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Old 04-23-2013, 09:59 PM
 
Location: Portland, OR / Las Vegas, NV
1,808 posts, read 3,275,695 times
Reputation: 967

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Quote:
Originally Posted by ddrhazy View Post
How much more should the prices depreciate? 1/4 the cost to build? 1/5? What number would make you happy?
I don't think anything will make him happy until everyone is equally broke.

So you would like home values to fall. We did that already. 70% in many cases in LV. Check
You want less debt. I think most LV purchases now days are cash. Check
You want to reward the savers (see cash purchases above) Check

Did I miss anything?
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Old 04-24-2013, 01:44 AM
 
Location: Sunrise
10,869 posts, read 13,699,142 times
Reputation: 8987
Quote:
Originally Posted by ddrhazy View Post
I believe 6% was the market standard at 2007 for 30 year fixed mortgages. 2007 Annual Average - 6.34

Primary Mortgage Market Survey Archives - 30 Year Fixed Rate Mortgages - Freddie Mac
Yeah, 6% may be the national average for people who needed government assistance to get a loan. I don't begrudge them their government loan insurance. I think everyone who wants to own a home should reasonably be able to do so. (Ability to repay the loan is always a consideration. Reasonably be able to own, after all.)

But let's talk about Las Vegas numbers for people with decent credit scores. Three-point-five percent is nearer the mark. Not 6%. I also don't know anyone who was able to rent a $500K house for $1,500 a month. I don't know anyone who was financing $500K properties with a 6% interest rate.

I have asked for some more realistic numbers for apple-to-apple properties in the same (or at least nearby) developments. I already know what the answer is going to be because I have already done the legwork. As has anyone who has ever run a few real estate comps.

And while I disagree with the Realtors on this forum about the most effective mechanics for purchasing a house, I agree with their assessment that it's almost ALWAYS better to own than rent. It's hard to argue with math.
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Old 04-24-2013, 09:17 AM
 
2,132 posts, read 2,204,417 times
Reputation: 1301
30 Year Fixed Rate Mortgage for 01/2000 - 04/2013 in Nevada

Shows the 30y ARM as 7% for Nevada in 2007, also that is an average not just one set of loan instruments(e.g. - government loan)
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Old 04-24-2013, 11:26 AM
 
Location: Sunrise
10,869 posts, read 13,699,142 times
Reputation: 8987
Quote:
Originally Posted by ddrhazy View Post
30 Year Fixed Rate Mortgage for 01/2000 - 04/2013 in Nevada

Shows the 30y ARM as 7% for Nevada in 2007, also that is an average not just one set of loan instruments(e.g. - government loan)
That's just great. And also completely useless. ARMs were basically the problem -- that and giving loans to anyone who could pass the mirror test. So they hook people in with low rates and then adjust the rate through the ceiling a few years down the road.

What does that have to do with the cost of buying a house in 2007 vs renting a similar house since 2007? And for once, why don't you assume the person doing the buying has halfway-decent credit and can get a real mortgage.

You want to compare half million dollar homes? Splendid.

Here's a house that was going for $500K in 2007. I know this neighborhood well. All the houses in this neighborhood were selling for around $500K when we moved here in 2007. I know this because this is one of the neighborhoods we looked at very closely when we were house hunting.

61 Laura Kay St, Las Vegas, NV 89110 - Zillow

Many houses in this neighborhood are being rented. Rents are going for $2,000 per month. Again, I know this because I know people who are landlords in this development.

Rent for six years equals $144,000. The houses here sold for $500K in 2007 and are currently going for $380K and they're on their way up, fast. That's $120K in lost equity.

The choices for this particular property are:

1) Rent it for six years for $144,000 and have absolutely nothing at the end of a six year lease.
2) Buy it for $500,000 and still have a $380K house at the end of a six year purchase.

Buying a house at the peak of the bubble was still smarter than renting.
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Old 04-24-2013, 12:04 PM
 
1,205 posts, read 1,899,116 times
Reputation: 606
buying in 2005-2007: not a good choice
renting instead of buying in 2005- 2007: a better choice
buying after 2009: a winner's choice
renting instead of buying after 2009 (if you have the money to buy): the worst choice you can make
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Old 04-24-2013, 12:05 PM
 
244 posts, read 286,579 times
Reputation: 204
MANIPULATION...?...!...?

Some realize the wisdom of letting the market determine the values of real estate or interest rates.

...what CANNOT go on forever WON'T.
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Old 04-24-2013, 12:13 PM
 
17,547 posts, read 34,740,752 times
Reputation: 9994
There are other threads here where renting vs owning in LV have been discussed at length. That discussion is not on topic for this thread-- take that issue to one of those threads, which can be revived. Will edit this thread later as more time permits.

Last edited by observer53; 04-24-2013 at 12:33 PM..
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Old 04-24-2013, 12:21 PM
 
1,205 posts, read 1,899,116 times
Reputation: 606
Quote:
Originally Posted by ScoopLV View Post
2) Buy it for $500,000 and still have a $380K house at the end of a six year purchase.

Buying a house at the peak of the bubble was still smarter than renting.
No you don't have a $380K house, you have whatever the equity you put in the house.
If you pay $50K down 6 years ago for the $500K house, you still owe the bank nearly $450K after 6 years (first few years payments usually are all interest payments). So, if you sell it today: $380-$-450K = you have negative equity now, you don't have $380K

The scenario gets better if you had paid all cash $500K six years ago, then consider yourself owning the house free and clear for the last six years, but still paid rent $120K to an invisible landlord during these 6 years, now you have $380K equity.
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Old 04-24-2013, 12:29 PM
 
Location: Sunrise
10,869 posts, read 13,699,142 times
Reputation: 8987
There is nothing saying that the property owner cannot pay down the principle. If the property owner pulled the plug on the smart phone plan, ditched cable TV and just watched what's on the airwaves, lowered monthly utility costs, and bought a decent used car instead of making payments on a new one, that person could pay off the entire loan in six years. It's not at all hard. If people want to be financially foolish with compound interest, that's their problem.

The issue here is whether despite "market manipulation" is it still a solid financial choice to buy a house? I'm saying that it is. And I'm trying to back that up with real numbers not pulled out of thin air.

Seriously, what are the gloom and doomers doing for shelter right now? Renting? Living in the tunnels under Las Vegas? Couch surfing with friends/family? They're certainly not homeowners because they think that's foolish.
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Old 04-24-2013, 12:41 PM
 
244 posts, read 286,579 times
Reputation: 204
The issue here is whether being oblivious to the inherent dangers of "market manipulation" is prudent.
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