Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Minnesota > Minneapolis - St. Paul
 [Register]
Minneapolis - St. Paul Twin Cities
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 07-19-2010, 03:47 PM
 
22 posts, read 33,392 times
Reputation: 19

Advertisements

A house really isn't an investment at all...if you plan on living there. While you might gain equity over a long period of time, you're also paying interset and maintanace. It's been proven that one can do much better over 30 years by renting and investing the difference in the stock market. It really comes down to lifestyle. Many want the freedom, sense of pride of homeownership. While others like the flexibility of being able to live wherever they want when they want. Do what fits your budget/mindset without thinking of it as an investment equation.
Reply With Quote Quick reply to this message

 
Old 07-19-2010, 03:59 PM
 
9,724 posts, read 11,126,129 times
Reputation: 8479
Quote:
Originally Posted by golfgal View Post
The problem most of you are having is that you are looking at a home as a short term investment vs what is REALLY is, a LONG term investment. I am quite confident that in 30+ years when we move into our retirement home that our house will appreciated significantly. I am equally as confident that our home won't increase in value next year but in the mean time, we are still paying down our mortgage and still owe less than what our house is worth even after the price drops because we built up equity in other homes that we owned and used that for down payments on subsequent homes. I am sure our house payment is a lot less than most people that have bought homes for LESS than ours because of the equity we have built over the years.


People are looking at home ownership differently in 2010 and rightly so because there are all kinds of scenarios that can bite you.

I mentioned that appraisers dictate what your home is worth. We have been in our home for close to 20 years and plan on selling in a couple of years. So I figured I’d upgrade it to perfection now and enjoy it for the next couple of years. The reality is now you need to know what appraisers will find valuable. For example it doesn’t make sense for me to put in a wood floor in the Master bedroom because the appraiser won’t give a much for a wood floor over a nice grade of carpet. Before you could challenge the decision but now the mortgage company cannot pick the appraiser or talk with them. That decision of the appraiser can “stick” for months. The guy or gal might be an idiot. Ask any experience agents and they will tell you the horror stories. Same goes for landscaping and other upgrades that actually does add value to the buyer but not to the formulas or the appraiser.

There was a time when mobile people bought a home for 3-7 years and traded up or got relocated. In 2010, you need to understand what you are getting into. If you don’t plan on selling for 10 years, I’m sure this policy will all pass. But it’s easy to buy a place, dress it up and lose all of your dollars. When you amortize those lost dollars over 5-7 years it’s real money.

If you are renting and looking to buy in the next year or so, why not wait because chances are things will drop a good 10%. If you are looking at $300K home, that’s $30K. How long does it take the average family to save $30K???? I’d never ignore that kind of money by assuming your purchase is a long term plan. You never know what will come up and want to move (HATE your neighbors, transfer or take a new job etc).

I guess I am saying the old rules no longer apply in this new housing market.
Reply With Quote Quick reply to this message
 
Old 07-20-2010, 03:59 PM
 
22 posts, read 33,392 times
Reputation: 19
Keep in mind that interest rates can only go up from where they're at, and they'll go up fairly rapidly once the Feds determine that the economy is headed in a positive direction. That 10% you think that you might save by waiting a year will be erased pretty quickly by a 1-2% rise in interest rates...which may occur over the next 6-9 months. My opinion, for what it's worth, is that now is the time to buy given the current status of price and interst rates...you have to factor all of the pieces into your equation.
Reply With Quote Quick reply to this message
 
Old 07-20-2010, 06:13 PM
 
Location: MN
1,669 posts, read 6,229,177 times
Reputation: 959
Quote:
Originally Posted by designer/builder View Post
Keep in mind that interest rates can only go up from where they're at
I heard the same thing about home prices a couple years ago.
Reply With Quote Quick reply to this message
 
Old 07-20-2010, 06:15 PM
 
9,724 posts, read 11,126,129 times
Reputation: 8479
Quote:
Originally Posted by designer/builder View Post
Keep in mind that interest rates can only go up from where they're at, and they'll go up fairly rapidly once the Feds determine that the economy is headed in a positive direction. That 10% you think that you might save by waiting a year will be erased pretty quickly by a 1-2% rise in interest rates...which may occur over the next 6-9 months. My opinion, for what it's worth, is that now is the time to buy given the current status of price and interst rates...you have to factor all of the pieces into your equation.
I don't borrow money. But independent of that, we have an over supply of homes in the country to the tune of 4M homes. To absorb all of that supply, we are talking a few years at the current absorption rate. Since Ben Bernanke knows that deflation is the last thing he wants right now, interest rates are not going anywhere for the foreseeable future (higher rates ==deflation). Deflation is the current risk NOT inflation. Several trillion dollars have been evaporated in the economy even after all of the printing of money.

No one can predict the future but all crystal balls are pointing towards a 2nd dip in the housing market. The absolute last thing they want to do is raise rates. There isn’t an inflationary hint on the horizon. I stand by my prediction that it’s a great time to wait. If you think the housing makret is ready to take off and rates are going to raise a couple of percent any time soon I want what you are smoking.
Reply With Quote Quick reply to this message
 
Old 07-20-2010, 06:18 PM
 
9,724 posts, read 11,126,129 times
Reputation: 8479
Quote:
Originally Posted by moving123456 View Post
I heard the same thing about home prices a couple years ago.

Yea. We were going to have hyperinflation in 2010. Remember??

Read this Calculated Risk: Deflation and the Fed and tell me about how the rates are about to jump up any time soon.
Reply With Quote Quick reply to this message
 
Old 07-20-2010, 09:35 PM
 
22 posts, read 33,392 times
Reputation: 19
I didn't say that the housing market would take off anytime soon. Interest rate charged to banks right now is at zero. That can't last forever no matter what is happening in the housing market. If the job market stabilizes and begins to rise, consumer prices will rise and, therefore, interest rates will also rise. Therefore the money you might save on a lower priced home will be wiped out by the higher interest rate you'll pay. You're right that no one can predict what will happen. However I would be prepared to buy...if you want to buy...a house at the first sign of an interest rate hike because the predictions from the Feds is that when they do start to raise rates again it will be in one point increments.
Reply With Quote Quick reply to this message
 
Old 07-21-2010, 05:18 AM
 
9,724 posts, read 11,126,129 times
Reputation: 8479
Quote:
Originally Posted by designer/builder View Post
I didn't say that the housing market would take off anytime soon. Interest rate charged to banks right now is at zero. That can't last forever no matter what is happening in the housing market. If the job market stabilizes and begins to rise, consumer prices will rise and, therefore, interest rates will also rise. Therefore the money you might save on a lower priced home will be wiped out by the higher interest rate you'll pay. You're right that no one can predict what will happen. However I would be prepared to buy...if you want to buy...a house at the first sign of an interest rate hike because the predictions from the Feds is that when they do start to raise rates again it will be in one point increments.
We disagree. I'm not sure what you are reading. The Fed's rate-setting committee kept its target near zero percent and will maintain this ultralow rate policy for "a good while longer". The central bank has held the federal funds rate near zero percent since December 2008.

Narayana Kocherlakota, (president of the MPLS Federal Reserve), explained it this way in a recent speech: "We can't set interest rates to be negative. This means that the question, 'What's going to happen to interest rates?' is an even less interesting one to use at cocktail parties than usual!"

"Low rates cannot happen forever". Really. Have you studied what has happened to Japanese home interest rates after their real estate bubble collapse?? Although I am not predicting it, I would not be surprised to see rates go lower. When everyone was predicting that the rates would jump a few months ago I was predicting the opposite. The housing market HAS to soften based off the oversupply and overhang plus the lousy employment numbers.

How are we going to get out thiis economical mess and start to grow?? I'm all ears.... We are shedding jobs not increasing jobs. We have a better than 50-50 chance of having a douple dip recession and some non-kooks are predicting the start of a depression. See http://www.nytimes.com/2010/06/28/op...28krugman.html
The guy who wrote that is a household name with people who study economics. I don't agree with his solution but it could happen. We have deflationary pressures right now. We saw what happened when housing prices went down. People froze. If other widgets go down, people will freeze on those purchases as well and we should understand what that means to the rest of the economy. The next three months will be key. Hence, wait at least three months and tke another look. If I'm a betting man, new rebates will re-appear which usually will only kick the can down the road.

So when I suggested waiting to buy a home and predicting that homes will probably drop I have looked into the topic a wee bit. Now massive government spending and subsidies will change what is going on with rates and values so no one can say what is going to happen for sure. But all indicators say "wait" for a person who doesn't NEED to buy.

It should be pretty obvious to anyone other than someone who is trying to sell houses for a living. That's why new starts PLUMMITED last month. Other people "feel it" without researching a thing.

Last edited by MN-Born-n-Raised; 07-21-2010 at 05:31 AM.. Reason: typo
Reply With Quote Quick reply to this message
 
Old 07-21-2010, 07:25 AM
 
Location: Cleveland bound with MPLS in the rear-view
5,509 posts, read 11,860,460 times
Reputation: 2501
Quote:
Originally Posted by designer/builder View Post
Keep in mind that interest rates can only go up from where they're at, and they'll go up fairly rapidly once the Feds determine that the economy is headed in a positive direction. That 10% you think that you might save by waiting a year will be erased pretty quickly by a 1-2% rise in interest rates...which may occur over the next 6-9 months. My opinion, for what it's worth, is that now is the time to buy given the current status of price and interst rates...you have to factor all of the pieces into your equation.
Like my mother said: "interest rates can rise and fall, but your purchase price stays the same".....in other words, if you buy at a higher interest rate the price of your home should be discounted to factor that cost of financing, and you can always re-fi if rates drop, but if rates are already at the bottom you'll never be able to refinance your loan (assuming a fixed rate loan).

The moral of the story here is that ALL costs are considered from the buyer when purchasing the home, including cost of financing, meaning if financing costs are higher they can afford less equity in the home and that forces prices lower.
Reply With Quote Quick reply to this message
 
Old 07-21-2010, 12:11 PM
 
Location: Essex County, NJ
118 posts, read 316,209 times
Reputation: 68
Quote:
Originally Posted by designer/builder View Post
Keep in mind that interest rates can only go up from where they're at, and they'll go up fairly rapidly once the Feds determine that the economy is headed in a positive direction. That 10% you think that you might save by waiting a year will be erased pretty quickly by a 1-2% rise in interest rates...which may occur over the next 6-9 months. My opinion, for what it's worth, is that now is the time to buy given the current status of price and interst rates...you have to factor all of the pieces into your equation.
Yes, interest rates may rise in the near future only to put more downward pressure on house prices. Is it better to buy a house at a higher price and a low interest rate or a lower price and a higher interest rate? The second option enables to to pay down on you principal at a faster rate if you have the funds. The house is less likely to lose as much value at a lower price. You have a smaller down payment requirement so you have less risk if things go bad.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Settings
X
Data:
Loading data...
Based on 2000-2020 data
Loading data...

123
Hide US histogram

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Minnesota > Minneapolis - St. Paul

All times are GMT -6. The time now is 12:43 AM.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top