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Old 06-02-2008, 10:35 AM
 
670 posts, read 1,512,983 times
Reputation: 269

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Quote:
Originally Posted by cfIfan View Post
Im not offended and you are right the post is on topic, but what i am saying which no-one seems to understand that the figures given in statistics for an area as a blanket are wrong because each part of that areas is different. Many people do not want to rent because if that were the case they would never own their own property. The point is that in some if not many areas, prices will not fall any lower and for those who want to buy now is a great time. I acknowledge, this isnt the same in every area, but at least in a great many of the areas i work in it is true (not all of them though). There are a great many people sitting on the fence wanting to buy but dont want to now because they may get the wrong impression by what your saying. Whilst many may be paying the same in rent or a little more on there mortgage than rent, they are getting their own home which is theirs and which if they stay in for a while can sell and that would probably more than compensate for what they saved. As an example, Why do people go out and buy brand new cars when they can wait and pick up the same car 1 yr old and save a fortune? Because they want to. Why to people choose to finance rather than lease, because at the end of their finance period they own the car, they havent paid all that money and not own anything. In effect they are giving it back and dont have anything to trade in.
Im not saying your wrong. In your area that may be very true, but that isnt neccessarily the case everywhere.

What if they need to move in a year or two because of a job?
Here's the key that I see in your post:
"and which if they stay in for a while can sell and that would probably more than compensate for what they saved."
But how do we know that?
Hence the calculator, no emotion to it:

Quote:
Originally Posted by jbravo View Post
Here's an own versus rent calculator:
The New York Times > Log In
I know it says New York Times log in, but if you click all you will see is a graph / calculator.
It's a lot of fun to use.
I am not telling everyone that they should rent; for many this would be silly because price / cost may not be the deciding factor i.e. they have the money and want to enjoy it on their own terms.
For many $$$ is a factor, you should not listen to me or for that matter anyone else, it's an important decision, specially if you may need to move due to job circumstances.
In MY opinion, for a very few it amy even make financial sense to buy now. There are no absolutes, you may have the opportunity to buy a cheap foreclosure and the numbers work, for that matter, maybe you just want to protect your assets against an impending lawsuit (ala OJ)
If this helps anyone, then I am glad.
For full disclosure, I just saw CFian post above. Yes, I made my decision to rent.
Yes, I could buy a nice house in a very nice neighborhood, though not were I currently live (I consider it a vacation / spa time)
This post is on topic and I do not see how it could possibly offend anyone.
_
Since this is off topic I'd appreciate it if you PM me; otherwise it clouds the thread.
I've never financed a car or leased one. But aren't most people upside down that finance? Wouldn't it be better to save to buy cash, or, as you pointed out, "wait a year and save a fortune."
I agree, they do it because they want to. But, is this not the point? That they make a bad financial decision based on wants.
I am very frugal on certain things, although I am willing to spend on those things I like (I even cut my own hair.)
On second thought, maybe it is not off topic too much, "wants" versus sound financial decisions but the 2 questions above and the calculator are more than enough.
_

 
Old 06-02-2008, 10:43 AM
 
Location: Championsgate, Fl
986 posts, read 3,203,088 times
Reputation: 290
I do appreciate what you are saying, but there are so many uncertainties in life. If we were to be concerned about all these things we would not do anything or even buy a home. Just as what your saying is true, it would be true to say i could walk out into the street and get run over tomorrow, so perhaps i shouldnt buy a house. The majority of people know where they stand in their work and if they are going to be moving every 6 months to a year with their work then i agree with you, they should wait for some stability in their work, but the majority of people arnt in that situation. I just feel to advocate that position which may be true for a minority of people, to the majority of the people isnt really responsible without qualifying it. If i have misunderstood you and your are advocating this for the few people who do change states or cities often then i agree, but for the majority who dont, i think that is wrong.

Quote:
Originally Posted by jbravo View Post
What if they need to move in a year or two because of a job?
Here's the key that I see in your post:
"and which if they stay in for a while can sell and that would probably more than compensate for what they saved."
But how do we know that?
Hence the calculator, no emotion to it:



Since this is off topic I'd appreciate it if you PM me; otherwise it clouds the thread.
I've never financed a car or leased one. But aren't most people upside down that finance? Wouldn't it be better to save to buy cash, or, as you pointed out, "wait a year and save a fortune."
I agree, they do it because they want to. But, is this not the point? That they make a bad financial decision based on wants.
I am very frugal on certain things, although I am willing to spend on those things I like (I even cut my own hair.)
On second thought, maybe it is not off topic too much, "wants" versus sound financial decisions but the 2 questions above and the calculator are more than enough.
_
 
Old 06-02-2008, 11:10 AM
 
670 posts, read 1,512,983 times
Reputation: 269
Default FINALLY! We nailed it! Hence the calculator.

I put the bold typeface to emphasize one part:

Quote:
Originally Posted by cfIfan View Post
I do appreciate what you are saying, but there are so many uncertainties in life.... I just feel to advocate that position which may be true for a minority of people, to the majority of the people isnt really responsible without qualifying it. If i have misunderstood you and your are advocating this for the few people who do change states or cities often then i agree, but for the majority who dont, i think that is wrong.
All right we nailed it!!!
This is the crux!
I strongly believe that I advocate for the MAJORITY.
You strongly believe that you advocate for the MAJORITY.
Obviously, we disagree.
That's OK.

So, what next?
Impartial numbers anywhere?

Wholla!
The CALCULATOR:


Quote:
Originally Posted by jbravo View Post
Here's an own versus rent calculator:
The New York Times > Log In
I know it says New York Times log in, but if you click all you will see is a graph / calculator.
It's a lot of fun to use.
Use the sliders on the left to set appreciation to zero.
Many what if's to play with or keep it simple.
Notice the graph that pops up and how the time you predict you will live in the house may be the deciding factor.
Similar calculators elsewhere, it's just a nice tool if money is a factor in the decision.
I am not telling everyone that they should rent; for many this would be silly because price / cost may not be the deciding factor i.e. they have the money and want to enjoy it on their own terms.
For many $$$ is a factor, you should not listen to me or for that matter anyone else, it's an important decision, specially if you may need to move due to job circumstances.
In MY opinion, for a very few it amy even make financial sense to buy now. There are no absolutes, you may have the opportunity to buy a cheap foreclosure and the numbers work, for that matter, maybe you just want to protect your assets against an impending lawsuit (ala OJ)
If this helps anyone, then I am glad.
For full disclosure, I just saw CFian post above. Yes, I made my decision to rent.
Yes, I could buy a nice house in a very nice neighborhood, though not were I currently live (I consider it a vacation / spa time)
This post is on topic and I do not see how it could possibly offend anyone.
_
And, magically neither of our opinions matter any more!
_
 
Old 06-02-2008, 11:21 AM
 
Location: Championsgate, Fl
986 posts, read 3,203,088 times
Reputation: 290
Perhaps you can answer this question for me since you posted that link. I put in all the details for my own home/mortgage etc. I have a townhome, i put the price in etc etc, and i put in the rent that people are charging which would b around the same price as we pay in mortgage prices. it said buy after 3 years. I doubled the rent to a completely unrealistic amount and it said buy in 1 years time. Im not sure how this calculator can advocate spending double what you would pay on a mortgage for a year unless i have made a mistake. I assume the rent is how much the comp would be? I assume it is saying in which year of your mortgage you would be ahead?

Quote:
Originally Posted by jbravo View Post
I put the bold typeface to emphasize one part:



All right we nailed it!!!
This is the crux!
I strongly believe that I advocate for the MAJORITY.
You strongly believe that you advocate for the MAJORITY.
Obviously, we disagree.
That's OK.

So, what next?
Impartial numbers anywhere?

Wholla!
The CALCULATOR:



And, magically neither of our opinions matter any more!
_

Last edited by cfIfan; 06-02-2008 at 11:35 AM..
 
Old 06-02-2008, 11:49 AM
 
670 posts, read 1,512,983 times
Reputation: 269
Quote:
Originally Posted by cfIfan View Post
Perhaps you can answer this question for me since you posted that link. I put in all the details for my own home/mortgage etc. I have a townhome, i put the price in etc etc, and i put in the rent that people are charging which would b around the same price as we pay in mortgage prices. it said buy after 3 years. I doubled the rent to a completely unrealistic amount and it said buy in 1 years time. Im not sure how this calculator can advocate spending double what you would pay on a mortgage for a year unless i have made a mistake. I assume the rent is how much the comp would be? I assume it is saying in which year of your mortgage you would be ahead?
You made a mistake.
Look at the sliders on the left.
Set both to zero.
Decide on down payment, etc.
It's quite good.

However, there are MANY:
E-LOAN: Rent Vs Own Calculator | Should You Buy a Home or Rent | Estimate How Much You Can Save
Even from Ginnie May Ginnie Mae: Your Path to Homeownership Set appreciation to zero then play around

Just Google "buying versus renting calculators."

I still prefer The New York Times > Log In
Much more control.

_
 
Old 06-02-2008, 12:33 PM
 
Location: Championsgate, Fl
986 posts, read 3,203,088 times
Reputation: 290
unless i am mistaken, this is indicator of how much interest is being paid off. For example the bulk of a mortgage payment in the early years is paying the interest on the loan. As far as i can see, unless someone is paying cash ourtright for a property, this indicator will always show it is better to purchase after say X years because it is essentially taking in the interest on the loan in the early years. So unless you are buying cash and not paying interest it will never indicate now is a good time to buy. it is essentially saying that if you compare rent with buying after say 8 years you will be paying less in terms on paying off the mortgage. That doesnt neccessarily mean it isnt a good time to buy now. I put in as an example properties which are selling at the moment which are 149990 and are renting for 1200 per month, with a standard 6.5% and 10% down. it shows the monthly payment to be $853 per month. of course adding escrows hoa and title insurance would bring it up to the $1200 mark i indicated, but it says it is better to buy after 7 years which makes no sense. It seems to me to be indicating that after 7yrs a good portion of the payment will be going to the pricinple as opposed to interest. It doesnt seem to take into account house value or anything of that nature, merely an indicator or payments towards principle and interest. The reason i say this is it has no way to determine HOA dues or the such as just 1 variable expense
 
Old 06-02-2008, 12:51 PM
 
670 posts, read 1,512,983 times
Reputation: 269
Talking Patience, it makes sense... and there are many calculators

Quote:
Originally Posted by cfIfan View Post
unless i am mistaken, this is indicator of how much interest is being paid off.
Sorry, yes, you are mistaken this calculator takes into account many, many factors, interest paid off is just one of the factors.
The reason that the calculator will say that it takes "x" years before it makes sense to buy is because of closing costs. See expenses at the right.
All factors can be adjusted. Taxes, HOA, inflation, insurance, etc.
This is a very nice tool.

Quote:
Originally Posted by cfIfan View Post
It doesnt seem to take into account house value or anything of that nature, merely an indicator or payments towards principle and interest. The reason i say this is it has no way to determine HOA dues or the such as just 1 variable expense
See above

However, again, there are many such calculators.
For this to work, Set appreciation and inflation to zero to start of with.
See others below.

Quote:
Originally Posted by jbravo View Post
You made a mistake.
Look at the sliders on the left.
Set both to zero.
Decide on down payment, etc.
It's quite good.

However, there are MANY:
E-LOAN: Rent Vs Own Calculator | Should You Buy a Home or Rent | Estimate How Much You Can Save
Even from Ginnie May Ginnie Mae: Your Path to Homeownership Set appreciation to zero then play around

Just Google "buying versus renting calculators."

I still prefer The New York Times > Log In
Much more control.

_

Last edited by jbravo; 06-02-2008 at 01:11 PM..
 
Old 06-02-2008, 01:19 PM
 
Location: Championsgate, Fl
986 posts, read 3,203,088 times
Reputation: 290
But then with the factors you mentioned, these are factors which are going to have to be paid regardless of whether you buy now or later. There are always going to be closing costs, unless you negotiate this, there will always be HOA dues unless you dont buy in a development. Do you see what i mean. It just seems to me that this is an indicator of when more money will be put to the principle in comparison to rent, which when you get a mortgage you expect this. Otherwise you would just rent for the rest of your life because.
 
Old 06-02-2008, 01:44 PM
 
670 posts, read 1,512,983 times
Reputation: 269
Quote:
Originally Posted by cfIfan View Post
But then with the factors you mentioned, these are factors which are going to have to be paid regardless of whether you buy now or later. There are always going to be closing costs, unless you negotiate this, there will always be HOA dues unless you dont buy in a development. Do you see what i mean. It just seems to me that this is an indicator of when more money will be put to the principle in comparison to rent, which when you get a mortgage you expect this. Otherwise you would just rent for the rest of your life because.
_

Exactly

_
 
Old 06-02-2008, 02:00 PM
 
670 posts, read 1,512,983 times
Reputation: 269
Default Unbiased calculators!! Hurrah

Quote:
Originally Posted by jbravo View Post
....
However, there are MANY:
E-LOAN: Rent Vs Own Calculator | Should You Buy a Home or Rent | Estimate How Much You Can Save
Even from Ginnie May Ginnie Mae: Your Path to Homeownership Set appreciation to zero then play around

Just Google "buying versus renting calculators."

I still prefer The New York Times > Log In
Much more control.

_
Quote:
Originally Posted by cfIfan View Post
But then with the factors you mentioned, these are factors which are going to have to be paid regardless of whether you buy now or later. There are always going to be closing costs, unless you negotiate this, there will always be HOA dues unless you dont buy in a development. Do you see what i mean. It just seems to me that this is an indicator of when more money will be put to the principle in comparison to rent, which when you get a mortgage you expect this. Otherwise you would just rent for the rest of your life because.

The factors are all taken into account. Try different calculators.
For many renting makes more economic sense.
Notice I said "for many" not for all.
And, I said economic sense, for some, other factors such as asset protection because of an impending law suit would sway all other considerations.


I've tried a couple of the calculators, again I like The New York Times > Log In because of the graphs and all the tweaking one can do.


On topic here's a letter from the FED in March 7 2003 ! House Price Bubbles - FRBSF Economic Letter (03/07/2003)

It has rentals and home prices and warns of "bubble" in home prices!
In 2003!!!

Notice they do a rent and home price comparison.


_
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