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Why not suffice it to say that renting simply works out better for those who are not up to home ownership and home ownership works out better for those not suited to rent?
Saying that renting simply works out better for those who are not up to home ownership is elitist at best and possibly not knowledgeable. There are people out there like Humanoid (looking to buy in cash in 2-3 years) who clearly could be homeowners if they chose to do so, but are choosing to be renters until the market declines further.
There are renters out there who are not "up to home ownership" but there are certainly renters out there who are but are waiting for a better deal. There are also renters out there who prefer to rent then to buy because of the flexibility it gives them.
This is all coming from a landlord in Chicago who is getting ready to buy his 3rd building and will be looking to buy more properties in the future, not some bitter renter.
Thank you for not only calling me an elitist who is possibly 'not knowlegdable, but for also proving my point in your very own words. Odd how they mirror exactly what I said. Odd indeed, yet I'm the elitist.
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Originally Posted by SoCal Bottom Rider
'renting simply works out better for those who are not up to home ownership'
That right there is a pompous and arrogant statement. You sir, are stirring up the barrel, not the pot!
So SBR, in your mind, everyone out there is ready, willing, able and interested in home ownership huh? I love the way folks are able to mysteriously read into a post and be fully aware of the posters intent with nary a second thought. I guess that's my pompous arrogance..
I don't think we are 1-2 years from a recovery. I think we will be close to bottom price-wise nationally and then prices will stay there for 2-3 years before any real recovery price wise is seen. It may take longer in areas like California. If I were looking to buy in bubble areas like cali or florida I would be looking to buy in 3 years. For more stable yet still declining areas like Chicago I am saying 1-2 years is a good time to buy but do not expect prices to go up after that for another 1-2 years here.
403b plan Humanoid, are you some teacher making 60K a year giving us financial advice? I hope not.
I don't think we are 1-2 years from a recovery. I think we will be close to bottom price-wise nationally and then prices will stay there for 2-3 years before any real recovery price wise is seen.
Right, that is what you've been saying for months. But that is sort of the problem, much has happened yet you aren't updating your view of matters. That shows me that perhaps you don't get whats going on, but then again your mental well being depends on not understanding what is going on.
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Originally Posted by Humboldt1
403b plan Humanoid, are you some teacher making 60K a year giving us financial advice? I hope not.
Your comment here is odd for two reasons. Firstly, teachers in general don't even have 403(b)s, rather some sort of pension. So why you'd jump to that conclusion is beyond me. Secondly, whether I'm a teacher, a nurse, a gardener, a professor or whatever else it doesn't matter. The validity of an argument does not depend on the source of the argument, perhaps this is a hard notion for you. You seem more impressed by status, than logic.
Right, that is what you've been saying for months. But that is sort of the problem, much has happened yet you aren't updating your view of matters. That shows me that perhaps you don't get whats going on, but then again your mental well being depends on not understanding what is going on.
Your comment here is odd for two reasons. Firstly, teachers in general don't even have 403(b)s, rather some sort of pension. So why you'd jump to that conclusion is beyond me. Secondly, whether I'm a teacher, a nurse, a gardener, a professor or whatever else it doesn't matter. The validity of an argument does not depend on the source of the argument, perhaps this is a hard notion for you. You seem more impressed by status, than logic.
Humanoid, I was kidding, of course. Actually, we lost more in the stockmarket between 1999-2000 than we did in the last 8 years since. It recovered, is my point, and actually, we are FOREVER talking about had we not "cashed out" some of our stocks in 1999 to have a bigger down payment on the house we bought in 99, we would have probably lost that too. Instead, we "invested" it in that home and we did just fine on our return when we recently sold this year, as I've already posted.
I've never put money under a matress and I am sure you have not either. But this almost "panic mode" that you seem to post with and that others read and get soaked into, is why I posted such sarcasim. Remember the millinium and Y2K? The panic was just rediculous and people were stashing water, canned goods, finding below ground "shelters" as if the world was finally coming to an end. I remember watching the special on ABC with Peter Jennings(God rest his soul) and watching all the lights and everything working in Australia. We had a PARTY that new years eve and with all friends around, teased one and told him that he was going to supply all of the bottled water for soccer and baseball season to all our kids for the 2000 seasons since he had been one to "stock up" his basement with it in preparation.
I think we are all aware of the financial situation and unfortunately, it hits some harder than others. But the truth of the matter is, we've gone through this before and we'll "get out of it again". I'm already a little pissed my taxes are going to be paying for all of these bailouts but what can we do? Our problems in this country are many and are debated daily. My wife works in healthcare and it is a hot button on a daily basis as to those who get "free health care" though public aid, with all the royal treatment if not more, than those who pay their own insurance get. The government doesn't pay for public aid, even though they regulate it, WE, the insured tax paying citizens do. So once again, we pay for the bad business decisions that the banking/financial/mortgage industry made by lending out ALL of this money to those that should NOT have gotten it, period! And once again, the poor, irresponsible get the relief and benefit form it, while the rest of us pay for their mistakes as well. And I'm not just talking about mortgages. Yo can bet these same types have a plasma in every room, all the "technology" you'd ever want, every family member with a cell phone to "text by the thousands", designer clothes on their backs, and so much more- ALL BOUGHT ON CREDIT they now can not pay for!!!!!!! So even though some of us don't get into great detail about the analysis of our real estate market, financial markets, and "macroeconomics" as you put it, it doesn't mean we are all not aware of EXACTLY what is going on. We are!
Right, that is what you've been saying for months. But that is sort of the problem, much has happened yet you aren't updating your view of matters. That shows me that perhaps you don't get whats going on, but then again your mental well being depends on not understanding what is going on.
This is a personal attack. I understand what is going on better than most as I am financially involved. I tried to give you credit for having $350K in cash in 2-3 years to buy a place, but perhaps you were just full of it.
FMV and I don't often agree, particularly about where Chicago real estate is headed (I am more pessimistic), but I feel that at least we have mutual respect. I don't get this from you.
This is a personal attack. I understand what is going on better than most as I am financially involved. I tried to give you credit for having $350K in cash in 2-3 years to buy a place, but perhaps you were just full of it.
Your financial involvement is precisely why you have a motivation (psychologically) to not understand it. Furthermore, you rarely if ever comment on the actual economy above and beyond mentioning your predictions for Chicago real estate recovery. I've asked you many times in what sense real estate is going to "recover" without answer. Also, I don't mind at all if you think I'm "full of it", I'd most likely think the same.
I admire your candor. Maybe you will purchase a place for cash in 2-3 years. I guess the only thing that rubs me wrong about you is how you seem to doubt I will succeed. Whatever, I guess I will do it whether you believe in me or not. I too could buy a place for cash in 2-3 years but I choose to take on debt and buy another place when the market gets closer to bottom in 12-24 months here in Chicago.
I stated in other threads today how the govt action scares the hell out of me and how I think things are really bad.
BTW, most of my family assets are tied up in commodities via corn and soybeans futures, which have done quite well in the past couple of years, though crop inputs have risen quite a bit recently. Land prices correlate with harvest prices.
Commercial banking and real estate in Chicago is ultimately a small piece of my game plan, though I do hope to establish my financial independence from the family by making my fortune here in Chicago. I don't want people coming to me and saying "You are only where you are at because your parents gave you this."
I, like you, believe things will get worse before they get better. I just think a recovery will start to happen in 5 years. Economy-wise, we still aren't in recession, though we may be approaching it.
With regards to a real estate recovery, I see prices going down for the next 12-24 months in markets like Chicago. For FL and California and Vegas I see prices dropping for the next 2-3 years. I think areas like Boston may be only 12-18 months from bottom price-wise. Then, we will see a period of flat prices for 2-3 years.
For Chicago, this means price drops rest of 2008 and 2009, with bottom achieved price wise in 2010, then flat prices for rest of 2010, 2011, and part of 2012, with prices finally starting to rise in 2012.
Nationwide, this means price drops rest of 2008 and 2009, with bottom achieved price-wise in 2010, then flat prices for rest of 2010, 2011, and part of 2012, maybe even 2013, with prices finally starting to rise again in either 2012 or 2013. Basically, I don't see much difference time-wise in recovery for nation vs Chicago, though I do think declines in Chicago will be less. I don't think the recovery in Chicago will be any better than nationally.
For bubble markets, timing maybe a little longer, but recovery will take longer because prices fell further.
Someone who buys today will see their property go down in value until 2010, when prices bottom and then I would predict it will take until at least 2012-2013 in Chicago for them to get back to their purchase price, at least until 2013-2014 nationwide, and 2015 or beyond in bubble markets. Essentially, I don't believe it is wise from an investment perspective to buy a home for the next couple of years.
Those who bought in 2004 and 2006 (including myself) will see our properties go down further in value before they go up again.
Specificially with my 4 flat in Chicago purchased for 7/23/06 for $360K, it would sell for $325K now. By early 2010, I would expect it to sell for $280K-300K, the bottom of the market. I think it will be 2012 before it is again $360K and 2013 before it is $385K, which would allow me to break even after closing costs. Clearly, it was not the best use of funds if I were not able to live there rent-free for the past 3 years. Even with the cheap rent, it was not the best investment.
The townhouse in Itasca was purchased 1/20/04 for $215K and is now worth $250K. By early 2010, I would expect it to sell for $200-225K, the bottom of the market. I think it will be 2012 before it is again $275K, which is what it was in early 2007 at the height of the market. It covers my mortgage, property taxes, and association fees, but is not a big money maker.
Both of these properties I put 20% down on, so yes there is the opportunity cost of $121K which could have been used for other things.
I guess the only thing that rubs me wrong about you is how you seem to doubt I will succeed.
I doubt you'll succeed because you're trying to play the same game. What worked investment wise over the last 20-30 years is not guaranteed to happen again, not only that there is now good reason to believe it won't. So many changes are occurring right now. Such as the retirement of the baby boomers, realignment of the global economy, the collapse of high finance etc. Those that do well investment wise in the future will be those that can predict the effects of the gigantic shift in the coming years, playing the same game is unlikely to succeed.
Quote:
Originally Posted by Humboldt1
Someone who buys today will see their property go down in value until 2010, when prices bottom and then I would predict it will take until at least 2012-2013 in Chicago for them to get back to their purchase price, at least until 2013-2014 nationwide, and 2015 or beyond in bubble markets. Essentially, I don't believe it is wise from an investment perspective to buy a home for the next couple of years.
Firstly are you speaking nominally? If so it will take a lot of inflation (of wages) to make your predictions true. Historically the median in Chicago is around 3x median income. Currently, its just a bit below 5x. In order for your predictions to occur via inflation we'd have to see wage inflation of around 5~6% a year. Now, if we aren't just talking about fun and games with inflation then how do you purpose houses are going to appreciate in real terms without another expansion in credit? Anyhow, you are just repeating your predictions. I'm far more interested in the basis of the predictions.
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humanoid
