68% of home owners in metro Phoenix have negative equity (for sale, rentals)

[khuntrevor]

I think very few of the people squatting are actually banking any money; they just aren't that type of people. Gotta gas up the SUV, buy dog food, pay the cable bill, and the kids gotta have i-phones.
How many bank the savings from free lunch or medicaid or section 8 housing? I know people with hundreds of thousands in the bank, who have never made their first mobile phone call.

[twiggy]

Originally Posted by roosevelt

Let's see, thanks to the government, you can walk away from your house, 1st and 2nd mortgages (if you got the 2nd at the time of the 1st) and live payment free for over a year plus not pay property taxes; or, rent the house out. A person could accumulate all that money and have plenty to put down on a similar house at 1/3 the price.

Well, if the taxpayers paid for themselves to be able to do that, what is the problem? Taxpayers have paid for things way more idiotic than this before. At least this has something to do with the some of the people who paid in to it.
We all throw it in a pile and use it when we need it. We aren't going to need it for the same things or at the same time. Not everyone will do with it how others see fit. It evens out down the road.
Some people will take advantage after a disaster. Construction prices always rise after a hurricane but things will calm down eventually. This wasn't a natural disaster but a disaster nonetheless. Don't let your ethical panties get in a bunch over it, it's not worth the stress.
Besides those people are now stimulating the economy because they aren't spending money on their homes. Spending is spending and this country needs it.

[Ponderosa]

Originally Posted by twiggy

A lot of people will pay higher to rent simply because they can leave if needed. If you buy and get a job transfer, etc., you really have to go through the ringer to sell. If you rent you can just go. In this economy the jobs aren't as secure and so staying put isn't as secure either anymore. It's worth the extra rent to some for this option alone. You might lose more buying and having to get rid of the house for a lower price to leave. There are a lot of transplants their that have to keep a mobile option.
I know I won't buy anywhere for a long time simply because it took so long to get out of the last home I owned, lost thousands, won't do that again for quite a while. I imagine there is that "fear factor" as well. A lot of things have changed with this economy, it's not that simple. You don't just buy because it's cheap to buy anymore unless you're planning on being a landlord.

Yes, but being a landlord is an option if you buy low like you can now. The reason you and I were/are stuck is that our payment is too high to cash flow our homes as a rental if we leave. But if someone buys today for 1/2 the payment the house would rent for, they would be in good shape if they were to leave and simply let a management company handle their home as a rental. And when prices return (and they must because they are below cost and inflation is (almost) a given), they stand to make a handsome profit if they choose to sell several years down the road.

This is a truly unique moment in the real estate business.

On the other side of this, it seems to me that rentals this much higher than ownership can not be sustained and that one or the other are going to have to move. Rentals are due for a crash if home prices and interest rates stay low.

[twiggy]

Originally Posted by Ponderosa

Yes, but being a landlord is an option if you buy low like you can now. The reason you and I were/are stuck is that our payment is too high to cash flow our homes as a rental if we leave. But if someone buys today for 1/2 the payment the house would rent for, they would be in good shape if they were to leave and simply let a management company handle their home as a rental. And when prices return (and they must because they are below cost and inflation is (almost) a given), they stand to make a handsome profit if they choose to sell several years down the road.

True, but only some would take on that pain in the butt. lol

[Captain Bill]

Originally Posted by kdog

Well, don't leave us in suspense. What did you say in the cover letter?

Hey, I've spent a lot of money and time studying negotiation, and if a special strategy works for me in a given situation, I'm not gonna share it for free. I share a lot of information on the forum, but not techniques and strategies that I've learned and developed over time that work for me and my clients.

[_Charles_]

I live in the vicinity of Bethany Home and 12th Street. A year ago there were no "bank owned" signs in my meighborhood. Central Phx was spared the worst of the crash at first. But now I am seeing "bank owned" signs cropping up in my area - started right after the holidays.
I am not under water - bought way before the bubble and did not use my home as an ATM when its valuation soared.

[slackjaw]

Originally Posted by wuds

3. people who have owned their home for many, many years. still with a mortgage, and still with positive equity.

Yup.

It doesn't even have to be decades, if you bought before the big runup in prices and didn't use the equity to buy other things you are likely just fine. You saw the value of your home become double what you owed on it, then saw it come back to where you where when you started.

[Ponderosa]

Originally Posted by slackjaw

Yup.

It doesn't even have to be decades, if you bought before the big runup in prices and didn't use the equity to buy other things you are likely just fine. You saw the value of your home become double what you owed on it, then saw it come back to where you where when you started.

I bought mine in 1998 and got a pretty decent price on it. I would be very lucky to get what I paid in 1998 if I had to sell it today and would certainly be upside down (regardless of equity extractions) when considering costs of sale into the deal. When I decide I can no longer take living in Phoenix, I will rent my place while I move to a new home and then default. There is no other way these days which is why I see no end in the depressed market unless we see substantial renewed population growth in Phoenix leading to a shortage of homes.

[BabsJohnson]

I've got to run over to 12th. St. and Bethany to see what's for sale. I'm buying rentals in decent areas with my savings. This is sure better than interest that Chase or Wells Fargo pays. My retirement income is better than when I worked. If my central Phoenix neighborhood gets any worse than it is, I'll move to a different house. I could just rent the one I live in and buy a really nice house in a better area with a huge mortgage. Think of the tax deductions on a primary residence to offset the tax liabilities on the rentals.

[azriverfan.]

Originally Posted by Ponderosa

You bring up a really interesting point. I have been house-hunting with a friend the past couple weeks. I was stunned to learn that it costs a little more than half as much to buy a comparable home as it does to rent one. We are talking hundreds of dollars difference per month! A good-shape 2000 sf foreclosure in my area can be had for about 800 per month mortgage and rents for about 1300-1500. That's a lot of money in the bank on buying versus renting. You would think people would be standing in line to buy.

It doesn't matter how much things cost when your source of income is shaky at best. People do not want another financial obligation especially when the perceived notion is home values could still decline. Furthermore, many of these deals you speak of aren't so great when examined in further detail. Many have weak floor plans, poor landscaping or high maintenance landscaping, non-contemporary finishings, lack of amenities like swimming pools. Many are enjoying renting because they don't have the financial obligation and can live in a home they would normally have never been able to afford. Even in my neighborhood, there is a house for sale that is going for cheap but it's a problem child and everyone in the neighborhood is aware of it and is not surprised why it can't sell. And when you account for maintenance, property taxes, HOA fees etc, it's not such a bargain to own especially if you lack job security and aren't sure if you are going to remain in Arizona for the next 7 years or so. It's a huge luxury to not worry about pest control, pool maintenance, basic lawn care, HOA fees, weeds, tree trimming...many of which are included in many rentals. People are realizing renting is not a bad deal