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You're fortunate you bought your house when you did. Be thankful for that but don't think anyone buying their first house in 2012 will be able to build up that much equity in 10 years time.
Couple posts back I gave an example of a friend of mine who closed Jan 2 and is almost ready to move in. He did it. Just don't expect a 4 bed 2bath brand new house.
Couple posts back I gave an example of a friend of mine who closed Jan 2 and is almost ready to move in. He did it. Just don't expect a 4 bed 2bath brand new house.
So you're saying he'd be able to flip it for a $90K profit? No, I don't think that's the norm nowadays. You'd have to supply more information in order to make a fair analysis of his situation, like did the owner want to get rid of the house quickly, how much did he truly spend on renovations (often the estimates of how much things will cost are too low, is everything really included in the $35K figure), etc. Years ago my sister bought a house in Mineola and the seller actually talked her down on the price. The seller was an adult child and was selling the house for his parents who were going into a nursing home. He wasn't going to see any of the money anyway and wanted to give my sister a really good price. There are all sorts of scenarios that could have an impact on the price; short sales, foreclosures, job relocations, divorce, death, etc. Whatever. I'm really not interested. All I'm saying is there can always be exceptions but overall buying a house today with visions of fast equity isn't a good idea. It's not the reality of today's economy and won't be for a long time.
The gov can't keep interest rates low indefinitely and they won't risk raising them when the economy begins to recover. This will spark inflation and those holding real property will benefit.
So you're saying he'd be able to flip it for a $90K profit? No, I don't think that's the norm nowadays. You'd have to supply more information in order to make a fair analysis of his situation, like did the owner want to get rid of the house quickly, how much did he truly spend on renovations (often the estimates of how much things will cost are too low, is everything really included in the $35K figure), etc. Years ago my sister bought a house in Mineola and the seller actually talked her down on the price. The seller was an adult child and was selling the house for his parents who were going into a nursing home. He wasn't going to see any of the money anyway and wanted to give my sister a really good price. There are all sorts of scenarios that could have an impact on the price; short sales, foreclosures, job relocations, divorce, death, etc. Whatever. I'm really not interested. All I'm saying is there can always be exceptions but overall buying a house today with visions of fast equity isn't a good idea. It's not the reality of today's economy and won't be for a long time.
Nobody said anything about making a quick buck. There is no reason to believe that in 30 years from today a 400k home won't cost you 800-900k. This place has a history and there is no good reason why it won't continue.
May I ask what are the good reasons it should? Are LI salaries rising that quickly or companies expanding that much on the Island? Also wouldn't high housing prices too far off the norm act as a throttle as to new business and people moving in?
GPC is right.....the days of housing "super appreciation' are over.....maybe in the 1960's when you bought a house for 60 or 70K and happen to still own it today well that's different....with the way the economy is now, and the unemployment rate, you will never get appreciation like that again.
Plus, Galicia, the appreciation is somewhat of an illusion and not what it seems. You are taking into account the fact that the person will be in the house for the whole 30 years until the mortgage is payed off.
Are you aware that you will wind up spending MORE money on interest, than actual principle on the house? And that the first 10 or so years of "owning" a house mostly goes all to interest? So if you buy a house for 350K at say, a 4% interest rate, at the end of the mortgage, you will probably wind up paying DOUBLE after all is said and done.....
Not to mention, in that 30 year period......property taxes will go up, oil and utilities will go up, house insurance will go up, you will probably have to so some repairs on the house in that time....all of this eats into the value of your "profit" you think you are making....
The 'American Dream' has really turned into the American Farce....and ppl are buying into it....you don't own your house.....the gov't and bank own your house....
Nobody said anything about making a quick buck. There is no reason to believe that in 30 years from today a 400k home won't cost you 800-900k. This place has a history and there is no good reason why it won't continue.
You are probably right.
But consider now investing that $400k - at a reasonable/not overly optimistic return rate of 5% per year, in 30y, you will have $1.7M with way less associated expenses and headaches. You could rent a nice house for 30y AND end up with an extra $1M... It's all relative.
And it's wrong to link investment notions to a house... Reality is, LI housing market has not corrected itself enough.
You are probably right.
But consider now investing that $400k - at a reasonable/not overly optimistic return rate of 5% per year, in 30y, you will have $1.7M with way less associated expenses and headaches. You could rent a nice house for 30y AND end up with an extra $1M... It's all relative.
And it's wrong to link investment notions to a house... Reality is, LI housing market has not corrected itself enough.
Yes, compared to other areas of the country that have seen 40-60% declines, the LI housing market has not nearly corrected enough for whatever reason.....maybe 10-20%, if that?
Yes, compared to other areas of the country that have seen 40-60% declines, the LI housing market has not nearly corrected enough for whatever reason.....maybe 10-20%, if that?
GPC is right.....the days of housing "super appreciation' are over.....maybe in the 1960's when you bought a house for 60 or 70K and happen to still own it today well that's different....with the way the economy is now, and the unemployment rate, you will never get appreciation like that again.
Plus, Galicia, the appreciation is somewhat of an illusion and not what it seems. You are taking into account the fact that the person will be in the house for the whole 30 years until the mortgage is payed off.
Are you aware that you will wind up spending MORE money on interest, than actual principle on the house? And that the first 10 or so years of "owning" a house mostly goes all to interest? So if you buy a house for 350K at say, a 4% interest rate, at the end of the mortgage, you will probably wind up paying DOUBLE after all is said and done.....
Not to mention, in that 30 year period......property taxes will go up, oil and utilities will go up, house insurance will go up, you will probably have to so some repairs on the house in that time....all of this eats into the value of your "profit" you think you are making....
The 'American Dream' has really turned into the American Farce....and ppl are buying into it....you don't own your house.....the gov't and bank own your house....
Excellent post. So many people fail to look at the whole picture when buying a house. There are lots of costs people forget to factor in, and then of course, the economy overall has a huge impact. Thanks for your input.
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