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buying a home in some of these areas is one of the dumbest thing one can do with your money. Just saw a home in Irvine, 990 sqft asking $580,000. With 5% down (typical these days from what I am told by brokers) + 3% closing costs that is $50,000 upfront. The payment calculators with PI+HOA+Mortgage insurance+Property Taxes+Maintenance+HOA comes out to $4100 per month, for a 990 sqft home, are you F kidding me???
I found a similar unit for rent for $1,900/month. If you invested the down payment and the monthly difference (rent indexed for inflation) between owning and renting for the next 30 years in VFINX you would have $4 million dollars at the end of it. How much is this stupid home going to appreciate? If you are even smarter and choose an active fund that outperforms the S&P500 you could even end up with $5 million and that is LIQUID cash, not an illiquid asset that is hard to sell, has aged 30 years, requires a 6% commission to sell.
Irvine has historically appreciated at 4% and that may even slow since the market is fully saturated, even with a assumption of a brisk 4% appreciation that home will only be worth $1.8 million at the end of 30 years, less 6% commission, $1.7 million or less than half of what you would have if you'd just rented. Not to mention, the flexibility lost by being locked down in one place and also the huge risks of carrying such a debt through major recessions.
Also note that rents fall quite drastically during recessions, in 2008 I was able to negotiate a rent drop of 30%!!! When your home value falls you can't renegotiate your mortgage, another absolutely terrible situation when you are a homeowner who has bought at a staggeringly overvalued price.
The real estate shills here consistently speak just pure and unadulterated nonsense with zero analysis of the facts. The only thing they have in their arsenal is to hurl insults because they are so bitter about buying their overvalued asset.
I was with you until you said rents fell in 2008...
Rents in the San Francisco and Oakland increased and continue to do so.
Lots of people walking away from homes and needed a place to live... that was one of the arguments... why pay mortgage, taxes, repairs when renting is half the price... to the last one... all those I know that bailed regret it now... it was not that they couldn't afford to honor the contract they made... it was short term thinking.
A few shrewd ones, like two Docs I know... bought replacement homes in the same area at bargain prices and then walked from their upside down mortgages... strategic default.
Criminal activities from 2008 will not be repeated again. Once interest rates rise and dollar becomes the king no one cares about buying a house. Housing speculation is non-existant or minimal. Why speculate during the savings season when you can earn risk free interest money in the bank. No one cares about speculations, even stock market becomes unattractive.
It's not normal or legal for banks to keep properties off the market, sell to hedge funds and etc. This should NEVER be legal. This is criminal!!!! We need to end speculations in housing. House is a shelter, not some kind investment or a trading vehicle. This is absolutely crazy and insane what has been done to the American housing market.
* We need to DISMANTLE domestic terrorist organization NAR (National Association of Realtors and their STRONG lobby). We don't need Realtors and Real Estate Agents to buy and sell our homes + pay unnecessary fees. These clowns barely have two-three weeks training and sometimes no additional education.
* We need to prohibit all foreigners from buying American homes unless they have permanent residency or a green card.
* End users should have a priority to buy a house before so called investors or speculators. Only if no end user is interested it should go to an investor.
* Banks need to be regulated like public utilities. They should exist only to SERVE American people and NOT THE OTHER WAY AROUND.
It's time to wake up!!!!
I'm not a Realtor and never have been one...
I have nothing against Realtors and found them to be very useful in some situations.
That said... I have bought and sold homes without using Brokers/Agents... not a big deal.
People are free to use them or not... this is America.
I have nothing against Realtors and found them to be very useful in some situations.
That said... I have bought and sold homes without using Brokers/Agents... not a big deal.
People are free to use them or not... this is America.
Ultrarunner, with all the tools available online and the popularity of social-media sites that allow everyone to share what they know, all the information you could possible want is available to you if you just do a little digging.
Let's say I want to buy a house in a certain neighborhood. I could use Redfin to get all the basic details about the property, and even stuff like recent price drops. That's everything you'd find on an MLA listing. If I want to see what the facade of the building is, I'd use Google's Streetview function.
What else would you need an agent for? To tell you that a house across the street is owned by a guy names Steve who is "great"? Is that worth thousands of dollars in commissions? The real estate industry has done a good job of trying to convince us that we need their services to buy or sell a house. The truth is, most of us do not need their services, any of them.
But the #1 threat to our country and why I call them a domestic terrorists is their lobby and what they have done to our housing market. Ever heard of a SIZZLING, HOT or ON FIRE housing market? These gangsters should all be in jail for what they have done to America and this criminal organization needs to be dismantled ASAP!!!
But the #1 threat to our country and why I call them a domestic terrorists is their lobby and what they have done to our housing market. Ever heard of a SIZZLING, HOT or ON FIRE housing market? These gangsters should all be in jail for what they have done to America and this criminal organization needs to be dismantled ASAP!!!
Riiiiight.
You know, I find realtors to be, on average, useless. This is just crazy talk.
My best Realtor was an older woman that had 30 years in her little area... office right in the middle of it.
She knew everything and everyone... not an exaggeration... whether it was passing out her calendars during the Holidays or tomato plants each Spring... she for three decades she had walked those sidewalks and visited each property.
The Real Estate Appraisers would often stop in for up to date information... such as a homes in Escrow or why one home went for so little... because the inside had been used for a grow operation.
In my case... she would track me down when a fixer property came up... often these were properties that could not go conventional... might be as simple as no one had the money to pay for a roof or more extensive with termites or foundation work.
I would not be where I am today without her expert knowledge of her "Farm"
She was free with her advice and know personally several situations where the family had decided not to sell and she tore up the listing and wished them well...
Also a great source for referrals… I needed chimney work and she mentioned who did chimney work several blocks over... never would have found that guy on my own... semi retired mason with a lifetime of chimneys...
My first home came about only through her...
I wanted to own in the worst way... but at 22 and new college grad I kept having to lower my expectations... I would scan for the least expensive single family homes in the East Bay... which were always in Deep East Oakland CA.
She told me of one and we looked at it... it was the lowest on the MLS... the home was bad... real bad but had the utilities on... it was actually scheduled for a condemnation hearing..
We went back to her office and she kept me talking... fishing for an offer... I said the home is just too much work... she asked what I thought it would really be worth... it was listed for 36k... I said between 11 and 12k... tops...
I did not know she had written up an offer for 11.5k until she handed it to me to read... I was shocked... she said never know unless you try... gave her my deposit of $100 and went home and told the folks I had made an offer... they were silent... remember I am 22 but had been paying into social security since age 12.
So the next day she calls to congratulate me!!! and yes I bought the home and still own it today.
This NEVER would have happened without the services of my Realtor...
Oh... the office Grossed $690 on this sale... she got $242 before her expenses... 1/2 of 70% gents cut.
Again... no requirement to use an agent and I am escrow now... no brokers involved on either side... the seller was actually quite upset with the two brokers that came out to do CMA.. they wanted the home painted, items put in storage, new counter tops, etc... saying it was all dated...
I said how much do you want As-Is and would you like a free, 90 day no rent, Hold Over after close to move out... we made the deal.
Last edited by Ultrarunner; 08-26-2018 at 06:02 PM..
buying a home in some of these areas is one of the dumbest thing one can do with your money. Just saw a home in Irvine, 990 sqft asking $580,000. With 5% down (typical these days from what I am told by brokers) + 3% closing costs that is $50,000 upfront. The payment calculators with PI+HOA+Mortgage insurance+Property Taxes+Maintenance+HOA comes out to $4100 per month, for a 990 sqft home, are you F kidding me???
I found a similar unit for rent for $1,900/month. If you invested the down payment and the monthly difference (rent indexed for inflation) between owning and renting for the next 30 years in VFINX you would have $4 million dollars at the end of it. How much is this stupid home going to appreciate? If you are even smarter and choose an active fund that outperforms the S&P500 you could even end up with $5 million and that is LIQUID cash, not an illiquid asset that is hard to sell, has aged 30 years, requires a 6% commission to sell.
Irvine has historically appreciated at 4% and that may even slow since the market is fully saturated, even with a assumption of a brisk 4% appreciation that home will only be worth $1.8 million at the end of 30 years, less 6% commission, $1.7 million or less than half of what you would have if you'd just rented. Not to mention, the flexibility lost by being locked down in one place and also the huge risks of carrying such a debt through major recessions.
Also note that rents fall quite drastically during recessions, in 2008 I was able to negotiate a rent drop of 30%!!! When your home value falls you can't renegotiate your mortgage, another absolutely terrible situation when you are a homeowner who has bought at a staggeringly overvalued price.
The real estate shills here consistently speak just pure and unadulterated nonsense with zero analysis of the facts. The only thing they have in their arsenal is to hurl insults because they are so bitter about buying their overvalued asset.
The biggest problem with your post is a lot of renters do not invest in the market. They just don’t. Out of all the tenants/applicants I have and had contact with 80% of them have little investments or enough finances to have the extra money to invest.
As far as the market......the market fell right along with housing. Plenty of people lost their butts in the stock market in 08.
People need to stop bringing up 2008 like it’s gospel. There is no resemblance of that market in 2008 today. Other than “high” prices....what do you have for proof of the market crashing or imminent crash? So prices dropped by n a overpriced house. I’m not saying today’s market is right in every sense of the word and it has its share of issues. Yes there is a lot of speculation. But not everyone is stupid to buy the example posted above. I wouldn’t even bother looking at it.
I’m not sure if this is directed towards me but I’m not bitter about the asset I bought. And as far as I know I didn’t insult anyone.
I would need to lose 40/45% of the value to go to a break even debt to sake ratio. . And then where would I be? Renting? I couldn’t rent for what my house mortgage is a month. Why would I sell and rent? And thinking back in 08/09 rents skyrocketed due to demand. It’s still going up slightly in my areas.
I’ve been through a few of these downturns. I tightened my belt and ride out the bad times. I saved and had the means to get me through the rough times. There were tons of people who didn’t lose their houses in 08 and made it through.
Another thing to think about. Supply is starting to catch up putting downward pressure on homes too. And the market itself could be slowing down simply because it’s reaching a more normal state and the prices simply are stabilizing. Rent hikes are starting to slow down and normalize.
There will always be homeowners who are gonna over reach and have houses sitting on the market and not sell. There is nothing supporting a housing crash right now. We may have a recession, but I doubt it will be the catastrophe everyone thinks or wants it to be.
Personally I’m ok with a normal 2% home value increase. Hell even I thought the increases were absolutely insane.
If history repeats the market is in for a major reversal...
How do I know this?
Because it has every time I have bought a home in the last 20 or so years and I am in Escrow now...
The two listings I posted have substantial price reductions... both properties heavily advertised and one owner fired the broker and has a new broker... open houses every weekend... Saturday and Sunday...
Again... I am not seeing price reductions in the 500k and under listings... but a lot in the million and higher...
Another way I have viewed it...
It use to take 3 or 4 starter homes to equal one higher end custom home.
Right now I am seeing it takes two starter homes to equal one higher end custom home.
Another possibility is FOMO. People have been reallocating wealth from one type of asset (the stock market) to another (residential housing). But now, people are saying to themselves, "wait a minute. The stock market is booming. If I sell stock now to purchase a home, I'm missing out on the stock market appreciation that will happen over the next few years as the tax changes roll their way through the economy. So I'm not going to reallocate; I won't buy a trade-up home now."
I'll bet you don't own a house hence all this anger. Your rule is incomplete. Sure you want to buy at a low point if you can, but I and many others lost when people like you urged us to stay on the sidelines. I held back because everyone said don't buy at $300k, wait , it will drop. They repeated the same thing every year. I finally bought at $600k. Hmm, glad I listened to them.
You also don't know when rates will rise or fall. You might not be able to qualify to refinance. In my case the mortgage went up with the lower cost rate and higher value home. There's no guarantee I will have a job that allows me to get refinanced.
You can sit on the sidelines and wait and maybe come out ahead, or maybe never get a house ever while you wait.
Reminds me of a long term to do list item finally crossed off. See the Smashing Pumpkins. Billy's back and his band sounded great. I never wanted to pay some outrageous amount of $20, because I kept hoping to catch a $5 or $8 show at Metro back in the day when they were local. But $315 the wife and I finally got to see them live this past week.
I guess the effects were probably a bit better than in the day...
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