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Well yeah - availability of credit, minor wage growth, supply, demand, more qual'd buyers, easier lending standards etc. etc. etc.
What is your point here?
You try to isolate low rates as a dangerous factor and ignore the many other important factors. Guess what, for folks 5 years ago, those low rates were nothing but GOODS because they've seen nice increase in value AND benefited from the low rates.
I'll explain in a different way. If you just bought and sold the same house over and over again you would have to cough up a commission each time and would therefore be enriching your agent and going completely broke over time.
Yes, thanks for a completely meaningless example.
Let's just stick to YOUR example, where the buyer after 15 years has an asset that is free and clear and worth +/- $400K. Why can't you recognize that value?
(and your assurances are quite empty based on your fuzzy math)
Nothing? then how did YOUR figure of $45K per annum suddenly grow to $60K?
As for the 401K, yes ABSOLUTELY deduct costs, but also need to recognize that it's cash coming back later on. You just refuse to acknowledge the return of capital.
You are entertaining at least.....the answer to that was my original and entire point - you have to analyze the expense over time plus interest, taxes etc - so you aren't actually paying an exact $60k per year - you are paying an average $60K per year over the duration of the loan.
You try to isolate low rates as a dangerous factor and ignore the many other important factors. Guess what, for folks 5 years ago, those low rates were nothing but GOODS because they've seen nice increase in value AND benefited from the low rates.
There is no increase in value until you sell. There is no loss either.
Take your emotions out of the debate - your point would have been valid about stocks or houses in 2006 and then everything went kaplooie.
The economy grew and jobs were created and houses, stocks and bonds all benefitted nicely.
None of that has anything to do with the cashflow required to make a purchase nor with a future sales price.
There is a great chance a home will retain a lot of value. And there is also a decent chance it will lose value as well.
Be impartial and analyze the costs, interest, taxes, their increases over time etc etc etc.
When you do so you realize most people are deep in over their heads and are one layoff away from poopsville.
Since you have to live somewhere, you should compare the rent expense over the duration of loan (or owning the home) and calculate the incremental expense of owning vs renting.
You are entertaining at least.....the answer to that was my original and entire point - you have to analyze the expense over time plus interest, taxes etc - so you aren't actually paying an exact $60k per year - you are paying an average $60K per year over the duration of the loan.
Again... you threw out some figures that only partially supported a $45K figure, and now use $60K as the average???
Since you have to live somewhere, you should compare the rent expense over the duration of loan (or owning the home) and calculate the incremental expense of owning vs renting.
Definitely and do so with a calculator or spreadsheet so you can see the costs. One also has to account for other areas in a given region (ie CT, NYC etc.) as their income tax and property tax structures are entirely different.
A $350k purchase (ie with say $2,100/month payment) can easily cost a family $60k per annum over the duration of a loan (meaning they need to come up with that much money somehow and yes they get a few g's back in April) and while they MAY get some of that back when they sell it doesn't make it a sound decision if a family's after-tax take is say $80k or $90k.
60K/yr for a 350K purchase seems high. Assuming ZERO down, 4.5%APR amortized over 30 yrs (if such a mortgage is available today), the monthly payment would come to about $1775. Add $1K/mo property taxes, $1K Home owner's insurance, you are at $2850/mo. Rest in maintenance etc., but I doubt it will be $2200/mo every month for the next 15yrs.
Mayorquimby- I agree with you that home ownership has its costs and risks and is not for everyone, but your numbers seem a bit off, IMHO.
2012-13 was probably a great time to buy .... The houses were decently priced and the rates were low at that point. Taxes are crazy in some places. A friend bought a new house in country classic development !! The house is close to a million dollar after upgrades. And taxes are unimaginably high !!!! I guess deciding where to buy is the first big decision.
Quote:
Originally Posted by Bikas_B
Unfortunately NJ is where I work, and relocating is not an option. With 3 kids, I do need the space, and rented apartments do not really give that much. I agree with the taxes. 14K annually on taxes in a average school district (Monroe), really did not make any sense to me. But there has to be a place which is affordable .. Right ? At least that is what I am hoping ...
If you work in Princeton, head west to look for a home. Center your search around Hopewell.
You should easily find something in your price range; more so, with a very reasonable commute of about half-an-hour to your job.
So I have been debating whether to purchase a house this year or should I wait till next year. Do you guys think that the housing market is recovering and the houses would cost more ?
Also wanted to find out what is the best time to purchase a house ? Is it around Spring or before the school year ? Any thoughts and ideas around this ?
I have some areas in mind, but I do not want to rush into buying a house just because the real estate agents have me thinking that the prices are going to sky rocket soon.
Best time to buy is when everyone else is afraid to buy. I bought my place 2.5 years ago in downtown JC. Everyone said I was crazy (herd mentality). Glad I didn't listen to them. The market is strong now and it should remain strong in the short term because 1) interest rates will remain low/reasonable, and 2) inventory is historically low (meaning there is not enough supply to meet demand). Therefore, prices should remain stable to increasing over the near term.
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The market is strong now and it should remain strong in the short term because 1) interest rates will remain low/reasonable, and 2) inventory is historically low (meaning there is not enough supply to meet demand). Therefore, prices should remain stable to increasing over the near term.
