[Bhaalspawn]

Originally Posted by TurboState

Also keep in mind, the days of suburban sprawl are coming to a close. Gas prices will only go up, and go up a lot as we reach peak-oil and no alternatives are found.

People living in the sticks and driving 1-2 hours to work just aren't viable these days. Worse, people living in the burb's in houses they can't afford, are QUICKLY drained of cash when they suddenly have to pay $3-$4 a gallon for gas! I see people practically giving away their homes out in the sticks these days so they can move closer to their work.

I have wondered about this, too. As we approach Peak Oil will it become increasingly expensive to live out in the boondocks? Our poor middle class will get crushed. I suppose that people will give up their luxurious SUVs first and replace them with Smart Cars and the like.

Most folks have never heard of Peak Oil. They'd be amazed if they saw the kinds of conversations that people have on the Peak Oil discussion forums. Forget about talk of recessions and great depressions; on those forums people are talking about mass die-offs worldwide, how to live as a survivalist, how to farm, and how to fend off bandits. (For those of you who have no idea what this is about, consider that our entire economy is based on oil and that the demand for oil is increasing as the world's popluation explodes while the amount of oil in existence continues to decrease, esepcially the amount of oil that we can pull out of the ground.)

[M TYPE X]

Peak Oil theory is for the loons. Michigan won't have an economy by the time Peak Oil happens anyway. What's that, Peak Oil is 5 years from now? My point exactly!

[cksh]

I tend to think that our economy for the last five years has been based on the old Housing ATM. Forget everything else. With housing values declining no one can take out an equity loan because they suddenly owe more than the house is worth. And on top of it all the toxic interest only loans are going to hit over the next year or two and leave plenty without the ability to make their payments.

Time for me to step onto the old soap box
And since no one is remodeling or even buying a new home? Home Depot and Lowes are on the chopping block. Not to mention all of the appliance stores. Oh, and paying off credit cards with the house atm? Forget it.
Bye Bye construction industry too. No one can buy a new car or afford a new home because they can't find work. Can't buy a car? Michigan's economy gets a double whammy since most of it is Automotive in Metro Detroit.

It is a nasty neverending circle that hopefully will change once Michigan moves towards a technology base. Maybe Never?

I truly believe that our economy has been supported by the crazy rise is home prices and we are in for one heck of a ride back down to reality.

[Virginia1]

Well you know how the stock market has to correct itself on occasions, the real estate market will do the same. Michigan may be on the forefront of negative real estate news, the state is just the first domino. Major cities are already seeing some downward numbers, even in my area prices are ever so slowly coming down. People selling there homes are trying to get the same cash as there neighbor did 2 years ago, the homes are moving slower and slower, even with our transient military. I am sooooo glad I am renting right now, but I will be buying in Michigan, hopefully.

[TurboState]

1 in 200 homes now in foreclosure.... Ouch !

http://news.yahoo.com/s/nm/20070313/bs_nm/usa_mortgages_delinquencies_dc_4 (broken link)

[AussieMale]

Looks like i just may rent something for a while when we get there.
Before i buy something , I will make very low offers & see how bad people want out then that will give me some more insight.
eg $100k home first n final offer i will tell the agents $50k ower has 24 hours to answer & everyday they take longer it drops $1k per day or $5k per week.
Hate to do it but its the only way to really see how bad it is over there as ive been watch very very closely from over here atm.
Another eg saw some houses that came on at $70k watched them drop like 5 to 6k every second month till they sold for $40k approx as i have been in contact with some agents while watching sad but true.
I have to go this road as if the prices go to hell i dont get caught out down the track.

[TurboState]

I saw a house a few streets over here in Royal Oak. Guy was having a firesale, his truck was out front for sale cheap.

He had a sign infront of his house saying "$130,000 or best, must sell today!!!".. Looking at the house, it looks like a nice 1600+sq Foot home with a 2 car garage. Sad.. That house would have been 250K 3 years ago..

Whats it going to come to?!?!

[michiganbob]

I feel lucky to have sold my house in Eaton Rapids (about 15 miles south of Lansing) last fall. The district is now talking about closing the elementary school in the neighborhood and that will certainly hurt property values.

We're now renting a very nice house (2200 sq ft, built in 2001) just outside of Lansing that the owner couldn't sell for the past two years after he built himself another. Because of a growing glut of rental properties (I can't remember ever seeing so many "for rent" signs in East Lansing this time of year) our rent is pretty low for such a nice place. The only column in the classified section of the newspaper that seems to grow every Sunday are the "homes for rent" section because people can't sell and are trying to get some money back to cover the mortgage.

It's not that I don't like Michigan, or have anything against the Lansing area, but both my job and the one my wife has do not seem so secure anymore. Do we want to move out of the state? Not really, but if we don't own a home and we lose our jobs we may have to . . . and we would be able to. I think a lot of people in Michigan feel that way these days: they don't want to go, but they may have no other choice.

So we won't be buying another house any time soon. The prices are still falling and until the economy stabilizes, it's not worth the rest . . . especially when you can rent for $500 less a month than the mortage would be.

[TurboState]

Renting, under any circumstance, is a waste of money.

I get thousands of dollars in deductions and writeoffs every year that basically mean we pay little to no taxes anymore. As such, we are basically owning this home for pure principle and no interest.

Buying is a good decision in a down market for renters. Why pay $500-$1000+ a month in rent when you can own a pretty darn nice home for $500 a month and get the writeoffs?

Unfortunately almost everyone smart enough to own a home, already does, so the market is saturated with homes for sale and few buyers. But the few people out there renting better take advantage of the downturn while they can - I would say within the next 24 months.

[michiganbob]

Originally Posted by TurboState

Renting, under any circumstance, is a waste of money.

Sorry, there's no way you can make such a blanket statement anymore. That might have been true once, but not anymore, and certainly not for everyone, and definately not in a state with a growing unemployment rate and falling home values. Please note, I am not against home ownership and actually owned a house here in Michigan up until last Fall. But like most "conventional wisdom" things are never as black and white as you seem to think.

None other than the Wall Street Journal published a very lengthy article yesterday called "Why Your Home Isn't the Investment You Think It Is" (Google it for a link) and it refutes every argument that you--and others who agree with you--could possibly make. IF you plan to live someplace 20 or more years and IF the properly values go up and IF there is a market to sell your house when you want to sell it at the price you want, yes, renting is not the best option.

But let me give you an actual Michigan example that happened to some friends of mine:

Bought a house three years ago in a Lansing suburb for $250,000 and put $25,000 down. Paid about $1500 a month for three years, and yes, got some tax benefit. However, they also had to make about $15,000 in repairs to their house that was not covered by their insurance. This winter the husband was transfered to New Mexico and they had to move. They found out that their house would now probably only sell for around $225,000 MINUS a 7% real estate agent commission of just over $17,000 . . . but they still owe almost the full $225,000 . . . so they completely lost their down payment. Had they rented an equally nice house for $1500 a month you are correct they would not have gotten the tax break, but their total cost for 36 months: $54,000 which is equal to what they paid on their mortgage over that same period.

Plus the $15,000 in repairs
Plus the $17,000 in agent's commission
Plus the $25,000 down payment

Care to rephrase your statement?

It's thinking like yours that is one of the reasons we will see record foreclosures in Michigan an across the country this year. Which, ironically, will further drive down house prices, causing more foreclosures and utlimately will lower everyone's property values. Including yours. (Let's hope you don't owe very much on your property.) Me? I have 10 months left on my lease and don't really care what happens to the value of the house I'm living in.

And please, don't respond by taking pot shots at my example ("they should have bought a cheaper house" or "they should have sold the house themselves" or "he should have kept his job here in Michigan"): you said in your quote that

Originally Posted by TurboState

Renting, under any circumstance, is a waste of money.