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How can one give a recommended course of action to random people on the internet?
Okay here goes - if you are a doctor I say buy the biggest damned house you can find and will love and in the neighborhood of your choice. Same for those with tons of cash.
But your typical worker bee? Take a look at your skill sets, your career and finances. It is a gray area. Some people should buy - some can always buy safely etc. But some should not. Depends on the specifics.
How can one give a recommended course of action to random people on the internet?
Okay here goes - if you are a doctor I say buy the biggest damned house you can find and will love and in the neighborhood of your choice. Same for those with tons of cash.
But your typical worker bee? Take a look at your skill sets, your career and finances. It is a gray area. Some people should buy - some can always buy safely etc. But some should not. Depends on the specifics.
haha you remind me of a laywer, afraid to actually give any concrete advice.
why should a doctor buy the biggest house they can find? you are assuming doctors have endless cash available to them? its interesting that you think that. so where did you learn all the stuff you are talking about here? you trying to parrot back what someone said on another forum that you found appealing? that person probably at least understood what they were saying better than you do.
Bah - you are trying to win an argument not help anyone. Ignore this guy peeps - he's not there to help you. He's probably deeply in debt himself.
Anyways - if anyone DOES need advice I am happy to help.
Generally speaking my advice is to ignore guys like this - live within your means, work hard, stay healthy and avoid the illusion that a 50x100 lot with a box on it is worth 30 years of slaving away by two people. In the vast majority of cases...it is not.
If I was moving into NJ like many of these threads, I would not buy. Rent and live a few places 1st and then decide. You never know how the commute situation, school zoning issues, and whether or not the people in their area are nice or not. NJ is very segregated deeply.
People claims certain towns are higher in crime but when you look at the stats many of the burglaries, home invasions, and car jackings happen more often in wealthier and trendy parts of NJ. So is it good buy a $450k home and pay like $15k in taxes and have to install all types of security systems around the house including paying for neighborhood watch?
Rent some places and find out you'll be surprise that some areas deemed dangerous but are quite safe and cheap to live compare to those fancier places.
A price of a home is determined by the transaction or closing price. What people can afford is determined by the amount of cash or credit they have. If wages remain flat then prices cannot appreciate without rates dropping or lending standards dropping. That is just basic math.
I agree with this statement, but there are other factors involved such as unemployment. If we see unemployment go down, you could see price appreciation due to increased demand. Lower unemployment does generally lead to wage inflation though, so no issues here.
We are in a bubble as evidenced by the Fed's printing. Invert it - where would we be without the Fed? Much lower prices (and fewer jobs)! We also have record cash buyers removing supply - I'd say that is all a bubble of sorts wouldn't you?
I think there's a legitimate argument to be had as to whether it is a bubble or a recovery. Not having prices fall through the floor, even one that was artificially created by the government, does not necessarily equate a bubble.
As for inflation - inflation is tied to collateral and real world economic activity. This is why student loans are not dischargeable. Banks create brand new bank credit with each loan which adds liquidity to the system. However - the Fed does not create inflation - they are a bank. People "borrowing" is what actually creates inflation.
People would not be able to "borrow" if banks weren't willing to lend, and the Fed is the biggest bank in the world. The driver of inflation is the higher growth of money supply relative to economic growth. That was the whole point of quantitative easing - the Fed essentially flooding banks with excess reserves by buying Treasuries, hoping the banks would lend (which they're slowly starting to do). The Fed does not create inflation, but they very much do have influence on it.
So the Fed imo will fail because they are just encouraging cycles of debt accrual which when they run out - create huge credit crunches as the uptake in credit creation halts (you run out of new debt which is essential since uptake not linear but aligned with biz cycle in sine wave).
When the Fed runs out of what, money? The ability to borrow or lend? If this happens, there will be a lot more to worry about than falling home prices, I can promise you that.
I recommend people take financial decisions extremely seriously.
1. Rent is a viable option and offers mobility which is important during times of volatility.
2. A home is not an investment. It is a means to improve your quality of life and offset rent. It MIGHT be an investment if the economy progresses in such a way that your purchase is favored longer term (NY purchase in early 90's for example). Or not (Detroit purchase in last 25 years).
3. Being a prudent saver and investing to outpace inflation are more important than owning a middle class property.
4. Assume the worst if you are going to buy - taxes will rise - one spouse will lose their job etc - run the scenarios. If you can withstand a lot of those things then do it - it is a wonderful thing to have some space and neighbors and be part of a community. If not - then wait.
You say a home is not an investment, but many of the reasons you provide for not buying a home are based on concepts of what an investment should be.
Last edited by jpf723; 04-14-2014 at 12:47 PM..
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