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Are homes really losing their value at a faster rate than automobiles?
We have never bought a home. Even though hubby has an awesome job, has been with his company for over ten years, makes a 6 figure salary plus awesome benefits and a big fat bonus every spring. We also are debt-free. We live well below our means and tuck our money away. We drive older cars and we are very careful with how we spend our money. I won't ramble on anymore about all we do... but simply put: we do not follow the norm.
At first we never bought a home because hubby's job was relocating us ever year or couple of years (which is what brought me to C-D in the first palce) so we felt it was better to rent.
But now that we are staying put - at least for the next 7 years - we still cannot convince ourselves to buy a home. We prefer renting.
Our tentative plan now is to rent until the kids are grown, then once we don't need all this space (we're renting a nice roomy three bedroom townhome with a large garage and huge kitchen, a pool and hot tub that other people maintain (yay!) and a really nice fitness center) hubby and I will pay cash for a small condo for just the two of us. We feel this is being smarter with ou money than it would be to buy a huge house and have to deal with all those issues and expenses and headaches that go along with that whole ordeal.
Also, because of the economy, my hubby feels a lot less stress since we're not tied down with a house. If something awful happens and he's laid off, we can up and move at a moments notice without having to worry about a house/mortgage. Plus - he doesn't have to spend his weekends doing yard care or fixing things, etc. Again - less stress. Less stress is a very good thing!!
So I get what you're saying desertsun41... but I didn't know that it was as bad as you make it out to be. Woah, really?
OH - another absolute deal breaker if we were to ever buy a home: never near a paper mill or water sewage treatment plant. At night and during cold weather it makes the neighborhoods near them smell AWFUL. For some reasons you don't smell it as bad during hot weather, I dunno why. But SMELLS are definitely important.
You are the perfect case of knowing not to buy. It doesn't fit your lifestyle at this point and there is nothing wrong with renting if it works for you. Sadly, yes real estate has tanked so badly that in some places cars are more expensive than houses. In my hometown of Detroit is pathetic. I graduated HS in 1990 and spent my twenties working in variety of decent paying jobs and enjoyed the perks of owning real estate. It was a money maker. My husband I purchased houses, fixed them up and sold in a few yrs time making a really good profit. In 2001 I got the first taste of things to come. Detroit started experiencing the down turn before most. I got laid off due to 9-11 and it was the first time I experienced the fear of the possibility of losing a house and not being able to find a decent job.
I called my trusted realtor. A great guy, not the typical 6 week course realtor. He held an MBA and was a true business man. I called him to come out about listing my house. I had noticed homes in the area were starting to drop in value but didn't quite grasp what was ahead. We got a deal on the house and then put 20% down. We still had the option of selling BUT our equity was gone. We could sell but only if it was FSBO (for sale by owner). The commission fees put us over the top. This realtor suggested I try FSBO asap. I was like ya, okay. I mean houses were still selling. But this guy was so dead serious he spooked me. He actually grabbed my hand, leaned in close and said, "NO IM SERIOUS. I care about you. You are one of my best clients. Do whatever you can to get out now." He predicted all of this mess. He said he was in the process of unloading his rental homes. I think he had quite a few. He told me I will break even if I go FSBO, if I wait, I will be underwater. That was the first time I ever heard that phrase. He told me real estate was going to take a major dump. I trusted his judgment and sold the house FSBO. I walked away with a couple thousand. I was pretty bummed. All that money we put down? Poof.
I sold the house for 136K. It is now worth about 40k. My mother bought her house 7 yrs ago for 85k. Hers is worth about 20k. I have a friend that has always rented. She pays 1100 a month, the going rate in her city just outside of Detroit. She is finally going to buy because she can buy a house for 60k and end up with a house payment of 600 a month. When she moves out her landlord is going to dump the house. He paid 145k for the house 7 yrs ago and its worth 60k. He can't sell. It really is pathetic. If people are choosing to buy they have to look at it as shelter and not an investment. If there is even a possibility of a near future move, then don't buy.
fallingwater that is the saddest thing I have read all day. It does, though, add to the good feelings I have about renting, though. Thank you for sharing that. Wow.
Lots of good stuff in this thread - good things listed in the poll to avoid, and good posts about NOT buying a house. But renting can suck (to me) becuz you still always know that it's not your's to do what you want to do with it. Many places you can hardly do anything to 'make it your own.' That does save you a lot of money, tho! And if you like to garden, have a deck or patio, etc. - you have to try to find something to accomodate your hobbies.
I'm in the process of trying to sell my house - bought it in 1995 for $83,000. Spent lots over the years fixing it up, including losing approx. $45K to a contractor who ripped me off (you will find my thread about it elsewhere lol). Paid a second guy to finish everything up. Paid house off.
I like my house, it's on 1.5 acres in NJ - and i cant afford to live here anymore (i'm retired - took an early retirement). Got a CMA done last year, for $160K. (ugh) Prices have gone up a bit this year, so i'm trying to sell it myself and asking $175 right now.
When i move (to another state) - I dont know whether to buy again, or rent!! (I also have a large dog.) So, i do understand where everyone is coming from...
WTS - the things that would keep me from a certain house would be if it were located near tons of kids, located in a dangerous area, washer and dryer not on main floor, smoke or cat pee smell, not enough windows.. and i'll check the poll for more..
Allow me to buck the trend of dreams here. Some could call it the American dream but the American dream is as dead as Saddam Hussein. Poof...never to return. I'd say the following issues are far more important reasons for NOT buying a home at all.
For the first time in American history, homes are losing value at a faster rate then automobiles. Each and every month banks are taking back 95,000 homes because their owners can't afford them anymore. More and more Americans are finding it harder and harder to make that monthly nut. There are few jobs out there. Without jobs, people can not afford to buy a home. No jobs, no recovery of the deep deep economic DEPRESSION we are in. And in 2 years all banks will do away with the 30 year mortgage. 20 year will be the norm. No banks are lending at this time unless your score is 850 and you put 25% down. This rule alone narrows the home buying pool to about 2% of America's working man.
3 months ago, sales of new homes have declined to the lowest level in America's history. On average, homes in America have declined as much as 70% in many areas. In Florida, 22% of all homes in that state are vacant and abandoned and in Nevada 24%. Most parts of the country see foreclosure rates where 1 in every 14 homes are in some stage of foreclosure.
What does all this mean? Homes will continue to lose value at an alarming rate for many many years to come. It's cheaper to rent these days. So all this is reason enough to NOT buy a home. All other things on the poll are irrelevant if the home has no value other then shelter.
You can check my posts from 5 years ago. The proof is there. I predicted all of this mess. What do I get for it? I'll say this now so you can bookmark this post and open it up in 10 years and smile at me. In 10 years we will be a nation of renters.
At this time buying a home is about as smart as punching one's self in the face over and over. At this time spending remodeling dollars on a home is just as stupid. Don't throw money into a losing depreciating asset, we all learned that lesson in high school finance 101. Elementary economics. The construction trades are done, finished. I can't even find Mexican day laborers in Home Depot parking lot anymore, they all went home. There's more construction work in Mexico.
I could not vote on the poll. Up till the last few years I surely would have voted not to live where communist HOAs rule the regime of commies.
People have gotta stop equating homes with piggy-banks, that's for sure...but we still have to live somewhere. If you rent, you are under the thumb of the landlord, who can raise the rent whenever he/she wants.
Home ownership will always be preferrable to renting for that reason, but people will have to go back to thinking of a house as a liability, not an investment.... and a place to stick around and grow old in so you don't have to pay rent as an elderly person and will be able to buy more cat food.
I find it amusing that so many of the things that HOA keep from happening -- cars on blocks, uncut lawns, illegal rooms, lots of cars & RV's parked on the streets score really, really high as items to dissuade buyers. But the one thing to protect your property from all that -- a HOA!!! --- is at the top of the list for dissuading buyers!
Some of my friends live across from a cemetary that sits far back off the road, and is surrounded by lush, green well-kept lawns. It is very quiet and peaceful.
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I mean houses were still selling. But this guy was so dead serious he spooked me. He actually grabbed my hand, leaned in close and said, "NO IM SERIOUS. I care about you. You are one of my best clients. Do whatever you can to get out now." He predicted all of this mess. He said he was in the process of unloading his rental homes. I think he had quite a few. He told me I will break even if I go FSBO, if I wait, I will be underwater. That was the first time I ever heard that phrase. He told me real estate was going to take a major dump. I trusted his judgment and sold the house FSBO. I walked away with a couple thousand. I was pretty bummed. All that money we put down? Poof.
