Foreclosure rate up 122% Raleigh/Cary (best cities, refinance, credit)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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[quote=My biggest quibble was with "2 years from now values will be well on their way up again". Previous downturns have been 4-5 years and then modest appreciation at the rate of inflation or so, not 2 years and then back to crazy.[/quote]
Yes.....4-5 year downturn. It has been 2.5 years so far, plus the 2 years I am projecting before we see a good upturn. That is 4.5 years. Your 1% rate of return is way off. There are pockets of the country where that may be true, but the average rate of return is much higher, not to mention the tax savings on the deductions year after year.
The important thing for people to remember is that you should only buy a house you can afford NOW and not bank on a particular return over a specified period of time.
My husband and I laughed when we were approved for a $375,000 loan. We are a couple of teachers in our early thirties. We have no business borrowing that kind of money. We borrowed less than half that amount, and we are comfortable.
I think we need a shift in our collective cultural mindset. Let's make living within your means cool again!
Yes.....4-5 year downturn. It has been 2.5 years so far, plus the 2 years I am projecting before we see a good upturn. That is 4.5 years. Your 1% rate of return is way off. There are pockets of the country where that may be true, but the average rate of return is much higher, not to mention the tax savings on the deductions year after year.
Just under 1% real return is the historical average for house appreciation for the US - research has shown this, and it makes sense. Real estate can't grow above people's ability to pay for it (i.e. the rate of inflation plus or minus a bit) otherwise no one can buy it.
Tax deductions just mean you pay less interest than the mortgage rate. It doesn't gain you free money or anything like that.
And this area has been late to get started in the downturn - things here only started to slow last year, and prices really hadn't dropped until the end of last year. I don't see why that also wouldn't make us late to recover.
Quote:
The important thing for people to remember is that you should only buy a house you can afford NOW and not bank on a particular return over a specified period of time.
That's true. Also, be honest about your ability to stay in the house for 5 years or more to build up enough equity to be able to move without owing more than the house is worth.
Maybe if the median income of an area is $80,000, builders should wait and build $600K houses only when somebody is standing there ready to buy it and able to pay for it.
This is a disparity that baffles me. The "average home" here just doesn't seem to mesh with the average income. Seems to me, to be able to comfortably afford that house in this town, the vast majority of people would need to make well into 6 figures....or like jfre81 said, unless you were some of the lucky ones that moved here from outrageous markets. And just how many of those folks are there? I'm just not buying that it's a lot. I think at the end of the month a lot of groceries are going on credit cards around here. But hey, ya can't live without a bonus room and community pool!
This is a disparity that baffles me. The "average home" here just doesn't seem to mesh with the average income. Seems to me, to be able to comfortably afford that house in this town, the vast majority of people would need to make well into 6 figures....or like jfre81 said, unless you were some of the lucky ones that moved here from outrageous markets. And just how many of those folks are there? I'm just not buying that it's a lot. I think at the end of the month a lot of groceries are going on credit cards around here. But hey, ya can't live without a bonus room and community pool!
Hi,
We are a family of 2 and have a 2BR flat - bonus room?
The shame of the mortgage mess is that a great many of those in foreclosure were not educated enough to see it coming. You could say that they were sold a home, but what they were really sold was a temporary way into something beyond their means.
There is too little focus on kids learning smart money management.
If they put a small amount down (I'm guessing there were lots of 0% down, and lots more less than 5%), you can basically look at it as renting. You put down a small security deposit, pay a monthly rent, and then walk away after living rent free for a few months it takes the bank to foreclose. Not a bad deal, really, except for the hit on the credit score.
The shame of the mortgage mess is that a great many of those in foreclosure were not educated enough to see it coming. You could say that they were sold a home, but what they were really sold was a temporary way into something beyond their means.
There is too little focus on kids learning smart money management.
There's a sucker born every minute? I don't buy that, at least not as it relates to the real estate market. When it comes to buying a house most people see their better selves in a nicer home. They start thinking they deserve the extra square footage or the high-end kitchen and are willing to acquire debt in exchange for indulging themselves. Those few people I know in Raleigh who are struggling with their finances admit to having bought beyond their means and they knew they were doing it on the way in. They let their emotions drive the decision.
Common sense doesn't scale up or down with the economy. Sound financial decisions are required regardless of whether or not the money is flowing. I learned this the hard way a few years back when I bought high and hoped for the best six months before being surprised by a corporate downsizing. I knew it was irresponsible and risky at the time but it allowed my wife and children a lifestyle that I wanted for them; better schools and more space. This time around I stuck to my budget and could pay the mortgage by working retail jobs if necessary.
I wasn't smarter in 2007 then in 2002, I was just applying hard earned life knowledge.
Most (not al) of these people couldnt afford what they think they bought.
you are not buying something if you need to to make payments you cant afford and then have a bank take it back. Funny I tought you bought that house! The world of if you cant afford you can still get it is falling apart. We have a virtual money system and this shows it. Pay now or pay later but you will have to pay for whatever you have
Government loves this because people will continue to rely on them...notice how fast the "bailout" happended. Realize that this bailout means money the government doesnt have which = moeny from taxpayers. So this bailout was not from the government, it was from everyone else that chose to live within their means.
this is what we call a "nanny state"
Last edited by ducter; 02-14-2008 at 09:46 AM..
Reason: added text
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I'm just not buying that it's a lot. I think at the end of the month a lot of groceries are going on credit cards around here. But hey, ya can't live without a bonus room and community pool! 
