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Sooo......... Sit tight? Who will raise housing prices again?
Food stamp use still climbing, with no end in sight, meaning more people are making less and unemployment is much higher than the gov is reporting.
Young people have HUGE student dept payments and are not making enough to even cover the minimum payment of a student loan.
On March 25th, the Fitch Ratings Agency came out with a staggering report that shows nearly one-third (27%) of student loans are now at least 30 days delinquent in repayment, and the growing number of students unable to pay on those loans is increasing rapidly. In other words at least*$270 billion*in student loans are no longer current.
Following debt to income ratio's how much will the next generation of home buyers be able to afford? Not much.
Baby boomers downsizing homes.
As millions of baby boomers retire in near future, largest population of americans, they will be selling their homes and looking for smaller ones. When excess inventory hits the housing market, what happens? Prices go down as sellers race to find a buyer, any buyer.
Let me ask you this simple question? Have you been renting for the past 5-6 years? Do you have a family? Cause chances are you won't be able to live in a one bedroom apartment and save on rents much with a single family home.
On the other subject I think mortgages need to be like student loans. Make it so you can't default. Also student loan defaults are very misleading. Many of the worst defaulted are from vocational schools or beauty schools. 27% default rate is getting better. Those schools used to have almost a 50% default rate. So we are making progress.
Let's spin it another way. The stock market has essentially doubled in 3 years. I diversified my assets.
Similarly, I'm renting a ~2,400 sq foot condo now, and it's pretty cheap. Space isn't much of an issue, but the problem is that I have no insentive/ desire to live the way I want (meaning painting walls, getting nicer carpet, newer appliances, screening in the deck... People (generally) don't do these things on a rental, so while it saves money, it's not ideal for quality of life (if you want those things). Also, the landlord could sell at any time, and I have to leave (I think I get like 3 or 4 months).
This quote is straight from us dept of education. I don't make this stuff up on default rates. People don't realize how misleading student loan rates are until they read the details. It's always beauty schools vocational schools and for profit schools that make up the high percentage of defaults.
"Under current rules, all schools with default rates of 25 percent or greater for three consecutive years face loss of eligibility in the federal student aid programs. This year, two schools are affected by this provision: Charleston School of Beauty Culture, Charleston, W. Va.; and Human Resource Development & Employment-Stanley Technical Institute of Clarksburg, W.Va. Schools with a default rate greater than 40 percent in the latest year may lose eligibility to participate in the federal loan programs, and this year three schools are subject to this provision: Cuttin' Up Beauty Academy, Denver; Academy of Healing Arts, Las Vegas; and Clinton Junior College, Rock Hill, S.C.".
This quote is straight from us dept of education. I don't make this stuff up on default rates. People don't realize how misleading student loan rates are until they read the details. It's always beauty schools vocational schools and for profit schools that make up the high percentage of defaults.
"Under current rules, all schools with default rates of 25 percent or greater for three consecutive years face loss of eligibility in the federal student aid programs. This year, two schools are affected by this provision: Charleston School of Beauty Culture, Charleston, W. Va.; and Human Resource Development & Employment-Stanley Technical Institute of Clarksburg, W.Va. Schools with a default rate greater than 40 percent in the latest year may lose eligibility to participate in the federal loan programs, and this year three schools are subject to this provision: Cuttin' Up Beauty Academy, Denver; Academy of Healing Arts, Las Vegas; and Clinton Junior College, Rock Hill, S.C.".
I don't think the defaults in student loan rates are misleading. Yes, you're right that figures could be skewed from vocational and beauty schools which I see why you're saying that it's misleading. However, if you just take the fact about how price of college tuition is rising at an alarming rate with very easy loans that almost anyone can obtain. As well as all of these online colleges popping up every year. This system is going to collapse in the near future. I mean, from my first job when I just started working out of college, I knew so many people taking online MBA classes from worthless schools that they're just piling on debts.
National averages are meaningless.Some areas are recovering. Some areas have yet to bottom. Some places will recover sooner than other places. Some places may never recover in our lifetime.
National averages are not meaningless at all. It's good to get a grasp of the macroeconomics, the big picture. It's much easier to win when the entire market is doing well than trying to beat the market in a declining time. True real estate investors will make money in any kind of market, but very tough to do so.
National averages are not meaningless at all. It's good to get a grasp of the macroeconomics, the big picture. It's much easier to win when the entire market is doing well than trying to beat the market in a declining time. True real estate investors will make money in any kind of market, but very tough to do so.
Ummm......FALSE!
I worked for a guy that has been in shopping centers for 30+ years. He lost a major tenant (chap 7) and that particular center never survived after losing the anchor tenant. He defaulted on the loan that he personally guaranteed for over 25MM. Bank sued, got a judgment and he was forced to declare bankruptcy and in the process lost his primary residence (couldn't afford the mortgage/taxes/insurance etc).
He built this property from raw land in 2005. Area crashed after the boom, property sold at auction for less than 8mm.
What I don't get is nationwide prices are about 34% off peak (2005/2006). So assuming it doesn't get much worse (it could still sink another 5-10%). We are at 2002 levels in most parts of the country and 1999-2000 levels in the hardest hit states (2000 is about time of the boom). Even if homeowner brought at 2005 prices and put zero down. By 2015, they should have eaten into the principal by at least 1/3 (33%)? right? We are already in 2012. So who's worst off? Someone renting for the 10 years (2005-2015) or someone sitting tight and owning the home for 10 years even with the 30-40% price decrease.
Depends on how much rent is compared to a mortgage at 30-40% above market value.
I worked for a guy that has been in shopping centers for 30+ years. He lost a major tenant (chap 7) and that particular center never survived after losing the anchor tenant. He defaulted on the loan that he personally guaranteed for over 25MM. Bank sued, got a judgment and he was forced to declare bankruptcy and in the process lost his primary residence (couldn't afford the mortgage/taxes/insurance etc).
He built this property from raw land in 2005. Area crashed after the boom, property sold at auction for less than 8mm.
I guess he's not that great of real estate investor.
My point of the post is the false statement by realtors stating that only your local market matters. That is absolutely false b/c the entire market does influence your local market and it's very important to pay attention to the entire market if you're entering into real estate.
What I don't get is nationwide prices are about 34% off peak (2005/2006). So assuming it doesn't get much worse (it could still sink another 5-10%). We are at 2002 levels in most parts of the country and 1999-2000 levels in the hardest hit states (2000 is about time of the boom). Even if homeowner brought at 2005 prices and put zero down. By 2015, they should have eaten into the principal by at least 1/3 (33%)? right? We are already in 2012. So who's worst off? Someone renting for the 10 years (2005-2015) or someone sitting tight and owning the home for 10 years even with the 30-40% price decrease. Money is being thrown away in rents or a declining real estate market. It's just the psychology of Americans who think being underwater is the end all. It's not. Sit tight.
If you're staying put for 10 years and your mortgage is not too much more compared to rent, you could be better off. But again, it's the tough part of staying put for 10 years.
Realtors like to point out that you're throwing money away renting and after you stay put for 30 years, you'll be mortgage free when you retire. Well, if that's the case and you plan to stay forever, then who the hell cares if you're underwater right now, or your house value dropped by 30-50%. You're staying there forever so selling price doesn't matter if that's the case. Unfortunately though, especially with today's tough job market, people move and don't stay in the same town their entire life like people used to.
If you're staying put for 10 years and your mortgage is not too much more compared to rent, you could be better off. But again, it's the tough part of staying put for 10 years.
Realtors like to point out that you're throwing money away renting and after you stay put for 30 years, you'll be mortgage free when you retire. Well, if that's the case and you plan to stay forever, then who the hell cares if you're underwater right now, or your house value dropped by 30-50%. You're staying there forever so selling price doesn't matter if that's the case. Unfortunately though, especially with today's tough job market, people move and don't stay in the same town their entire life like people used to.
What I am saying is most can still rent out their properties even if moving. They can hold onto property and eventually be even. It's just people want the quick fix. Will they lose money on rents? Possibly especially if they brought at peak. They can make up some of that money by eliminating unnecessary spending easily (smartphones, cable etc) But the main issue is people are what I call generation now. They want to be made whole NOW. Americans were taught that no one loses money on real estate. And that thinking has got to change.
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