[nychiefsfan]

Originally Posted by kort677

The local paper ran a story yesterday about sales ande values and in MY zip code values increased by 52% with sales down over 50%

The NAR headlines for your area would read:
"Home Prices Increase; Housing Market on the Upswing"

[Obrero]

Originally Posted by JimKing

Hee, hee...that was a good one. All these people who can rent for 1/2 the cost of buying will now buy because interest rate increases will scare them into buying.

Okay...I need to go take a long, long run to clear my head now.

There is a house in Sarasota I have been watching that is for sale for 1.2 million with 15k property taxes and 8k insurance or for rent for $3,400 a month. Hummmm, wonder which one is a better deal.

[kort677]

Originally Posted by UKOK

There is a house in Sarasota I have been watching that is for sale for 1.2 million with 15k property taxes and 8k insurance or for rent for $3,400 a month. Hummmm, wonder which one is a better deal.

the guy renting you the house could still be making out, he has the renter covering some of his costs and he carries the house through bad times, even if the bad times last 10-20 years, he still owns the house and the renter has nothing to show for his years of paying rent

[nychiefsfan]

Originally Posted by UKOK

There is a house in Sarasota I have been watching that is for sale for 1.2 million with 15k property taxes and 8k insurance or for rent for $3,400 a month. Hummmm, wonder which one is a better deal.

Using JK's formula, the house is worth about $408K

[firemed]

Originally Posted by kort677

this is the fallacy of all the gloom and doomers, not everyone who bought at the top is bailing out, not everyone at bought at the top is losing their job, not everyone who bought at the top is going belly up, if you have to sell, you're screwed, but if you don't have to sell and you're living in the home what's the difference what the value is, you not selling, it just isn't an issue

Your right about people buying, If you paid cash for a home your ok if you like losing money. I sold a guy 20 acres of my land in 2005. He was what I would call well off. But the market changed very fast after that. he walked on the loan. The bank wants to sell it but can't recoup most of the money. ok who got screwed in all this. I got my money, the bank sold the loan, Who is holding the bag? I love the doom and gloom thing. I look at it this way, If your in debt your crazy. But if your rich your eccentric. Whats the difference ?

[cariad]

Originally Posted by kort677

the guy renting you the house could still be making out, he has the renter covering some of his costs and he carries the house through bad times, even if the bad times last 10-20 years, he still owns the house and the renter has nothing to show for his years of paying rent

It's too early in the morning for me to do the exact math but this is close:
Mortgaging $900,000 at 6% gives you a PITI monthly payment of $7400.(this does not include any extra maintenance costs of the house)
So the renter can take the $300,000 down payment and $4,000 a month difference between rent and piti payment and put it in CD's, stocks, bonds, etc.............tell me where he has nothing to show for his years of paying rent.

[TriMT7]

Originally Posted by kort677

the guy renting you the house could still be making out, he has the renter covering some of his costs and he carries the house through bad times, even if the bad times last 10-20 years, he still owns the house and the renter has nothing to show for his years of paying rent

Not necessarily. If the renter is the type of person who WOULD be able to afford a million dollar mortgage (lets assume he'd pay over 10k month + taxes + insurance), then what the renter will have to show after years of paying less than a third or quarter in rent than what it would cost to finance the same home is a fat bank account. That almost 10k savings/month can go straight into interest bearing accounts or high yield investments. Sure, in 10 years the owner's investment might double.... or triple.... but renter has saved and invested $1200000 in costs over the same period!


IMO, renting isn't a risky financial decision, if you're smart about it and actually SAVE and INVEST money you're NOT spending on your house. What's risky about renting is that you can technically be forced to move every year should your landlord decide not to renew your lease. And moving is NOT fun!


Edit: Just realized the poster above me made about the same analysis!

[kort677]

Originally Posted by cariad

It's too early in the morning for me to do the exact math but this is close:
Mortgaging $900,000 at 6% gives you a PITI monthly payment of $7400.(this does not include any extra maintenance costs of the house)
So the renter can take the $300,000 down payment and $4,000 a month difference between rent and piti payment and put it in CD's, stocks, bonds, etc.............tell me where he has nothing to show for his years of paying rent.

how about we change the assumption to the guy bought the house in 01 for 400k, it's now worth 1.2, and he's renting it out for 4k a month. he's ahead of the game.
my point is that these 1 size fits all scenarios are meaningless attempts to justify petty jealousies.


FWIW I am in that boat, I own a house in that is worth at least 1.2, and between my loans mortgage and insurance it costs me about 3500 a month to keep it, I may not want to sell it, so if I rent it out, get at least 3500 a month for it, I'm ahead of the game, the renter pays my expenses and maybe in a few years it will sell for even more money. If it doesn't sell for more money, I've lost nothing, the renter is paying my expenses.

[Obrero]

Originally Posted by kort677

the guy renting you the house could still be making out, he has the renter covering some of his costs and he carries the house through bad times, even if the bad times last 10-20 years, he still owns the house and the renter has nothing to show for his years of paying rent

That is not the point. The point is; Is it better for me financially to buy or rent this house? Why would I care how he's making out?

[Sage113]

I was going to comment on the original poster who was wondering why home prices aren't going down after the "bubble" popped. But, as for renting vs buying (if I read the prior posts right) I almost never rent unless someone has a gun to my head. The only reason I would ever rent is if I'm going to live somewhere temporarily to check the area out or if I get moved around frequently or if I'm in a market like California where I can't afford to buy at the moment. I was in the military and got moved every 2 or 3 years whether I needed to or not and I always bought. It was a pain but each time, we found the worst house in the best neighborhood, fixed it up while we lived there and made a good profit when we sold and left. As for the Landlord's problem of renting, you have to consider his basis in the home.

For instance, my aunt bought a 3 bedroom, 2 bath house in Fremont, California back in 1960 for $16,000. She can rent it for $2000 (close guess) per month or sell it for $800,000 (accurate figure) if she wanted to. Same with anywhere else. I used to live in a neighborhood in Coconut Grove in 1970 where the houses were little 3/2s with a nice big yard in the front and nobody was interested in the least. They sold for about $25,000 to $45,000. I know people who still have one they keep as a rental. All of those houses have iron gates or walls around them now and they sell for $1.2 mil and up. So what if the owner can't rent it for most of the year for what he did in 2005? Just lower the price until it rents and be good at screening applicants. A great reason for buying not renting.

As far as prices coming down in this "Buyers" market...it depends on how desperate the sellers are as to what prices are going to do. You've got a lot of resistance to losing money and that's what most people don't want to do. The "motivated" sellers will make a deal to the point where they have to decide how much money they want to lose. I know people (investors) who actually have sellers PAY them to take their house with no equity just so they can walk away and not get their credit dinged. Remember, many of the homes out there that are For Sale are from people who don't have to move or lose money. They can just stay put, live there and "fish" for a buyer.

If you're really interested in buying a house at Market Value or thereabouts, do some research. Go to the Tax Assessors office in the town you're interested in and research properties. It will tell you, in print, what someone paid on their home loan, when they closed, etc. You can't just expect someone who bought a home for $300k to suddenly sell it to you for $200k unless they're running from the law or something. They'll just walk away from the loan first. You can call the local bank and ask if they have any REO or Real Estate Owned. If they do, it's probably listed with the local realtor but sometimes you can find a good deal here or follow the foreclosures the courthouse has listed. This same thing happened in Houston back in the mid 80's. You could get some really good deals on really nice homes, but that's all changed now. It took about 10 years but the market corrected.

Basically, do some research. Check into the Foreclosure market. If you find a home for sale, find out how much is owed on it and see if the owner is motivated to take your deal. If not, keep looking. If you're looking for a rental house, find one you want then ask the landlord if they would take less rent. I've got a friend here in town who collected rentals over the years for good prices. She's asking $1000 rent for most of her homes (8 of them) in nice neighborhoods but, because of the market, she's making deals on rent. She just rented one out the other day for $500 per month on a 6 month lease, renewable and subject to rental increases. She's not hurting that much.

Good luck, do your research and you'll find a great deal.

Sage