Why do people stay in overpriced real estate markets?
hchi...@hotmail.com
watch a couple of them last night. One compared homes in Maui HI,
Dallas TX, and San Fransisco CA.
I know that circumstances dictate a lot of where people live, and some
folks just can't live without a fix of seashore, mountains, big city
life, etc., but surely not everyone is this way?
A grad student and his wife were buying a $500K small condo near San
Fransisco. How the f^&* are they going to pay the almost $2K mortgage
payments and still have money for food, taxes, clothing, and
everything else?
$250K in Maui doesn't even get a person into the market. A million
dollar home is a "starter" home.
The only place that seemed anywhere near reasonable was Dallas, where
a three million dollar home was a palace, and even the low end homes
seemed nice.
After watching this program and thinking about the mortgage "crisis,"
I've come to a conclusion that it isn't a crisis at all, but a case
where real estate costs in some areas are grossly out of proportion to
incomes, and people have continued to buy-in to these markets.
If a relative or friend of mine wanted to buy an 800 square foot condo
in any area for $500K to a million, I'd be telling them "Here's yer
sign!"
What kind of shortsightedness has overtaken these millions of people?
I think of the amounts of interest being paid, the taxes, the
insurance, the riskiness of such over-the-top investments, and I shake
my head in disbelief. Perhaps the mantra of real estate should be
changed from location, location, location to stupidity, stupidity,
stupidity.
It isn't that we have a housing and mortgage crisis that occurred out
of thin air, we have had a fever of speculation that is finally
breaking.
Rod Speed
Bet it isnt 'breaking' in the sense that that will stop any century soon.
Seerialmom
Actually pay does tend to go up in areas that have higher cost of
living. Additionally many of the people who live in SF may work in
the tech sector of Santa Clara or San Jose so the pay is decent. But
I agree that sometimes it's ridiculous what price some people will pay
to live in a "location". I remember seeing a 2 bedroom "bungalow"
listed in San Jose for 1M...same one here in Sacramento would have
been about 100K...max.
BeaF...@msn.com
Why live in a desirable market? Because it is desirable.
Look at places that are so called 'over priced', and they have assests
that pull people from all over the country. Weather, culture, mass
transit, night life, employment opportunities, medical care, lack of
Texas accent, open mindness, educational opportunities, the list is
endless as to why one part of the country is more desirable than
others. In the eighties, Sothern California had a real estate bubble
that burst. Homes lost twenty percent of value. People abandoned their
properties rather then pay on an upside down mortgage. A few years
later the prices again rose and those who stayed saw their equity
increase.
Folks who live lives full of experiences and opportunities live full
lives. People who live life always looking for the cheapest way tend
to feel life is cheap and never really enjoy the richness of human
existense.
To each their own.
hchi...@hotmail.com
> Folks who live lives full of experiences and opportunities live full
>lives. People who live life always looking for the cheapest way tend
>to feel life is cheap and never really enjoy the richness of human
>existense.
I understand your point, but it isn't as cut-n-dried as that. I just
escaped the South Florida real estate bust after having lived there
for twenty years. I had the rich and full experience of the area, and
watched it change for the worse, even as the real estate bubble was
driving prices up. I've also lived in a number of other cities and
towns, including NYC and Atlanta. Aside from the Broadway plays,
concerts, and larger selection of dining choices, the big cities
didn't seem to offer much in exchange for the increased costs. Riding
the subway? Dealing with crowded elevators? Rush hour traffic?
These may be vibrant signs of life, but since I'm not an extrovert, I
don't crave them.
One aspect of my confusion is that I need a certain amount of space to
feel comfortable, and a certain amount of stability to feel
financially secure. I don't understand living in an 800 sf condo for
$500K plus taxes and insurance, if there is the option of living for
less than half that cost in a far larger paid-for home with decent
ammenities, where income doesn't go into a black hole.
I'm aware of the equity argument, and agree that sometimes it works,
but in many areas that equity is a false gain, once you deduct the
outrageous property taxes and insurance that have been paid over the
same period.
Gene S. Berkowitz
hchi...@hotmail.com says...
One aspect of what makes a town or city desireable is strong local
control over building and development. Areas whose "boom" is really
just sprawl are the hardest hit when a downturn slows the speculation
that drove it to begin with.
Cities and towns that contain sprawl, through a simple lack of space,
and/or tough building codes, zoning, and historic preservation
requirements, tend to maintain the character that made them attractive
in the first place.
--Gene
Rod Speed
And they also tend to drive up the cost of that property too.
Chloe
news:b3f62888-5ee7-445c...@v46g2000hsv.googlegroups.com...
Your "to each their own" doesn't ring quite true when read in the context of
the commentary directly preceding it.
Based on direct experience, the FRUGAL way here seems to me to settle in the
least costly area *where one's physical, emotional, intellectual and
spiritual needs will be met.* For some people that might be a very
inexpensive rural area, for others it might be nothing less costly than
Manhattan or the Bay Area.
DH and I lived for 30 years in a mid-size city with a moderate cost of
living that many people consider a perfectly nice place. It has a thriving
economy, good government, a decent crime rate, and a major state university.
We had jobs that met our needs and a satisfactory standard of living in the
physical sense. I was never completely happy there because I needed the
specialized artistic resources--specifically musical resources--that are
only found in a place with a larger population base to support them.
The larger place we moved to 7 years ago after DH retired has plenty of
problems. The economy is stagnant, government is inefficient, the public
schools are a nightmare, taxes are very high, and although crime is not an
issue in our neighborhood, it's never far from my consciousness. But because
of those negatives, the cost of living is not particularly high. We have a
home we're happy with, and other aspects of the community have enriched both
our lives in a way that wouldn't have been possible in a smaller city--at
least not in a smaller city with a cost of living we could afford.
It's not about being cheap or spendy, it's like anything else involving
frugality. It's about getting the best value for the resources you expend.
Snowbound
<b3f62888-5ee7-445c...@v46g2000hsv.googlegroups.com>,
BeaF...@msn.com wrote:
> Why live in a desirable market? Because it is desirable.
Head On Desirable Real Estate! Apply directly to the forehead! Head On
Desirable Real Estate! Apple directly to the forehead! Head On Desirable
Real Estate! Apple directly to the forehead! Head On Desirable Real
Estate! Apple directly to the forehead! Head On Desirable Real Estate!
Apple directly to the forehead!
> In the eighties, Sothern California had a real estate bubble
> that burst. Homes lost twenty percent of value. People abandoned their
> properties rather then pay on an upside down mortgage. A few years
> later the prices again rose and those who stayed saw their equity
> increase.
With any luck, before the OO's expire, Sothern California will fall into
the ocean taking its pretentious population with it, making Sierra the
next boom real estate market.
Snowbound
> Folks who live lives full of experiences and opportunities live full
> lives.
Which of course is reserved to those who live in "desirable" real estate
markets. No, you are not full of yourself. Snotty is as snotty does: it
inflates worthless desert real estate values if nothing else (as long as
someone is willing to export water to it). Otherwise, sothern california
would be less filled with oh-so-wonderful life and experiences than
Tucson, AZ. I personally, based on your article, hope the water-rich
folks turn off your tap real soon now. Enjoy playing golf in an endless
sand trap.
Coffee's For Closers
hchi...@hotmail.com says...
There is your explanation right there, in that word -
"speculation." There are folks out there who simply cannot
comprehend the value of a house or condo going down. Or staying
stagnant, while inflation causes that amount of dollars to be
worth less. They absolutely assume that real estate is a
guaranteed, quick, easy, huge profit-maker.
Lots of people cannot see the overall big picture, because their
vision is blocked by the dollar-signs rolling up in their eyes.
And they want to buy NOW, because they don't have the patience or
attention span to think and act in terms of economic cycles
spanning several years or more.
If you try to warn them otherwise, they refuse to listen.
There is also snobbery. Some people don't have much to feel good
about within themselves. While, at the same time, they have a
craving to show superiority. So, they buy property (maybe the
cheapest apartment for which they can barely qualify on an ARM
time-bomb mortgage...) in order to feel cool, and to look down on
lowly tenants.
--
Earn Money With Your Web Site
http://www.WebSponsorZone.Net
Web Site Advertising Directory
Beachcomber
>There is your explanation right there, in that word -
>"speculation." There are folks out there who simply cannot
>comprehend the value of a house or condo going down. Or staying
>stagnant, while inflation causes that amount of dollars to be
>worth less. They absolutely assume that real estate is a
>guaranteed, quick, easy, huge profit-maker.
>
>Lots of people cannot see the overall big picture, because their
>vision is blocked by the dollar-signs rolling up in their eyes.
>
>And they want to buy NOW, because they don't have the patience or
>attention span to think and act in terms of economic cycles
>spanning several years or more.
>
>If you try to warn them otherwise, they refuse to listen.
>
And a lot of otherwise intelligent people would sign for a mortgage on
whatever terms their sub-prime lender served up for them. Many of
them were whipped into a frenzy and were afraid of missing out on
jumping on the home ownership train.
Everyone sort of gets into the act to encourage this "ownership at any
price mentality"... real estate agents don't want to sell you a house,
they want you to buy into having a home in a "neighborhood",
regardless of what you think you can afford. Appraisers and home
inspectors have a vested interest in turnover.
Beachcomber
Too_Many_Tools
>
> - Show quoted text -
Everyone ...and I mean everyone ...related to the housing market has a
vested interest for a transaction to occur.
Everyone that is except for the buyer...who is supplying the cash to
make it happen.
A vested interest does not mean the best interest for the buyer.
Remember this whenever you are the buyer and it will serve you well.
TMT
KarlMarx_MiddleClass_Ipod_HipHop
> A vested interest does not mean the best interest for the buyer.
>
> Remember this whenever you are the buyer and it will serve you well.
>
> TMT
Classic example was when Bush issued us taxpayers those tax refund
checks in 2001. The Home Depot ran ads on radio reminding folks that
they could spend those refunds at the HD. I kid you not. The other
best interest served was you got financing options for purchases over
$299 I believe. The refund checks were for $300 if memory serves me
right.
michael...@gmail.com
>
>
>
> > >There is your explanation right there, in that word -
> > >"speculation." There are folks out there who simply cannot
> > >comprehend the value of a house or condo going down. Or staying
> > >stagnant, while inflation causes that amount of dollars to be
> > >guaranteed, quick, easy, huge profit-maker.
>
> > >Lots of people cannot see the overall big picture, because their
> > >vision is blocked by the dollar-signs rolling up in their eyes.
>
> > >And they want to buy NOW, because they don't have the patience or
> > >attention span to think and act in terms of economic cycles
> > >spanning several years or more.
>
> > >If you try to warn them otherwise, they refuse to listen.
>
> > And a lot of otherwise intelligent people would sign for a mortgage on
> > whatever terms their sub-prime lender served up for them. Many of
> > them were whipped into a frenzy and were afraid of missing out on
> > jumping on the home ownership train.
>
> > Everyone sort of gets into the act to encourage this "ownership at any
> > they want you to buy into having a home in a "neighborhood",
> > regardless of what you think you can afford. Appraisers and home
> > inspectors have a vested interest in turnover.
>
> > Beachcomber- Hide quoted text -
>
> > - Show quoted text -
>
> Everyone ...and I mean everyone ...related to the housing market has a
> vested interest for a transaction to occur.
>
> Everyone that is except for the buyer...who is supplying the cash to
> make it happen.
>
> A vested interest does not mean the best interest for the buyer.
>
> Remember this whenever you are the buyer and it will serve you well.
>
> TMT
Okay, I got really tired of the WINTER BLUES. UGH! We found out that
it is vital to get Vitamin D to get and feel healthy all year! We
tried Cod Liver Oil and that worked pretty good but not enough! Then
we realized we needed to make a complete latitude adjustment and
moved
SOUTH to get more sun! We found http://www.your-new-home-in-florida.com
and have decided to move to Orlando Florida! Love the folks at Royal
Palm homes! We are getting the condo of our dreams!
Cindy Hamilton
> Okay, I got really tired of the WINTER BLUES. UGH! We found out that
> it is vital to get Vitamin D to get and feel healthy all year! We
> tried Cod Liver Oil and that worked pretty good but not enough! Then
> we realized we needed to make a complete latitude adjustment and
> moved
> SOUTH to get more sun! We foundhttp://www.your-new-home-in-florida.com
> and have decided to move to Orlando Florida! Love the folks at Royal
> Palm homes! We are getting the condo of our dreams!
Dreaming of a condo strikes me as setting your sights a little low.
My dreams include acreage. My husband would like to be able to step
out the back door and shoot skeet.
Cindy Hamilton
Anthony Matonak
> On Jan 18, 12:49 pm, michaelcalt...@gmail.com wrote:
>
>> Okay, I got really tired of the WINTER BLUES. UGH! We found out that
>> it is vital to get Vitamin D to get and feel healthy all year! We
>> tried Cod Liver Oil and that worked pretty good but not enough! Then
>> we realized we needed to make a complete latitude adjustment and
>> moved SOUTH to get more sun!
A little vitamin D and a few extra lights (well, a lot of extra lights)
seems much more affordable than pulling up roots and moving to the land
of hurricanes.
Just how much would it cost to cover the ceiling of a room with
fluorescent fixtures filled with sunlight tubes? Say you've got
a small bedroom you use as an office, den, knitting room or the
like and it's 10x12 ft. Four tube 2x4 foot ceiling fixtures can
be had for $40. They could be arranged in a 5 x 3 grid to cover
the ceiling for a total of 15 fixtures, $600. 6200K full spectrum
T12 tubes cost about $11 each, though perhaps less in full cases.
This room would need 60 tubes for a total of $660.
Total cost, about $1260 plus something for the electrician to
install. I don't know what electricians cost but I would hazard
a guess that the entire thing would come in less than $2K. This
is probably much less than the cost to move to another state.
How much would it cost to run? 60 tubes at 40W each (roughly)
would be 2.4kW. Perhaps one would need a window fan to keep
things cool. A quick web search found me websites that claim
less than one hour of light therapy a day will work for most
people. If electricity costs 10 cents/kWh this would come out
to 24 cents a day.
Perhaps the cost could be reduced by doing the majority of the
installation yourself, finding surplus fixtures and using a mix
of UV, blue and ordinary fluorescent tubes in place of the special
sunlight versions. It could help keep you tan in the winter. :)
> Dreaming of a condo strikes me as setting your sights a little low.
>
> My dreams include acreage. My husband would like to be able to step
> out the back door and shoot skeet.
With condos it's quite likely that Skeet lives next door so you
would still be able to step out the back door and shoot Skeet.
I agree that dreaming of a condo is setting ones sights a little
low. I prefer to dream of an entire evil empire AND a condo.
Anthony
hchi...@hotmail.com
<angelica...@hotmail.com> wrote:
>On Jan 18, 12:49?pm, michaelcalt...@gmail.com wrote:
>
>> Okay, I got really tired of the WINTER BLUES. UGH! We found out that
>> it is vital to get Vitamin D to get and feel healthy all year! We
>> tried Cod Liver Oil and that worked pretty good but not enough! Then
>> we realized we needed to make a complete latitude adjustment and
>> moved
>> SOUTH to get more sun! We foundhttp://www.eat-shit-in-florida.com
>> and have decided to move to Orlando Florida! Love the folks at Hairy
>> Palm homes! We are getting the condo of our dreams!
>
>Dreaming of a condo strikes me as setting your sights a little low.
>
>My dreams include acreage. My husband would like to be able to step
>out the back door and shoot skeet.
>
>Cindy Hamilton
Cindy, replying to spammers just encourages them. Better to set your
filters to avoid gmail addresses, and never quote their message
including the website they want to promote.
Too_Many_Tools
Good example.
I was SHOCKED to hear our idiot President to publicly state that
consumers should SPEND - SPEND - SPEND shortly after 9/11.
That is when I realized we had an idiot in the White House.
The sub prime crash is proving this opinion to be correct.
The next check you get from Washington in their latest quick fix
should be saved ....when you are thrown out of your house you will
need that money for food.
TMT
KarlMarx_MiddleClass_Ipod_HipHop
> On Jan 15, 7:15 pm, KarlMarx_MiddleClass_Ipod_HipHop
>
> <kwo...@hotmail.com> wrote:
> > On Jan 15, 7:59 pm, Too_Many_Tools <too_many_to...@yahoo.com> wrote:
>
> > > A vested interest does not mean the best interest for the buyer.
>
> > > Remember this whenever you are the buyer and it will serve you well.
>
> > > TMT
>
> > Classic example was when Bush issued us taxpayers those tax refund
> > checks in 2001. The Home Depot ran ads on radio reminding folks that
> > they could spend those refunds at the HD. I kid you not. The other
> > best interest served was you got financing options for purchases over
> > $299 I believe. The refund checks were for $300 if memory serves me
> > right.
>
> Good example.
>
> I was SHOCKED to hear our idiot President to publicly state that
> consumers should SPEND - SPEND - SPEND shortly after 9/11.
>
> That is when I realized we had an idiot in the White House.
>
> The sub prime crash is proving this opinion to be correct.
>
I have a friend who I consider a permanent bear. He called the market
for what it was over 3 years ago. Maybe it was 5 years ago. I don't
remember specifically, but he saw how construction and fiat home
prices were was all that was goosing the economy when others were
celebrating the buy high, sell higher mentality of real estate. The
facts are there to inspect. How have we grown as a diversified nation
of jobs and asset allocation for weathering a recession?
Logan Shaw
> I have a friend who I consider a permanent bear. He called the market
> for what it was over 3 years ago. Maybe it was 5 years ago. I don't
> remember specifically, but he saw how construction and fiat home
> prices were was all that was goosing the economy when others were
> celebrating the buy high, sell higher mentality of real estate.
Anyone can predict that the market will have a downturn or that a
particular boom will eventually end. And they will be right 100%
of the time.
What's actually difficult is predicting *when* it will happen.
That's where there's money to be made or lost.
- Logan
KarlMarx_MiddleClass_Ipod_HipHop
> Anyone can predict that the market will have a downturn or that a
> particular boom will eventually end. And they will be right 100%
> of the time.
>
> What's actually difficult is predicting *when* it will happen.
> That's where there's money to be made or lost.
>
> - Logan
OK
Houses are not the money makers they were a few years ago. Maybe a
great majority were ignoring the shoe-shine boy telegraphs when we saw
"Flip This House" and McMansion talk fill the buzz circuit. Surf over
to the thehousingbubbleblog dot com and follow the stopped clock
postulating. They were calling it a bubble at least 2 years ago with
forecasts for much financial meltdown. I am sure many there had shorts
on building stocks and financial stocks. Heck , many preached about
buying gold and bonds and all that doomsday stuff. There are a few on
the blog that can handle some risk and have shorted bank stocks
repeatedly. Evidently, the market is in turmoil.
Rod Speed
> Logan Shaw <lshaw-use...@austin.rr.com> wrote
>> Anyone can predict that the market will have a downturn or that a particular
>> boom will eventually end. And they will be right 100% of the time.
>> What's actually difficult is predicting *when* it will happen.
>> That's where there's money to be made or lost.
> OK
> Houses are not the money makers they were a few years ago.
Some have been mindlessly saying that lots of times in the last century or so.
> Maybe a great majority were ignoring the shoe-shine boy telegraphs
> when we saw "Flip This House" and McMansion talk fill the buzz circuit.
Most have seen their property still worth a hell of a
lot more than it was worth before that happened.
> Surf over to the thehousingbubbleblog dot com and follow the stopped clock postulating.
No thanks, its just the usual pig ignorant mindlessly hyperventilating.
> They were calling it a bubble at least 2 years
> ago with forecasts for much financial meltdown.
There is no financial meltdown and they didnt even
realise the problem with sub prime loans at that time.
> I am sure many there had shorts on building stocks and financial stocks.
You cant short over that period of time.
> Heck , many preached about buying gold and bonds and all that doomsday stuff.
Yep, fools have been doing that stuff for more than a century or more now.
> There are a few on the blog that can handle some
> risk and have shorted bank stocks repeatedly.
Its always been one way to make money in any market that isnt booming.
> Evidently, the market is in turmoil.
It would be more surprising if it wasnt given the sub prime fiasco.
Cindy Hamilton
<anthony...@nothing.like.socal.rr.com> wrote:
> Cindy Hamilton wrote:
> > Dreaming of a condo strikes me as setting your sights a little low.
>
> > My dreams include acreage. My husband would like to be able to step
> > out the back door and shoot skeet.
>
> With condos it's quite likely that Skeet lives next door so you
> would still be able to step out the back door and shoot Skeet.
I'm grateful I wasn't drinking a beverage at this point.
> I agree that dreaming of a condo is setting ones sights a little
> low. I prefer to dream of an entire evil empire AND a condo.
I suppose the condo would be a getaway from the stresses of
running an evil empire?
Cindy Hamilton
Cindy Hamilton
> Cindy, replying to spammers just encourages them. Better to set your
> filters to avoid gmail addresses, and never quote their message
> including the website they want to promote.
I didn't know that Google Groups provides filters... I'll have to
poke around
the interface.
Cindy Hamilton
Dennis
Kill two birds with one stone -- grab a spot on the condo's
homeowner's association board.
Dennis (evil)
--
"There is a fine line between participation and mockery" - Wally
Too_Many_Tools
No Rod...it has far to drop yet.
As for increasing property values, I know of people whose property
gained no value and even lost significant value during the runup.
Location and timing is always important.
And currently having property in the US and having Bush for a
President are both a bad location and bad timing.
TMT
Rod Speed
> No Rod...
Yes Too...
> it has far to drop yet.
Didnt even comment on that there.
> As for increasing property values, I know of people whose property
> gained no value and even lost significant value during the runup.
Yes, but they are a tiny minority of the total market.
> Location and timing is always important.
Nope, not with the extent of the boom we saw thru those times.
> And currently having property in the US and having Bush
> for a President are both a bad location and bad timing.
Nope it wont be over the longer haul, you watch.
And that has absolutely NOTHING to do with Bush anyway.
Bob F
"Cindy Hamilton" <angelica...@hotmail.com> wrote in message
news:1393eb3d-9a16-4592...@p69g2000hsa.googlegroups.com...
>Cindy Hamilton
If you do as he says, you'll miss a lot of helpful posts.
Bob F
"Too_Many_Tools" <too_man...@yahoo.com> wrote in message
news:ae31bb20-8276-4270...@z17g2000hsg.googlegroups.com...
Good example.
******************************************88
Thereby defeating the whole purpose of the check.
Rod Speed
> "Too_Many_Tools" <too_man...@yahoo.com> wrote in message
> news:ae31bb20-8276-4270...@z17g2000hsg.googlegroups.com...
> On Jan 15, 7:15 pm, KarlMarx_MiddleClass_Ipod_HipHop
> <kwo...@hotmail.com> wrote:
>> On Jan 15, 7:59 pm, Too_Many_Tools <too_many_to...@yahoo.com> wrote:
>>
>>> A vested interest does not mean the best interest for the buyer.
>>
>>> Remember this whenever you are the buyer and it will serve you well.
>>
>>> TMT
>>
>> Classic example was when Bush issued us taxpayers those tax refund
>> checks in 2001. The Home Depot ran ads on radio reminding folks that
>> they could spend those refunds at the HD. I kid you not. The other
>> best interest served was you got financing options for purchases over
>> $299 I believe. The refund checks were for $300 if memory serves me
>> right.
> Good example.
Nope.
> I was SHOCKED to hear our idiot President to publicly state that
> consumers should SPEND - SPEND - SPEND shortly after 9/11.
More fool you.
> That is when I realized we had an idiot in the White House.
We've always known that you are just that.
> The sub prime crash is proving this opinion to be correct.
We'll see.
> The next check you get from Washington in their latest quick fix should be saved ....
> when you are thrown out of your house you will need that money for food.
Nope. Anyone with a clue wont have been stupid enough to sign up
for a sub prime loan, they would have qualified for a prime loan, and
so wont be being thrown out of their house, you watch.
> ******************************************88
> Thereby defeating the whole purpose of the check.
Only in your pathetic little drug crazed pig ignorant fantasyland.
Just as 9/11 was survived fine by anyone with a clue, so will the latest glitch too.
clams_casino
Almost NO posts via google groups are worthy as 99.9978675% are spam.
SMS
> What kind of shortsightedness has overtaken these millions of people?
> I think of the amounts of interest being paid, the taxes, the
> insurance, the riskiness of such over-the-top investments, and I shake
> my head in disbelief. Perhaps the mantra of real estate should be
> changed from location, location, location to stupidity, stupidity,
> stupidity.
Many are in complete denial that their area could ever experience a
significant decline in prices. I see this with people in my own extended
family. One sold a gawd-awful condo in a huge apartment to condo
conversion complex in San Bruno that was in poor condition. She made a
nice profit nevertheless, and would have been better off renting a
rent-controlled apartment in San Francisco, near her job, at least for
five years or so until the market bottomed out. But she was convinced by
another family member of how important it was to own real estate, how
prices would never fall, etc. She bought a triplex with two other family
members. One unit is to be rented, but one of the owners is so picky
about renters, and expects to receive such a high rent, that it remains
empty.
You forget one other thing. In order to have even a semi-affordable
mortgage payment, you have to put down a big down payment. Don't forget
the lost interest on this capital. Another group of extended family
members just bought a duplex as an investment property, in a 1031
exchange. I told them to just pay the tax on the gain and get out of the
market for now. Instead they put down a huge down payment, over $500K,
on a $1.2 million duplex, and now claim to be cash-flow positive because
the rent is covering the $4500/month mortgage. Of course it was a
terrible investment, they are cash flow negative after property taxes,
insurance, and maintenance, and they have lost the interest income on
$500,000, the value of the property is falling, the property is run down
and requires a lot of repairs, that they don't know how to do
themselves, so they are spending a lot on contractors.
> It isn't that we have a housing and mortgage crisis that occurred out
> of thin air, we have had a fever of speculation that is finally
> breaking.
What's going to aggravate it even more are the government attempts to
bail out the people that made the bad decisions. They need to just let
the market come back to reality on its own. It took 20 years in Japan
for the market to bottom out.
However some people _stay_ in overpriced markets that would never come
in as new buyers at current prices. Personally I'd cash out and leave,
but the spousal unit wants to be near her family. If I bought my house
at current value, I wouldn't and couldn't buy it. I'd have a $7000/month
mortgage and $1200/month property tax bill. I remember when we bought
it, and I told a friend in Florida how much it was, and she thought we
must be moving into some sort of mansion, ha, ha. Where I live, the
mantra is "schools, schools, schools." Most cities in the area have
pretty poor public schools, but my area is famous for good schools. The
extra you pay in your mortgage is offset by the lack of need to pay
private school tuition, which can run to $10,000 a year per child, and
is not tax-deductible.
SMS
> There is your explanation right there, in that word -
> "speculation." There are folks out there who simply cannot
> comprehend the value of a house or condo going down. Or staying
> stagnant, while inflation causes that amount of dollars to be
> worth less. They absolutely assume that real estate is a
> guaranteed, quick, easy, huge profit-maker.
>
> Lots of people cannot see the overall big picture, because their
> vision is blocked by the dollar-signs rolling up in their eyes.
>
> And they want to buy NOW, because they don't have the patience or
> attention span to think and act in terms of economic cycles
> spanning several years or more.
>
> If you try to warn them otherwise, they refuse to listen.
Oy, can you talk to some of my relatives?!
> There is also snobbery. Some people don't have much to feel good
> about within themselves. While, at the same time, they have a
> craving to show superiority. So, they buy property (maybe the
> cheapest apartment for which they can barely qualify on an ARM
> time-bomb mortgage...) in order to feel cool, and to look down on
> lowly tenants.
Very well stated.
Every time a developer comes into my city and wants to get some land
rezoned for high-density condos, they trot out the excuse that some of
the units will be for "below-market-rate" housing.
When the city council and planning commission, which are owned by
developers, try to approve the rezoning, they always bring up that it
must be approved so that lower income people can buy property in the
city. We're not talking about $80,000 condos, we're talking about
$350,000-600,000 being "below-market-rate." An equivalent quality
apartment would be about $1500/month, versus a $3000-4000/month mortgage
payment, plus property taxes, plus association fees. There is no shame
in renting while you save for the down payment to buy a property, if
that's what you really want to do.
SMS
> Everyone sort of gets into the act to encourage this "ownership at any
> price mentality"... real estate agents don't want to sell you a house,
> they want you to buy into having a home in a "neighborhood",
> regardless of what you think you can afford. Appraisers and home
> inspectors have a vested interest in turnover.
The appraisers were pressured into high appraisals at the risk of not
being hired for more appraisals.
However in my experience, home inspectors do not intentionally lie about
defects. They are normally hired by the buyer, and have no vested
interest in overlooking defects. In fact, they would be liable if
obvious defects that they should have seen later showed up.
Unfortunately they do miss a lot of stuff that is hidden, and that shows
up only after a few years.
Bob F
"clams_casino" <PeterG...@DrunkinClam.com> wrote in message
news:0cmmj.10698$M24....@newsfe17.lga...
And I wasn't talking about google groups - I was talking about gmail.
Bob F
"SMS" <scharf...@geemail.com> wrote in message
news:479a28e4$0$84166$742e...@news.sonic.net...
Liable you say? Have you ever heard of inspectors paying for unnoted problems?