Unlike OTHER markets, Pittsburgh housing market is S-T-A-B-L-E !!!! (California: real estate, homes)

[right-here-i-say]

I agree with kpoeppel. However, I'd like to add that home appreciation is really land appreciation. No matter what, it costs $x to build a home ($y more or less depending on slope/etc). So if somebody thinks there home is worth $300K, when it cost $200K to build their home, and there is plenty of land available and cheap, they are most likely wrong. Of course, if somebody pays $300K for it, you can pass the risk on to them.

[Tallysmom]

Originally Posted by kpoeppel

Houses don't just magically gain value over time, any more than anything else built by man. Houses gradually fall apart and need constant maintenance like any other durable good. Worse, you have to pay the government annually for the privilege of living in your "own" house, i.e. pay property taxes. You don't have to pay property taxes on your washing machine.

I don't understand this all-pervasive myth that houses can somehow create wealth out of thin air. That mentality drove the housing bubble. But now "reality" is asserting itself and prices are crashing back to the fundamentals of supply and demand.

To be sure, one CAN make money speculating on real-estate just like one can make money speculating on any other commodity. One can also lose money.

If a house is worth more than at some time in the past (assuming no upgrades or additions to the house), it can only be due to an increase in demand over that period. Or, it could be worth more "on paper", simply because the dollar is worth less today than it was in the past. Thus it isn't surprising that house appreciation, on nationwide average, only beats inflation by 1%. It would seem that there are better "investments" than real-estate, on average. Also, one doesn't have to repaint the stock portfolio every year or mow the savings bonds weekly. Better yet, you are only taxed on regular investments if you make money from those investments. With real-estate, you pay property taxes regardless of whether the price goes up or down.

The spectacular appreciation of the last 6 years was from irrational exuberance and mania, not from the fundamentals of supply and demand. Ratios of house prices to rents were (and still are) off the charts in places like CA. The bubble was partially caused, no doubt, by the aforementioned myth that houses magically generate wealth all on their own. On the upside of the bubble, the myth seemed to be very true indeed! It was a classic example of a self-fulfilling prophecy...on a mass scale.

With any speculative bubble, no wealth is actually produced...it is merely transferred from greater fools (who bought in late) to lesser fools (who bought in early). It's essentially a big ponzi scheme. Oh and one more thing...in the housing business, realtors and lending institutions take their percent cut from every transaction. It reminds me of the classic movie "Trading Places" when "Duke & Duke" explain that no matter what happens in the market, they make money. To which Eddie Murphy responds, "sounds to me like y'all are a couple of bookies." So the real-estate business wants to keep the scam going for as long as possible. Now they are "reaping what they have sown."

HOWEVER -- what buying a home does is -- if you do not treat your house like an ATM -- prevents the ever inflationary increases of your housing payments.

That is where true wealth can be created. Look at it this way. My house payment in Crazy California is 642.50. We've done small re-dos and the house itself financed those, so we're not in the end stage of our mortgage, but, my house payment has stayed more or less around the same amount for the 20 years we've been in the house.

Our income, when we bought the house could afford 642.50, but back then, it wasn't easy. Over time, with rasies and bonues and promotions, it got easier--- and then became a no-brainer. If I got a mortgage on my house now, we'd be paying 2500. a month. (And, K -- if we rented it'd be about 1800. -- The ratio is still wacked... LOL)

Now that we own our own business, the mortgage is the only debt we have and we can sock away 3 thousand a month in various investments.

We wouldn't have what we have now if we had stayed renters. And we're not the only people that can say that. Lots and lots of people can. Although I have the feeling that most of them don't watch HGTV... , which encourages outrageous keep up with the mythical Joneses home spending

Just saying -- houses are a two sided thing.

[kpoeppel]

Houses, like gold or other tangible assets, are hedges agains inflation, yes. For most places it's probably still better to buy long term than to rent long term, I agree. It all depends on the Price-to-Rent ratio. In the Bay Area of CA, you're actually far better off renting than buying: less equity loss per month from making rent payments than making mortgage interest payments. Interest is "money down the toilet" just like rent is.

I'm just railing against the irrational housing mania that came from the idea that houses are like cash machines that spew free money, heh.

[Tallysmom]

Originally Posted by kpoeppel

Houses, like gold or other tangible assets, are hedges agains inflation, yes. For most places it's probably still better to buy long term than to rent long term, I agree. It all depends on the Price-to-Rent ratio. In the Bay Area of CA, you're actually far better off renting than buying: less equity loss per month from making rent payments than making mortgage interest payments. Interest is "money down the toilet" just like rent is.

I'm just railing against the irrational housing mania that came from the idea that houses are like cash machines that spew free money, heh.

Oh. don't get me started... when I was in banking I saw serial refinancers and HELOCers.... the minute they had more equity it had to come to out out out NOW.... and now in janitorial at condos, I see where it all goes... granite's in so we have to tear out the tile... a year later, marble is in so out goes the granite, a year later out goes the marble because QUARTZ is the thing.... and these are very middle class (to lower now -- the area's declining) units of long term owners that have gained a lot of equity. Not only that but the money spent on cars, and clothes -- it's "lifestyles of the strapped and stupid"...

Most people aren't like that -- but I do have one place that is continually being worked on and updated... and not in stages. He's been there 6 years and it's his fourth remodel -- which I know because the workers he hires are FILTHY and I get to clean up after them daily....

[Katarina Witt]

Originally Posted by kpoeppel

Houses, like gold or other tangible assets, are hedges agains inflation, yes. For most places it's probably still better to buy long term than to rent long term, I agree. It all depends on the Price-to-Rent ratio. In the Bay Area of CA, you're actually far better off renting than buying: less equity loss per month from making rent payments than making mortgage interest payments. Interest is "money down the toilet" just like rent is.
I'm just railing against the irrational housing mania that came from the idea that houses are like cash machines that spew free money, heh.

IF you acatually invest the money you save. Buying a home is like a forced savings account. A paid-for house is probably the largest investment most people have (if it ever gets paid for). Even a house with a mortgage that is worth more than is owed is a good investment. The main problem with the house as investment theory is that you can't get your money out of it unless you sell or borrow.

[Stagger Lee]

Originally Posted by gswpa

I agree. Add to that the number of college grads leaving the area.

You make me want to slice my wrist........

[guylocke]

You make me want to slice my wrist........

Ridiculous, isn't it?

[Seaharbour]

There are not too many places left in America where you can buy a nice home and actually be able to sleep at night too, Pgh is one of them, you can keep your home, if you buy under what you can afford..good for old age, when you can then live rent free!

[OutaFL]

Originally Posted by Seaharbour

There are not too many places left in America where you can buy a nice home and actually be able to sleep at night too, Pgh is one of them, you can keep your home, if you buy under what you can afford..good for old age, when you can then live rent free!

Exactly. One of the main reasons I bought a home in Pittsburgh. I couldn't have afforded to buy my beautiful rebuilt brick Victorian in any other cities that have all the things Pittsburgh has to offer. And in old age, I will be able to walk to just about anything I need, as I already do. If not, I can take the bus!

[Seaharbour]

outafl are you happy to be out of fla??! LOL!