U.S. Foreclosure Filings Surge 55 Percent in July (sale, price, value)
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Why is this not a fair statement? I have absolutely no plans to move to the suburbs of Chicago, not only that but I've never been to the suburbs of Chicago! I don't care what is happening there, and I don't pretend to know what real estate is doing there.
This is completely inaccurate. Real estate has took a hit across the nation due to a variety of macroeconomic events, it is not because everyone thinks real estate in XYZ is just like California. Real estate is going to remain weak in the vast majority of the country for many years and again...its due to macroeconomic conditions.
Actually the situation in California isn't that unique, many other states are having similar issues. In fact population wise, around 1/3 of the country is dealing with real estate conditions similar to the California market.
Currently the majority of foreclosures have been from subprime loans, these don't necessarily correspond to low income households though. But, a new foreclosure crisis is just on the horizon. The next crisis is going to be with prime loans and more high income households, "At-A" is going to be the next hot topic.
I don't believe this, for the right person a home can be a very good part of their investment strategy. In general homes appreciate with inflation and they pay out a "dividend" (i.e., they give you shelter). You just have to be sure that the dividend is worth it the inflation. Houses are poor investments if you just think in terms of appreciation though.
I don't discount this in any sense, you seem to be going for the old "rent is throwing away money line". In the first 10 years or so of home ownership the vast majority of your monthly carrying costs go towards interest, taxes, insurance. Like rent you'll never see this money again, only around 15% goes towards paying down the mortgage. Additionally, the areas that are seeing major price declines are exactly the areas that have a high price to rent ratio. That is to say, renting is actually cheaper in these areas. If the carrying costs for your house is $2,500 and you can rent the same house for $2,000 then you are actually throwing away MORE money than the renter!!
Now, if your PITI was less than rent for a similar property than it may make sense to buy regardless of what the market is doing. But this hasn't happened yet, so it truly makes little sense financially to buy a home right now.
I made a general comment, obviously I don't know you so I don't know whether it applies to you. It does apply to many Realtors though.
OK, as said in my first post on this thread, "I TRIED". Clearly you know EVERYTHING and it's a shame we waisted our time trying to explain things in a reasonable manner to you. I think you have some serious issues where real estate is concerned and I understand the sense of denial you really seem to be in. You didn't get the "rent vs. own arguement" the last time it was brought up and "PROVEN" that in MOST ALL CASES, renting is paying for shelter to someone else and owning is paying to yourself. What you continuously ignore and NEVER answer to is that in that "5 year scenario" Dave gave you, you still OWN something until you sell it and MOST ALWAYS get your money back AND THEN SOME!! And by the way, monthly rental rates are far above mortgage payments (apples to apples) by a long shot. NO ONE could rent a 4 bdrm. home for near what our mtg., taxes. and interest are! And WRONG, nation wide, not too many other states are even close to what a mess CA. is. Now you actually have "another crystal ball" which tells you, above all others, that the foreclosure that is "coming" is among middle/upper class. Funny how you NEVER answer to any specifics or have a defense for such. I and others like Dave should stick to my own advise which is to just simply realize trying to change a misguided, misinformed poster like you and yours are a complete waste of time. At least others reading this will perhaps "pause in thought" when they actually read our posts and the arguements against your very distorted data and opinions. I think to say you don't care where anyone else lives, therfore justifying why it's not important as to what the real estate market is doing is probably the most discrediting statement you could have made. Thank you for clarifying what I have been saying all along. And your "macroeconomic" statement is nothing more than the use of a big word. What the heck are you even talking about? I know, I know, you don't care about anywhere else but "NOT happening here!"
You seem to be implying that 1.) If you like it, 2.) Can afford it, 3.) plan to keep it for a bit then you should buy it. But from a financial point of view this is pretty bad advance. Take Sheri's case, she says that if she purchased few months ago she would've spent 50k more than she could purchase the home for today. Since you are financing that 50k that ends up costing you around $100k in the long term. For your average person that is a huge amount of money and you'd have to do a lot to make up for the loss. But in most cases (at least in CA) the savings between buying now vs buying later will be even more dramatic. Realtors really need to stop giving financial advice.
Especially since that $100K could go into my retirement account instead and make paying off my house for retirement a lot easier.
Maybe the savings would be much smaller in markets other than California ... something like $25K to 50K but ... that's still a lot of money for most people. Especially in states with lower incomes where people don't make as much money.
... the fact that a HOME by its very nature is a poor investment. You have to feed it every month, it doesn't feed you. Read the Wall Street Journals Guide to Real Estate Investing - he makes the point more clearly than I could here. People buy homes to provide a place to live, sometimes it makes them wealthy, sometimes it doesn't. Real estate INVESTING is a different animal....
This is the very point where the whole thing blew up. People around the world began to see a HOME purchase as a REAL ESTATE INVESTMENT. And the entire global financial system went along with the game as well. Everybody, and I do mean everybody, got caught up in the fever, just like the South Sea bubble, just like tulipmania. The crash is happening in markets around the world, and could take years to unwind.
As Pogo said, "we have met the enemy and he is us."
You didn't get the "rent vs. own arguement" the last time it was brought up and "PROVEN" that in MOST ALL CASES, renting is paying for shelter to someone else and owning is paying to yourself.
Do you want to get the calculator out and try to prove this to me? Realtors have used this argument for years and should be ashamed of themselves for getting people into the trouble that they are in today.
Your fellow California 'doom and gloomer' here
In my previous posts I have stated that I currently own 2 homes so I am definitely pro home ownership. Of course only under certain conditions and a falling market is not one. And I have also pointed out many many times that when I post it's about MY MARKET. I even post it in caps. I dont understand why this certain individual continues to try and invoke more animosity on these boards by labeling us 'doomers' etc. and calling us out on it. The reality is (no pun intended)..we are realists.
And while I am here, may I make a special request pretty please? Lets try to keep down the length of the posts. Most people dont want to read and endless book of the same re hashed stuff
Thanks! your friendly neighborhood 'doom and gloomer' SoCal
Oh yeah! one more thing. Things are rapidly heading towards a bottom here. What does this mean? I am getting ducks in order for my 3rd property!! Sometime next year values drop another 20-30%.
Certainly does not seem to have effected the lower Hudson Valley counties here in NY. Home prices are still 3-4 times the cost of what they were in 2000 and wages have not kept up. Does not make any sense but time will tell.
Scone,
thanks, we are in agreement here. American culture's overwhelming desire to find the way to quick and easy wealth beyond their wildest dreams - and people jumping on the latest bandwagon to get there - certainly sets us up for these types of things over and over, doesn't it?
A financial expert/radio host in the San Diego area some years ago made a comment on the stock market at the time - and it applies to almost every "bandwagon" that comes along - Enjoy the party, but dance by the door!
Scone,
thanks, we are in agreement here. American culture's overwhelming desire to find the way to quick and easy wealth beyond their wildest dreams - and people jumping on the latest bandwagon to get there - certainly sets us up for these types of things over and over, doesn't it?
I wish it were just American culture, but it's the whole planet, and it's not just people who want to get rich quick. It's the cumulative effect of trillions in individual accounts, pension funds, municipal, county, state, and international funds, all looking for returns at once, and all being piloted by financial people who are reading mostly the same news and looking at all the markets in real time. These people had a fiduciary duty to get the best returns, or lose their jobs. So several hundred thousand people, from Moscow to New York, to Tokyo, to Shanghai, to Johannesburg, were all making trades with trillions of dollars, and no one was looking at the quality of the trades. The people buying and selling houses were just small fry in a much larger system that just vacuumed up the transactions as "raw materials" and "remanufactured" them for global consumption. But the raw materials (bad loans) were like tainted meat with mad cow disease, messing up all the McBurger trades around the planet. The whole factory system spread the disease, not just the American people.
And the system has not been fixed. It hasn't even begun to recover. So, it is inevitable that bubbles big and small will pop up one after the other, for some time to come, until the global economy constructs a working framework to regulate this disease-spreading machine and keep it from blowing up constantly, not just in real estate, but in all sorts of transactions, from commodities to futures.
The system is out of control, and no one is really in charge.
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)..we are realists.
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