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Old 06-29-2017, 09:24 AM
 
Location: Florida Suncoast
1,823 posts, read 2,259,249 times
Reputation: 3046

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I think it's perfectly understandable why you chose to retire in a lower cost of living area. It's not reasonable at all to assume that people are going to invest a lot of assets, buying a property in an economic downturn. Although, if you look back in the past, it would have been a wise decision. But it probably wouldn't have been a wise decision at the point in time while the economic downturn was occurring. There are other concerns occurring in the economic downturn, such as you might lose your job and be out of work for an extended time period. As a result, you manage you finances very conservatively, probably too conservatively.

Even if you're already retired, and a millionaire. There's a huge motivation while you're currently in an economic downturn, to protect your capital, and reduce risk of economic losses. If you're rich, richer than just a millionaire, where you can easily afford to fly in private jets, then you don't have the pressure or as much pressure to preserve your wealth by avoiding bad decisions.

I think it's a bad idea to compromise your standard of living, putting up with a bunch of roommates or live at a much lower quality of life, go back to work in your old age, just to survive living in a high cost area.

So, you're decision to leave Hawaii during your retirement years makes perfect sense. Your money goes a lot farther in lower cost of living places. Although, living in a no income tax state might be a better choice, especially when pulling money out of the income tax deferred retirement accounts. We have a lot of assets in the pretax retirement savings accounts. There's no way that we will be paying the state income tax in addition to the Federal income tax when we pay the taxes and move the money to conventional taxable accounts. Another factor to consider is the poor quality of healthcare in Hawaii, which might be a bad situation if you have to fly to the mainland for treatment, and your condition isn't good enough to handle the flight, as you get older and develop more health problems.
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Old 06-29-2017, 10:00 AM
 
Location: The Bayou State
688 posts, read 1,095,343 times
Reputation: 966
As for buying a house after the market crashes: particularly when looking at the crash of a decade ago that not only affected housing but also cratered the credit markets, for quite a few years after that shakeout it was VERY difficult to qualify for a mortgage loan. I recall reading that then Fed chair Ben Bernanke got turned down for a loan.

Hindsight is 20/20, but if you were in the market to buy a house after the crash, the only way you could be sure to get the house was to pay all cash.
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Old 06-29-2017, 12:04 PM
 
Location: Kahala
12,120 posts, read 17,755,512 times
Reputation: 6175
Quote:
Originally Posted by Westbound and Down View Post

Hindsight is 20/20, but if you were in the market to buy a house after the crash, the only way you could be sure to get the house was to pay all cash.
That's just silly. After the crash lending tightened on people with poor credit and tightened loose appraisals. If you were 720+, had at least 10% down, and the house appraised at the purchase price you'd find a loan.
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Old 06-29-2017, 12:50 PM
 
Location: Moku Nui, Hawaii
11,048 posts, read 23,883,505 times
Reputation: 10901
Actually, right after the crash, we got mortgages from personal lenders who were thrilled to get a higher return rate on a solid investment (mortgage backed) than they could find anywhere else. You don't personally need cash, just friends with cash.

After a crash is the perfect time to buy real estate. Buying in a hot market is crazy unless you're gonna live in it and it's less expensive than rent and you're gonna stay there until the next uptick. I know a lot of folks who lost tons of money on houses, but they bought when the market was really high and just didn't ever consider that the prices would ever drop. ?? I never did convince them that the market is cyclical and goes up and down. But, for a retiree, unless they were here through one of the cycles and bought when it was down, staying here wouldn't be overly economical frugal.
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Old 06-29-2017, 01:34 PM
 
Location: The Bayou State
688 posts, read 1,095,343 times
Reputation: 966
Quote:
Originally Posted by whtviper1 View Post
That's just silly. After the crash lending tightened on people with poor credit and tightened loose appraisals. If you were 720+, had at least 10% down, and the house appraised at the purchase price you'd find a loan.
Baloney. i worked in the industry (now retired), and while I wasn't in Hawaii, I am very familiar with how difficult it was for people to obtain mortgage loans for several years after the housing / economic crash. Credit tightened on all borrowers.

Plus - and I am sure this happened in Hawaii, because it happened where I lived on the mainland - all cash buyers showed up, and sellers did not want to fool with any buyers who had to borrow money, tie up the process, etc.
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Old 06-29-2017, 01:56 PM
 
2,095 posts, read 1,540,675 times
Reputation: 2300
Quote:
Originally Posted by davephan View Post
I think it's perfectly understandable why you chose to retire in a lower cost of living area. It's not reasonable at all to assume that people are going to invest a lot of assets, buying a property in an economic downturn. Although, if you look back in the past, it would have been a wise decision. But it probably wouldn't have been a wise decision at the point in time while the economic downturn was occurring. There are other concerns occurring in the economic downturn, such as you might lose your job and be out of work for an extended time period. As a result, you manage you finances very conservatively, probably too conservatively.

Even if you're already retired, and a millionaire. There's a huge motivation while you're currently in an economic downturn, to protect your capital, and reduce risk of economic losses. If you're rich, richer than just a millionaire, where you can easily afford to fly in private jets, then you don't have the pressure or as much pressure to preserve your wealth by avoiding bad decisions.

I think it's a bad idea to compromise your standard of living, putting up with a bunch of roommates or live at a much lower quality of life, go back to work in your old age, just to survive living in a high cost area.

So, you're decision to leave Hawaii during your retirement years makes perfect sense. Your money goes a lot farther in lower cost of living places. Although, living in a no income tax state might be a better choice, especially when pulling money out of the income tax deferred retirement accounts. We have a lot of assets in the pretax retirement savings accounts. There's no way that we will be paying the state income tax in addition to the Federal income tax when we pay the taxes and move the money to conventional taxable accounts. Another factor to consider is the poor quality of healthcare in Hawaii, which might be a bad situation if you have to fly to the mainland for treatment, and your condition isn't good enough to handle the flight, as you get older and develop more health problems.
I think part of this is that people in Hawaii are so used to making certain sacrifices, shopping in certain ways, working extra hours, packing in relatives like sardines at home etc. that we dont' really see that this sort of living isn't normal or necessary for many other locations in the country.


Hell, I personally sacrificed hard to be able to buy my first place. I attended college here, but during much of my time in college, worked a full time job at the same time, and saved as much as I could. During summers I picked up a second job, and was doing 60-80 hours a week. Kinda nuts, but those are the decisions I made. Even after I bought my place, I was concerned at the level of expenses given my income at the time, so I ran a small business in addition to my full time job.
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Old 06-29-2017, 03:08 PM
 
Location: Kahala
12,120 posts, read 17,755,512 times
Reputation: 6175
Quote:
Originally Posted by Westbound and Down View Post
Baloney. i worked in the industry (now retired), and while I wasn't in Hawaii, I am very familiar with how difficult it was for people to obtain mortgage loans for several years after the housing / economic crash. Credit tightened on all borrowers.

Plus - and I am sure this happened in Hawaii, because it happened where I lived on the mainland - all cash buyers showed up, and sellers did not want to fool with any buyers who had to borrow money, tie up the process, etc.
Considering my wife is a loan officer and remained gainfully employed (albeit with less income now since she can't mark up rates and throw massive fees in like she used to reducing commission) - we would both disagree.
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Old 06-29-2017, 07:35 PM
 
Location: Hawaii Kai
206 posts, read 184,415 times
Reputation: 410
Quote:
Originally Posted by whtviper1 View Post
While it doesn't apply to Ray's situation - lets take your situation at face value.

1) If you don't have enough for a down payment, it doesn't matter what the median is - whether it be $300,000 or $1,000,000

2) The beauty of the median is half the homes are below the median (currently $760K on Oahu) - you likely won't live in Hawaii Kai, Kahala, or Kailua at the median - and it might be in Kapolei, or it might be a fixer upper, but nobody is entitled to buy at the median.

3) Can't afford the median single family home? Well, one can go the condo route. Median about $415,000 - again, half are below that price.

Can't buy now - form a plan. Get roommate(s). Save. Instead of living by yourself at $2,000/month, maybe you get a $3,000 place with a roommate and bank the $500/month you save. Or get 2 roommates. One can always have sour grapes about the cost of housing, but it is near record highs and if you don't formulate a plan, 30 years will go by like for Ray and you still won't have a home
You plan sounds great in theory. In reality the lower wages in Hawaii coupled with the high cost of housing make even your plan far fetched. But you don't have to take my word for it, you can read this Hawaii News Now article that was just posted.

Here's the percentage of Honolulu renters who can afford a media - Hawaii News Now - KGMB and KHNL

To sum it up: In no other metropolitan area was the percentage of renters that could afford a home lower.

Sure you can buy a 2/1 condo for 300k. Saving $500/month you can secure your 20% down payment in ONLY 10 YEARS! Then all of a sudden you have a family and children, how you gonna fit?

The reality is unless you have an above average income in a state with below average wages, or can rely on your family, you're not going to make it here for long when you can get a 4/3 house on the mainland in a decent state/neighborhood for 300k.
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Old 06-29-2017, 08:36 PM
 
Location: Portland OR / Honolulu HI
959 posts, read 1,203,790 times
Reputation: 1869
Quote:
Originally Posted by rya96797 View Post
Hell, I personally sacrificed hard to be able to buy my first place. I attended college here, but during much of my time in college, worked a full time job at the same time, and saved as much as I could. During summers I picked up a second job, and was doing 60-80 hours a week. Kinda nuts, but those are the decisions I made. Even after I bought my place, I was concerned at the level of expenses given my income at the time, so I ran a small business in addition to my full time job.
This is really a key point. It shows determination, discipline, and focus on a goal is what it takes to get started. It's disappointing when I hear people make excuses to justify why they can't get ahead in life. Most things in life boil down to the choices you make along the way.

I have many friends who came to this country with absolutely nothing .. nothing more than the clothes they were wearing. Some who could not even speak English. But they learned the language and worked very hard and made sacrifices. And eventually they all bought homes and raised successful families.

You also don't need 20% down to buy a house. With few periods of exception, you could almost always buy for as little as 5% down plus closing costs. To get my start, I bout several homes with 5% down. Lived in them, then rented them and went and bought a new primary residence for 5% down. Held them for a period of time and then sold them and rolled the appreciation into something else.

The point is just that if you're motivated and focused to succeed, you'll find a way and sacrifice what you need to sacrifice to make it happen.

Ok, I'm off an a tangent now. I'm going back to lurking.
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Old 06-29-2017, 08:42 PM
 
Location: Kahala
12,120 posts, read 17,755,512 times
Reputation: 6175
Quote:
Originally Posted by WaikikiBoy View Post
This is really a key point. It shows determination, discipline, and focus on a goal is what it takes to get started. It's disappointing when I hear people make excuses to justify why they can't get ahead in life. Most things in life boil down to the choices you make along the way.
Absolutely - listening blau808?
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