my first house in 1972 for $20,000, same house sold in 2006 for $629,000. It had many ups and downs in the market.
Sold 4 months ago for $340,000. Here is the kicker, it has never been upgrated. If I had owned it all this time I would be glad to take the $320,000 profit? You bet!
That is why you buy a house and hang on, for the good times.
The market will go up again. Do I know when? no. Do you know when? No! I don't have to lie to my clients, I tell them just what I told you!
I DO NOT KNOW WHEN THE MARKET WILL TURN!
Bough my first house in 1972 for $20,000, same house sold in 2006 for $629,000. It had many ups and downs in the market.
Sold 4 months ago for $340,000. Here is the kicker, it has never been upgrated. If I had owned it all this time I would be glad to take the $320,000 profit? You bet!
That is why you buy a house and hang on, for the good times.
- HomeSand.net, "White Picture"
- Contributions:4386
By the way, Yabis2000 is not intend to buy the house at this time.
- mrfnuts
- Contributions:1386
...Like Pasadanean said, 30% today off of prices that were inflated 200% is not a bargan...
Hey, come on now, I've still got that 1992 Ford Escort. Last week it was for sale at $36,000. However,..
THIS WEEK i HAVE DROPPED THE PRICE A WHOPPING 30%! YOU CAN BUY IT AT THE BARGAIN PRICE OF $25,200!!
CALL TODAY, THERE'S NEVER BEEN A BETTER TIME TO BUY 1992 FORD ESCORTS! THEY ARE NOW AT HISTORIC LOWS, AND INTEREST RATES HAVE NEVER BEEN LOWER. BUY NOW OR BE PRICED OUT FOREVER!!
Hey, come on now, I've still got that 1992 Ford Escort. Last week it was for sale at $36,000. However,..
THIS WEEK i HAVE DROPPED THE PRICE A WHOPPING 30%! YOU CAN BUY IT AT THE BARGAIN PRICE OF $25,200!!
CALL TODAY, THERE'S NEVER BEEN A BETTER TIME TO BUY 1992 FORD ESCORTS! THEY ARE NOW AT HISTORIC LOWS, AND INTEREST RATES HAVE NEVER BEEN LOWER. BUY NOW OR BE PRICED OUT FOREVER!!
- klarek the realist
- Contributions:7044
And they have nothing more to say... their intellectual capital has been generously dumped into this thread and that's it. Really amazing.
- Pasadenan
- Contributions:21388
Boy, am I glad there are so many really inteligent Realtors that are anxious to pay "present market value" for my house! That means, the even though they can't convince anyone else of their deceptions, there are still plenty of buyers for my house to be sold within 30 days.
And after pocketing the full price (less the 4.5% commission), I could use some of that money to rent, and then in 3 years, I could buy something bigger and better for $300k less!
Even if I just put the cash under the mattress instead of "investing it", I would still come out ahead compared to the $300k loss over the next 3 years. While the Realtors are loosing $300k equity that they think they are "building", I will be building $300k equity by keeping it in the mattress waiting to buy back at $300k less.
(Or should I let Mr Made-OFF make off with that cash by believing his imaginary 25% annual return?)
And after pocketing the full price (less the 4.5% commission), I could use some of that money to rent, and then in 3 years, I could buy something bigger and better for $300k less!
Even if I just put the cash under the mattress instead of "investing it", I would still come out ahead compared to the $300k loss over the next 3 years. While the Realtors are loosing $300k equity that they think they are "building", I will be building $300k equity by keeping it in the mattress waiting to buy back at $300k less.
(Or should I let Mr Made-OFF make off with that cash by believing his imaginary 25% annual return?)
- Pasadenan
- Contributions:21388
"May be worth what you paid, minus the principal payments"?
You mean it will only be worth the out of pocket interest, and not even any of the money borrowed???
So if you pay $10k in interest the first year, the value of the house has dropped to $10k?
You mean it will only be worth the out of pocket interest, and not even any of the money borrowed???
So if you pay $10k in interest the first year, the value of the house has dropped to $10k?
- Pasadenan
- Contributions:21388
Why do people keep saying housing is like stocks? Houses are NOT stocks! A stock can be sold less than a day. A house takes an average of 6 months to sell, and presently it is closer to 10 months. Even if somone made an offer immediately, it would still take a minimum of 30 days to close.
And stock prices fluctuate by the minute while trading is open, but house prices only gradually change over a period of weeks.
And trends in housing are very easy to predict, yet even if one knew which sectors will do well in stocks, the competion between various companies in that sector make it very difficult to predict individual stocks.
You can do "dollar cost averaging" for stocks; but for a house, what you offer is what you are stuck with.
It is clear; those that propogate such nonsence plan on having someone else waste their retirement investment.
And stock prices fluctuate by the minute while trading is open, but house prices only gradually change over a period of weeks.
And trends in housing are very easy to predict, yet even if one knew which sectors will do well in stocks, the competion between various companies in that sector make it very difficult to predict individual stocks.
You can do "dollar cost averaging" for stocks; but for a house, what you offer is what you are stuck with.
It is clear; those that propogate such nonsence plan on having someone else waste their retirement investment.
- NotBucknersFault86
- Contributions:27
To purchase a house for the same or close to your rent may make sense. First, it's your dwelling and it MAY increase in value (are you still contributing to 401K even though you lost 40% ?!?!?) If you don't plan on sellling in 3-5 years, it may be worth at least wht you paid (minus principal payments).
- interested_observer
- Contributions:517
"you will be building equity for yourself rather than your landlord"
Please explain how I build equity if the value of the house decreases by 25% over the next few years? Seems to me that it's much more likely that I will just be flushing my downpayment down the toilet. Isn't it better to let the landlord take the loss?
I'm still not sure whether the Realtors who post this nonsense are clueless or shameless or a little of both.
Please explain how I build equity if the value of the house decreases by 25% over the next few years? Seems to me that it's much more likely that I will just be flushing my downpayment down the toilet. Isn't it better to let the landlord take the loss?
I'm still not sure whether the Realtors who post this nonsense are clueless or shameless or a little of both.
- klarek the realist
- Contributions:7044
[post edited by moderator] Is there not a shred of shame amongst you to work in an industry and not have the single smallest idea about the market?
"your rent is 1000 pm over three years you will have lost 36,000. "
Equivalent purchase in my area would cost at least $1500/mo. So I'd spend $54,000, and lose another 20% of the house's value. Pretty simple math: spend $36,000 with ZERO LOSS or $54,000 with MASSIVE LOSS??? DO YOU UNDERSTAND MATH???????
"Why would you wait and miss out while property values are down about 30%?"
30% off of artificially inflated properties. So a $200k house ten years ago became "worth" $500k during the bubble, and on the way back near its original value now is 30% off at $350k. Why would I wait and miss out on losing another $100-150k?
"Nobody can predict the future"
Then stop telling people they will miss out. It's one thing to be naive and say nobody knows where the market will go, or predict the future. It's insulting when in the same breath you tell us that we'll "miss out".
"your rent is 1000 pm over three years you will have lost 36,000. "
Equivalent purchase in my area would cost at least $1500/mo. So I'd spend $54,000, and lose another 20% of the house's value. Pretty simple math: spend $36,000 with ZERO LOSS or $54,000 with MASSIVE LOSS??? DO YOU UNDERSTAND MATH???????
"Why would you wait and miss out while property values are down about 30%?"
30% off of artificially inflated properties. So a $200k house ten years ago became "worth" $500k during the bubble, and on the way back near its original value now is 30% off at $350k. Why would I wait and miss out on losing another $100-150k?
"Nobody can predict the future"
Then stop telling people they will miss out. It's one thing to be naive and say nobody knows where the market will go, or predict the future. It's insulting when in the same breath you tell us that we'll "miss out".
- Mara Cruwys, "homes4unewjersey"
- Contributions:50
if your choice is to buy or rent why wouldn't you buy? if your rent is 1000 pm over three years you will have lost 36,000. if you stay in your home for the medium to long term you will not only benefit from tax credits and depreciation write offs,you will be building equity for yourself rather than your landlord, what other investment do you get to use and enjoy. you also get the added advantage of being able to potentially increase the value by updating or adding an addition. if you are smart this IS the time to buy with rates and prices low. good luck.
- Pasadenan
- Contributions:21388
Why? Because the people you are buying from need the money more than you do! And the people you will eventually sell to need the house more than you do but you won't need the money, so you should sell it for less.
Don't you remember about going two miles when someone asks you to go one, and giving your shirt as well if someone needs your coat?
It is all about being "generous", especially to the desparate dusty agent that needs your commission.
Don't you remember the story of the man that went to market to sell the cow, but consistently traded down and ended up with a sandwich which he ate and came back home with nothing and was highly commended by his wife for his good decissions?
That is your "misssion"; give everything you have away. You can't take it with you, so you better find someone that will use it.
(Don't you just love those 30% off sales after they mark the prices up 300%? I don't shop where stores play those games. Usually 75% off is the "normal" price. I know the target price and pay absolutely no attention to amount off).
Don't you remember about going two miles when someone asks you to go one, and giving your shirt as well if someone needs your coat?
It is all about being "generous", especially to the desparate dusty agent that needs your commission.
Don't you remember the story of the man that went to market to sell the cow, but consistently traded down and ended up with a sandwich which he ate and came back home with nothing and was highly commended by his wife for his good decissions?
That is your "misssion"; give everything you have away. You can't take it with you, so you better find someone that will use it.
(Don't you just love those 30% off sales after they mark the prices up 300%? I don't shop where stores play those games. Usually 75% off is the "normal" price. I know the target price and pay absolutely no attention to amount off).
- Dusty Brazil, "SanElijoHills"
- Contributions:61
Why would you wait and miss out while property values are down about 30%? Nobody can predict the future, but if you are looking in Carmel Valley, you should monitor how fast the properties are being bought and talk to a Realtor about how hard it is to buy a home right now because most places ( bank owned) are receiving multiple offers because things are being listed low and people are fighting for them.
- djzag9
- Contributions:20
houses? Plural? Sounds like they may have overleveraged. I doubt many people will claim the market is primed for highly leveraging yourself. But many will say rates are low, prices are low, tax benefits are there, building equity is good, renting vs owning is comprable.
Just because your friends went out and bought multiple houses and lost doesn't mean you will.
Just because your friends went out and bought multiple houses and lost doesn't mean you will.
why would i buy a house now only to lose money in it for the next 3 or so years.??
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