The U.S. Housing Bust is Over - WSJ (new agent, banks, prices)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I have to laugh at such claims. I read the other day that housing sales were up; but reading the fine print of the survey revealed that most were foreclosures.
In March 2012 I was looking for investment properties. I saw several houses in the price range I was looking in the neighborhood I wanted (55+ community, great amenities). Unfortunately I was unable to purchase at that time.
Now, 4 months later, I can no longer afford the houses in that community. They have all gone up at least $10,000 to $20,000. I did buy 2 homes in the last couple weeks in a 55+ community, but the amenities are not nearly as nice and I won't be able to get as much rent from these 2 homes as I would had I been able to purchase in the original community. And, no, they were not foreclosures nor short sales.
I looked for 3 bedroom 2 bath homes in my price range and they don't exist, at least not in a neighborhood where I would want to own rental properties. Four months ago I could have had my pick of a dozen or more.
I'm in Ocala, FL. I personally live in an equestrian community. The house I purchased 2 years ago for $245K is now valued at $280K and the home down the street from us, similar but without some of the upgrades we have, recently sold for $380K, cash deal. Homes in my neighborhood are selling in 30 days or less.
It's trying to come back, even here in Ocala with its 10% unemployment rate.
I stopped thinking of real estate as an investment in 2007
Primary home should never be viewed as investment and that's really caused this mess.
Who's worst off in 10 years (2005-2015)?
1. Someone who purchased at peak 2005 and whose home has gone down by 35% (the national average). Assuming they paid into principal for 10 years....they should knock off original mortgage by 33% or more. Let's say their mortgage (principal/taxes/insurance/hoa etc) equals about $3500 a month (before tax deductions) plus maintenance of home (
or
2. Someone who rented similar home for $3000/month for 10 years (assuming no tax deductions and no rent increases).
The rough math says they both (both renting for 10 years or owning home at peak with a 35% decrease in pricing). The math says both end up at the same exact point.
They both end up no equity after 10 years.
The renters don't know if their lease will be renewed or if their rents will increase from year to year (but at the same time gain advantage of be very mobile).
The homeowners while losing 35% of their home value, know they can basically pay the same price per month and it's stable. But they lose the ability to be mobile and are responsible for maintenance on their homes. If they purchased a new home, the maintenance could be close to zero. If it's an older home, it could cost them thousands.
That's why you should never treat your primary home as investment.
Primary home should never be viewed as investment and that's really caused this mess.
Who's worst off in 10 years (2005-2015)?
1. Someone who purchased at peak 2005 and whose home has gone down by 35% (the national average). Assuming they paid into principal for 10 years....they should knock off original mortgage by 33% or more. Let's say their mortgage (principal/taxes/insurance/hoa etc) equals about $3500 a month (before tax deductions) plus maintenance of home (
or
2. Someone who rented similar home for $3000/month for 10 years (assuming no tax deductions and no rent increases).
The rough math says they both (both renting for 10 years or owning home at peak with a 35% decrease in pricing). The math says both end up at the same exact point.
They both end up no equity after 10 years.
The renters don't know if their lease will be renewed or if their rents will increase from year to year (but at the same time gain advantage of be very mobile).
The homeowners while losing 35% of their home value, know they can basically pay the same price per month and it's stable. But they lose the ability to be mobile and are responsible for maintenance on their homes. If they purchased a new home, the maintenance could be close to zero. If it's an older home, it could cost them thousands.
That's why you should never treat your primary home as investment.
Eh. A home on a 15 year mortgage is a fine place to put your money if you plan to stay for the long term.
Eh. A home on a 15 year mortgage is a fine place to put your money if you plan to stay for the long term.
Yes, so true. My next home I am going to do a 15 year mortgage.
But realistically, most people in areas like Los Angeles, SF, DC, Chicago, Boston, NY. A 15 year mortgage will push mortgage payments pass the $4000-5000 mark each month. Sure you save more on interest paid but it's a huge difference between rents at $3000 vs. $4500 mortgage (with 15 year).
Properties with location and all the right, stuff priced to sell often get multiple bids in my neck of the woods and we are not talking foreclosures, here. Conversely, properties priced aggressively and in need of updating continue to make up the majority of unsellables. The longer they sit, the more their values will decline, kind of like used cars.
Yes, so true. My next home I am going to do a 15 year mortgage.
But realistically, most people in areas like Los Angeles, SF, DC, Chicago, Boston, NY. A 15 year mortgage will push mortgage payments pass the $4000-5000 mark each month. Sure you save more on interest paid but it's a huge difference between rents at $3000 vs. $4500 mortgage (with 15 year).
Well it's a lifestyle vs financial decision for many. With the popularity of the 30 year many are picking lifestyle.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.