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Plus any worthy realtor is going to price the home realistically. It doesn't benefit them to inflate a home sale price knowing it won't sell or appraise. A home sale price getting raised due to a bidding war is a different thing and those folks come with enough cash to close the deal.
Actually, you're wrong. It is very common for new houses that the builder quotes much higher prices than they're willing to sell. I was in the market myself and most builders I visited over the past 2-3 months offered me discounts of 30-50k. They always start super high and then they try to play the customer. I have no clue where their bottom line is. The might not be able to fool donblackie, we already know he's superman, but not everybody is so smart and adept at negotiations so a lot of people get fooled into overpaying.
I have no interest to continue the conversation with donblackie about why are people fooled into anything or whether they deserve it or not. This thread was about housing being overpriced at the moment, and I'll only comment on that pricing aspect.
Most finance people I spoke with believe the current price surge is due to temporary market imbalances due to covid and that the market is due for a pullback over the next 12 months. Forecasts range from 1% to over 10% drop in prices, depending on the segment and the area. So with that in mind, I think it is prudent that people who really can't wait and wish to buy now, to refrain from putting down a big downpayment. That's all. As with everything else, that's just my educated opinion. Nobody knows for sure what the future will bring.
This is indeed linked to property taxes, but not in the way you are trying to say. This is a common narrative among conservatives - blaming poor people for not knowing better or even worse, for spending too much instead of saving more. It's all part of the narrative that makes poor people look like they are poor because they are lazy and immoral so they deserve being poor. I'm not saying you do that on purpose, but you've been made to believe it by years of indoctrination.
Housing is an investment more than anything else. It is the most important asset that most people who have any assets have. It is also the only way for the majority of Americans to build any wealth. You get a job, you apply for a mortgage, you pay a little bit every month while living in your house, and after 20-30 years you have something to call wealth. As long as you can afford the monthly payment, the more expensive the house, the more wealth you'll create for yourself when it's all said and done. Of course in states like TX, property taxes come into play and keep poor people from buying expensive homes. The tax payments simply make it impossible for them to do that. They could afford to pay more to the bank for a larger loan, but they can't afford to pay to the tax collector. So the poor cannot accumulate wealth and remain poor.
Meanwhile, the super-rich can get credit over credit to invest in their businesses and make income, which is not taxed by the state. And when they take too much risk, well that's ok too because we'll bail those businesses up with tax money. Nobody tells those businesses then, hey maybe you shouldn't have taken that much risk. Maybe you shouldn't have borrowed and invested that much. So someone can borrow billions from banks and have multiple failed businesses and bankruptcies only to be bailed out, but poor people have no business getting a half a million dollar loan to buy a house because why? Because you say so? Common man!
Im not sure who you are referring to when you say poor people vs rich people. I am business owner. I am not over leveraging myself and over extending with the notion that the govt will bail me out. I have never borrowed billions, been close to bankruptcy nor have a i received/used money for a bail out. So I assume I am part of the poor correct?
That being said, as part of the poor, I do MY OWN due diligence. I am not saying poor people should not be able to buy opens and build assets. I literally did that as a poor person. Why didnt you address due diligence? Why do I continue to see people buy things for amounts that are not considered financially prudent? Answer that one?
As for this" As long as you can afford the monthly payment, the more expensive the house, the more wealth you'll create for yourself when it's all said and done"
This can not be further from correct. That is how the financially unsaavy get trapped. You shouldnt be looking at monthly payment. You should be looking at the deal in general and then once you have ascertained you have a good deal on your hands, you structure a deal that fits within your monthly budget. This is the same trap people fall into when they buy cars. Who cares of the $30k car you are looking at you end up buying for $60k. You can afford the monthly payments......
Im not sure who you are referring to when you say poor people vs rich people. I am business owner. I am not over leveraging myself and over extending with the notion that the govt will bail me out. I have never borrowed billions, been close to bankruptcy nor have a i received/used money for a bail out. So I assume I am part of the poor correct?
That being said, as part of the poor, I do MY OWN due diligence. I am not saying poor people should not be able to buy opens and build assets. I literally did that as a poor person. Why didnt you address due diligence? Why do I continue to see people buy things for amounts that are not considered financially prudent? Answer that one?
First off, I wasn't referring to anyone in particular. Why do you try to make everything personal? It's not about you, man. I was just making a general statement: that the system doesn't allow poor people to benefit from the same type of things that rich people do. In this case, I was talking about loans and building wealth. Maybe even you, as a business owner, might have been able to sit on larger wealth at this point in time if the system was different. But again, that's besides the point. It's not about you.
As to why do you continue to see people making mistakes...well because they're people. People are not robots. They make mistakes. Often. And sometimes other people are trying to take advantage of them. So you can't really blame anyone just because you're smarter than them. How entitled can you be to basically call people out for making mistakes.
When a bank tells a 16 yr. old student, hey take all this money and you don't have to pay us anything for 5 years...but never tells them that they will never be able to get rid of that debt not even in bankruptcy. Do you really blame the 16 yr. old kid? Seriously...no wonder kids these days absolutely hate old people. You guys are so disconnected with reality.
When a bank tells a 16 yr. old student, hey take all this money and you don't have to pay us anything for 5 years...but never tells them that they will never be able to get rid of that debt not even in bankruptcy. Do you really blame the 16 yr. old kid? Seriously...no wonder kids these days absolutely hate old people. You guys are so disconnected with reality.
That's a very good point. Banks who issued reckless loans were bailed out in 2009, but student loans do not get cleared even in bankruptcy. Now with covid, another round of bailouts occurred, primarily directed at large businesses. The amount of money that regular folks received was nothing compared to the amount received by large businesses. But again, can we keep this thread to real estate pricing issues without going down this political rabbit hole? Please guys!
First off, I wasn't referring to anyone in particular. Why do you try to make everything personal? It's not about you, man. I was just making a general statement: that the system doesn't allow poor people to benefit from the same type of things that rich people do. In this case, I was talking about loans and building wealth. Maybe even you, as a business owner, might have been able to sit on larger wealth at this point in time if the system was different. But again, that's besides the point. It's not about you.
As to why do you continue to see people making mistakes...well because they're people. People are not robots. They make mistakes. Often. And sometimes other people are trying to take advantage of them. So you can't really blame anyone just because you're smarter than them. How entitled can you be to basically call people out for making mistakes.
When a bank tells a 16 yr. old student, hey take all this money and you don't have to pay us anything for 5 years...but never tells them that they will never be able to get rid of that debt not even in bankruptcy. Do you really blame the 16 yr. old kid? Seriously...no wonder kids these days absolutely hate old people. You guys are so disconnected with reality.
Great point, I am not trying to make it about me, I am just speaking from my experience. Dont know how to speak in general since I dont know everyone elses' path.
Making mistakes is MORE THAN ok. But you cant make a mistake on arguably the biggest purchase of your life. Sure, if you chose the wrong noodles for dinner that night, no big deal. But if you literally get locked into a 30 year engagement on the biggest purchase of your life? Should they not be doing DEEP due diligence? really?
As far as the 16 year old. I agree. Thats where the family structure comes into play. You should have guidance from a very young age to teach the up and coming generations what is a good idea and what is not. No? Do you not think there were people lined up at the universitys trying to sign people up for credit cards and loans when us "old people" were at school? Sure there were. And everything is right there. You read the fine print and it tells you when you pay, at what interest rate, etc.
But again, can we keep this thread to real estate pricing issues without going down this political rabbit hole? Please guys!
Absolutely. My stance is real estate pricing "issues" wouldnt be an issue if everyone were doing their due diligence and assessing their deals appropriately. At that point the market will sort itself out.
Absolutely. My stance is real estate pricing "issues" wouldnt be an issue if everyone were doing their due diligence and assessing their deals appropriately. At that point the market will sort itself out.
Which is impossible in reality. I know you like to think it's easy to do, but it's not. And markets don't work well all the time. That's another myth. If that was the case, banks out of all businesses would never go bankrupt. Mutual fund managers who are supposedly experts at assessing financial markets should never lose money. And I can keep going. So can we please stop pushing this narrative that the markets are always functioning well? Cause they're really not and they teach you that in Econ 101.
And once again, we didn't held banks accountable. We're not currently holding airlines and other large businesses accountable. Bail them all out! But god forbid we bail plumber Joe out. It's his fault for biting more than he could chew! He should have done his due diligence!
This can not be further from correct. That is how the financially unsaavy get trapped. You shouldnt be looking at monthly payment. You should be looking at the deal in general and then once you have ascertained you have a good deal on your hands, you structure a deal that fits within your monthly budget. This is the same trap people fall into when they buy cars. Who cares of the $30k car you are looking at you end up buying for $60k. You can afford the monthly payments......
No one pays $60k for a $30k car unless they are totally uncreditworthy. A $30k car at 5.25% for 60 months ends up with $4200 in total interest.
Quote:
Originally Posted by donblackie
Absolutely. My stance is real estate pricing "issues" wouldnt be an issue if everyone were doing their due diligence and assessing their deals appropriately. At that point the market will sort itself out.
Sometimes you don't have a choice but to pay the going rate. Especially if rental markets are tight at the same time.
No one pays $60k for a $30k car unless they are totally uncreditworthy. A $30k car at 5.25% for 60 months ends up with $4200 in total interest.
Sometimes you don't have a choice but to pay the going rate. Especially if rental markets are tight at the same time.
Perhaps $60k for a $30k car was a bit of an exaggeration. But people are DEFINITELY overpaying for cars by negotiating on monthly payment especially in the used market. True, most people have no credit or bad credit. If thats the case, they should be buying a $1000 car. Not negotiating on a $20k car. I just sold my mom's 20 year old Lexus for $600 the other day. Absolutely great car. Just didnt have a need for it. I was thining that man that bought it got an absolute great car.
Theres always a choice. The situation might not always be best. And thats why you have funds stockpiled so when you get caught in a uncomfortable situation you can ride out a storm without having to make a terrible decision.
As for this" As long as you can afford the monthly payment, the more expensive the house, the more wealth you'll create for yourself when it's all said and done"
This can not be further from correct. That is how the financially unsaavy get trapped. You shouldnt be looking at monthly payment. You should be looking at the deal in general and then once you have ascertained you have a good deal on your hands, you structure a deal that fits within your monthly budget. This is the same trap people fall into when they buy cars. Who cares of the $30k car you are looking at you end up buying for $60k. You can afford the monthly payments......
Once again, you don't understand what I'm trying to say and you turn it into something else.
What you're saying is true, but refers to interest rate games that dealers often play with their clients. That means different loan structures. For instance they try to give them low monthly payments for longer terms which lower the monthly payments but increase the overall interest they pay.
I wasn't talking about that. I was just saying that for a given mortgage contract, if you can afford a larger monthly payment it is better to buy a more expensive house because that will translate into bigger wealth creation. Mortgage loans, especially at the low rates over the past decade, are the easiest way for low income people to create wealth for themselves. For a couple hundred bucks more per month, you can create over 100k worth of wealth over 10-15 years, when you account in for inflation and real estate appreciation. But in the presence of high property taxes, folks have to account not only for the extra 200 a month to the bank but also for the extra couple of thousands to the tax collector.
People in finance use leveraged investing all the time. That means they loan money so they invest more because the rate of return is higher than the rate of interest. The same holds true about housing. The rate of return for every 100 dollars of property you buy is much much higher than the rate of interest so from a financial perspective you should borrow and buy as much of a house as you can afford. But I agree that you need to be careful with the terms of the loan so you don't pay too high of an interest rate.
Also keep in mind that housing is not like cars. Cars depreciate over time while housing appreciates. So you cannot compare one with the other in this type of investment decisions so folks should definitely not buy as pricey a car as they can
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