Our new Indie Games subforum is now open for business in G&T. Go and check it out, you might land a code for a free game. If you're developing an indie game and want to post about it, follow these directions. If you don't, he'll break your legs! Hahaha! Seriously though.
Our rules have been updated and given their own forum. Go and look at them! They are nice, and there may be new ones that you didn't know about! Hooray for rules! Hooray for The System! Hooray for Conforming!
Real Estate: Renting, Home Ownership, 3AM infomercials on Time Shares, &c.
moniker
Registered User regular
Registered User regular
Since the talk about housing and crap in the stimulus bill is getting OT...here's a thread to talk about it in.
What may the housing market look like in 2011?
Better but nowhere near what it was 2 years ago. Which is still good for the likes of us. You just won't get as many perks or assistance, the interest rate will probably be a bit higher, and the cost of the same home/condo will probably be a bit higher. Architectural billings still hasn't bottomed out, so there might be a resurgence of some new construction around then if things start getting back to normal.
So a seller's market?
Still probably a buyer's market. At least I hope it is as that's probably the earliest I could be a buyer. Though I don't really like the mindset of 'flipping' a house for a profit. Real Estate is a slow moving investment where you get the rent check every month, if you're going to buy it as an investment, or it's a better form of renting if you plan on living in it. If you don't plan on holding onto something for years if not decades, you'd be better off renting and investing in a real estate company like CBRE or something.
Then again I'm very conservative when it comes to money.
But this year is the big ol' buyer's market?
This is the year that everything is supposedly going to bottom out, yes. Plus this is a year that you seem to be guaranteed to get assistance. Hell check up to see if the city you live in has any programs that dovetail with any federal ones. I know Chicago has a couple of their own and that isn't even counting the $15k that you might get for free depending on what comes out of conference with this bill. Next year may also be chock a block full of shit, but who knows.
moniker on
Posts
Yeah, I'm not seeing things turning around that quickly here, either. Of course, we were one of the highest foreclosure rates in the nation, so that's not entirely surprising.
QEDMF xbl: PantsB G+
That said, lending is tight as hell, but it is a great time to buy if you have a decent down payment saved, reasonable job security, and good credit. Unfortunately vast swathes of the country are missing one of the above so I don't see some miraculous propping up of real estate values. Price reductions are great, but you still need someone to lend you the money to buy in most cases. And lenders are pretty gun shy at the moment.
However, I am revelling in my ability to get a 5% interest rate on a 15 year refi.
6% on 150k loan is 9k/year
9k/12=750/month
So you can pay 750/month rent or 750/month interest on the loan for your house.
Presumably you would pay more then 750/month for your house, which would lead to lower monthly payments and develop equity in your house.
But if the renter puts the same extra money (beyond 750) away monthly somewhere where it earns 6% interest he/she should end up with the same amount of money, but in stocks or whatever instead of equity.
Play around with the rent amount, loan amount, interest rate, etc and see for yourself if your better off renting or buying. I'm currently renting, but my rent is going up by $100 this summer so I'm thinking of buying.
Of course there are other factors to consider when buying, but in the current market your presumably not going to be overpaying for a house.
There are tax implications as well. Which are going to vary from person to person.
Personally I think incentivizing home ownership via tax credits and the like is of dubious value, but it is there and we are stuck with it.
For a bit of local flavor, finding a house for $150K in the Seattle area means you've likely found a one-room shack built in a bog. The average price for a home Seattle/Eastside is still a median of around $500k, the southside around $300k.
Rent on a 2BR is easily up to $1000-1200/mo. With the above formula, monthly on a $300k is $1500. The gap is slowly closing.
Steam: DigitalArcanist | XBoxLive: DigitalArcanist | PSN: DigitalArcanist | Backloggery: Houn
You're forgetting taxes and (potentially) association dues which you also have to pay out every month. Also utilities, if your rent has that stuff included. Also, also, pay to repair anything that gets fucked up. Not that you shouldn't buy, but don't look at the mortgage payment alone as your 'rent' as there are more things that you have to send money to in a house than the bank.
Well, I'm just pissed that there aren't also incentives or aid to help with the rent.
this. this is incredibly important for anyone looking to buy a house. another thing is to look long and hard before buying a fixer upper. It may be a great deal right now with the intention of fixing it up, but it costs a lot of money and time to do projects like that. if you are looking at one that needs work, do a real estimate of costs to buy material and double it. that is probably closer to what you would pay to fix up a house. another important thing is to get two inspections. it may cost you an extra $300, but the second guy may catch something the first guy missed and save you $texas. its a big decision with a lot of risk, but I've never been more satisfied than when i walked into my house for the first time and laid down on the bare floor thinking 'this is mine'
edit to add: incentivising home ownership may backfire by artificially increasing homevalues since sellers might try to tack on the extra money someone would get as credit, but i don't think that will happen. most people are desperate to sell since demand is so far down that they wont risk bumping a price up a few thousand when americans are getting more used to the idea of bartering.
This is true, but as eljeffe mentionned, if you look 10 or 20 years down the road, your home loan amount will still be the same, but your rent will have gone up alot, probably outweighing costs associated with home ownership.
But yeah, I'm sure someone can make an excel sheet that takes into account property tax, condo dues or anything else. I just wanted to put it out there as a basic formula to see how much money you throw away to interest on a loan vs how much money you throw away to rent.
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
It takes pretty much everything into account (taxes, tax deductions, inflation, opportunity costs, insurance, and maintenance)
Assuming you register.
Steam: DigitalArcanist | XBoxLive: DigitalArcanist | PSN: DigitalArcanist | Backloggery: Houn
I meant more in a general sense, not necessarily in light of the current crisis. It distorts the housing market and has a side effect of (probably minorly) impeding labor liquidity by tying people to a non-liquid asset. But like I said, the cat is out of the bag now, so whatev. The only positive I can see is that it is sort of a back doors savings plan, but there are probably more direct ways of acheiving that.
Registration is free
It also (among other government programs) promotes sprawl as almost all home ownership occurs in single family homes rather than multiple occupancy units. There are numerous condo owners and coops, but by and large government subsidies presume that you own the entire building and base themselves off of that fact. Which promotes single family homes more than it does density.
Also, the tight credit market was AWESOME for me as someone with a 740+ credit score and a solid downpayment. Hard to beat 5% flat on a thirty year fixed, and our $170k bought us a three bedroom on a dead end street in a great neighborhood instead of a studio condo under the freeway. Plus the market never really became inflated over here like it did in the I-5 corridor, so even in the crappy market we'll be building equity through appreciation until she's ready to go back to work full time once the kids are in school, and then we'll probably move back over.
Would it be advantageous of me to buy a house? Even if I plan to move in the next 5-10 years?
I'd like to get a dog, and step out of my bedroom without being met with the possibility of tripping on something.
Her mom's a realtor, and put in a bid for it for her as soon as she saw it go up for $40,000.
yeah my first thought is 18 year old girl with a house? thats a bad idea. unless its only hers in name and shes actually gonna go to college..... but if shes gonna live there? i can't even begin to describe the horror.
The type of house my girlfriend and I are looking at would cost twice as much in Boston itself and 100K less an additional 30 minutes from town. Its cliche for a reason: "location location location"
QEDMF xbl: PantsB G+
She's a good kid and a straight A student so I guess I'd trust her more than another high schooler to live there, but yes, I do agree with you guys that it's insane for her to have a house at 18.
Well, her mom is a realtor, so hopefully the mom has some idea what is going on and is prepared to help. But yeah, hahaha if she is left to her own devices.
Also bowen, it depends. Take a look at one of the rent or buy calculators and plug in all the information for a place in your area. Past 5 years and it might not be a bad idea.
After buying a house 5 years ago, I think I wouldn't buy another house unless I could afford a 15 year mortgage with 20% down. I don't have any problems with cash flow or anything, but the amortization schedule of a 30 year is just a joke for the first few years. I'm paying 2.5 times as much interest as I am principal after 5 years, and that result would be considerably worse if my HELOC was for the same term as my actual mortgage.
I got an 80/15/5 before the bubble burst, which mean that 80% of my house's equity was covered by a normal 6.5% 30 year mortgage, 15% was financed by a Home Equity Line of Credit (HELOC) at 7.5% and 10 years, and 5% was a downpayment. Something like a 15 year with 20% down would have probably been better. But, with your first house you basically expect to make sub-optimal decisions, so welp.
If I take the same amount I'm spending on rent right now I can afford probably a $80,000 house (with no down payment). But if I go after a 50-60K house with a 5,000$ down payment I could reasonably afford the mortgage payment with the upkeep costs I'll be incurring.
I mean a 60K house is only about a $360 mortgage payment. Plus, that gives me actually more money per month in case I don't incur any exorbitant repair/upkeep costs. With the housing market the way it is it does seem like a buyer's market right now and hopefully, even if I do decide to move in 5 years, I'll be able to recoup my costs.
No shit there. Whenever we get around to buying another house, I'm aiming low on price and interest. We're lucky enough that our household income can keep up the payments comfortably, but I think we're slightly underwater, so it'll be a while before we can sell. On the upside, we're in a college town, so I imagine that we'll be renting the place out if we move.
I don't know where you live, but it is unlikely that a bank is going to give you a house with no downpayment. One of the myriad ways in which banks screwed up was giving people loans without an equity stake in the property. It incentivizes people to just walk away if things go south.
Again, I don't know where you live but will you be able to get 1200 square feet for that 80k? I live in a fairly low cost area, and 80k would net you about 700 square feet without buying a run down shack.
You also need to account for other costs incurred. Electric, gas, property tax, garbage collection, sewer, water, and any association fees. Not to mention the repair costs you already mentioned. And capital costs of getting the things associated with yard maintence and the like (lawn mower, snow blower depending on the state, etc).
Finally, there are frictional costs associated with purchasing a home. You get to pay for title insurance, application fees, a couple home inspections, maybe a real estate lawyer, etc.
My dad keeps telling me to just go ahead and see if we can get pre-qualified somewhere, and not worry about a down payment yet, and my step-mom keeps sending us listings. But I can't see that we're anything but proper-fucked for now, unless we qualify for some grant or credit or somesuch...
No.
It's because that retard over there got a loan that went past what he could spent a month in rent because the bank guy told him it was cool. Or that single mother who was told she should get a variable rate mortgage and it'd never go up.
No, downpayment free loans encourage people to abandon mortgages when they are on the border line. If you have a house and are struggling but able to make payments, the amount of equity in that house will effect their decision on whether to keep the house. If they have a large portion of equity, they would be locking in a very real loss by bailing since they would lose their equity stake. If they have no or little equity, they lose less as well.
From a buyer's perspective, it makes a certain amount of sense not to put a large downpayment down since it reduces risk, passing it on to the lending institution. And for a long time banks allowed this to happen. Those days are mostly gone, so I'd be surprised if you could get a no downpayment loan with anything less than sparkling credit and a good income:loan amount ratio anyhow. Banks are almost pathologically risk averse right now.
Ruining a credit rating is certainly a disincentive to walking away, but these things aren't taken in isolation. And banks do not treat them as such. In other words, say we have four pools of people (this is incredibly generalized, but whatever);
Pool A - Good credit, large downpayment
Pool B - Good credit, small downpayment
Pool C - Poor credit, large downpayment
Pool D - Poor credit, small downpayment
How do you think those are going to rank in terms of likelihood to default? I would contend it is fairly obvious that the likelihood is ranked from highest to lowest as either {D, C, B, A} or {D, B, C, A}. Both B and C have more incentives to walk away from a house than A (A would lose both their equity AND their good credit) and less incentives than D (C would lose their equity, B their good credit).
The bank doesn't care that you, as a special snowflake care a whole hell of a lot about your credit rating and won't default. All they care about is that their risk models show that B is a bigger risk than A and they will modify their terms to account for such. Since they are terrified, they are a lot less inclined to lend to the B's and C's and especially the D's of the world than they were in the past.
For most people making house payments they can barely afford only to be building negative equity each month, it's not.
There comes a point where your credit rating takes a backseat to reality.
This point, apparently, comes more quickly to those that did not make a down payment. Makes sense to me, on a purely mathematical level.
I haven't looked into it but I've heard that your credit can recover from a foreclosure in 2-3 years.
Personally, I currently owe slightly more on my mortgage than my home is worth, but I'm comfortable with the payments so I'm gonna try to wait for it to go back up. But I often wonder, if my situation changed (lost my job or I couldn't afford the payments anymore), how much is saving my credit worth. Assuming I even have it, would I pay $5k, $10k, $20k, $50k? This is, of course, on top of my 5% downpayment.
I guess my question is how much would you pay to save your credit? And I'm sure lots of people around the country are wondering this about themselves
7 years. Your record is updated daily and anything that happened 7 years ago gets erased.