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Comparing the original to the current ask is not the best way to get the pulse of a local market. Sellers can and often do ask prices that have nothing to do with the reality of the market, any market, at any time.
Curious what you think good evaluating methods are.
Definitely agree that one wackjob original list and successive drop shouldn't set the tone for a whole area, but there are lots of them out here.
Have also looked at price trend from 1994 to present, inventory, days-on-market. Don't know how to do a price/income or price/rent out here on a local level, since the census dates don't match and everything has changed so much in the last 7-10 years.
Your posts always make lots of sense to me, so any additional insight would be genuinely welcome.
Rent on the same home isn't cheaper than mortgage + taxes + insurance, and maintenance is also figured into the rent. Otherwise, landlords would be going out of business right and left and would have been for as long as there've been landlords, because you can't run a business at a loss that way. Those are the costs of doing business (purchasing the "equipment" you need to run the business - in this case, the house - and maintaining it). The very cheapest rent you could get has to cover all of those, with no income for the landlord at all.
The thing you are missing in your analysis is that most landlords purchased their home below it's current market value. So in essence, you are comparing mortgage payments based on prior (and lower) market values against current rent prices.
It is very unusual to find a home that can immediately cash flow. The ones that can pass that test are most often at the low end of the market, and many times not in the condition that someone who can afford to buy them would want to live. Not to say they aren't out there, but you're making it sound like they are common. Investors do the math on homes and end up having to be extremely selective, which only proves the point that most homes are not priced to cash flow.
If you were right, everyone would be a landlord, because we could simply buy a bunch o' houses and let someone else pay them off. It just doesn't work that way, and I think you know that.
There again. That's because you are more interested in your wallet than finding a nice home for your family.
These ideals are not mutually exclusive! Being able to find a nice house that is more affordable allows you to provide more for your family in other ways as well as greater flexibility in your finances and greater peace of mind. I'm not talking about a $200K home here but a $750-850K home which is typical in middle to upper middle class areas where I live. The homes are still overpriced. I will not pay for a home that is clearly going to lose significantly more in value in the next 1-2 years and a trend to go up will not likely happen for several years (possibly 6-10 years) . As a younger executive, I move around quite a bit so I doubt I'll be in this home that long.
Curious what you think good evaluating methods are.
Definitely agree that one wackjob original list and successive drop shouldn't set the tone for a whole area, but there are lots of them out here.
Your posts always make lots of sense to me, so any additional insight would be genuinely welcome.
We see some jaw dropping reductions in my neck of the woods. In most cases, they are relatively meaningless, cause the original prices are nothing more than a fantasy and without defense. There is at least one whack job, in every neighborhood.
I am not into " averages" in areas where there is a tremendous spread in prices. One year it may be dumpies for tear down followed the next year by sales of the Mc Mansions. This says nothing about the great middle market.
Some of the best values right now in the greater Chicagoland, ( if one is looking for a primary residence) , are properties owned by relocation companies. They are ready to deal rather than risk over wintering into a uncertain future. If I were looking to buy, right now, this is where I would put my time.
This house is also available for rent for $2800 a month:
Rentals - 328 MARSHMAN, HIGHLAND PARK, IL, 60035 - Realtor.com (http://www.realtor.com/rentals/search/listingdetail.aspx?zp=60035&ml=3&mxp=27&bd=4&typ=4 0&sid=96a3ad433fe64f719728a6b0192fb4fc&pg=3&lid=11 03622793&lsn=26&srcnt=31#Detail - broken link)
I think the "individuality" that Bill Hitchcock mentioned with reference to markets vs. specific properties also applies to renting. Some rentals are a good deal, others not so good.
There are a lot of accidental landlords out there right now.
This is a very special unique, 1911 architectural gem on an incredible piece of property, waiting for a buyer who can appreciate it and accept or work with it's limitations, no AC and two car garage, for starters. All things considered, the ask price is in the ball park, for the area.
There is no debt so the rent is going to cover the substantial property taxes, and then some. I am going to speculate this may be an estate sale or the long time owner relocated elsewhere, willing and able to wait for the right buyer, who will appreciate and love the house.
Right now, it makes more financial sense to rent this place. No doubt, the owner has no intention of renting it out for the next 30 years. It's a bookmark- nothing more or less.
The reasoning behind requiring them to print two positive articles (about anything, you'll note I said) for every negative one is to counteract the "the world is ending" spin (to use your word) that is put on everything by focusing so heavily on the negative. Rather than "spin", it's a suggestion to bring some balance (which, once established, could be maintained by one positive for every negative story - it's just so far out of whack now that it needs to be weighted heavily towards the positive).
I never said the world is ending - not sure where you came up with that. I said that a 4% foreclosure rate (which you thought was good news) was enough to kill a number of large institutions holding those loans. I said this because it did kill them - no spin needed on that simple fact. You see that as a negative for whatever reason - I see it as a necessary positive, weeding out weak players in a market that took too much risk and warning the remaining companies why lending standards exist. So this issue isn't black and white by any stretch - you have your reasons for seeing this as papers spinning a negative story while I see it as fairly neutral reporting of an important event. Who gets to impose their will on whether this is a positive story which is allowed to be printed or a negative story which has to be censored for the good of the unwashed masses?
Anyway, I still don't get your point of why the papers should be your personal spin machine. If the problem really is imbalanced reporting, why is imposing an requirement to make them even more imbalanced, just in the direction which benefits you, any sort of solution?
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Remember, this started with my saying that those who believed that what they're told by the media is "the truth, the whole truth, and nothing but the truth" are naive. A wise man once said there are three kinds of lies, lies, damned lies, and statistics. Lies can be told even with facts, if you're selective enough about the ones you choose to present.
So how exactly would you report the current effects of real estate on the economy?
Follow the money. Media has learned that it also carries the potential of turning off ad income.
The ad income cares about the readership. If the media turns off readers it turns off ad income.
Of course some companies may prefer certain messages and only support programming that displays it (like HGTV). But who exactly benefits from doom and gloom? Maybe a few mutual funds. Everything is rigged to put a positive spin on things not a negative spin, which makes claims about the media causing this in some way rather funny.
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