Showings dropping off in 2nd/3rd week. How can I improve showings in this market? (Plano: apartment complex, rentals)

[unexpected]

Originally Posted by Rakin

Buying vs Renting is a useless argument which should be determined by your lifestyle. There are a lot of good things about buying that economically you can't justify on paper.

It's the same as "Do I have kids or not? " Kids don't make a lot of economic sense, they are a pain and way to much work but yet in the long run it's all worth while. (For most people)

The same argument on buying or leasing a car.

you're totally right, but i think DWong is thinking 100% economically, and avoiding the fuzzy factors like roots, neighbors, warmth and love, joy of ownership, etc.

I've yet to see an analysis that says that leasing is more economical than straight up buying.

[caligurltotx]

Originally Posted by Ballyhigh

Keep it up guys. Nothing like creating a sense of urgency.

Sales 101. LOL

Awwwww we're just talking

[caligurltotx]

I'm still trying to see the advantages for being a lifelong renter

I see it as equivalent as taking cash money and burning it in a fireplace

I have owned and I am now a renter and even in my 40's I WANT to own a home. I see no point in sharing walls with strangers the rest of my life. And let's just say I rent for another 30 years at $1000 per month...what kind of return am I going to get on my $360,000. ZILCH!

[DWong]

Originally Posted by caligurltotx

I'm still trying to see the advantages for being a lifelong renter

I see it as equivalent as taking cash money and burning it in a fireplace

I have owned and I am now a renter and even in my 40's I WANT to own a home. I see no point in sharing walls with strangers the rest of my life. And let's just say I rent for another 30 years at $1000 per month...what kind of return am I going to get on my $360,000. ZILCH!

OK WELL TAKE $1,000 A MONTH INVESTED OVER 25 YEARS AND A CONSERVATIVE 7% RATE OF RETURN YOU HAVE...1.17 MILLION. I DON'T THINK THAT $ IN A TX HOME IS GOING TO GET YOU THAT KIND OF RETURN. MAYBE IN THE NE OR PARTS OF CALI. LETS JUST SAY YOU INVEST 500 OVER 30 YEARS, YOU'LL STILL BE ABLE TO BUY CASH IN TX AND HAVE CHANGE. JUST A THOUGHT....

[caligurltotx]

DWong, but my mortgage payment is paying down my principal and creating equity. So it still doesn't answer how my $1000 monthly rent is benefiting my future. You are comparing apples and oranges. I still have to PAY RENT, right? I can't live rent free. So even if I have a mortgage in TX, and have a 401k then I am still getting a double return on my money in some way. My landlord is not giving me back jack. How is my $1000 a mo. being invested over 25 yrs? Well it may be getting invested by my landlord I have to ask them.

[DWong]

Originally Posted by caligurltotx

DWong, but my mortgage payment is paying down my principal and creating equity. So it still doesn't answer how my $1000 monthly rent is benefiting my future. You are comparing apples and oranges. I still have to PAY RENT, right? I can't live rent free. So even if I have a mortgage in TX, and have a 401k then I am still getting a double return on my money in some way. My landlord is not giving me back jack. How is my $1000 a mo. being invested over 25 yrs? Well it may be getting invested by my landlord I have to ask them.

EQUITY IN TX DOES NOT GET YOU SUCH A RETURN, CONSIDERING WHAT YOU'D BE PAYING FOR IN TAXES, INS (WHICH ADJUST ALL THE TIME) AND MAINTAINING THE HOME.

LETS JUST SAY YOU RENT FOR $1000 A MONTH, VERSUS A $1300 MORTGAGE (REMEMBER THERE ARE MORE OUTSIDE COSTS IN MORTGAGE) $300 OR JUST SAY $400 MORE WILL MAKE YOU EXTREMELY WELL OFF IN THE FUTURE. CHECK THE POST FROM EARLIER TODAY... THEY HAVE A BETTER IDEA. I'M NOT BY ANY MEANS AN EXPERT HERE. TRUE YOU DON'T GET SQUAT BACK FROM LANDLORD, BUT BREAK DOWN ALL THE OTHER NUMBERS HERE... HOW MANY PEOPLE HAVE GOTTEN A GREAT DEAL AFTER LIVING IN TX FOR 5-10 YEARS AND SELLLING THEIR HOUSE. SURE MAYBE THEY WALKED AWAY WITH 30-40K BUT LOOK FURTHER INTO THE NUMBERS AND YOU'LL SEE THEY MAY HAVE BROKE EVEN OR ARE JUST A BIT IN THE RED OR BLACK...

[yjc281]

Originally Posted by DWong

EQUITY IN TX DOES NOT GET YOU SUCH A RETURN, CONSIDERING WHAT YOU'D BE PAYING FOR IN TAXES, INS (WHICH ADJUST ALL THE TIME) AND MAINTAINING THE HOME.

LETS JUST SAY YOU RENT FOR $1000 A MONTH, VERSUS A $1300 MORTGAGE (REMEMBER THERE ARE MORE OUTSIDE COSTS IN MORTGAGE) $300 OR JUST SAY $400 MORE WILL MAKE YOU EXTREMELY WELL OFF IN THE FUTURE. CHECK THE POST FROM EARLIER TODAY... THEY HAVE A BETTER IDEA. I'M NOT BY ANY MEANS AN EXPERT HERE. TRUE YOU DON'T GET SQUAT BACK FROM LANDLORD, BUT BREAK DOWN ALL THE OTHER NUMBERS HERE... HOW MANY PEOPLE HAVE GOTTEN A GREAT DEAL AFTER LIVING IN TX FOR 5-10 YEARS AND SELLLING THEIR HOUSE. SURE MAYBE THEY WALKED AWAY WITH 30-40K BUT LOOK FURTHER INTO THE NUMBERS AND YOU'LL SEE THEY MAY HAVE BROKE EVEN OR ARE JUST A BIT IN THE RED OR BLACK...

Your entire analysis is based on the assumption that the buyer doesn't want to live permanently in Texas and would move in a few years. You have not considered someone who really likes Texas and want to live his/her life here.
I have a very different formula. Instead of paying mortage I pay in cash
my 250k home with my 10 years of savings or at worst 150k cash and a 100k loan (Not that hard for a family making at least a combined 100k).You only look at the taxes and maintenance but you have to pay those in other states too. Texas has the huge advantage of no state income tax, which pretty much offset the difference in property tax rates. I would also not be punished with more state income taxes for taking two jobs or being promoted in texas. All those extra money can be used for investments.

You may talk about mortage interest deduction but to me that is just not as attractive as it seems because it takes away my standard deduction. Also, it is always a net loss no matter how you calculate. It just offset "some" of the cost of your mortgage.

Then, after paying off my mortage in 5-7 years(if I even have a mortage at all) I just invest all of my future monthly savings.

Sure, I won't get the insane amount of capital gains from my house but I never intended my house to be an investment vehicle! I want my house to be a comfortable place to call home and maintain at least a stable value.
I actually don't want its value to go up too fast because that means a huge increase in property taxes!

There is no way I could afford a similar house in California because all the greedy people who tried to make the 20% yearly gains with no or little down payment. Many of those people were also brought down by their greed.
I would have enough money to invest for not having to get a 500k mortage plus the savings on state/local income taxes. That's the difference of living in Texas versus California.

[DWong]

Originally Posted by yjc281

Your entire analysis is based on the assumption that the buyer doesn't want to live permanently in Texas and would move in a few years. You have not considered someone who really likes Texas and want to live his/her life here.
I have a very different formula. Instead of paying mortage I pay in cash
my 250k home with my 10 years of savings or at worst 150k cash and a 100k loan (Not that hard for a family making at least a combined 100k).You only look at the taxes and maintenance but you have to pay those in other states too. Texas has the huge advantage of no state income tax, which pretty much offset the difference in property tax rates. I would also not be punished with more state income taxes for taking two jobs or being promoted in texas. All those extra money can be used for investments.

You may talk about mortage interest deduction but to me that is just not as attractive as it seems because it takes away my standard deduction. Also, it is always a net loss no matter how you calculate. It just offset "some" of the cost of your mortgage.

Then, after paying off my mortage in 5-7 years(if I even have a mortage at all) I just invest all of my future monthly savings.

Sure, I won't get the insane amount of capital gains from my house but I never intended my house to be an investment vehicle! I want my house to be a comfortable place to call home and maintain at least a stable value.
I actually don't want its value to go up too fast because that means a huge increase in property taxes!

There is no way I could afford a similar house in California because all the greedy people who tried to make the 20% yearly gains with no or little down payment. Many of those people were also brought down by their greed.
I would have enough money to invest for not having to get a 500k mortage plus the savings on state/local income taxes. That's the difference of living in Texas versus California.

OF COURSE THERE ARE ALOT OF ASSUMPTIONS THAT ARE WHAT INDIVDUALS PREFER. JUST FROM AN ECONOMIST POINT OF VIEW AND FROM OTHERS, THEY'RE SAYING THE SAME THING. YA, THROW OUT THE HUMAN FACTOR OF COURSE. NO WAY YOU COULD AFFORD TO BUY SIMILIAR IN CA? COME ON NOW, THINK BIG.. NO YOU'RE RIGHT, HARD TO DO, BUT HEY SOME DO IT. JUST LIKE MANHATTAN, PEOPLE ARE STILL BUYING THERE, JUST HARD FOR WORKING CLASS PEOPLE TO DO IT.

[KantLockeMeIn]

Originally Posted by Ballyhigh

Renting rocks. My advice to the original poster is to beat the comps and sell it now. That "it will get better next month" attitude caused a lot of people to lose their life savings when tech crashed.

Here are some goood reasons to rent.

1. It's still much cheaper to rent than to own the same thing. Yearly rents are less than 3% of purchase price. Mortgage rates are 6.5%, so it costs more than twice as much to borrow money to buy a house than it does to rent the same kind of house. Worse, total owner costs including taxes, maintenance, and insurance are about 9%, which is three times the cost of renting. Buying a house is a very bad deal for the buyer. Put in the numbers for your own area here.
2. Salaries cannot cover current house prices. This means house prices must keep falling or salaries must rise much faster. You probably noticed that your salary is not rising much, and that inflation in food, energy, and medical care has been more than 20% per year. This leaves less money available to pay for housing. A safe mortgage is a maximum of 3 times the buyer's yearly income, but most mortgages are well beyond that. Anyone who buys now will suffer losses immediately, and for the next several years at least, as prices keep falling.
3. Prices disconnected from Gross Domestic Product. The value of housing in the US depends a lot on the value of what the US actually produces.
4. Buyers borrowed too much money and cannot pay the interest. Now there are mass foreclosures, and senators are talking about taking your money to pay for your neighbor's McMansion, even though no one in the US has been made homeless by foreclosure. In fact, forclosed owners end up far better off: they go reap large savings every month, since it costs less than half as much money in rent as they were paying to "own" the very same thing.
   Banks happily loaned whatever amount borrowers wanted as long as the banks could then sell the loan, pushing the default risk onto Fannie Mae (taxpayers) or onto buyers of mortgage-backed bonds. Now that it has become clear that a trillion dollars in mortgage loans will not be repaid, Fannie Mae is under pressure not to buy risky loans and investors do not want mortgage-backed bonds. This means that the money available for mortgages is falling, and house prices will keep falling, probably for 5 years or more. This is not just a subprime problem. All mortgages will be harder to get.
   A return to traditional lending standards means a return to traditional prices, which are far below current prices.
5. Interest rates increases. When rates go from 5% to 7%, that's a 40% increase in the amount of interest a buyer has to pay. House prices must drop proportionately to compensate. The housing bust still has a very long way to go.
   For example, if interest rates are 5%, then $1000 per month ($12,000 per year) pays for an interest-only loan of $240,000. If interest rates rise to 7%, then that same $1000 per month pays for an interest-only loan of only $171,428.
   Recent lower Fed inter-bank lending rates do not directly affect mortgages rates, nor do extra Fannie or FHA guarantees. The 30-year fixed mortgage rate actually went up after the Fed's rate cut, because rate cuts cause higher inflation.
   Also note that unlike the last few years, most lenders now require a 20% downpayment. That will eliminate many buyers from the market, driving down prices.
6. Extreme use of leverage. Leverage means using debt to amplify gain. Most people forget that losses get amplified as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss or an interest rate hike, he's bankrupt in the real world.
   It's worse than that. House prices do not even have to fall to cause big losses. The cost of selling a house is 6%. On a $300,000 house, that's $18,000 lost even if prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less.
7. Shortage of first-time buyers. High house prices have been very unfair to new families, especially those with children. It is literally impossible for them to buy at current prices, yet government leaders never talk about how lower house prices are good for pretty much everyone, instead preferring to sacrifice American families to make sure bankers have plenty of debt to earn interest on. If you own a house and ever want to upgrade, you benefit from falling prices because you'll save more on your next house than you'll lose in selling your current house. Every "affordability" program drives prices higher by creating more debt for buyers to use. To really help Americans, Fannie Mae and Freddie Mac should be completely eliminated, along with the mortgage interest deduction. Canada has no mortgage-interest deduction at all, and has a more affordable housing market because of that.
   The government keeps prices unaffordable through programs that increase buyer debt, and then pretends to be interested in affordable housing. No one in government except Ron Paul ever talks about the obvious solution: less debt and lower house prices. The real result of every "affordability" program is to keep you in debt for the rest of your life so that you have to keep working. Lower house prices would liberate millions of people from decades of labor each.
8. Surplus of speculators. Nationally, 25% of houses bought the last few years were pure speculation, not houses to live in, and the speculators are going into foreclosure in large numbers now. Even the National Association of House Builders admits that "Investor-driven price appreciation looms over some housing markets."
9. Fraud. It has become common for speculators take out a loan for up to 50% more than the price of the house he intends to buy. The appraiser goes along with the inflated price, or he does not ever get called back to do another appraisal. The speculator then pays the seller his asking price (much less than the loan amount), and uses the extra money to make mortgage payments on the unreasonably large mortgage until he can find a buyer to take the house off his hands for more than he paid. Worked great during the boom. Now it doesn't work at all, unless the speculator simply skips town with the extra money.
10. Baby boomers retiring. There are 77 million Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell.
11. Huge glut of empty housing. Builders are being forced to drop prices even faster than owners. Builders have huge excess inventory that they cannot sell, and more houses are completed each day, making the housing slump worse.
12. The best summary explanation, from Business Week: "Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low interest rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken."

Some of these are true, some are quite a stretch, but you're forgetting one big thing while making the leap. What do renters live in? Apartments and houses, which are "owned" by individuals and corporations. The two are not separate markets with separate fates, they are intertwined, albeit with different driving factors. Assume a housing crash occurs and you rent a home, and your landlord had an interest only mortgage which is getting ready to readjust. Where does that leave you?

[unexpected]

Originally Posted by caligurltotx

DWong, but my mortgage payment is paying down my principal and creating equity. So it still doesn't answer how my $1000 monthly rent is benefiting my future. You are comparing apples and oranges. I still have to PAY RENT, right? I can't live rent free. So even if I have a mortgage in TX, and have a 401k then I am still getting a double return on my money in some way. My landlord is not giving me back jack. How is my $1000 a mo. being invested over 25 yrs? Well it may be getting invested by my landlord I have to ask them.

caligurl, it's not the $1000 a month that's creating an interest in your future- you're right that you're throwing it away.

We're also assuming that $1000 a month in a mortgage, and $1000 a month for an apt will give you an equivalent place. In my eyes, that's not the case- if I'm paying $1000 a month, I'm living nice - let's take Shops of Legacy in Plano, for example. If I wanted to buy a house in that area (within 15 minutes), conservatively, I'm looking at $300 - $400 k, let's say $350k.

After a $70k down payment, this leaves about $280 on the mortgage, which is about $1400k a month in the mortgage payment.

Renting is $400 cheaper (for an 'equivalent' house), plus you didn't have to front the initial $70k. You can then take this money, and invest it however you see fit.

This is highly simplified and doesn't take into account property taxes, maintenance costs, mortgage interest, tax deductions etc.

If you work it out though, (and I encourage you to do so, if I get time I'll freshen up my spreadsheet and post it here), buying a house doesn't make sense until you have a long time horizon (lose money if you stay <5-7 years, break even 7-10, profit >10 years).

Historically, the stock market has proven a better vehicle for investing than real estate (avg. stock market return ~9%).

This is purely economics, from a monetary standpoint. I'm on the apartment side because I'm single, but I know the moment I have a family, I do not want them living in an apt- we're def getting a house. There are lots of other 'non-monetary' reasons to buy a house, and if you want a house, you should definitely get one- I'm simply saying that the answer isn't clear and that "building equity" isn't all that it's cracked up to be.