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This all seems rather knee jerk and short sighted. Just because you have a family member who is greedy and crooked doesn't make all landlords this way.
If there was a limit to home ownership as you suggest, rents could go sky high as there will not be enough rentals to go around forcing people to buy or move out. The people forced to buy will. Increase demand and thus make prices even higher.
Sure, I alo have a landlord friend out-of-CA, who made it to some very modest income with hard work, fixing torn-up homes with own hands, while scraping for money....still, I stand by all I said, firmly believe in what should be done to stop the current housing and overall mayhem. Housing is a human right. Can't criminalize living in tents, being homeless, ban living in RVs, sheds, while allowing current carnage. It all will come biting back... right now the situation is heading in Medieval direction & towards very ugly inequality.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,576,900 times
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Quote:
Originally Posted by Usrname
Sure, I alo have a landlord friend out-of-CA, who made it to some very modest income with hard work, fixing torn-up homes with own hands, while scraping for money....still, I stand by all I said, firmly believe in what should be done to stop the current housing and overall mayhem. Housing is a human right. Can't criminalize living in tents, being homeless, ban living in RVs, sheds, while allowing current carnage. It all will come biting back... right now the situation is heading in Medieval direction & towards very ugly inequality.
Do you tell your friend to his face that he is a greedy landlord?
If the OP really is in his early 40s, he never paid a double digit interest rate for his first home(s), unless he was dabbling in residential real estate as a child. Believe me, those of us who paid those high interest rates remember exactly when they started to decline.
It's doubtful that this poster is expecting anyone to cry tears for anyone. He's just being honest: there actually was a time when the average homeowner could buy a decent starter home here for 3 X his or her income. And those days are long gone, and probably will not return.
This has not been in years, I mean at least 30-40 years. You need double income times three to buy home in OC.
Regarding self-made RE millionaires (not talking about the OP!)....my greedy landlord family member who made a lot on real estate....they were getting those mortgages without having a job or any income, banks didn't care about papers or proof of anything (unlike now), 0-down, etc, etc. Then, this person went ahead screwing the banks, not paying, playing games, won. Typical CA real estate millionaire.
Government should just limit how much real estate can be owned by "investors": allow one 2nd home max, per household, not per person, that's it (and citizens or residents only should be allowed to own). May be then the place (CA) would become livable again. This housing plague (shortage, insane rents, overvalued homes, homelessness=destruction of "communities") is spreading all over the US now, not just CA, the end of it will not be pretty. A lot of people bash CA, having literally fleeced it earlier, are taking profit and heading to ruin the next state. The price of turning housing in nothing more but highly volatile, tradeable by entire world, for-profit commodity will be the destruction of society as a whole, it's morale and all social ties (very evident almost anywhere in CA now). Housing is a human right - especially since being homeless is illegal everywhere (yep, so much to freedom and free market-lovers,: it's all free and capitalist till there're 5 homeless camps around your nice Airbnb investment)
You could do the same thing if greedy landlords without job or income. You failed big time.
This all seems rather knee jerk and short sighted. Just because you have a family member who is greedy and crooked doesn't make all landlords this way.
If there was a limit to home ownership as you suggest, rents could go sky high as there will not be enough rentals to go around forcing people to buy or move out. The people forced to buy will. Increase demand and thus make prices even higher.
Clearly he's misguided as to what determines this notion of "greed" he speaks about? For a landlord to charge a specified amount for rent, there has to be a person willing to pay the given price he is asking. If not, his property will stay uninhabited or he will be forced to lower his price. I'm not sure how exactly one is greedy by accepting the market value of rent. Perhaps his definition of "greed" is that the landlord won't offer the property at the price he deems acceptable. But in no way does that make a landlord greedy. Some people have a problem understanding that concept.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,576,900 times
Reputation: 16698
Quote:
Originally Posted by JJonesIII
Clearly he's misguided as to what determines this notion of "greed" he speaks about? For a landlord to charge a specified amount for rent, there has to be a person willing to pay the given price he is asking. If not, his property will stay uninhabited or he will be forced to lower his price. I'm not sure how exactly one is greedy by accepting the market value of rent. Perhaps his definition of "greed" is that the landlord won't offer the property at the price he deems acceptable. But in no way does that make a landlord greedy. Some people have a problem understanding that concept.
In regards to my previous post, I'm assuming you meant....
In the long run, you would much rather purchase a 500,000 property with 100,000 down @ 12% interest than the same exact house for 1,000,000 house with 100,000 down at 3.5% interest even though they both would have about the same payment per month and same capital outlay. This is double true in CA due to Prop 13.
Correct?
You're simply saying that the property tax aspect would be one to take into account. Although admittedly, in that example, the former would be $500 less per month, but I understand your point (and I'm guessing you were just throwing out those numbers, so I'm not going to bust your **** over it). However, it's clear that the initial effort to purchase both those homes is not going to be much different for the parties involved. So the point about it being some increased hardship for those purchasing now is unfounded (in fact in that example, it would be easier for the party purchasing now). Which was the original point I was making on CR having to deal with the same factors as anyone dealing with it now. It's disingenuous and grossly unfair to claim otherwise.
Yes that's correct about the interest rates. I reversed them in my post. However, no I do not agree that it is easier to purchase now by any means. In fact, it is a significantly inferior financial proposition.
1) My example showed that it would require a loan to value of 90% in order to achieve the same mortgage payment for the million dollar property whereas it would only take an 80% LTV mortgage to get it in the $500K one. Conventional loans are not given out at 90% LTV and in order to get such loan there will be PMI involved which would then change the interest rate equation and make the more expensive house even less favorable.
2) The property tax in year 1 would be twice as much on the million dollar house - approximately 10,000 per year vs 5,000 per year (a difference of $5,000). However, in 20 years the taxes would be approximately 15,000 and 7,500 (a difference of $7,500 per year).
3) Having a high interest rate with a loan term loan you have the opportunity to refinance the loan in the future if interest rates drop. This is much more likely if rates are at 12% compared to the chances of refinancing a loan to a better rate when rates are at 3.5%
Yes that's correct about the interest rates. I reversed them in my post. However, no I do not agree that it is easier to purchase now by any means. In fact, it is a significantly inferior financial proposition.
1) My example showed that it would require a loan to value of 90% in order to achieve the same mortgage payment for the million dollar property whereas it would only take an 80% LTV mortgage to get it in the $500K one. Conventional loans are not given out at 90% LTV and in order to get such loan there will be PMI involved which would then change the interest rate equation and make the more expensive house even less favorable.
2) The property tax in year 1 would be twice as much on the million dollar house - approximately 10,000 per year vs 5,000 per year (a difference of $5,000). However, in 20 years the taxes would be approximately 15,000 and 7,500 (a difference of $7,500 per year).
3) Having a high interest rate with a loan term loan you have the opportunity to refinance the loan in the future if interest rates drop. This is much more likely if rates are at 12% compared to the chances of refinancing a loan to a better rate when rates are at 3.5%
Unfortunately, you've completely missed the point of what I was saying. In no way was I saying the scenario you laid out was smart for anyone to do (nor would I advise it). It was really more of an aside to say that in that scenario, you were looking to put down less to get into the home so it was an easier entry (nothing more, nothing less).
At a time when UR and myself were talking about, Glass Steagall was in effect and you put down 20% or you didn't get into a house. My wife and I own two homes and we would never pay less than 20% and be exposed to PMI (that's just dumb). So putting this example into more apples to apples scenario, the question as far as entry difficulty for homeownership really reverts back to a down payment (I should also point out that the prices of the homes in your scenario are not close to realistic....it's actually less than $500k in the time frame that should be compared). Your point on the property tax was duly noted as far as what one would pay on the overall cost but it is still only 1% to start with incremental increases (it always sounds so much more impressive to quote a dollar amount but let's keep these things in percentages so we can really see a true comparison). That is the beauty and fairness of Prop 13.
Could you refinance? Sure, but as mentioned, the best you were going to do into the early 90's was still in the 9% range with a couple of points added on (there was something like a 12 year span where the rate stayed at 9% or above).
So do I believe for entry at a 20% downpayment, it is more difficult? Absolutely not. And for that matter, I don't believe the overall cost over the length of the loan is any more difficult. The problem with these kind of debates is that people usually try and force the median income in the equation, which is really a silly place to start. Most people I know that were buying homes in both scenarios were closer to at least the top 5% of income earners in the area (or you did what UR did, and buy a dilapidated home and fix it up....a brilliant move on his part). And I work at a technology company in Palo Alto and know the going rate for people entering our company (that family income is indeed in that top 5% for people in their mid to late 20s).
On the income side, that top 5% is earning significantly more than when my wife and I started out, so I don't see much change in level of difficulty. So think somewhere in that $180k range and up. And if you're on the low end (the $180k income), you're brown bagging it and skimping on things for a bit (just like we did and I imagine like UR and CR did). Do you honestly think people buying homes are not in this income range in places like where I grew up (San Francisco)? And as you move up the ladder, your income grows and you get back to leading a bit more normal life and not have to skimp quite as much (a normal progression for most). And then you get to listen to people after you ***** and moan about Prop 13 when they pay that same 1% on entry that you did.
Admittedly, I get bored with these kind of arguments because people always try to twist things into unrealistic scenarios that never happened 35 to 40 years ago. It has always been hard to purchase property in the major metropolitan areas of California. To think otherwise is foolish. And making dumb statements like "you were born at the right time lottery" is pure BS and simply a sarcastic way of trying to discount the hardship people have always had to go through to buy a home here.
Last edited by JJonesIII; 11-20-2018 at 06:24 AM..
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