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Old 05-19-2014, 06:28 AM
 
8,204 posts, read 11,921,160 times
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Quote:
Originally Posted by Electrician4you View Post
That's why I'm waiting. Lots of people are waiting. Done. Were burned and will just rent. Let the LL have the headaches.
People like you will always be waiting. Where were you five years ago when the housing market collapsed? Why didn't you buy then? How about two years ago? You said that you missed out on a $500k house by a few days and now a similar house is valued at $850k. Surely that wasn't the only house on the market back when you were looking. Why didn't you buy then?

You say that you'll just wait for another collapse. But if it does come, you'll still be on the sidelines waiting for prices to fall further....and further...and further. And then when you miss the bottom and they begin their inevitable rebound, you'll complain once again that prices are "inflated" and that you're waiting for the right time to buy.

Enjoy the wait. In the meantime, I'll enjoy watching the waves gently hit the beach, with sail boats and cruise ships in the background, from the comfort of my living room sofa in the condo I bought two years ago - - - right around the time you could have bought property, but chose not to.
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Old 05-19-2014, 06:34 AM
 
8,204 posts, read 11,921,160 times
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Quote:
Originally Posted by GLS View Post
My wife LOVES watching HGTV, especially "House Hunters", and "Property Virgins".
A little anecdote: My wife and I (and our house) were featured on an episode of HGTV's Designed to Sell five years ago. I don't even know if that show is still on, but back then, it was the highest rated show on the network.

Quote:
Originally Posted by GLS View Post
I guess I shouldn't complain. My wife enjoys the show...and she buys me single malt scotch to watch it with her.
Talisker FTW!
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Old 05-19-2014, 07:07 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
Quote:
Originally Posted by jlawrence01 View Post
Two observtions:

1) I was digging through my papers this morning as I finally located them as we are packing out. One page that I never saw was my mother's notes looking for student loans for my education. Twelve banks, one loan of $2,500. Loans for education were minimal ... that forced universities to manage their costs as opposed to building the luxury campuses that some offer.

2) My aunts and uncles raised their families of 5-7 in homes that ranged from 700-1200 sq feet. my siblings and cousins raise their families of 3 to 5 in homes of 2400-3500 sq feet.

YES! Thank you for posting this, JLAWRENCE.

I have rarely seen anyone state what you wrote re: forcing universities to manage their costs . . . federal student loans have created many problems but the two that stand out to me are: (1)lowered admission standards (as administrators rush to grab those dollars) and (2) encouraged kids who do not even have the aptitude for college level academics to attempt to get a college degree. (Not everyone paying for student loans actually got that degree! We rarely see anyone discuss that fact!)

In re: to your aunts and uncles and size of homes . . . yes, that is an observation I have made, as well.

In 1960, the average home size was 1200 sq. ft.

In 2001, it was 2330 sq. ft. (nearly double the 1960 average sized home).

Google Answers: Historic home sizes
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Old 05-19-2014, 07:29 AM
 
Location: I live wherever I am.
1,935 posts, read 3,743,844 times
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Quote:
Originally Posted by anifani821 View Post
What amount of a mortgage is it that you think the "average wage earner" can afford? If a person is paying $900-1000 in rent, then they can afford the payments on a $150-170K house (of course, variances on HO insurance and taxes, but that would be the approx. range @ 5% rate).

First time homebuyers can qualify for all sorts of special loans . . . and so don't necessarily need to have that $30-35K (20%) downpayment.
Not true. You have to estimate that the total monthly payment on a property is going to be 1% of the purchase price, especially if you don't produce a large down payment. Thus, on a $150,000 house, you can figure on $1,500 per month between the mortgage payment and interest, property taxes, and homeowner's insurance. I've owned four homes and it's always been the same story.

If a person is paying $1,000 in rent, he/she should not exceed $100,000 for the purchase price of their home.

Quote:
Originally Posted by anifani821 View Post
How did we do it? We bought starter houses, fixer uppers or something old and small.

How many folks do you know who are willing to purchase the same types of properties we all bought when we were starting out?
*raises hand*

The house we got needs a good bit of work but it's livable as is, we moved right in, it's 1,700 square feet on 2/3 of an acre in an area with negligible crime, and we got it for $36,000. I think that qualifies. (Our payment is ~$358. Again, 1% of the purchase price.)

Quote:
Originally Posted by anifani821 View Post
I feel sure that you are right - those have to be two of the big reasons.

The student loan trap was not a biggie for Boomers, as loans were not available for most of us.
Also don't forget that college was far more affordable for Boomers.

As proof, I submit a comparison between myself and my father. We attended the same college, 35 years apart. When he was in college, he was able to work one job during the summer (doing land surveying) and earn enough money to pay for one entire semester of college. His parents paid for the other semester.

When I was in college, I had the best-paying summer job of anyone I knew. Even at that, if I didn't spend a dime, I would only have been able to save up about 30% of the cost of a year's college tuition, not counting books.
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Old 05-19-2014, 07:35 AM
 
29,782 posts, read 34,880,403 times
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Quote:
Originally Posted by anifani821 View Post
YES! Thank you for posting this, JLAWRENCE.

I have rarely seen anyone state what you wrote re: forcing universities to manage their costs . . . federal student loans have created many problems but the two that stand out to me are: (1)lowered admission standards (as administrators rush to grab those dollars) and (2) encouraged kids who do not even have the aptitude for college level academics to attempt to get a college degree. (Not everyone paying for student loans actually got that degree! We rarely see anyone discuss that fact!)

In re: to your aunts and uncles and size of homes . . . yes, that is an observation I have made, as well.

In 1960, the average home size was 1200 sq. ft.

In 2001, it was 2330 sq. ft. (nearly double the 1960 average sized home).

Google Answers: Historic home sizes
The percent who don't graduate within six years is discussed often. Perhaps not so much in ideology based discussions
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Old 05-19-2014, 07:38 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
Quote:
Originally Posted by GLS View Post
I wish your posts were required reading for young home buyers! My wife LOVES watching HGTV, especially "House Hunters", and "Property Virgins". Every time I hear the prospective buyers say, "I have to have granite!" or "What no stainless steel appliances", I pour myself another scotch. Twenty two year olds with budgets of $300 to $400 thousand, complaining because their first house is only 2500 square feet, and doesn't have two sinks in their on-suite bathroom.

......and another thing. Where did the trend start that a couple simply HAD TO buy a
house BEFORE they got married???? Many of the people on these shows are getting ready to take out a HUGE mortgage and spend $50,000 on a wedding a month later.

I guess I shouldn't complain. My wife enjoys the show...and she buys me single malt scotch to watch it with her.
Yep. Saw this happen with my stepchildren in the early 2000s. I just shook my head and kept my mouth shut. Only one of them could even come close to affording what they bought using "crazy loans" . . . but they HAD TO HAVE a 4 bdroom, 2 1/2 (or 3) bath home with wood floors and a fenced back yard. In their 20s. I didn't have a home like that til my late 30s and I had bought and sold 3 homes by then (building up my equity and downpayment with fixer uppers!).

I have always had a rule: never have a mortgage that is more than what you can afford if you lost your job and had to work PART TIME.
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Old 05-19-2014, 07:38 AM
 
29,782 posts, read 34,880,403 times
Reputation: 11705
As far as the cost of college goes I keep a loan note from my college days as a reminder of how cost have and haven't gone up. Which has gone up the most my salary from my first job to retirement or the cost of the degree to get it? Hmmmmmm.
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Old 05-19-2014, 07:49 AM
 
8,204 posts, read 11,921,160 times
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Quote:
Originally Posted by RomaniGypsy View Post
Not true. You have to estimate that the total monthly payment on a property is going to be 1% of the purchase price, especially if you don't produce a large down payment. Thus, on a $150,000 house, you can figure on $1,500 per month between the mortgage payment and interest, property taxes, and homeowner's insurance. I've owned four homes and it's always been the same story.

If a person is paying $1,000 in rent, he/she should not exceed $100,000 for the purchase price of their home.
I don't care how many homes you've owned, that is nowhere close to being accurate at today's interest rates.

Even with absolutely no down payment, the principal and interest portion of a 4%, $150,000 mortgage would be $716.12/month. If we assume 1% annual property taxes, that would add another $125/month to the mortgage payment. Finally, if we add another 1% for insurance (which would be quite high), that adds another $125. All told, the total PITI comes to $966.12.

IOW, anifani was correct.
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Old 05-19-2014, 07:53 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
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I disagree with the fundamental assumptions on both of the topics you touched on.

Quote:
Originally Posted by RomaniGypsy View Post
Not true. You have to estimate that the total monthly payment on a property is going to be 1% of the purchase price, especially if you don't produce a large down payment. Thus, on a $150,000 house, you can figure on $1,500 per month between the mortgage payment and interest, property taxes, and homeowner's insurance. I've owned four homes and it's always been the same story.

If a person is paying $1,000 in rent, he/she should not exceed $100,000 for the purchase price of their home.

I am not talking about a bank qualifying them for a loan. I have no idea how much debt anyone has. The point is, if you are paying that much for rent, then you should be able to pay that much for a home. I did the calculations with an amortization calculator and stated that I was not including HO insurance and taxes, as they vary so much across the country.

*raises hand*

The house we got needs a good bit of work but it's livable as is, we moved right in, it's 1,700 square feet on 2/3 of an acre in an area with negligible crime, and we got it for $36,000. I think that qualifies. (Our payment is ~$358. Again, 1% of the purchase price.)


Also don't forget that college was far more affordable for Boomers.

No it was not. My $900 a quarter tuition was paid at a time when minimum wage was $1.60, gas was $.25 and you could buy a 2000 sq. ft home with a basement for $18K-22K. That did not include books, living expenses, either.

As proof, I submit a comparison between myself and my father. We attended the same college, 35 years apart. When he was in college, he was able to work one job during the summer (doing land surveying) and earn enough money to pay for one entire semester of college. His parents paid for the other semester.

When I was in college, I had the best-paying summer job of anyone I knew. Even at that, if I didn't spend a dime, I would only have been able to save up about 30% of the cost of a year's college tuition, not counting books.

I have no idea what your dad was making/paying or you were making/paying, but I worked several jobs, including working for 2 professors at my college, year round, including holidays, working at night at JC Penney's (in merchandising, doing bookwork), and working on the weekend (antiques shows and liturgical organist). I made more than minimum wage at each of my jobs and it was hard as hell coming up with the money. I had no free time but then . . . I wasn't there to socialize. I was there to get a degree. That was undergraduate. More of the same for grad school, which was easier as far as tuition, as I was a Teaching Assistant.

My son, 30-some years later, attended my graduate school alma mater . . . and his tuition is only 2 x as much as what it cost me to attend undergrad school. And he can rent most of his books - no charge.

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Old 05-19-2014, 08:06 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
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Quote:
Originally Posted by newenglandgirl View Post
I can't speak for other areas, but in mine this is true. In addition, those younger folks who can buy tend to have lots more money to start off with than previous generations did, and they may not want the types of homes we settled for initially (small ranches). Many well-to-do younger buyers also don't want the types of homes we have now (such as big traditional colonial-style).

On another note, the huge wave of boomers will be unloading very expensive homes in the next several to ten years, creating market glut, so prices will come down on these. Boomers waiting too long to sell may take a hit b/c of this glut.

I also note that around here there are many boomers and elders who live rural on (now) very expensive properties. They tended to get these homes in their 30s when they were in the workforce and transportation (gas) was cheap. (Here most decent paying jobs were and are in education and health, and private practice professions, so living in a metro wasn't necessary.) I wonder how they will fare in selling their homes to go into condos, 55+, assisted living, etc. Will there be a market for them, the one they hope for?
I am thinking the situations vary so much across the country . . . here in my part of the world (North Carolina) . . . we didn't take the hit most of the country did (and some fared sooo badly) . . . and boomers who invested well are not having trouble selling their homes at all, depending on price range and of course, location.

I chose my last home (purchased in 2002) based on location, historic appreciation of investment, school district, and criteria I felt would only make my property more valuable in the future, i.e., all brick, 1/2 acre, close proximinity to upscale shopping and restaurants.

Styles of homes vary a lot across the nation, too. There are some architecturally interesting mid century moderns in upscale areas here and the Gen Ys seem to love them, but competition is pretty fierce for them. The majority of homes will be 18th C Williamsburg in my area (Georgian) or in the newer areas nearby, "transitional" or "traditional." Gen Xers are fine with those homes . . . Gen Ys not so much. But let's remember - the oldest Gen Ys are only 30-31 right now. Most are not even that anxious to buy a home, and many are still building their careers to where they feel they even want to settle down with a mortgage. Gen Ys are much more mobile than the 3 generations which precede them!

If a person has chosen wisely as far as location, they should have no problem making money off their home in this market, currently. The assumption is, of course, that they have had the home for long enough to accumulate a nice tidy equity in the property.
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