Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:21 pm
@DrewDad,
DrewDad wrote:

Over 15 years your rent creeps up.


My apartment is rent-controlled Laughing

Quote:
With a house, your payment remains stable.


But the value does not. Millions of people now are screwed because of this.

Quote:
Also, are you saying you don't pay renter's insurance? If you don't, I strongly advise you to get some.


Sure I do - but it's chump change compared to homeowner's insurance, property taxes, and upkeep on a house.

Cycloptichorn
0 Replies
 
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:24 pm
@Cycloptichorn,
Yes and like prior when the housing market went down - it went up again.
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:26 pm
@Linkat,
Linkat wrote:

Besides your parents who has done this?


Greenwitch has done this, see above.

Quote:
And depending on location " the average person cannot. Maybe if you live in the backwoods of Mississippi you could or perhaps even 50 years ago like possibly your parents when houses costs $24k, not over $300k now for an average house (not a luxury home).


My parents bought their house in Houston in 1997 for 135k. Cash. Their combined income is less then 70k per year, and it only took dedicated saving on their part.

I don't understand why you think this is so unattainable. It clearly is.

Quote:
Equity is the difference between mortgage and value and for the average home owner isn’t used to borrow against, but when retiring and becoming empty nesters, they downsize and use the difference in earnings for retirement.


You have that same equity whether you buy your house outright or on a mortgage, so I don't understand why this is relevant unless you are using it to take loans against.

Quote:
I think I fully understand the costs involved with a home. When I first bought my place my taxes and insurance were included in with my mortgage bill, my rent previously was $25 more than this combined amount. Now, as a result I currently have over $40k in equity " even in this down size by using the 2010 new tax assessed value (which is typically a conservative value). So if I continued renting assuming that rents would go up/taxes would go up and $25 difference used for maintenance - costs would have been pretty close either way. So net gain after 10 years of $40k. So in this case was renting better?

15 years of savings isn’t ridiculous and I would never say so " but having your own home and gaining $40k in 10 years isn’t bad either.


But how much have you spent in upkeep on the place? How much have you spent in interest on your mortgage that entire time?

My point is that the alternative to what you are proposing is a much better deal then you are making it out to be. And you have full mobility, earn interest on your money instead of pay interest on it, and never have to worry about the value of the place you are living going up or down.

Cycloptichorn
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:30 pm
@Linkat,
Linkat wrote:

Yes and like prior when the housing market went down - it went up again.


The market will have several more years before it begins to rise, and it will NOT rise at the same rate as before. This much is obvious from simple observations of the current mortgage market and economic climate our country is in. The market will NOT hit the peaks it was at within 15 years and I would bet within 20 years.

The tremendous jump in housing values, which was fueled by a combination of heavy speculation and loose mortgage policies, will not be repeated again soon. Millions of people right now cannot sell their homes without taking a huge bath on it; it will be some time before they begin to rise again at any rate whatsoever; we are about to hit the second half of the double-dip mortgage problem later this year and that certainly isn't going to help anything.

I also think it's fallacious to compare recoveries when the market rose/fell 10-15%, with 80% rises and the subsequent falls. This is really unprecedented in our country's history and the data from previous boom/bust cycles will not accurately predict this one.

Or perhaps you have some other data which I haven't taken into account? Merely asserting that the market 'will rise again' doesn't match the data that we are seeing these days.

Cycloptichorn
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:37 pm
@Cycloptichorn,
Historically the market has had ups and downs - none have lasted 10 years - even in 1971 when there was another housing bubble burst, it recover within 5 years.

http://www.followsteph.com/images/graphs/20050701A.gif

The general trend over time has been upwards. That is, as populations increase and space within cities become more condensed, prices have to go up, that’s the law of supply and demand. Of course, prices have not always gone up steadily, there have been some drastic dips.

Over the last 40 years no dip has lasted 10 years. Assuming that you buy a property at the very height of a boom, if you can hold it for at least 10 years, than by all accounts you should be able to sell it at least the price you paid. This means that no matter what the market, if you have at least a 10 year fixed mortgage and you can hold it for at least 10 years, you’ll make money (assuming you picked a good decent property). At the very least you’ll have paid down the equity with your rental income. However, chances are that you will be able to sell it at a price higher than what you paid for at at least one point over those 10 years.
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:39 pm
@Linkat,
You ought to pick a chart that goes past 2005 - things didn't get really ridiculous until after that.

It's a lot easier for the system to recover from 10% changes then 80% changes. The data you are presenting is not predictive of our current problem at all.

Cycloptichorn
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:48 pm
@Cycloptichorn,
Also during the Great Depression, there was a decrease of new homes by between 80 - 90%(I get different stats depending on the source)! That is twice the decline in our current economy. I've since (of course depending on location) between 30 - 40% drop in the current housing drop. So it is all relative.

In any case, the housing burst and resulting bubble was a result of people getting in over their head and not being knowledge about mortgages.
0 Replies
 
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:49 pm
@Cycloptichorn,
You ignore half of what I say and just highlight pieces - I do not intend to repeat it.

I am guessing you are prepping to be a politician.
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:51 pm
@Linkat,
Linkat wrote:

You ignore half of what I say and just highlight pieces - I do not intend to repeat it.

I am guessing you are prepping to be a politician.


I didn't mean to ignore anything you said - can you point out what you said that was important, that I ignored? I'm pretty sure I quoted your entire post and addressed all the points you raised.

I get the feeling in conversations like this, that people who have made an economic choice have a really strong desire to defend that as a smart choice, and don't want to give credence to the opposing case.

Cycloptichorn
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:55 pm
@Cycloptichorn,
Quote:
But how much have you spent in upkeep on the place? How much have you spent in interest on your mortgage that entire time?

My point is that the alternative to what you are proposing is a much better deal then you are making it out to be. And you have full mobility, earn interest on your money instead of pay interest on it, and never have to worry about the value of the place you are living going up or down.


Depends on what is important to you - you plan to stay in once place. I mentioned $25 a month for what I had paid for the upkeep. Pretty much didn't need to do anything to it when I moved in so years of saving the $25 paid for anything. As I stated before in regard to interest - all of this was less than what I paid in rent. Of course your mortgage bill includes interest.

The interest and taxes are deductible from your annual federal and state taxes. I did not worry about the value going up or down, I'd only sell if it was advantegous to me. A home is a long term purchase so no worries. Not much different than other investments. No different than having another investment when the market plumeted. What do you do then? Same thing, a smart person sits on it until the value (investment or home) goes up.

I work day to day in the financial market and have various investments as part of portfolio - I have an inkinkling (although I can't spell) of what is involved.
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:56 pm
@Cycloptichorn,
I am simply showing the peaks and valleys it wasn't meant to represent the current state. It was to show history.
0 Replies
 
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 04:56 pm
@Linkat,
Linkat wrote:

Quote:
But how much have you spent in upkeep on the place? How much have you spent in interest on your mortgage that entire time?

My point is that the alternative to what you are proposing is a much better deal then you are making it out to be. And you have full mobility, earn interest on your money instead of pay interest on it, and never have to worry about the value of the place you are living going up or down.


Depends on what is important to you - you plan to stay in once place. I mentioned $25 a month for what I had paid for the upkeep. Pretty much didn't need to do anything to it when I moved in so years of saving the $25 paid for anything. As I stated before in regard to interest - all of this was less than what I paid in rent. Of course your mortgage bill includes interest.

The interest and taxes are deductible from your annual federal and state taxes. I did not worry about the value going up or down, I'd only sell if it was advantegous to me. A home is a long term purchase so no worries. Not much different than other investments. No different than having another investment when the market plumeted. What do you do then? Same thing, a smart person sits on it until the value (investment or home) goes up.

I work day to day in the financial market and have various investments as part of portfolio - I have an inkinkling (although I can't spell) of what is involved.


Fair enuff. But you're fooling yourself about the market hitting it's peak within 15 years again.

Cycloptichorn
0 Replies
 
Linkat
 
  1  
Reply Wed 10 Feb, 2010 04:59 pm
@Cycloptichorn,
Nope - I actually made a good housing decision - I didn't buy at the peak like some and ensured I purchased in a good location. My home is still worth at least more than 17% of the original purchase price and homes in the neighborhood have begun to sell again.

I know it hasn't worked for some that didn't do the needed research, but it worked for me.
0 Replies
 
glitterbag
 
  1  
Reply Wed 10 Feb, 2010 05:00 pm
Bear, if you are still involved in this thread and I'll bet you are not....How long did it take to get from "Chase sucks" to "flinging insults back and forth".?
0 Replies
 
DrewDad
 
  1  
Reply Wed 10 Feb, 2010 05:15 pm
@Cycloptichorn,
Cycloptichorn wrote:
The data you are presenting is not predictive of our current problem at all.

But the general lesson holds true, none-the-less.

Some markets do better. Some markets do worse.

If the drawbacks of owning are too great for you, it doesn't mean that the drawbacks of owning are too great for everyone.

Didn't we just have this same discussion about iPads? Your situation is unique to you; you cannot apply your situation to say what is best for everyone.
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 05:17 pm
@DrewDad,
DrewDad wrote:

Cycloptichorn wrote:
The data you are presenting is not predictive of our current problem at all.

But the general lesson holds true, none-the-less.

Some markets do better. Some markets do worse.

If the drawbacks of owning are too great for you, it doesn't mean that the drawbacks of owning are too great for everyone.


You misunderstand me, sir; I am not against owning anything at all. In fact, ownership of one's house is exactly and 100% what I am advocating.

However, those who have mortgages don't own their house - the bank does.

Additionally, I never stated that the housing market won't rise again, just that it won't achieve the same peaks within 15 years. And I don't think that's a wild opinion on my part.

Quote:
Didn't we just have this same discussion about iPads? Your situation is unique to you; you cannot apply your situation to say what is best for everyone.


I didn't say that my situation was best for anyone. I only stated that it's perfectly possible to live a great life, enjoying the modern amenities that our society has become used to, without using a credit card or credit at all. And the idea that one 'has to' buy into the system is wrong.

Cycloptichorn
OCCOM BILL
 
  1  
Reply Wed 10 Feb, 2010 05:32 pm
@Cycloptichorn,
Cycloptichorn wrote:
And the idea that one 'has to' buy into the system is wrong.
Here we see Cyclo... not trusting the system:
DrewDad
 
  1  
Reply Wed 10 Feb, 2010 05:33 pm
@Cycloptichorn,
Cycloptichorn wrote:
I only stated that it's perfectly possible to live a great life, enjoying the modern amenities that our society has become used to, without using a credit card or credit at all. And the idea that one 'has to' buy into the system is wrong.

Alrighty, then.

I would suggest that totally ignoring the system, and having no credit history whatsoever, is a mistake, though.
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 05:36 pm
@OCCOM BILL,
Pretty funny!

But I don't throw stuff on the ground, that's just wasteful.

Cycloptichorn
0 Replies
 
Cycloptichorn
 
  1  
Reply Wed 10 Feb, 2010 05:36 pm
@DrewDad,
DrewDad wrote:

Cycloptichorn wrote:
I only stated that it's perfectly possible to live a great life, enjoying the modern amenities that our society has become used to, without using a credit card or credit at all. And the idea that one 'has to' buy into the system is wrong.

Alrighty, then.

I would suggest that totally ignoring the system, and having no credit history whatsoever, is a mistake, though.


Because I might need it someday?

Cycloptichorn
 

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