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Sorry to bring up the user_id/mathjak107 semantic argument, but it’s definitely relevant to a subset of people in this country (35~65 year olds with idle, devaluating cash).
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Originally Posted by user_id
Also, I should add that there are a lot of tax issues here as well. The "dividend" one receives from ownership, that is owning with no mortgage, is tax free. As a result owning when you retire becomes rather attractive. Personally, though I rent at the moment, I plan to effectively "retire" when I'm 40 and will at that point purchase a home, in cash, in a lower cost area. A dependable tax free "dividend" can't be found in any other investment.
The bolded text is exactly what I’m trying to do right now. As long as CD interest rates stay under 1%apy I can save $5-$600/month by owning a home mortgage free. If interest rates go north of 5%, I would be better off renting. In my circumstance, I consider owning a home as an investment/quasi-investment, but I follow what mathjak107 is saying.
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Originally Posted by user_id
... someone from a high cost area can sell their home and move to a lower cost area once they retire (or something similar). That is, they can use their real estate to further their retirement goals by taking advantage of the differential pricing of real estate across the country.
its nice when you dont have to plow everything back into a new house and have some money left over by relocating.
we were origonally hoping to see a big savings when we eventually relocated from nyc to the pocono mountains in pa where we bought a house.
the problem ended up that while a 2 bedroom apartment is fine for us in nyc because we have no kids staying over when we all get together in PA we have 6 kids visiting and staying over now and there are 8 of us .
so we went from a small 2 bedroom apartment to a nice size 3 bedroom house with finished basement that can hold even more because of the fact now everyone stays over..
that 2 bedroom apartment in queens sells for about the same as our 3 bedroom house in pa ended up costing us.
in this case the apartment would have been a swap by the need of a bigger living area and more bedrooms in the cheaper area..
the downfall to really re-locating to cheaper areas than where you live now is distance.
many times you really got to go pretty far from where you and your family are currently located. while initially we thought the carolinas or florida rather than nyc when the time got closer we realized we dont want to be more than 2 hours or so from the kids and grand children.
that was the end of the relocating to a really cheaper area for us.
we drew a 2 hour window around where we are and thats where we looked to buy.
we cant say anything we looked at anywhere that had the ammenities we wanted was cheaper . you got more for your money but most of the homes were in the 300-325,000 range when we looked.
you really dont know until your ready to look around and know the concessions your willing to make just how much you will be able to hold on to from the sale of that home.
Last edited by mathjak107; 03-19-2012 at 05:47 PM..
by the time your done supporting your house it cost you more in accumulated costs and expenses than its value . you may have improved cash flow from lowering expenses on housing but you dont have an asset worth more than it cost you in total costs.
Our homes have been excellent investments that have made us far more than they have cost us.
Of course we were lucky to exit the real estate market for a few years at a rather adventageous time and missed most of the most severe downturn.
We bought back in for a great price in an amazing house in an unbeatable location. We made some changes to it and I think it has seen a good increase in value over the past 2.5 years - of course again we were lucky to have moved from a market that saw large drops, to a market that didn't.
We are now trying to buy a second house in another amazing location.... but one that has seen larger drops in value. A lot of sellers seem to be priced too high, but buyers are coming out and good properties are selling. I think there is still room for some more downward movement.... but probably not a lot. As usual we are looking at an ugly house (with great bones) which means it has come down in price far more than other similar houses.
Only time will tell if we have indeed come close to bottom, or if in 2 or 5 years we will look back cursing ourselves for this move. For us though the low interest rate, combined with stunning location and a great (if currently ugly) house make it a risk we are willing to take.
Our first house is paid off and we can either sell it, or preferably keep renting it (it's rented now). It's in such a good location that I would be shocked if we had trouble ever renting it. Not to say it couldn't happen, but I doubt it.
If we can take advantage of a lower market to buy and expensive house in an expensive neighborhood for what we think is a great price with low interest rates, then we'll take it. Obviously that means we feel some sense of optimism that we are at least close to bottom in this area, but only time will tell for sure.
The evidence that the recovery is spotty is nowhere better highlighted than Seattle.
Amazon.com just said they're hiring about a bazillion people and buying out an enormous amount of prime real estate to put in new office towers. Other high tech firms are following suit and even Microsoft is considering hiring more. Boeing has been on a hiring clip for about a year and just relocated some guys to downtown, and the bigwigs go downtown now too.
Combine that with a change in school funding rules to more neighborhood-centric funding ...
The result is ALL the desirable areas north of Lake Union are even MORE desirable. Combine with the fact that now we're entering the traditional 5-7 year wait before selling typically got people at least break-even. Well those rules don't apply to those buying at the peak of the bubble years. Those folks are trapped / don't want to take the hit to the credit rating. So they hold on.
The result? A bubble located just north of Seattle, albeit probably more sustainable now that jobs are relocating to the city core. The four (count them, FOUR) new apartment complex highrises won't dent demand much either. Even south of the city is being "discovered" now.
The suburbs are much spottier. Just today my wife and I bid on a short sale for a house that sold for $450k back in 2007, in a really desirable area. Let's just say the bid we put in is much lower. Why? Because nobody's buying in the burbs. Combined with many buyers still in la-la land and brand new construction coming up less than a mile away, something like 100 new homes, presto you have a buyer's market.
I personally think a cultural shift towards being OK living in high rises (for the first time outside NYC-Manhattan) will put pressure on the burbs. Of course, some sectors will improve (especially those already with bus lines, parks, other amenities).
This is all relative though. Very neighborhood specific.
I don't know. The price fluctuate in different parts of the country. I have a home outside of a military base that continues to appreciate. I'm renting it out right now though.
I'm planning to buy a house in the Midwest where the houses continue to plummet. So based on my rental and buying location, the housing market seems favorable to me. Buy low, sell high!
I'm just hoping the interest rates stay low until 2014 at which point I'll be ready to buy.
I don't think we're even close to a bottom. I still say that housing will fall to the price of a used car!
If that happens I'll eat my hat! I'll have to because the world as we know it would be destroyed and jobs will be scarce. I won't be posting in CD because the Internet probably wouldn't exist in its current low-cost form.
The factors that would cause homes to fall to those prices would be far worse and economically devastating than the low prices of the homes. Basically you're talking about a widespread inner-city Detroit situation on national level. Neither the people nor the government would tolerate it.
We still have a long way to go. There still ae a ton of people living in homes that are waiting to be foreclosed. Along w a bunch of shadow inventory. Plus if unemployment is high along w people afraid to lose their jobs, its going to take awhile for things to change.
As I am planning to retire to a much lower COL area of the country this is all good news. Rent out the condo we have and buy a small house in cheaper place without winter.
No, I think prices will continue to gradually trend lower with the increase in bank owned houses entering the market again, further depressing prices. Also, you have quite a bit of shadow inventory that is about to hit the market this year which will further put pressure on prices. The desirable properties will always sell quickly, but those seem few and far between these days.
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