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A typical, one-bedroom apartment now goes for $1,400 to $1,600, and two-bedroom apartments go for $1,600 to $2,000, Rodriguez said. Rent has increased by 5.6 percent in Salinas from 2007 to 2008, and the vacancy rate - the lowest in the nation - has dropped to 2.4 percent, down from 4.3 percent two years ago.
Rents sure as hell aren't dropping around here. So, again I ask you ...
How am I overpaying if my house payment including taxes, insurance, etc. equals my rent?
Okay so you are either dishonest or have a bad memory. Which is it?
Real estate can't go "only to rent" unless you nationalized property so your question is completely meaningless. But I will repeat: I'm not against home ownership and have stated numerous times its the best financial move so long as you are not over paying and purchasing in a declining market. Once the real estate market correction is over I will here or else where advocate that people should buy a house as soon as 1.) They have a modest down payment, 2.) have an emergency fund, 3) Have stable employment, 4.) Their DTI doesn't exceed around 35.
And as I've stated numerous times, the decision to buy or is different in different areas of the country. Although real estate will be weak for some time, some areas of the country are unlikely to see major declines. Holding out for a 5% decline is most likely not worth it unless doing so doesn't put you at much inconvenience.
Additionally as you seem not to understand it. My claims about buying cash are simply to point out that you benefit the most when you won free and clear. My claim is not buying is a bad choice if you have a mortgage, rather that buying is even better if you pay cash.
How is anything I said dishonest or make me have a bad memory? I have disclosed, IN DETAIL, my own personal data, all of which supports what I just said up to this last post and been dead on consistant with my beliefs and opinions about the market and the differences in your area vs. mine. I also have repeatedly ASKED you to stop "generalizing" the data for CA to the rest on the nation and even though you have now concentrated on a California buyer (Sheri), you still can't give it a rest. What suddenly makes you the expert? She has done her research in detail with the market in her target choice. At times, I have not always agreed with her where foreclosures are concerned (as it was me who didn't understand the magnitude of how many in your state-I do now, and how they are different than most other places) but she has made a wise choice based on why people "buy" homes to begin with- she likes it, it's a place to live where she likes the area and she OWNS it-cash paid or loan, either way! Why must you be so argumentitive and contradictory yourself? Oh, I REMEMBER, you love to stir the proverbial pot- as accused of several times on this forum. And do you honestly think I needed an explanation of why a "nationalized rental market" would be impossible? Duh, that's the point of MY post, to show how ridiculous you sound, not others. Hence, the point of why most, including you, understand why owning is better than renting. If everyone thought like you, and we became a "rent is better than owning" nation, it would be a real mess.
And save your meaningless figures. Renting is part of our nation and the real estate market for specific reasons and those vary, but in most cases, because one can't buy (cant get a loan, have no down pay, bad credit, fresh out of school and first job, etc, etc, etc), one is transient and moves a lot, one does not want the responsibility, one doesn't need to have a place because he/she is single, or married with no kids, or lastly and most always because it's temporary until they find a home to buy! This sums up reasons why one rents, in a nutshell. It is a rare, rare circumstance that ANYONE rents because they think it's more cost effective than buying. Most understand that whatever the market conditions, owning is paying "rent" to something that is theirs, eventually or immediately, if paying cash, as you advocate, and it's theirs until they sell it again, whether at a loss or gain, all that "RENT" they've paid towards it will be obtained at least in part, but more likely in FULL. So this is my last attempt to argue the rent vs. own thing with you. I think most people get it and you'll always have those who want to argue it- those are usually the ones who can't buy, for reasons above.
Was this "honest enough for you ?- again" I believe you have berated me for my "honestly" in past, proclaiming how "you don't care" about my "personal" disclosure of info but all I have said is anything but dishonest! You on the other hand- not necessarily dishonest, but you sure can't seem to make up your mind.
Last edited by fairmarketvalue; 10-26-2008 at 07:15 AM..
I think the issue of rent vs buy is very much an individual one. Most of my adult life I've chosen to own a home.
Looking in the rear-view mirror, I've lived in most of my homes rent free when I add up the tax advantages and the appreciation realized based on the purchase and sale price of my homes.
One of the advantages I've seen to home ownership is the ability to customize where I live to meet my tastes. While some see remodeling and gardening as burdens I've embraced these activities as part of my lifestyle.
When problems do occur in the properties I've owned I get to choose how they are fixed. I know I take on the burden of costs of repair, but my desire to control my own situation is satisfied.
Today we are in a deflationary period relative to housing. In some areas housing price deflation will be greater than in others. As in any market the rational for purchase and purchase price can be argued. Using macro metrics like national median price and sales rates can be somewhat useful to show trends. I know that the numbers reported by me to begin this thread are not reflective of a bounce off of a bottom. They are merely numbers. They are backward looking and not really predictive.
To me, the most important factor is the attitude of people. If people believe in their future then things will improve. People looking for opportunities in times of distress have always turned the tide.
Real estate in California is going to continue to decline. If you buy something today for $200,000 than you could buy in a year for $160,000 you lost $40,000. In fact if you are using a mortgage then you are losing more like $80,000 as you'll pay almost $40,000 in interest with a 30 year loan. That is $80,000 you'll never get back. It doesn't matter what happens to the value of your house. If your house goes up to $500,000 in 30 years you're still out $80,000.
Actually, the situation is even more dramatic as you can earn interest on the money. $80,000 over 30 years is about $2,666 a year. If you put that into a low risk investment at 4%~5% you'll end up losing $155,000~$185,000.
The person that waits a year not only gets a house that is worth $500,000 but an additional $155,000~$185,000. So no, its not presumptuous at all.
All of that is great in theory and, I agree in theory. But when I look at the specifics of my neighborhood ... it's a different story.
What kind of real estate are we talking about? If I hate the design of the cheaper house where I can't set up my furniture where I want it ... if parking is a major hassle for the next 20 years because I compromised with a two car instead of a three car garage ...
If I hate the street because it's too busy with too much traffic ... and if I hate the property because it's a much smaller lot where I'm on top of my neighbors then ... It doesn't matter how much less that house cost because I'll hate living there and will want to sell it and move anyway.
And here's the other problem: I now know a lot of people who live here. Most of those who remain have steady jobs and steady income. This is a pretty desirable area so, I'm not convinced that property values are going to drop that much because ... most of the foreclosures have been sold already.
Yeah ... the bad areas are still dropping in price but ... who wants to live there?
One of the advantages I've seen to home ownership is the ability to customize where I live to meet my tastes.
Very true ... we have dogs, which makes renting a major hassle. And because I'm renting, I can't put in a doggy door, which is driving us crazy. We have to leave the back door open so bugs are always in the house, etc.
Not that it's a major reason to buy but, I am looking forward to having my own house again if this deal goes through.
What kind of real estate are we talking about? If I hate the design of the cheaper house where I can't set up my furniture where I want it ... if parking is a major hassle for the next 20 years because I compromised with a two car instead of a three car garage ...
You said this all before. And...a year later there are other houses you want to purchase.
Quote:
Originally Posted by sheri257
And here's the other problem: I now know a lot of people who live here. Most of those who remain have steady jobs and steady income. This is a pretty desirable area so, I'm not convinced that property values are going to drop that much because ... most of the foreclosures have been sold already.
If it was such a desirable area why did prices decline so much already? You just said in another post that there are another 20 or so defaults. So, whether most of the current foreclosures have been sold or not isn't all that interesting. Additionally, even if most of the foreclosure activity stops that doesn't mean prices will stop declining, it will just mean the declines will moderate.
What is driving the declines is not foreclosures, its the reduction of demand due to changes in the mortgage markets. You see, not everyone is able to get a risky 0% loan subsidized by tax payers. If you didn't have access to a VA loan its unlikely you'd be able to pay the house.
If it was such a desirable area why did prices decline so much already? You just said in another post that there are another 20 or so defaults. So, whether most of the current foreclosures have been sold or not isn't all that interesting.
I was referring to my realtor's statement regarding the entire south county area where she's waiting for 25 bank owned homes to hit the market ... not my particular neighborhood.
After checking out a bunch of properties this morning ... I feel like I've made the right decision. That is ... if the bank takes the offer at all.
I won't waste my time reading your ranks anymore. I read the first sentence of each paragraph. I say you are dishonest because you are claiming here that I'm "against buying" when I have said in other thread (where you were involved) that I intend to purchase a house sooner or later.
And yes save the "meaningless figures". This about sums up your positions. You aren't interesting in looking at things and seeing why buying in a declining market can be a bad idea. If you are going to buy in a declining market then you need to understand how much money you could potentially lose to make a good decision. If you disagree with my calculations then say so, but calling calculations "meaningless" is odd to say the least....
After checking out a bunch of properties this morning ... I feel like I've made the right decision. That is ... if the bank takes the offer at all.
You think you made the right decision because you are assuming a number of things happen, soom which are unlikely to happen. Now you could be right, but you won't know if you made the right decision for a couple of years.
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buy, for reasons above. 
