Is there some sort of housing frenzy going on? (Dunwoody: buying a home, layoffs)

[ElleKaye]

Originally Posted by Tryska

I think it totally depends on rental availability. One thing (which is rapidly changing in most of the Urban Center), is there used to be a dearth of Market Rate multifamily rentals. So your choices were houses, super expensive small multifamily, or scary old apartment buildings. I think as more market-rate multifamily, well-managed rentals are built, the rents will start to even out, just based on supply and demand. For new complexes - I think the premium rates will start to even out in about 5 years, once construction costs have been recouped.

I see what you're saying, but it is a little frustrating.

[travbo]

Originally Posted by LovelySummer

Some ppl may be putting 20 percent down but you say it almost as if the person that puts less than 20 percent down is less than. In any investmt, the smart person invests as little as possible down given the risk and diversifies investmts with the rest that he/she did not put down. That's just good business sense. Gone are those days when ppl save for years for the home they will live in until they pay off the mortgage. What if the bottom falls out again with the housing market. Who-s going to be more upset - the person who put all of his/her cash into it only to end up stuck upside down w with a house not worth the mortgage pymt and no ability to get rid of it.

This statement is not very prudent. First, putting less than 20% down on a home mortgage has it's on risk and cost. Additional upfront mortgage insurance premiums and monthly fees just to start. In addition, if you put less than 20% down a short term drop in the market is MORE likely to put you upside down on the home loan.

[jeoff]

Originally Posted by travbo

This statement is not very prudent. First, putting less than 20% down on a home mortgage has it's on risk and cost. Additional upfront mortgage insurance premiums and monthly fees just to start. In addition, if you put less than 20% down a short term drop in the market is MORE likely to put you upside down on the home loan.

If you buy a 100K home and it's value drops 30%. If you lose your job, or want/need to move for any reason, what do you do? If you put down 5% walking away can be the "prudent" option. If you put down 20%, having put so much money in your home may not seem prudent in retrospect.

[LovelySummer]

This. We are not living in the Leave It to Beaver days anymore....

Not only what Jeoff posted but what if you wanted to diversify your investmts. For a 100k home, you just plunked down 20k instead of 3k. The extra 17k is tied up in your house and the mortgage pymt btwn a 97k home and an 80k home is minimal. If 17k's effect on the mortgage pymt makes a diff, purchasing a home is not right for the prospective buyer at that time. Banks want you to put down 20 percent but it's to their benefit.

A little mortgage ins is going to be a heck of alot less cash outlay than an additional 17 percent down upfront.

Originally Posted by jeoff

If you buy a 100K home and it's value drops 30%. If you lose your job, or want/need to move for any reason, what do you do? If you put down 5% walking away can be the "prudent" option. If you put down 20%, having put so much money in your home may not seem prudent in retrospect.

[ATLTJL]

It really depends on your situation, but I don't believe putting down less than 20% is a good decision in the current market because the chances of the bottom falling out of the real estate market again are slim. If you're buying a home with the thought of how to walk away from it, you're probably not ready to buy quite yet.

The reason is because when you put down less than 20%, you are forced to pay mortgage insurance. That is a sunk cost, and in most cases is greater than 10% of the monthly payment. No good investment comes with a 10% premium that is completely unrecoverable.

Instead, what you should do is put down 20% on a good piece of real estate that you know you can unload quickly if you lose your job or need to move. That way, all of the money you pay goes toward interest and equity. PMI is investment poison that should be avoided at all costs as it serves absolutely zero benefit to the person paying it.

[Rick Lawson]

Originally Posted by ElleKaye

What do you think this is going to mean for the rental market which I think is way more expensive than it should be?

When I moved here, I bought a very good looking house in Kennesaw for what I thought was a reasonable amount of money. Considering the small amount of time I got to spend in it due to my commute, my opinion of what was a good or bad idea changed. A divorced person with no children probably doesn't need four bedrooms, which by the way, even though you are not there, can rack up quote hefty electric and gas bills.

So, I decided I'd rather rent in a location that suits me better which for now is Midtown. I think the rates are ridiculous though. I was fortunate that I was able sell my house before things completely burst. I know patience is a virtue, but I must admit I think vigorous sale of houses can only benefit who it turns out is ok with renting and never hiring someone to maintain a lawn that I will never see in daylight again.

It still surprises me with all the information available in house buying that many people dont take the time to research the investment eg. + and - of probably the largest investment of their life

[jeoff]

Originally Posted by ATLTJL

It really depends on your situation, but I don't believe putting down less than 20% is a good decision in the current market because the chances of the bottom falling out of the real estate market again are slim. If you're buying a home with the thought of how to walk away from it, you're probably not ready to buy quite yet.

The reason is because when you put down less than 20%, you are forced to pay mortgage insurance. That is a sunk cost, and in most cases is greater than 10% of the monthly payment. No good investment comes with a 10% premium that is completely unrecoverable.

Instead, what you should do is put down 20% on a good piece of real estate that you know you can unload quickly if you lose your job or need to move. That way, all of the money you pay goes toward interest and equity. PMI is investment poison that should be avoided at all costs as it serves absolutely zero benefit to the person paying it.

Right now folks are fighting over a lot of properties that probably have a nice up-side--but the potential short-term downside is huge! If another recession hits (even a mild one), every "up and coming" neigborhood in Atlanta could easily lose 20% of its value (before realtor fees)--and with interest rates so low, there is not much left that the government can do to stimulate the real estate market if it takes another hit. Not saying not to buy, or even not to put down 20%, but know that you could get upside-down pretty quick--especially in "the up-and-coming" neigborhoods.

[matilda79]

Do people not look at things like potential water damage, driveway/yard grading/water flow (which can contribute to water damage), the state of the roof/basement, traffic flow around the area, or other potential issues? That sure takes more than 10 minutes. Gosh, I must be old school. I do remember pointing out rotting fascia on a recently renovated property I viewed, and the realtor asked me what fascia was (gee, not surprised there). Yeah, that property sold, for pretty high. Unbelievable.

[evannole]

Originally Posted by matilda79

Do people not look at things like potential water damage, driveway/yard grading/water flow (which can contribute to water damage), the state of the roof/basement, traffic flow around the area, or other potential issues? That sure takes more than 10 minutes. Gosh, I must be old school. I do remember pointing out rotting fascia on a recently renovated property I viewed, and the realtor asked me what fascia was (gee, not surprised there). Yeah, that property sold, for pretty high. Unbelievable.

Most of those things can be and are found and addressed through the inspection and during the due diligence period.

[matilda79]

Originally Posted by evannole

Most of those things can be and are found and addressed through the inspection and during the due diligence period.

Understood. But, you want to have the information to ask questions. Nothing beats seeing potential damage firsthand with your own eyes.