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On a side note. the Forbes article lists Raleigh's population at 408,985, the highest I have seen. Anyone know if this correct?
I wondered about that myself. I did some digging and the best I can figure is that are including the city's ETJ. I did find something that showed the ETJ to be about 405,000 recently. That's the best I can guess.
Also remember that RealtyTrac has a history of inaccurate information. Some cities and counties have critizied the way they come up with those numbers and that homes are counted 2-3x.
For example, a NOD is filed... thats 1. Then the homeowner brings it current but again defaults a few months later, it is counted as a brand new default so 2. Then the home goes into foreclosure, many times they count that again as a "new foreclosure" so that is 3.
So sometimes the same home is counted as being foreclosed 3-4x according to some reports. Many local governments in CA, FL and NV (which you think know how many foreclosures are occuring in their area) say that the #s on RealtyTrac are often much higher than their lists of homes in foreclosure.
Much like Zillow... RealtyTrac is a good site to get some general housing info but do not believe every figure you read.
Just under 1% real return is the historical average for house appreciation for the US - research has shown this, and it makes sense. Real estate can't grow above people's ability to pay for it (i.e. the rate of inflation plus or minus a bit) otherwise no one can buy it.
Tax deductions just mean you pay less interest than the mortgage rate. It doesn't gain you free money or anything like that.
And this area has been late to get started in the downturn - things here only started to slow last year, and prices really hadn't dropped until the end of last year. I don't see why that also wouldn't make us late to recover.
That's true. Also, be honest about your ability to stay in the house for 5 years or more to build up enough equity to be able to move without owing more than the house is worth.
The historical average in the US for real estate appreciation is 6%. Also, a person can get a $150,000 mortgage on a townhouse for the same or less than renting the same amount of space, including HOA fee and taxes. When you then write off the interest & taxes you are actually saving a boat load of money over renting.
The historical average in the US for real estate appreciation is 6%. Also, a person can get a $150,000 mortgage on a townhouse for the same or less than renting the same amount of space, including HOA fee and taxes. When you then write off the interest & taxes you are actually saving a boat load of money over renting.
Those gains are nominal, not real. In addition, you are not taking into account the offset that occurs for maintenance of the home (siding, roofing, HVAC, etc). The 6% appreciation also does not take into account the other costs of home ownership such as hazard insurance and property taxes.
Also, for someone looking to leave the area for whatever reason, the house is an illiquid "investment" and may take a considerable amount of time to sell. While that's an indirect cost of home ownership in any scenario, it's particularly dangerous in a slow market, and especially when someone recently bought is too stubborn to lose a portion of their downpayment or recent upward paper gains.
The historical average in the US for real estate appreciation is 6%. Also, a person can get a $150,000 mortgage on a townhouse for the same or less than renting the same amount of space, including HOA fee and taxes. When you then write off the interest & taxes you are actually saving a boat load of money over renting.
Plugging in mortgage calculator, $150K mortgage (assuming no money down b/c the down payment could be invested in some other security):
$900 monthly payment
include $100/mo for maintenance, $120/mo taxes, and $50/mo hazard insurance, and whatever HOA fees, say $50/mo, totals 1200+/mo, take away 100-200 for tax deduction, about $1000/mo. PMI plays here, unless you piggyback.
I would not consider this a boatload of money vs. a comporable rent scenario, and mobility has it's own benefit .
In addition, rent probably escalates at a rate commensurate with property tax/hazard ins increases.
Just started to follow this thread so hopefully this isn't a repeat. Being new to the Triangle I have learned that others did what I would not do. That is they bought here before they sold up north or elsewhere. I have met a few down here who are still holding two houses. Remember the slowdown up north began about two years ago and builders here were still taking contingencies here into 07. So now the house here is done and you still haven't sold do you drop your offer to buy or do you do a bridge loan assuming things will get better in the second half/spring of 07. Oooops they didn't, ouch I have two mortgages, yipes do I foreclose on the one up north with all my equity or do I walk away from the one here? What to do? Does this sound like a feasible scenario. I don't have many thoughts on these kinds of things so I don't know if I sound clueless or not.
Plugging in mortgage calculator, $150K mortgage (assuming no money down b/c the down payment could be invested in some other security):
$900 monthly payment
include $100/mo for maintenance, $120/mo taxes, and $50/mo hazard insurance, and whatever HOA fees, say $50/mo, totals 1200+/mo, take away 100-200 for tax deduction, about $1000/mo. PMI plays here, unless you piggyback.
I would not consider this a boatload of money vs. a comporable rent scenario, and mobility has it's own benefit .
In addition, rent probably escalates at a rate commensurate with property tax/hazard ins increases.
There was a time when I believed in the numbers you put forth. However, after 30 years of not owning my own home and struggling paycheck to paycheck I made a change. I took the only $3500 I could get my hands on and bought my own home. Over 12 years, I ended up buying 4 homes and selling 3. I turned $3500 into hundreds of thousands dollars. I never would have been able to do that renting. I do not make very much money at all, but I knew that renting was just throwing money away. What is it that almost every millionaire has...............it's real estate. There is a reason for that. The numbers you chose to use are not exactly true to cost. I currently own a townhome for LESS than the others rent for, INCLUDING all the costs you mention and then I get the tax break, which in the 28% tax bracket ends up being hundreds per month.
To be successful in real estate you need to follow 4 simple rules:
1) Choose a home in a desirable area (It does not have to be expensive, just in an area that has something going for it).
2) Only choose a FIX RATE mortgage. If you can't afford the current fixed rate mortgage, you should not buy the house. That is the one rule I wish the government would create. Ban the use of adjustable rate mortgages.
3) Only buy within your means. Better homes will follow later.
4)Start small and take what profit you make and use just enough to put 20% down on the next home and invest the rest. Never leave too much equity locked up in the home. Staying as liquid as possible will prevent problems should you be out of work for a time.
If people followed these 4 simple rules, I would argue that 99% would profit significantly over the years. You may stall for a few years during a lull, but then excel during the good times. Be happy where you live and know when to make the move. I struck gold 4 times in a row.
Just started to follow this thread so hopefully this isn't a repeat. Being new to the Triangle I have learned that others did what I would not do. That is they bought here before they sold up north or elsewhere. I have met a few down here who are still holding two houses. Remember the slowdown up north began about two years ago and builders here were still taking contingencies here into 07. So now the house here is done and you still haven't sold do you drop your offer to buy or do you do a bridge loan assuming things will get better in the second half/spring of 07. Oooops they didn't, ouch I have two mortgages, yipes do I foreclose on the one up north with all my equity or do I walk away from the one here? What to do? Does this sound like a feasible scenario. I don't have many thoughts on these kinds of things so I don't know if I sound clueless or not.
Another facet of the housing crisis resulting in foreclosures: buying a home in the new location before selling the old one elsewhere! Yes, yes, I know the houses were selling like lemonade on a hot July afternoon and people thought it would continue but all that goes up must come down and a much safer bet would have been to rent in new location until the former home sold.
I know of people who carried the two-mortgage monkey on their back for a while and let me tell you, I can not think of a worst case of emotional/financial entrapment....you can not MAKE someone buy your home and dropping the price repeatedly is a slap in your face as we Americans wear our homes like a badge of honor!
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