housing market

[Bobber]

I bought my house in 1999 for 299,900. A little over 10yrs later it is assessed at 330,000.

That's under 1% per year through the housing "boom". I'm perfectly fine with it as I don't look at it as an investment so much as a place to live. My goal when I sell (likely another 20yrs) is to break even.

I bought mine about the same time and am in a similar situation to you. That's a healthy way to look at it and actually is the way most people thought prior to the last 10 years.

My goal is for the house to keep up with inflation and at least pay for improvements I make to it. I want it to be able to sell it quick when the time comes!

 

[explorer]

It's just hard to look at the numbers and see the home value only went up 9% over 5 years. I realized I should be happy that I didn't lose any money. If I would have had to pay the realtors fees and the other costs it would have been really ugly.

Too many people look at their home as an investment and it's really not. It's just a place to live. You'll be lucky if the value keeps pace with inflation. If it wasn't for the tax advantages, owning a home would be an unwise decision.

This is untrue. Your house is an investment, it's just that people have over bought recently with the housing boom and since the values aren't escalating astronomically like they did in the 90's everyone has soured. It should be considered a safe investment as in MOST times, your house won't devalue like it has in the current economy. If people purchase wisely and don't borrow over their heads, most often housing values will rise modestly and you will regain your investment over time. Once your house is paid for, you live "rent free" for the rest of your life. If you don't purchase, you have no investment. I would rather pay $1000 a month to live in my home and only gain 1% per year on that investment than pay $1000 a month to some landlord and throw my money away. In this way, your home is really an investment.

Unfortunately, many people purchased WAY above their ability to pay and when the economy went south, many lost their rear ends in the process (and everyone is paying the price for it).

 

[06_CY]

i would love for the tax credit to be extended, as i am hoping to start looking for a house in des moines in july/august. I won't be ready to get serious about it by april unfotunately.

 

[jpete24]

If you can buy, now would be the time to do it, BUT ONLY BUY A HOUSE FOR PERMANENT RESIDENCE. Sorry, but homes are not an investment, they are a place to live. You would be better off investing your money over time (especially right now) than buying a house for an investment. I hate when realtors try to sell you a house as an "investment"....not the case.

 

[jpete24]

Here is an article backing my statement up:
why-your-home-is-not-the-investment-you-think-it-is: Personal Finance News from Yahoo! Finance

 

[CyPride]

This is untrue. Your house is an investment, it's just that people have over bought recently with the housing boom and since the values aren't escalating astronomically like they did in the 90's everyone has soured. It should be considered a safe investment as in MOST times, your house won't devalue like it has in the current economy. If people purchase wisely and don't borrow over their heads, most often housing values will rise modestly and you will regain your investment over time. Once your house is paid for, you live "rent free" for the rest of your life. If you don't purchase, you have no investment. I would rather pay $1000 a month to live in my home and only gain 1% per year on that investment than pay $1000 a month to some landlord and throw my money away. In this way, your home is really an investment.

Unfortunately, many people purchased WAY above their ability to pay and when the economy went south, many lost their rear ends in the process (and everyone is paying the price for it).

calculate all the interest you paid over the life of your loan. calculate the upkeep, maintenance, improvements, etc. and don't give me this 'mortgage interest is a deduction' line of BS. that is negligible. renting is not throwing money away any more than paying 30 years of interest to a bank is.

And this is coming from a person who derives 100% of his income from real estate.

 

[Cychl82]

well i work for the loss mitigation department in wells fargo doing modifications. Dm metro is very good compared to most the US. Nebraska is pretty good as well but Florida, Arizona, California and Nevada are just awful. Seeing a lot of 500K houses originally now going for short sales of about 240K-270K on average

 

[CYdTracked]

I live in the Beaverdale area and I'm sure I can't get as much for my house right now as I probably could have 3 years ago. That being said I'm going to drop a little money into mine this summer on a few project and hope in 2-3 years from now the market is better which is about the time the wife and I will be ready to buy something that will be more practical long term.

 

[jpete24]

well i work for the loss mitigation department in wells fargo doing modifications. Dm metro is very good compared to most the US. Nebraska is pretty good as well but Florida, Arizona, California and Nevada are just awful. Seeing a lot of 500K houses originally now going for short sales of about 240K-270K on average

Yep. The housing market will work its way out of this funk, but home prices will drop before they do. Too many people jumped into the market and tried to make a couple bones with little to no experience in the industry.

The economy WILL NOT turn around until four things happen:
1) Housing market stabilizes
2) Consumer credit stabilizes and sorted out
3) People get back to work
4) Government gets its hands out of the private sector. Too much uncertainty.

 

[Cychl82]

Yep. The housing market will work its way out of this funk, but home prices will drop before they do. Too many people jumped into the market and tried to make a couple bones with little to no experience in the industry.

The economy WILL NOT turn around until four things happen:
1) Housing market stabilizes
2) Consumer credit stabilizes and sorted out
3) People get back to work
4) Government gets its hands out of the private sector. Too much uncertainty.

So true in many ways. Government having a hand in about 50 % of the private sector is borderline communism. President goes on the news saying hes enforcing penalties to banks for not meeting a certain amount of modifications is bull. Hes so full of it. Wells never touched the money the govt said they had to take and wells was cranking out modifications left and right at a rate of .31% for four years even on current accounts. Then Obama and the OCC stepped in with their "government regulations" and says you cant do that. Then make banks look like the bad guys in the media while the whole time its the gov't and our so called leader....makes me mad

 

[jpete24]

So true in many ways. Government having a hand in about 50 % of the private sector is borderline communism. President goes on the news saying hes enforcing penalties to banks for not meeting a certain amount of modifications is bull. Hes so full of it. Wells never touched the money the govt said they had to take and wells was cranking out modifications left and right at a rate of .31% for four years even on current accounts. Then Obama and the OCC stepped in with their "government regulations" and says you cant do that. Then make banks look like the bad guys in the media while the whole time its the gov't and our so called leader....makes me mad

Politicians need a scapegoat right now and they can't point their fingers at previous politicians anymore (Bush) thus they need somebody else....banks. Think about all the bad banks that caused SOME of these issues Lehman Brothers, AIG, etc...where are they? Out of business, gone. We're going after fiscally responsible banks now?

When I said SOME I meant it because MOST of the bad housing loans out there right now are owned by Freddie and Fannie.....hmmmmm, who runs those entities now? THE GOVERNMENT.

 

[MNCyGuy]

If you can buy, now would be the time to do it, BUT ONLY BUY A HOUSE FOR PERMANENT RESIDENCE. Sorry, but homes are not an investment, they are a place to live. You would be better off investing your money over time (especially right now) than buying a house for an investment. I hate when realtors try to sell you a house as an "investment"....not the case.

I'm gonna piggy-back on this thread. Where is a good starting point for information if you're looking at buying a house for the first time? My fiancee and I have talked about moving to a nicer apartment after we get married in August, but part of me thinks we might be stupid to not at least look into buying a house instead. I have a feeling that since we just graduated last spring and she is still in grad school that our student loan situation might make it a bit of a stretch right now, but I'd at least like to look into it. Normally I'd ask my dad about this kind of stuff, but I'd really like to be able to just look at things myself without having to get all of my parents opinions on the matter.

 

[Bobber]

This is untrue. Your house is an investment, it's just that people have over bought recently with the housing boom and since the values aren't escalating astronomically like they did in the 90's everyone has soured. It should be considered a safe investment as in MOST times, your house won't devalue like it has in the current economy. If people purchase wisely and don't borrow over their heads, most often housing values will rise modestly and you will regain your investment over time. Once your house is paid for, you live "rent free" for the rest of your life. If you don't purchase, you have no investment. I would rather pay $1000 a month to live in my home and only gain 1% per year on that investment than pay $1000 a month to some landlord and throw my money away. In this way, your home is really an investment.

Unfortunately, many people purchased WAY above their ability to pay and when the economy went south, many lost their rear ends in the process (and everyone is paying the price for it).

It's a relative thing. Some times you are better off renting and sometimes you are better owning.

House values have tended to be cheap in the midwest relative to rents, so makes more sense to own. That's what I've done.

My brother, who has plenty of money, choses to rent in the Louisana area for the opposite reason. He can rent cheap relative to buying.

Saying one is always better than the other is not correct.

 

[tejasclone]

I'm gonna piggy-back on this thread. Where is a good starting point for information if you're looking at buying a house for the first time? My fiancee and I have talked about moving to a nicer apartment after we get married in August, but part of me thinks we might be stupid to not at least look into buying a house instead. I have a feeling that since we just graduated last spring and she is still in grad school that our student loan situation might make it a bit of a stretch right now, but I'd at least like to look into it. Normally I'd ask my dad about this kind of stuff, but I'd really like to be able to just look at things myself without having to get all of my parents opinions on the matter.

My wife and I are kind of in a similar situation. We were married last May and started looking at houses then, but were forced to look at apartments again after we burned through a nice chunk of our money on our wedding (we paid for most of it ourselves). We have been looking recently again.

If your fiance is still in grad school (my wife is also), her student loans should be suspended as long as she is a full time student, and then repayment would begin like 6 months after she is done.

Hopefully the new home buyer tax credit will be extended. Right now it will expire April 30. So if you wait until August, overall home prices might still be low, but interest rights may be skyrocketing by then (right now they are pretty low, at least in Texas), and the tax credit won't be available.

There are various loans that you can qualify for by putting as little as 3.5% down, but keep in mind that part of the reason the housing market tanked was because people got into situations where they put next to nothing down on the house, then they couldn't afford the mortgage payments and lost their homes. (And I say that as someone who is looking at a 3.5% down plan).

 

[explorer]

calculate all the interest you paid over the life of your loan. calculate the upkeep, maintenance, improvements, etc. and don't give me this 'mortgage interest is a deduction' line of BS. that is negligible. renting is not throwing money away any more than paying 30 years of interest to a bank is.

And this is coming from a person who derives 100% of his income from real estate.

First, mortgage interest deduction is not negligible, it does add up over time so that is not a line of BS - it does reduce the taxes you pay. You are correct in saying that paying 30 years of interest to a bank is a lot of money, but you do not need to do so. I have started out with 30 year mortgages on two different houses. I moved to a 15 year mortgage within two years of purchasing my first home. I have been in my second home for four 1/2 years and am about to move to a 15 year mortgage for this one. Another tactic is to pay ahead. There are many ways to reduce the interest you owe to a bank.

Second, if you rent, you are paying for upkeep, maintenance, and improvements - just not directly. Most often, when you rent, you are not living in near the level of home you live in when you buy. If you compared renting a place comparable to the one you would live in if you bought, then you are better off purchasing the home if you plan to live in the area for any length of time. I understand that if you don't think you are going to live in that area for any more than 3 - 4 years, you are better off to rent - I agree with this. I also understand there are time periods in your life that it is better to rent. However, if you decide you are going to live in a certain location for several years, you are better off to purchase. Yes, you do pay interest on that money, but if you don't over-purchase, you will be better off in the long run.

 

[MNCyGuy]

My wife and I are kind of in a similar situation. We were married last May and started looking at houses then, but were forced to look at apartments again after we burned through a nice chunk of our money on our wedding (we paid for most of it ourselves). We have been looking recently again.

If your fiance is still in grad school (my wife is also), her student loans should be suspended as long as she is a full time student, and then repayment would begin like 6 months after she is done.

Hopefully the new home buyer tax credit will be extended. Right now it will expire April 30. So if you wait until August, overall home prices might still be low, but interest rights may be skyrocketing by then (right now they are pretty low, at least in Texas), and the tax credit won't be available.

There are various loans that you can qualify for by putting as little as 3.5% down, but keep in mind that part of the reason the housing market tanked was because people got into situations where they put next to nothing down on the house, then they couldn't afford the mortgage payments and lost their homes. (And I say that as someone who is looking at a 3.5% down plan).

That's the kind of thing I'd like to avoid. The whole thing is a bit intimidating to me because my parents avoided debt like the plague and I've sort of had the same mentality. Her engagement is the first thing of any signifigance I've bought on credit, and even that was knowing that I'd be able to pay it off very quickly. The downpayment will hold us back more than anything, because we have a similar situation where all of the money we're sitting aside right now is for the wedding. I just want to have the facts so we can have the conversation of whether we want to go rent somewhere nicer or hold on where were at and pocket the money for a downpayment.

 

[Bobber]

That's the kind of thing I'd like to avoid. The whole thing is a bit intimidating to me because my parents avoided debt like the plague and I've sort of had the same mentality. Her engagement is the first thing of any signifigance I've bought on credit, and even that was knowing that I'd be able to pay it off very quickly. The downpayment will hold us back more than anything, because we have a similar situation where all of the money we're sitting aside right now is for the wedding. I just want to have the facts so we can have the conversation of whether we want to go rent somewhere nicer or hold on where were at and pocket the money for a downpayment.

There is nothing wrong with that. The only time I've ever taken on debt is for real estate purchases and whenever I've bought, I've paid it off early. That philosophy has treated me very well over the years.

Buy wisely.

Even with the government tax credit, I'm not sure this housing correction is over. I wouldn't get too excited about buying something if it's just going to lose value. It may be a different story in Florida, California, and Nevada where there are a lot of distressed properties. There may be some "deals" there.

 

[tejasclone]

That's the kind of thing I'd like to avoid. The whole thing is a bit intimidating to me because my parents avoided debt like the plague and I've sort of had the same mentality. Her engagement is the first thing of any signifigance I've bought on credit, and even that was knowing that I'd be able to pay it off very quickly. The downpayment will hold us back more than anything, because we have a similar situation where all of the money we're sitting aside right now is for the wedding. I just want to have the facts so we can have the conversation of whether we want to go rent somewhere nicer or hold on where were at and pocket the money for a downpayment.

The down payment is a big obstacle. Our parents have been on us for trying to put down a bigger down payment. Her folks put 20% down on a house they bought in the 70s. We don't have that kind of money lying around.

We discovered that we could do a 3.5% down payment and the monthly payments (including the mortgage payment, debtors' insurance, and property taxes) would still be manageable, maybe a couple hundred bucks more than what we pay each month for rent currently.

You could try and meet with a loan officer at a real estate office and try to estimate what you can afford in terms of total cost, down payment, and monthly payment. It was pretty helpful for us in figuring out what kind of house we could afford (we are the furthest thing from rich).

 

[Bobber]

The down payment is a big obstacle. Our parents have been on us for trying to put down a bigger down payment. Her folks put 20% down on a house they bought in the 70s. We don't have that kind of money lying around.

We discovered that we could do a 3.5% down payment and the monthly payments (including the mortgage payment, debtors' insurance, and property taxes) would still be manageable, maybe a couple hundred bucks more than what we pay each month for rent currently.

You could try and meet with a loan officer at a real estate office and try to estimate what you can afford in terms of total cost, down payment, and monthly payment. It was pretty helpful for us in figuring out what kind of house we could afford (we are the furthest thing from rich).

Yeah you have lot less equity starting out and a lot more interest to pay.

Not a good situation. I put 20% down on my home 15 years ago, but didn't buy my first one until I was 26 and it was a duplex so I had money coming in from the property. Save up for the down payment...

 

[MNCyGuy]

The down payment is a big obstacle. Our parents have been on us for trying to put down a bigger down payment. Her folks put 20% down on a house they bought in the 70s. We don't have that kind of money lying around.

We discovered that we could do a 3.5% down payment and the monthly payments (including the mortgage payment, debtors' insurance, and property taxes) would still be manageable, maybe a couple hundred bucks more than what we pay each month for rent currently.

You could try and meet with a loan officer at a real estate office and try to estimate what you can afford in terms of total cost, down payment, and monthly payment. It was pretty helpful for us in figuring out what kind of house we could afford (we are the furthest thing from rich).

I might do that. The trick would be finding a time to just run down to Veridian by myself. I'd really like to at least have some basic info before entering into that conversation with significant other.