Posted on 09/21/2007 10:49:53 PM PDT by Freedom_Is_Not_Free
Where I am rents are way overpriced against incomes too. And the buyers may also be sellers, so the high prices tend to wash out. It is really tough on first time buyers, though.
from BJungNan’s post...”Once it is paid off, you can live in a nice house for a couple hundred a month for the taxes.”
I think BJungNan said once the house is PAID OFF...then ‘you can live in a nice house for a couple of hundred a month FOR THE TAXES’...
...didn’t mean the ‘house payment’ or mortgage payment was a couple of hundred, just the tax payments after house is paid off. oops.....
The answer is, if you have a median income, don’t buy a median home. Buy an older home, below median price.
Cash flow and equity build up support buying rather than renting. Your cash flow is better because you can deduct your interest from your income tax. Your equity grows, even if the home depreciates in value.
I tend to think home prices in general will not depreciate. Some areas of the country, DC area and CA, where they were bid up during the bubble, will see a reduction in prices—but I think they already have seen most of it.
In your location, it sounds like folks should buy if they can swing it. High rents ARE throwing money away. That is really hard when rent and homes are both high. Many people just can’t afford to buy, but renting means they can’t save up a down payment or invest for the future. The worst of both worlds.
I honestly don’t know how I would cope with that. Logic would say “move”, but you can’t subordinate your life to only financial considerations.
That said, some people aren’t realistic. If you don’t earn much, you can’t expect to buy or rent that chalet with it’s private beach. You have to have realistic expectations.
But in the case of your location, it sounds like folks should make every attempt to buy if they can.
I made the mistake of buying my house 20 years ago, Recently I bought more land next to it, now I find it is all worth a lot more money than I paid..what should I do now? maybe I can rent it to myself?
Probably not a mistake to have bought the house. But what you don’t know and what you will never investigate is, if you had rented and packed away all that money in the stock market since 1987, would you have more net worth or would you have less.
Since you are never going to bother trying to do the comprehensive analysis in this regard, you will never know the answer.
The only answer you see, is that you have made money over 20 years by buying. What you can’t accept is that you would have also made money by renting and investing the entire savings from not having to make mortgage payments, increased electricity, garbage service, maintenance, improvements, property taxes, insurance payments, special district assessments, landscaping costs, etc.
The only question is, which would come out ahead. You will never know and you don’t want to know. That’s OK. Because at least you made good money in your home and that can never be a bad decision. It certainly is a much better decision than renting and blowing the rest of your money on shopping, gambling, exotic vacations, or garbage purchases.
You did good. The only question is, could you have done better. That all depends on what your rent would have cost over the past 20 years and what your stock market balance would be now if you had invested the savings over the past 20 years.
Who knows?
Have rents not risen? Who rents out a $300,000 house for $1000 a month?
ICBW but I think you’re not considering the large number of variable rate mortgages that are due to re-set between Jan. and June 2008. Of course, if the gov’t. steps in, all bets are off.
BTT
Imagine a population of 100 people: 99 of them make $100,000 and the 100th person is Warren Buffet. Assume Warren Buffet made $50 million last year.
In your example, how is the median calulated?
My HS math stopped at Algebra II; I was always better at English :)
I took statistics, and about all I remember of it is the three points on the distribution curve (mean, median, and mode). One other thing I seem to remember though is that the median is often used if the curve isn’t a normal curve (skewed, or not bell shaped), since the mean isn’t reflective of what we think of as “average” any more.
Example: Newer 4/2, 2,000 sf. homes, 2-car garage, renting for $1,200 per month as opposed to $275,000 purchase, 20% down ($55,000), paying $1,900 MTI per month, not including association fees or maintence.
Probably more than if he buys. Why? Because even after 10 years on a conventional 30 year mortgage, most of the monthly payments have gone to interest on the debt, and therefore, any increase in the value of the realty comes from capital appreciation in the value of the real estate itself, which is problematic in an inflated market. After throwing in the cost of owning such as real estate taxes, insurance, and maintenance, renting is the clear choice for many, particularly for those who are diciplined enough to invest the difference between the cost of owning and the cost of renting.
I've done it. Of course, the house was just a modest little house.
I think that it makes sense for someone who doesn’t own a house yet to continue to rent rather than to buy in today’s over-inflated market. People who already own houses are just going to have to wait until the market bottoms out before selling. This won’t be a problem for us since we our own house outright—there is no mortgage on it. But it could be a serious problem for people who took out huge mortgages in order to buy more house than they could really afford.
Heh, after all of the renovation I've been through, done by my own hand, I'd simply lift a beer your direction and say "Cheers", bro.
I do this for my family, for my children. If it wasn't for them, I'd certainly consider something that wasn't the constant maintenance problem.
Lifestyle choice nails it. Beautiful thing is that we all have a choice.
I think my choice today will be to watch some games, swim a little and have a beer. I'll start my next renovation project in January, think I'm about done for all I can take in 2007 - lol!
Thanks for bursting my bubble :)
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