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ugh, I hate getting into the middle of these, really I do...
Where did this median income for an area multiplied by 3 should be the median home price? That is lacking serious merit.
It's like you guys don't actually read full messages, but only comment on subsets of messages. I said it's a ROUGH guide. Those numbers are based on country wide averages over US history. And statistics derived from long term historical trends certainly have more merit than guessing or anecdotal evidence.
For any given area though, to estimate what the long term trend "fair" price might be, you could look at pre-bubble prices and add inflation. So if you go back to a home's price in 2000 (pre-current-bubble period) and add 3.5% inflation/year you get what that house should be worth today. (It's 41% more than the 2000 price.)
Of course there are many other factors that you would want to consider. For example, I wouldn't buy a house in Detroit at any cost.
Just to throw my 2 cents in here. Something that must also be taken in to consideration in renting vs. buying is all of the additional expenses associated with buying. Repairs and maintenance can be significiant over time. Those are generally expenses that don't exist when renting. I really think people don't really analyze the numbers when they throw out a "break even point" for selling.
That being said, I think the non-financial benefits of owning are huge. Being able to do what you want to your own home is huge. Along with pride of ownership and all that jazz. That is why I decided to buy. It really wasn't about analyzing renting vs. owning.
That being said, I think the non-financial benefits of owning are huge. Being able to do what you want to your own home is huge. Along with pride of ownership and all that jazz. That is why I decided to buy. It really wasn't about analyzing renting vs. owning.
Calling a bottom in a market of any sort is difficult. When we are at "bottom," there is no reliable and observable definitive indicator to tell you we are at the "bottom."
It will only be seen in the rear view mirror.
As in, "It appears that housing bottomed in 2xxx."
Some will want to call the bottom in a specific quarter. Doing that for the nation as a whole ignores the local aspects of real estate. Various localities and regions are ahead or behind others in economic trends.
And then someone will say we will have a "W" bottom, or a "double dip."
That may be accurate, and the second dip may be observable when occurring, but calling the bottom of a second dip is just as difficult as calling a first dip bottom.
Some will tell you we are at bottom, but flat-lined, i.e., not going to slide, but will enjoy an extensive period of no growth.
^^ well said kind sir.
Quote:
Originally Posted by manderly6
Just to throw my 2 cents in here. Something that must also be taken in to consideration in renting vs. buying is all of the additional expenses associated with buying. Repairs and maintenance can be significiant over time. Those are generally expenses that don't exist when renting. I really think people don't really analyze the numbers when they throw out a "break even point" for selling.
That being said, I think the non-financial benefits of owning are huge. Being able to do what you want to your own home is huge. Along with pride of ownership and all that jazz. That is why I decided to buy. It really wasn't about analyzing renting vs. owning.
From a pure financial aspect I don't think "now is the time to buy" at all. As I've stated several times - you have to look at the escalating debt (13+ TRILLION and climbing!) and the fact that the vast majority of mortgages are being funded by FHA right now. This indicates to me that we're not completely out of the bubble.
So, the market hasn't "turned" across the board and there's no need to "ZOMG get in before you MISS the bottom". It's a trap perpetuated by mass media and some irresponsible members of the RE industry.
That said, "King of your castle" mentality and that some local markets are stabilizing (especially at the lower price points) means that buying now could be a great decision for some people. It's a personal decision that you have to fully vet based on your own personal research.
We were on the fence for 3 years. Finally the price declines seemed to have slowed in my area rather than plummetting. I figured what if prices continue to decline for 20+ years, I might be dead by then! So for us, we were in a good financial position and bit the bullet. If you are buying now, all you can do is plan for the worst and hope for the best.
How else do you count it? What exactly do you get
back monetarily when you terminate your lease?
Some of your rent goes to pay the landlord's property taxes.
Some of your rent pays for repairs and such.
Some of your rent buys you the right to just move easily.
Some of your rent shields you from the effect of bad markets.
.... I could go on. ...
Your original post makes it sound like 100% of your mortgage goes into
some sort of investment fund and 100% of your rent disappears.
At best, in a period of increasing housing values, 5%-10% ( give or take )
of your mortgage payment + all other expenses such as taxes, insurance,
etc. goes toward your investment.
Much of the profits from housing that people used to see were simply from
the leverage they were getting and you can't count that. I could rent and
buy stocks using leverage if I wanted to.
Buying a house with a mortgage is simply a leveraged investment in real estate
( with special tax treatment ).
We were on the fence for 3 years. Finally the price declines seemed to have slowed in my area rather than plummetting. I figured what if prices continue to decline for 20+ years, I might be dead by then! So for us, we were in a good financial position and bit the bullet. If you are buying now, all you can do is plan for the worst and hope for the best.
You may well have made the right decision. If you know you are going to stay in a place long term, owning is sometimes the best option. Also, I believe, although we clearly aren't at a "bottom", we are probably closer to the bottom than the top.
I decided to buy now too. The last place I sold was a condo in '09 at the Jersey shore. I had bought it in '07 just as the bubble was bursting. I decided I didn't like living there (all the foreclosures and short sales were depressing) so I wanted to sell in '08. It was either that, or watch the prices continually go down and wait years for them to come back. So I luckily was able to sell in early '09, at about a 9% loss. I've been renting for the past year, but have now decided to buy a single home in an affordable area of PA. Prices seem to have stabilized somewhat, and I'm tired of living with apartment rules and white walls. I'll be paying a mortgage equivalent to my rent, including taxes. I know utilities and other maintenance will be higher, but I'll just have to economize in other areas. I'll be happy to be in my "own" home again! For me, it seemed a good time to buy.
First of all: Downtownventura! I was just there last month and it is splendid! We have been there twice in the last couple years and we love the thai/peru restaurant! I would have loved to get the county resident discount and olivas links though...keep supporting those that are ensuring the apparently clean and vibrant community you now have!
back to op...
YES buy now! Here is how you do it: Shop by using the MLS lite in your area and a loving BUYERS agent of outstanding reputation.
The mls lite in your area will have a funny name, ask you agent how to access it. It will have more or less real listings frequently updated and w/o ads or redirects.
Make sure you really know the neighborhood(s) you desire including street names so you can know when the listings come up. Homes are coming into foreclosure by the thousands each month and they are all over the demographic spectrum. You are probably going to have to wait( like being pregnant) and go though some disappointments so why not start now.
Visualize your blessing, speak it and reach out for it! Buy a house, make the payments for the next few years , make money when the market turns around: not always easy, but, indeed quite simple. Hope deferred makes the heart sick( Proverbs 13:12)
edit: btw the neat math to do is this : your loan amount with a 1/2 - 1.5 % increase in interest above the rate if you locked in now.....want to say goodbye to 10k? this would be the place!
Last edited by QIS; 06-13-2010 at 10:44 AM..
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