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Sorry if I came off rude but your other posts said you were interviewing at the cosmopolitan. I tell it like it is, period. Jonathans mad because his ideal purchase was not recommended by anyone except himself. Just a young money kid from la. Check the other posts. As for a purchase I would wait prices on condos are still up in the air and next to impossible to finance. Sorry again I didn't mean to be rude. I'm sure I'm one of the few agents saying not to buy yet
I'm not mad, haha, I don't get mad at anyone on a forum especially this one.
I don't respect anyone's opinion here if they don't have very close to the same desire for a place of living as I do. I respect your opinion for what you are looking for and what you want, but if someone says, "Dude get a house 15 minutes from the Strip, that's the way to go," they obviously have no clue what I want and don't care, they just are spouting off what they personally would buy and that's of zero interest or concern to me.
I don't have any desired building in Vegas right now. There are a number I would be looking at, all of which I like so far, from the Allure to Sky to Panaroma, etc. All I know is it has to be something on the Strip, at least what I consider to be on the Strip -- I realize many of those are a block off the Strip but they are for all intents and purposes considered Strip condo buildings.
Also I have no idea what "money guy" from L.A. means. If anything I'm moving to Vegas to save considerable money, which is one of the things that excites me about the current opportunities. I think some people actually living in Vegas are either so poor or so depressed about the massive falling of value in their own homes that they think there is no bottom to the market and it's just going to keep tumbling. I don't live in your city, which in this case actually means my perspective is less biased and more accurate -- I can tell you that nobody I know, from people up in Seattle to people down in San Diego, can believe me that condos on the Strip are $100,000 to $300,000 for pretty darn nice units. That's because those prices are completely insanely low to anyone in other major cities on the West Coast. Here, you would never find any condo for $150,000, let alone a nice one. You couldn't get anything for that except a down payment on something, but by no means cash.
I agree with the people who say the market in general is not going to pick up that much in the next 3 years even. But what seems to be completely lost on someone like you, airics, is that I don't care about a condo as an investment. Frankly my condo in L.A. was a terrible investment, but whatever I buy in Vegas is going to by home. Even in the tiny chance that I hate Las Vegas as a place to live and eventually decide I want to move elsewhere, I would still want to keep my condo because it's a fantastic place to visit. So if I pay $200,000 cash for a condo, and it goes down to $165,000 a few years later, so what? I'm not paying a mortgage, I own it. The only loss is a loss realized, not on paper, the same as a gain. Its value could be anywhere from $1.00 to $2 million but if I'm living in the place, what matters to me is whether I enjoy being there and the huge amount of money I'm saving every month by not having a $300,000+ mortgage and high income taxes in California. That's a GOOD investment!!!
I'm not mad, haha, I don't get mad at anyone on a forum especially this one.
I don't respect anyone's opinion here if they don't have very close to the same desire for a place of living as I do. I respect your opinion for what you are looking for and what you want, but if someone says, "Dude get a house 15 minutes from the Strip, that's the way to go," they obviously have no clue what I want and don't care, they just are spouting off what they personally would buy and that's of zero interest or concern to me.
I don't have any desired building in Vegas right now. There are a number I would be looking at, all of which I like so far, from the Allure to Sky to Panaroma, etc. All I know is it has to be something on the Strip, at least what I consider to be on the Strip -- I realize many of those are a block off the Strip but they are for all intents and purposes considered Strip condo buildings.
Also I have no idea what "money guy" from L.A. means. If anything I'm moving to Vegas to save considerable money, which is one of the things that excites me about the current opportunities. I think some people actually living in Vegas are either so poor or so depressed about the massive falling of value in their own homes that they think there is no bottom to the market and it's just going to keep tumbling. I don't live in your city, which in this case actually means my perspective is less biased and more accurate -- I can tell you that nobody I know, from people up in Seattle to people down in San Diego, can believe me that condos on the Strip are $100,000 to $300,000 for pretty darn nice units. That's because those prices are completely insanely low to anyone in other major cities on the West Coast. Here, you would never find any condo for $150,000, let alone a nice one. You couldn't get anything for that except a down payment on something, but by no means cash.
I agree with the people who say the market in general is not going to pick up that much in the next 3 years even. But what seems to be completely lost on someone like you, airics, is that I don't care about a condo as an investment. Frankly my condo in L.A. was a terrible investment, but whatever I buy in Vegas is going to by home. Even in the tiny chance that I hate Las Vegas as a place to live and eventually decide I want to move elsewhere, I would still want to keep my condo because it's a fantastic place to visit. So if I pay $200,000 cash for a condo, and it goes down to $165,000 a few years later, so what? I'm not paying a mortgage, I own it. The only loss is a loss realized, not on paper, the same as a gain. Its value could be anywhere from $1.00 to $2 million but if I'm living in the place, what matters to me is whether I enjoy being there and the huge amount of money I'm saving every month by not having a $300,000+ mortgage and high income taxes in California. That's a GOOD investment!!!
the unemployement rate in Vegas is the biggest reason for the downfall in prices. It seems cheap to you because their are more jobs in SD or LA, etc. In Vegas, its very difficult still.
Good point on buying the condo, cash. However, the HOA really bites in these places.
I do live here and I do have a job...this forum is not been very helpful thus far.
There are many schools of thought on buying a home right now. It is true that interest rates and prices haven't been better than they are now, but we still have an uncertain road ahead of us. In many ways, the local market still feels like a game of musical chairs to me.
Think of buying a home when you have a decent amount of money saved for a down payment. If you can save 20% down, you can avoid having to pay for private mortgage insurance. It never makes much sense to purchase a home without some future equity in mind. Paying for unnecessary expenses like mortgage insurance eat away from the supposed advantages of homeownership. Like other investments, are you willing to hold on to a starter home for 10 years just to see what the market does?
How would you feel to buy as an owner/occupant in a neighborhood that is dominated by renters and investors?
Buying in a declining market is a risk proposition. If for some reason you were to have to list and sell your new home within a few years, could you tolerate losing money? Even if appreciation remained flat, you will be out the money you used to purchase the mortgage, upfront PMI and the listing fees which will cost you several thousands of dollars.
The other value proposition in real estate is to buy a fixer upper. In these scenarios, you need the capital and experience to know how to improve the property and turn it for a profit. That is a game best played by people with a bit of money.
Some people will tell you that buying a home is wise because you get a tax incentive. While it's true that if you itemize your taxes, you can currently write off a portion of your mortgage interest that you pay. The way that a 30 year mortgage is structured is that you pay more in interest during the first 15 years than you do towards the principle. This is exaggerated even further during the first few years of ownership where you will be paying virtually everything towards interest. In essence, you will be throwing money away in the form of interest payments for a small tax brake equal to your tax rate and only above what you itemize. Furthermore, there are rumblings in government about doing away with this deduction in the future.
Buying a home with a 15 year mortgage makes a whole lot more sense because you will pay significantly less in interest and more towards principle. You will build equity in your home faster this way. Not to mention, if you are young, you can look forward to having your first home paid off in a relatively short amount of time. Once that home is paid off, it will generally be considered an asset. You can sell it and use the proceeds to buy a bigger and better home or let it lay a golden egg for you each month. Regardless, try not to pay more than a quarter of your earnings towards a home that you finance or you run the risk of being too damn poor to do anything else in life.
Owning a home is not the end all/be all of American culture anymore. The best answer to any question that starts with "should I buy" is "do I have any money?" If you're like most people when they buy a home they do it when they have very little money and then they throw it all away in financing. Be patient and save first. Your odds of becoming a statistic are much greater buying a home with virtually no money.
There are many schools of thought on buying a home right now. It is true that interest rates and prices haven't been better than they are now, but we still have an uncertain road ahead of us. In many ways, the local market still feels like a game of musical chairs to me.
Think of buying a home when you have a decent amount of money saved for a down payment. If you can save 20% down, you can avoid having to pay for private mortgage insurance. It never makes much sense to purchase a home without some future equity in mind. Paying for unnecessary expenses like mortgage insurance eat away from the supposed advantages of homeownership. Like other investments, are you willing to hold on to a starter home for 10 years just to see what the market does?
How would you feel to buy as an owner/occupant in a neighborhood that is dominated by renters and investors?
Buying in a declining market is a risk proposition. If for some reason you were to have to list and sell your new home within a few years, could you tolerate losing money? Even if appreciation remained flat, you will be out the money you used to purchase the mortgage, upfront PMI and the listing fees which will cost you several thousands of dollars.
The other value proposition in real estate is to buy a fixer upper. In these scenarios, you need the capital and experience to know how to improve the property and turn it for a profit. That is a game best played by people with a bit of money.
Some people will tell you that buying a home is wise because you get a tax incentive. While it's true that if you itemize your taxes, you can currently write off a portion of your mortgage interest that you pay. The way that a 30 year mortgage is structured is that you pay more in interest during the first 15 years than you do towards the principle. This is exaggerated even further during the first few years of ownership where you will be paying virtually everything towards interest. In essence, you will be throwing money away in the form of interest payments for a small tax brake equal to your tax rate and only above what you itemize. Furthermore, there are rumblings in government about doing away with this deduction in the future.
Buying a home with a 15 year mortgage makes a whole lot more sense because you will pay significantly less in interest and more towards principle. You will build equity in your home faster this way. Not to mention, if you are young, you can look forward to having your first home paid off in a relatively short amount of time. Once that home is paid off, it will generally be considered an asset. You can sell it and use the proceeds to buy a bigger and better home or let it lay a golden egg for you each month. Regardless, try not to pay more than a quarter of your earnings towards a home that you finance or you run the risk of being too damn poor to do anything else in life.
Owning a home is not the end all/be all of American culture anymore. The best answer to any question that starts with "should I buy" is "do I have any money?" If you're like most people when they buy a home they do it when they have very little money and then they throw it all away in financing. Be patient and save first. Your odds of becoming a statistic are much greater buying a home with virtually no money.
'
nice work here.
Another problem with buying property, even as primary residence, is that with a uncertain job market, people need to be more flexible and be willing to re-locate for work.
It is going to be dam hard to sell property when you need to move.
I am going to disagree with my friend SK in at least a good part of his analysis.
I have no argument with saving a 20% down payment...and some reasonable reserve funds before buying. But at this time I would point out that, for most first time buyers, the amount that might be saved will in fact be greater on a buy rather than rent.
i would also argue that being underwater for some years is the normal condition for the first time American home buyer. In fact the normal amount on buying a new home is equal to or greater than a 20% down payment. And you may well be five or ten years or even more before you achieve a zero loss based on the home value. In some US locations you will never get even. The resale house is less of a hit but still substantial. You need something like 10% appreciation to break even.
The west coast has had a long history of appreciation that has left us somewhat spoiled...but much of the rest of the nation has had much slower appreciation.
So you do take a gamble of sorts. But if you manage it well and get a reasonable outcome you will do better by buying than renting. Note that a saving of $100 or $200 each month over a span of years gets to be a considerable sum. You do however have to save it...
The present set of numbers are compelling. The combination of low interest rates and low prices is unlikely to continue long term. We have an economy being driven toward at least moderate if not high inflation. Still is not happening due to the bad news offsetting the trend...but that won't continue forever. 7 or 8% mortgages will greatly change the economics. While I do not see a rapid rise in home pricing I would not be surprised to see substantially higher interest rates in the coming years.
I too would minimize the impact of taxes on the decision. The standard deduction is high enough that the first time home buyer should have only small, if any, impact from the mortgage deduction.
Note that in the span of a few years there may be risks to not buying. I would particularly worry about a restoration to rational pricing...a rise to roughly replacement value. A general economic up could well bring that about in a relatively sudden manner.
i would also argue that being underwater for some years is the normal condition for the first time American home buyer.
Being underwater is the normal condition for the average American consumer, not just the first time home buyer.
How on earth can you argue that without 10% appreciation (which is very true) you will even break even on a the purchase of a home and then, in the same breath, say that you will eventaully beat out renting by purchasing a home (and by extent, buy one right now!)? A fully amortized 30 year mortgage ends up costing several times the purchase price of a home and that is the only way people end up gaining over rent in the short term is to take a 30 year mortgage at a low interest rate.
The important thing to note here is that a person takes on a substantial amount of debt and an illiquid asset in order to "save" money over rent. It will take several years for the average person to break even over rent.
The track for the "normal" American is to buy the first home on a 30 year mortgage, make a bit of equity before rolling into the next move-up home with yet another 30 year note. Most people never see or realize the advantage of their equity this way. The normal family will eventually want to move again within a certain amount of time and then be subject to market conditions down the road. The normal reasons why people move will not change. I guess that is to say now is a great time to buy if you plan on staying put for a while. If you are impatient to buy that starter home that you are going to be sick of in five years...maybe I would say keep renting.
The way to beat "normal" is to have a substantial down payment and stick with a 15 year mortgage. That is, if you want to beat "normal" as a gauge.
A little delayed gratification is all I am espousing here. There is little to actually disagree with.
Last edited by Spraynard Kruger; 03-06-2011 at 04:17 PM..
Being underwater is the normal condition for the average American consumer, not just the first time home buyer.
How on earth can you argue that without 10% appreciation (which is very true) you will even break even on a the purchase of a home and then, in the same breath, say that you will eventaully beat out renting by purchasing a home (and by extent, buy one right now!)? A fully amortized 30 year mortgage ends up costing several times the purchase price of a home and that is the only way people end up gaining over rent in the short term is to take a 30 year mortgage at a low interest rate.
The important thing to note here is that a person takes on a substantial amount of debt and an illiquid asset in order to "save" money over rent. It will take several years for the average person to break even over rent.
The track for the "normal" American is to buy the first home on a 30 year mortgage, make a bit of equity before rolling into the next move-up home with yet another 30 year note. Most people never see or realize the advantage of their equity this way.
The way to beat "normal" is to have a substantial down payment and stick with a 15 year mortgage. That is, if you want to beat "normal" as a gauge.
A little delayed gratification is all I am espousing here. There is little to actually disagree with.
$200 per month over 5 years. $`12,000. Ten percent on a 120,000 home. I would also expect some appreciation and some inflation.
And you don't do it to save money against rent. You do it for the other reasons for home ownership. A place you can call home. Where you can decorate as you like, place pool as you like, landscape as you like and have your kids attends the schools that you like.
Fifteen year mortgages are a great idea but generally unworkable for a first time buyer. Maybe on a Refi 5 years out. I would also point out that the low interest mortgages that people acquired in the 50s were great things to have in the 60s and 70s.
$200 per month over 5 years. $`12,000. Ten percent on a 120,000 home. I would also expect some appreciation and some inflation.
True. And rent wont sit in a vaccum, either. I realize this.
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And you don't do it to save money against rent. You do it for the other reasons for home ownership. A place you can call home. Where you can decorate as you like, place pool as you like, landscape as you like and have your kids attends the schools that you like.
The money pit aspect of home ownership is very fun indeed!
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Fifteen year mortgages are a great idea but generally unworkable for a first time buyer.
An impatient first time buyer, perhaps. You would have to convince the person to purchase less home for more monthly expenditure.
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Maybe on a Refi 5 years out. I would also point out that the low interest mortgages that people acquired in the 50s were great things to have in the 60s and 70s.
I'd like to point out the advantages of being in a hot tub with Kim Kardashian...but lets get real here! This isn't the 50's!
Most people move within a 10 year span and will be subject to market conditions once again. The urgency of now makes more sense for aspirational people who want to move up to a home they can see themselves spending the rest of their life in.
It makes little sense for the first time homebuyer who's options are a three story home with a one car garage built so close they can hear their neighbor take a deuce. That person is not likely to want to live there much longer than five to ten years.
It is true that a rapid increase in interest rates coupled with rapid appreciation could price people out of the market but there doesn't seem to be any great crisis at hand to go into debt to buy a home right now if one doesnt have at least 10% to put down.
Buying right now is definitely a question of faith.
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