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David Bowater and his fiancée were priced out of Spring Hill when the rent on their two-bedroom townhouse rose to about $1,100, from $875, over four years. “It’s cheaper to buy at this point,” Mr. Bowater says.
After bidding on six homes, they won the seventh. The house is even deeper into the middle Tennessee countryside and farther from the restaurants where they work. Mr. Bowater says it is costing him about $100 a month more to own the home than he was paying in rent on the townhouse, but that it is far cheaper than it would be to rent a comparable home with a yard.
“We had to make a big offer,” he said. “I just hope the bubble doesn’t burst and our loan goes upside down.”
This is why (well, one of the reasons why) it is foolish to think real estate won't go bust because the conditions are "just not the same" as they were in 2008 (i.e., subprime mortgage and mortgage fraud mess). Real estate bubbles in various locations are going to burst (or deflate) for a different reason this time, and this could be one of them.
This is why (well, one of the reasons why) it is foolish to think real estate won't go bust because the conditions are "just not the same" as they were in 2008 (i.e., subprime mortgage and mortgage fraud mess). Real estate bubbles in various locations are going to burst (or deflate) for a different reason this time, and this could be one of them.
Ok so where are your market indicators of a bust coming?
As far as I can tell you have a few choices
Live in a box/homeless/RV
Live with friends/family
Rent
Buy.
I can sit here and come up with many reasons why I shouldn't buy. But for me and MANYpeople buying made sense.
A coworker bought about 8 months ago. His Piti is 2k a month. He CANT rent anything for that now in the area he lives in. His house value went up 50,000.
And truthfully rentals are NEVER going to go away. Because most people will rent. Why? Because they don't want to be homeless . The demand will always be there.
Sure there may be a correction due to supply demand but there will sways be a demand. Because nobody builds in a downturn. But oeollecstill needcaroof over their heads.
The dream of a crashing economy to get in and buy is just that. Sure it may have some corrections or drops. So what. I went through two boom bust cycles. Sure my house and rentals lost value. So freaking what. I could make my payment and still needed somewhere to live. So my choice was to walk or sell for a loss and rent or keep making my payment.
Gee tough choice there. Let me put money in someone else's pocket while taking the high hard one up the behind. Yeah no thanks.
Last edited by Electrician4you; 07-21-2017 at 08:54 PM..
Ok so where are your market indicators of a bust coming?
As far as I can tell you have a few choices
Live in a box/homeless/RV
Live with friends/family
Rent
Buy.
I can sit here and come up with many reasons why I shouldn't buy. But for me and MANYpeople buying made sense.
A coworker bought about 8 months ago. His Piti is 2k a month. He CANT rent anything for that now in the area he lives in. His house value went up 50,000.
And truthfully rentals are NEVER going to go away. Because most people will rent. Why? Because they don't want to be homeless . The demand will always be there.
Sure there may be a correction due to supply demand but there will sways be a demand. Because nobody builds in a downturn. But oeollecstill needcaroof over their heads.
The dream of a crashing economy to get in and buy is just that. Sure it may have some corrections or drops. So what. I went through two boom bust cycles. Sure my house and rentals lost value. So freaking what. I could make my payment and still needed somewhere to live. So my choice was to walk or sell for a loss and rent or keep making my payment.
Gee tough choice there. Let me put money in someone else's pocket while taking the high hard one up the behind. Yeah no thanks.
I think you're reading far more into my words than their actual meaning. I'm not predicting an imminent market crash, or even saying I have any idea when one might be coming. I'm not even saying there will be a "crash" but that some bubbles in some locations will at least deflate. (And that isn't a radical idea - the real estate market is known to go through cycles and so therefore at some point it is clear it will become more of a buyer's market, at least in some places. It just will. Basic fact.) All I am really pointing out is that everyone who acts like that can't/won't happen because the subprime mess has been "fixed" ignores the reality that bubbles deflate or burst, markets crash, whatever, because of unseen/unknown/ignored factors at play, not due to the exact reasons for the last deflation/bust/crash. That's it. It's not a comment on your personal situation or decision. In fact, I could be the one who buys at the top of the market in my particular area, not you. I am looking to start house hunting again soon (after selling my first home) and perhaps I'll buy at the top. But because I plan to stay in the house for several years AND I will stick to a strict budget when purchasing, I'm not terribly worried about it.
My post had nothing to do with admonishing people to time the market. It was just a statement on the fact that crashes come from things you don't expect, and the issue described in this article (although briefly and vaguely) could be one of them.
Blessed, I think you've got a point at least in some markets where inventory is very,very tight. In my market (West Valley Phoenix Metro) it's a low inventory area and houses are going under contract quickly to very quickly. We've got 2-3 builders ramping up large subdivisions though.
In my specific area existing houses are back to pre-bust pricing at the top of the boom but I think that's going to change at some point when the builders that are now clearing land ramp up production and start putting new homes on the market at the same price or a bit lower. This I think will cause existing 10 year old plus "boom" homes to actually drop some in value given you can get "new" for either less or close to used pricing...
I think you're reading far more into my words than their actual meaning. I'm not predicting an imminent market crash, or even saying I have any idea when one might be coming. I'm not even saying there will be a "crash" but that some bubbles in some locations will at least deflate. (And that isn't a radical idea - the real estate market is known to go through cycles and so therefore at some point it is clear it will become more of a buyer's market, at least in some places. It just will. Basic fact.) All I am really pointing out is that everyone who acts like that can't/won't happen because the subprime mess has been "fixed" ignores the reality that bubbles deflate or burst, markets crash, whatever, because of unseen/unknown/ignored factors at play, not due to the exact reasons for the last deflation/bust/crash. That's it. It's not a comment on your personal situation or decision. In fact, I could be the one who buys at the top of the market in my particular area, not you. I am looking to start house hunting again soon (after selling my first home) and perhaps I'll buy at the top. But because I plan to stay in the house for several years AND I will stick to a strict budget when purchasing, I'm not terribly worried about it.
My post had nothing to do with admonishing people to time the market. It was just a statement on the fact that crashes come from things you don't expect, and the issue described in this article (although briefly and vaguely) could be one of them.
I dont know anyone who is saying it's never gonna happen again. What gets me is the people who are cheering for it to happen. Ironically because they want their turn to get in in a house purchase cheap. What they forget is that in a downturn lots of people struggle so unless your job is safe and got serious cash reserves you're probably not buying either
The reason the 1990s and 2000s housing crashes imo happen because both times were preceded by an extended period of relaxed underwriting standards, excess capital chasing returns and steep increases in asset values.
The one way we could face the same or similar issue is if we relax standards again, which it sounds like El Trumpo is already trying to do by getting rid of Dodd/Frank. Which btw will do absolutely NOTHING to lower housing prices. All it's gonna do is allow banks to make hocus pocus loans to qualify people. And the housing market/construction will ramp up full throttle then finally crash eventually.
Right now by not allowing the past relaxed standards lots of people are out simply based on qualifying for the loan. Doesn't matter what the price is if you can't qualify. Although imo the FHA loan for a first time home buyer are laughable. To me that's the subprime market with a different name.
Either way man, we can hash this out to the size of sushi bites but in the end buying a house should be based on personal decisions. Can you afford the payment, is your job or income pretty safe, do you have a few years of savings to cover everything.
Most people don't. They wing it and they just want the house. The market crashed around me twice. Each time it's come back stronger than before.
(The you I refer to is a general you not you personally)
I dont know anyone who is saying it's never gonna happen again. What gets me is the people who are cheering for it to happen. Ironically because they want their turn to get in in a house purchase cheap. What they forget is that in a downturn lots of people struggle so unless your job is safe and got serious cash reserves you're probably not buying either
The reason the 1990s and 2000s housing crashes imo happen because both times were preceded by an extended period of relaxed underwriting standards, excess capital chasing returns and steep increases in asset values.
The one way we could face the same or similar issue is if we relax standards again, which it sounds like El Trumpo is already trying to do by getting rid of Dodd/Frank. Which btw will do absolutely NOTHING to lower housing prices. All it's gonna do is allow banks to make hocus pocus loans to qualify people. And the housing market/construction will ramp up full throttle then finally crash eventually.
Right now by not allowing the past relaxed standards lots of people are out simply based on qualifying for the loan. Doesn't matter what the price is if you can't qualify. Although imo the FHA loan for a first time home buyer are laughable. To me that's the subprime market with a different name.
Either way man, we can hash this out to the size of sushi bites but in the end buying a house should be based on personal decisions. Can you afford the payment, is your job or income pretty safe, do you have a few years of savings to cover everything.
Most people don't. They wing it and they just want the house. The market crashed around me twice. Each time it's come back stronger than before.
(The you I refer to is a general you not you personally)
I think we agree on most points. And trust me - my husband was laid off twice during the recession and although we had purchased a foreclosure, we had houses on our street that were sold at even lower prices as the recession deepened - so I am by no means rooting for such a thing to happen again. It was a stressful time in our lives (but less so because we had not made risky financial decisions that we certainly could have prior to that). I think you hear people who seem to cheer for a recession to occur, and find offense in that (rightly so). On the other hand, I hear voices around me that are eerily similar to 2007 ("get in now while you can, prices - or in this go-round, interest rates - are only going to go up, hurry before the door closes" type of talk). And those are the people who are willing to take financial risks, and seem to lean toward the "there will be no subprime mortgage problems this time because that is all fixed" viewpoint. Like Warren Buffet, I tend to get fearful when others are greedy (or just plain stupid).
I especially agree with your last paragraph. I much prefer home ownership and building wealth to renting and I think that holds true as a general principle. But especially in this environment, there is a need to remain rational about how to go about it.
This is why (well, one of the reasons why) it is foolish to think real estate won't go bust because the conditions are "just not the same" as they were in 2008 (i.e., subprime mortgage and mortgage fraud mess). Real estate bubbles in various locations are going to burst (or deflate) for a different reason this time, and this could be one of them.
seeing one or two of the big players reducing and even ending purchasing along with Blackstone taking its portfolio public suggests to me that the big guys see a top and are cashing out to some degree.
I am no expert,but the only reason i can see a long term cash rich company like blackstone effectively "selling" its portfolio to the public is that they think it is time to push the risk to someone else or they have some other much more lucrative projects in mind.
With regard to the article, we are moving to a new area and had a heck of a time finding a house for our kids, lots of occupancy issues (we have a large family). Despite being responsible home owners ourselves, with excellent credit and well over the income requirements, finding a rental that wasn't ridiculously huge or expensive was difficult. So we ended up going with American Homes 4 Rent and it was SUCH an improvement over trying to deal with single shingle landlords. Once we filled out the application we qualified for anything in their inventory with the requisite number of bedrooms. Landed a rental in our price range within a day. This is after hassle after hassle of trying to find one on our own.
For us, at least, dealing with a rental company has been a singularly better experience. Like, worlds better.
This is why (well, one of the reasons why) it is foolish to think real estate won't go bust because the conditions are "just not the same" as they were in 2008 (i.e., subprime mortgage and mortgage fraud mess). Real estate bubbles in various locations are going to burst (or deflate) for a different reason this time, and this could be one of them.
Always goes through ups and downs. Word on the street is that this upward trend will cool a bit through 2018 and then go up more 2019-2021 with a whole bunch of new buyers seeking homeownership.
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