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Old 11-16-2009, 01:35 PM
 
584 posts, read 1,337,965 times
Reputation: 476

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Quote:
Originally Posted by santaclara34 View Post
I guess you people must not pay attention to the numbers. Unemployment is getting worse every week. Home prices are falling. Why would you want to buy now when all economic indicators indicate that sinking your savings into a mortgage is likely a very bad idea? Unless you have a very steady GOVERNMENT job, you are at risk of losing your job (your income) in this economy. Unless your local market is such that you can save money by buying (as I said before, BUYING LOW), you are dumb for buying. What is the hurt in waiting? It's not like home prices are going to suddenly skyrocket the minute the economy improves. Predictions are a flattening in prices or a very slow increase. A lot of people are getting caught up in the tax credit/NAR hype machine and making a big mistake. Remember: the job of a Realtor is to separate you from your money, not the other way around.

Let's say caravan has to sell that home she bought in one year due to some catastrophic income loss. Even if she gets what she paid for it (497000), she is still going to be out all of the money it cost to close that mortgage, the maintenance/repairs of the house for one year, the taxes, the fees, the insurance, the extra utility costs, and most costly: her time and effort.

Anyone who knows anything about real estate knows that jobs are the LIFEBLOOD of the housing market. We are now at 10% unemployment. Some cities are much higher. Given the likelihood of further job losses and the accompanying home price declines, I see little reason for most Americans to rush into buying a home right now. If something happens to your income, it's a lot easier to come up with rent (and/or you can always easily move into a cheaper place) than a mortgage payment+all of the costs associated with a (possibly overpriced) house. Really depressing, as I myself am dying to get out of my dingy apartment and back into a house.
Put me on your dumb list as well since i just bought a house paying cash. I love to be dumb while everyone is trying to be smart. Get the idea do you ?
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Old 11-16-2009, 02:39 PM
 
Location: North Carolina
756 posts, read 1,650,951 times
Reputation: 289
Quote:
Originally Posted by Discovery1 View Post
Put me on your dumb list as well since i just bought a house paying cash. I love to be dumb while everyone is trying to be smart. Get the idea do you ?
Amen. Color me dumb, too! At least I'm not stupid.
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Old 11-18-2009, 10:32 AM
 
4,538 posts, read 10,607,861 times
Reputation: 4073
1.) Most definitely makes sense to buy IF mortgage is lower than rent AND you intend to reside at the location for a significant length of time(10+ years).

2.) I presume OP's point is made on the factors where I live...Los Angeles...a HUGE market, and presumably one with a very large impact on nationwide numbers. Rents are MUCH lower than mortgages although its getting close in some blue collar areas of SF Valley and SG Valley where rents on a 3bd, 1 ba 1300sq ft house are around $1500-2000 and prices on the same are $250-250K. However on the westside I'm currently looking at renting a 2 bd, 2ba house for $2500 a month where it would sell at around $650-700K, an amount that on an FHA loan would be $3300 a month plus property taxes, insurance, upkeep, etc. Anyway, the standard logic around here is not one of "dumb to buy now". The standard(and incorrect) line of thought is "OMG prices are sooooo low.....the market just HAS to go up!". The common home purchaser in Los Angeles right now believes their home will rise in price significantly in 3 years and will return to 2006 levels within 5 years. I haven't found one person who bought here in the past year who believes they will be living in the same house ten years from now.
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Old 11-18-2009, 11:51 AM
 
845 posts, read 2,323,333 times
Reputation: 298
My neighbor paid 152 in January 2008. I paid 22K, today. I guess he's the smart one. Identical floorplans.
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Old 11-18-2009, 01:16 PM
 
Location: Columbia, MD
553 posts, read 1,703,869 times
Reputation: 400
Quote:
Originally Posted by JohnG72 View Post
1.) Most definitely makes sense to buy IF mortgage is lower than rent AND you intend to reside at the location for a significant length of time(10+ years).

2.) I presume OP's point is made on the factors where I live...Los Angeles...a HUGE market, and presumably one with a very large impact on nationwide numbers. Rents are MUCH lower than mortgages although its getting close in some blue collar areas of SF Valley and SG Valley where rents on a 3bd, 1 ba 1300sq ft house are around $1500-2000 and prices on the same are $250-250K. However on the westside I'm currently looking at renting a 2 bd, 2ba house for $2500 a month where it would sell at around $650-700K, an amount that on an FHA loan would be $3300 a month plus property taxes, insurance, upkeep, etc. Anyway, the standard logic around here is not one of "dumb to buy now". The standard(and incorrect) line of thought is "OMG prices are sooooo low.....the market just HAS to go up!". The common home purchaser in Los Angeles right now believes their home will rise in price significantly in 3 years and will return to 2006 levels within 5 years. I haven't found one person who bought here in the past year who believes they will be living in the same house ten years from now.
Well stated.

We collectively are not smart financially. Collectively, Americans will try to catch the falling knife over and over until untold trillions in capital are lost.

Then, by the time equilibrium is reached in most markets nationally, we'll have been conditioned like Pavlov's dogs that buying RE is bad. And the market will drag an unnecessarily long time beyond when it recovered.

Those wise enough to recognize we're not bottomed yet who are in a position to postpone their purchase will be the ones who reap the rewards of buying at the bottom and being in a better financial situation of not having a burdensome mortgage + carrying costs.

But for every one of those, there will be many living in their homes underwater for a decade or more, and many more who were forced to rent because of foreclosure/short sale taking their savings and preventing them from saving enough to buy again.
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Old 11-18-2009, 02:08 PM
 
584 posts, read 1,337,965 times
Reputation: 476
The bottom line it is depends where you are. For me if you are in San Jose for example where home prices still out of touch with the lost of high tech jobs then buy now would be dumb as you have called it. But for regions like Vegas, Phoenix, parts of Florida and even in Sacramento where prices down to the floor then it is a good time to buy.
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Old 11-18-2009, 03:20 PM
 
4,538 posts, read 10,607,861 times
Reputation: 4073
Quote:
Originally Posted by Discovery1 View Post
The bottom line it is depends where you are. For me if you are in San Jose for example where home prices still out of touch with the lost of high tech jobs then buy now would be dumb as you have called it. But for regions like Vegas, Phoenix, parts of Florida and even in Sacramento where prices down to the floor then it is a good time to buy.
With Vegas I'd agree with you on the low end of the market(under about $200K), but disagree with anyone considering investing there. The unemployment rate is sick, but mitigated by $1600 a month in unemployment benefits for 18 months. No one in that market has answered my question...and the KEY question.....

What happens to rents in a market of 20%+ actual unemployment when the HUGE amount paid in unemployment benefits run out? Answer please in light of the fact that a HUGE number of homes there are now owned by investors(ie huge supply/limited market).

And if rents drop drastically, what happens to prices of homes? Particularly if investors find a decent investment vehicle, they may be willing to sell at losses up to and exceeding 50% in order to free up the capital.

Not one person on this board or in real life who is investing in Vegas real estate has provided me any answer to the above scenario.
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Old 11-18-2009, 04:05 PM
 
28,455 posts, read 85,164,534 times
Reputation: 18726
Default What happens is we substitute "stocks" for "houses"...

Quote:
Originally Posted by trickymost View Post
Well stated.

We collectively are not smart financially. Collectively, Americans will try to catch the falling knife over and over until untold trillions in capital are lost.

Then, by the time equilibrium is reached in most markets nationally, we'll have been conditioned like Pavlov's dogs that buying STOCKS RE is bad. And the market will drag an unnecessarily long time beyond when it recovered.

Those wise enough to recognize we're not bottomed yet who are in a position to postpone their purchase will be the ones who reap the rewards of buying at the bottom and being in a better financial situation of not having BOUGHT OVER VALUED SECURITIES burdensome mortgage + carrying costs.

But for every one of those, there will be many WITH NEGATIVE PORTFOLIOS living in their homes underwater for a decade or more, and many more who were OVER COMMITTING forced to rent because of foreclosure/short sale taking their savings and MAY NEVER WANT TO preventing them from saving enough to buy STOCKS again.
Pretty laughable...
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Old 11-18-2009, 05:48 PM
 
301 posts, read 1,434,456 times
Reputation: 165
Quote:
Originally Posted by JohnG72 View Post
Not one person on this board or in real life who is investing in Vegas real estate has provided me any answer to the above scenario.
Seriously... you couldn't pay me to live in Vegas. Literally. My relatives moved down there in 2005 on the crest of the wave, specifically to take loan officer jobs offered by a bank there. 4 years later, they were practically begging for my husband and I to come down and rent their house for pennies, while they moved elsewhere. Right. They should be grateful they're employed and have a ton of equity in their house, unlike a lot of other people.

We said no thanks, we'll stay with rainy ol' Seattle--which while it may have high housing prices, there's somewhat of a reason for that. You cannot compare this kind of market to Vegas--you can't even really compare markets to each other, across such vast distances. THAT's the dumb thing to do. Seattle is a very desirable city to live in, evidenced by all the Californians moving up here, heh. We have a GREAT quality of life up here, and I understand urban housing prices reflecting that to some extent. REAL ESTATE IS LOCAL.

Microsoft, Boeing, Amazon, Costco, and all the other biggies around here keep people employed--sure, there are lay-offs, but the region is strong. This is one reason why I am not waiting for housing prices to drop very much in this city, and why we're in the market to buy *now*. You could wipe Vegas off the map and not many people would miss it. That is not the kind of place to be buying a house in. So why would you want to buy a house there again, even if it's a bargain?
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Old 11-18-2009, 11:22 PM
 
Location: Arkansas
2,383 posts, read 6,050,856 times
Reputation: 1141
Just bought in April and am so glad that I did! Love my house and if I had waited for the market to completely rebound, there is no way that I would have been able to afford to get into my house! Plus, smaller homes in my neighborhood, since I bought, have sold for more! I got a good deal and I don't plan on moving anytime soon!
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