Mr. Yun is not an 'outstanding forecaster' his forecasts have been way off the mark. In September 2005 Yun predicted "The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC will outpace the national average price growth. DC prices will rise at close to a 7 to 10 % rate of appreciation. "
As we know prices have declined in the DC area since Yun's wrong prediction. According to the S&P Case Shiller Index, since September 2005 DC area prices have fallen 6.3%.
Do not trust Lawrence 'paid spinner' Yun. The general public and media need to be aware of his spins, predictions that have proven wrong, and his contradictory statements. Mr Yun is a paid shill who has lost his credibility.
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This just in:
ReplyDeleteThe biggest plunge in new home prices in 37 years was not enough to revive October sales, according to the government's latest reading on the battered housing and home building markets.
The sales pace for October was well short of economists' forecasts. The Census Bureau's latest report also sharply cut back on its earlier estimates for sales in August and September, when a meltdown in mortgage markets kept many potential buyers from getting the financing they needed.
Also depressing sales and prices was a record 191,000 completed new homes on the market that have not yet been sold.
The report showed that the median price of a new home sold in October plunged 13 percent from year-earlier levels to $217,800. It was most severe year-over-year drop since September 1970, when the median price was only $22,600, or less than the cost of a typical new car purchase today.
http://money.cnn.com/2007/11/29/news/economy/newhome_sales/index.htm?source=yahoo_quote
Anonymous said...
ReplyDelete"This just in:
The biggest plunge in new home prices in 37 years was not enough to revive October sales, according to the government's latest reading on the battered housing and home building markets."
It would be interesting to see a major news organization do a story on how much the bubble myth is contributing to the slowdown. People thinking they'll get something for nothing if they "just wait".
You yell "fire" in a crowded theater and people run ... even if there isn't a fire. I'd imagine the people that run feel like real fools when the truth comes out.
Amazing catch. I wish I could have asked him that at the NVAR summit that I attended.
ReplyDeleteI wonder if any homeowner will sue because this almost sounds like a guarantee for price appreciation.
Frank
Hey Lance,
ReplyDeleteHow about the myth that real estate never goes down in value and that it is the road to riches (Flip that House, Property Ladder, etc)? Check out this article (don't have the source)
The Myth of the Miracle House..
I'm sure you've heard it in some form or another: the idea that buying a house is the ticket to wealth, or at least solid middle-class prosperity. A recent Bankrate.com article presents the numbers: "The average renter has a median net worth of $4,000, and the average homeowner has a median net worth of about $150,000." As Neo says in The Matrix, "Whoa." Those numbers surely seem to back up the article's contention that "the fastest way to wealth in America is buying where you live."
Or do they? The problem is that with numbers like these is that the authors are drawing a conclusion that's unwarranted, at least from the data that they're presenting us with. Home ownership is correlated with a higher net worth, sure, but does it cause a higher net worth? That's the conclusion that's drawn, with the attendant advice to go forth and buy a house, but it could just as easily be looked at the other way. Maybe having a higher net worth to begin with is what allows people to buy a house. After all, having a Jaguar or Mercedes in the driveway is probably correlated with having a high six-figure income, but I think you'll get some funny looks if you contend that the former actually causes the latter.
The thing is, I consider buying a house as a smart move... some of the time. There's no arguing that if you buy a modestly priced house, and stay in it, over time the cost of living in that house will almost certainly end up being lower than the cost of renting an equivalent place. But those aren't necessarily the circumstances that face all potential home buyers... and it's a far cry from the blanket assertion that home ownership is a financial panacea.
When it comes time to consider the eternal question of "rent vs. buy," there are a number of factors to take into consideration. In fact, there are a whole lot more factors than most people realize, and many of them don't work quite the way most people think they do. So let's take a look at the myth of the miracle house.
The tax deduction
I guarantee it. Mention to someone that you think it makes more financial sense to rent rather than buy an expensive house, and you'll get the surprised reply, "But you're forgetting about the tax deduction!" Since good old Uncle Sam lets you deduct the interest on your mortgage from your taxable income, your mortgage payment is effectively less than it looks.
Three points here.
The first is that the tax deduction has been around for years now. Sellers price their houses to what the market will bear... do you really think that prices don't reflect the fact that the tax deduction gives buyers a couple hundred dollars more that they can devote to a monthly payment?
The second point is that depending on your circumstances, you may not get any benefit at all from the mortgage tax deduction. Two words: standard deduction. You get to choose whichever benefits you more: the standard deduction, or the itemized deductions. If you want to deduct your mortgage interest from your taxable income, you have to itemize... which means that you get an extra benefit from your mortgage interest only to the extent that it exceeds the standard deduction.
One incidental byproduct of this is that the tax deduction preferentially rewards those who buy large, expensive houses. Buy a modest house with a substantial down payment – the sensible thing to do – and most likely you'll never see more than a few dollars in tax benefits.
That's not quite as infuriating as it might be, because the third point to consider is that the value of the tax deduction is overstated. People typically confuse "tax deduction" with "tax credit." A tax credit reduces your tax bill dollar for dollar: if you qualify for a $100 tax credit, that's $100 that gets to stay in your pocket. Hooray! On the other hand, a tax deduction means that you don't have to count the money that you spent on that thing as part of your taxable income. That same $100, as a tax deduction, is worth different amounts to you depending on what your marginal tax rate is (that's the highest rate that you're taxed at). Let's say you're in the 25% bracket: the fact that you aren't taxed on that $100 allows you to keep $25 that you would otherwise have paid to the government.
That's why it's so silly to use the tax deduction as an excuse to buy a bigger house than you really need. Paying an extra dollar in interest in order to get 25 cents back still leaves you 75 cents poorer than you were.
The equity piggy bank
Second in line for "most persistent myths about home ownership" has got to be the idea that the equity in your home is a superior method of savings. Let's say you can buy a house and pay $1000 per month ($800 in interest and $200 in principal).Over time, that will build up to a sum that you can access either by selling the house, or by taking out a home equity loan. Clearly, if the alternative would be to pay $1000 or more in rent, the numbers work out in favor of ownership. But what if you can rent for $800 per month? You're "throwing away" the same amount of money (since you won't get back either the rent payment or the interest payment). Why is it better to have that $200 locked up in the equity piggy bank instead of in your bank account?
Self-control... or the lack of it... is the answer. The standard argument in favor of paying the $1000 per month toward a mortgage is that it's a "forced savings." You see, we're all such frenzied consumers that if we weren't obligated to hand over that extra $200 every month as part of the mortgage payment, we'd blow it on takeout pizza and the latest designer duds. Therefore, the savings imposed upon homeowners by the buildup of equity is essential.
The trouble with that reasoning is that it's ultimately self-defeating. If you don't learn financial self-control, you'll eventually get yourself in trouble one way or another. Home equity is a fine thing, but it's no substitute for learning how to save. If you know you would just blow that $200 per month, then address the problem at its root: learn how to save that money. That will do you a lot more lasting good than counting on the mortgage payment to help you build up savings behind your own back.
Capital appreciation, yum yum.
I can see you frowning at me. I know what you're thinking. What about the fact that houses appreciate in value, so that if you buy a home and house prices continue to rise in your area, you can turn a nice profit on it a few years later? The key to looking at this realistically is to consider what you would do when you sell your house. If you take your gains and use them to buy a less expensive home (either a more modest home in the same area or an equivalent home in a cheaper area), then you will have genuinely benefited from your home's rise in value.
But if you "trade up" or even just buy an equivalently priced home in the same area, it's a wash. Why? Because your house wasn't the only one increasing in "value." The price tags on other homes around you were getting bigger and bigger at the same time. Well, one thing is different: you'll pay more out of pocket in closing costs and property taxes (since those are based on a percentage of the home's price). Rising housing prices are not a win-win situation.
What if you just want to stay put? Then there's a downside to seeing your home appreciate in value. Property taxes are based on the assessed value of your home... so that means that in most places, as your house's on-paper value goes up, your tax bill increases. Your house will cost you more to live in, even though absolutely nothing has changed except for the willingness of other people to pay more for houses in your neighborhood.
The housing market has never declined!
The argument for houses as an investment is a valid one, but in its "myth" form it often takes the approach of touting houses as an outstanding investment because the housing market has never declined. That's true... as a national average. Particular areas can and frequently do decline. While areas that merely putter along in terms of housing appreciation generally don't go down much, areas that go through phases of booms have a nasty tendency to go bust every so often. If you're content to stay put, that's not a problem at all... but if you need to move after housing prices have gone "pop," you could very well end up losing money on the deal, especially after you take into account the costs of selling it.
Whoops, I forgot I'd have to pay for that...
Now that we've dealt with some of the myths that tend to associate themselves with home ownership, let's take a look at some of the things that just get forgotten or overlooked. One of these is just how many miscellaneous expenses are associated with home ownership.
To begin with, the process of buying and selling a house is not cheap. You'll need to pay a fee to the realtor on each end. When you buy, you'll need to pay for a house inspection, and most likely a lawyer to help you with the contract. These are as much a part of the cost of the house as the house's actual price tag. Are you planning on getting new furniture or draperies for the house? Do you need to buy a lawn mower?
There are also the recurring expenses of home ownership... these are all things you don't have to deal with as a renter, and these do add up:
Property taxes.
Homeowner's insurance
Repairs to the house
General maintenance
Condo fees
The overall financial picture may very well look better with home ownership, but it's a lot better to consider all the pieces beforehand. If you make yourself "house poor" by putting all your resources toward that mortgage payment, the effect of any smaller unexpected expense can be distinctly unpleasant.
Cost trade-offs
"Rent vs. buy" considerations generally compare apples to apples: how much it would cost to rent an equivalent house. That makes sense, except that in the real world, it's rarely quite that neat and tidy. Let's say you rent an apartment for $800 in the same city where you work, and you decide you want to buy a house in the suburbs instead. You may be able to find a place for what looks like the right price, but make sure to consider all the angles... most notably, your commute. If you live very near one person's job, even a two-income family can get by nicely with just one car, or even no car at all, but as commute distances stretch out, that becomes less feasible. How much of your housing "savings" get eaten up with the cost of having a second car? Of paying for gasoline for the longer commute?
No more wheels on your toolbox
It's a common catchphrase that renting is just "throwing money away." It's not. One of the things that renting buys you, in addition to a roof over your head, is flexibility.
I have an acquaintance who is an auto mechanic. He has a very positive attitude about his work. "My toolbox has wheels," he says, meaning that he can pick up and change jobs on a moment's notice, with no fuss. If you rent, your toolbox has wheels. If your finances change abruptly, you can move to a new apartment. If you decide to move to another city or state for a different (and better) job, it's easy to do, and at worst you lose your security deposit.
Are you interested in living in a different part of the country? Would you like to try a different job, one that would require moving? If you can roll your toolbox easily from one place to the next, you can be flexible enough to roll with life's punches and take advantage of unexpected opportunities. But if you own a house, it's not that easy. You have to find a buyer... not always an easy task, depending on the state of the economy where you live. Depending on the market, that great job offer in another state might coincide with a lackluster housing market, so you end up at a loss after you pay the realtor's commission. You might find yourself passing up on potential opportunities, because of the hassle and cost involved with selling your house. What figure can we put on opportunity costs?
Home ownership ties you to an area, for good or for bad. If you're very happy with your current job and community, or if you're a retiree who has no reason to move, then there's no need for your toolbox to have wheels. But it's wise to take this factor into account when you weigh the pros and cons of settling down in a house.
When all's said and done...
Maybe it's just that I'm a contrary person by nature, but the fact that the media pushes the "miracle of homeownership" so enthusiastically makes me want to scrutinize it that much harder. There are many good reasons to buy a house, both financial and emotional, but even if buying a house is a smart move for many people, a lot of the time, that doesn't mean it's the best move for everyone, all the time. When you're contemplating making a purchase that will tie you to the bank for 30 years, and that will cost you many times your annual salary, doesn't it make sense to consider whether it's really the right thing to do for you at that moment?
"I'd imagine the people that run feel like real fools when the truth comes out."
ReplyDeleteBut the theater is empty, nonetheless, and likewise, prices will drop as the masses continue not buying.
Imposter:
ReplyDeleteIt would be interesting to see a major news organization do a story on how much the bubble myth is contributing to the slowdown. People thinking they'll get something for nothing if they "just wait".
You yell "fire" in a crowded theater and people run ... even if there isn't a fire. I'd imagine the people that run feel like real fools when the truth comes out.
November 29, 2007 12:47 PM
The truth is even though prices are down elsewhere in the country, this does not afffect the District, and certainly not my area, because we all know they are not building anymore houses in dupont. Sure, prices may fall elsewhere but surely not here!
Note: I have not only reported the imposter to Google, but also to the NAR, NRA, Lawrence Yun, and of course, my personal hero David Lereah! Forget about knocks on the door, they'll be barging it down, because there is only once Lance, and I will not be imitated.
LANCE! LANCE! LANCE!
ReplyDeleteTHERE'S A REAL ESTATE BUBBLE... WAKE-UP! IT IS THE BIGGEST BUBBLE IN HISTORY. LANCCE! WAKE-UP!
Yeah right, Lance. Why don't you also do a study about how much the media crying "free money" during the boom contributed to rising prices? People sure feel like fools now that it is obvious the money wasn't free.
ReplyDeleteYeah I agree with Lance
ReplyDeleteI have not seen the fire sale despite the spins of the media. Just some paranoia driven mini-sales
-Fresh
Ok look forcasting is a very tough business, especially in a housing market like washington DC.
ReplyDeleteHowever, I completely agree that anyone who is being paid by an organization is bogus and obviously needs to reveal who is filling their pockets and influencing them!
Lance --
ReplyDeletePlease come back to thehousingbubbleblog so that we can crucify you and your alogical, data-free bon mots some more. We miss you!
Remember readers, if there's a panic, it's best to be the first one to panic. And if you're out on the street after somebody yells, "Fire", maybe it's time to go home. To your rented or paid-off home, of course.
MrBubble
Lance:
ReplyDeletePlease tell us why your blogger number changed on April 9th 2007.
As Mrbubble notes, in investing, its best not to panic. But if you are to panic, make sure you are the first to panic.
Look at the Florida government fund. Salaries are being threatened. Now, hopefully all of the teachers, police, and firefighters get paid. But what if they don't?
When is the last time you heard about a government missing payroll due to bad investments?
Last time it was well into the recession.
http://en.wikipedia.org/wiki/Robert_Citron
This time, its leading:
http://www.news-press.com/apps/pbcs.dll/article?AID=/20071130/NEWS01/71129068/1014/BUSINESS
(Hopefully the link works.)
Trying to pretend this isn't happening isn't working anymore. Investors have lost far too much money for the mortgage market to recover. Too many homes are owned by wanna be Trumps who are bleeding cash and will be unable to hold onto their properties. Cuts in construction spending have hit commercial real estate too.
We'll have laws soon keeping government and retirement funds out of real estate. Yes, its going to get that bad.
Got popcorn?
Neil
Looks like all the doomsdayers waiting for all of the subprimes to re-adjust may just be out of luck...and waiting on the sidelines for a "cheap" home forever!
ReplyDeletehttp://www.washingtonpost.com/wp-dyn/content/article/2007/11/30/AR2007113002627.html?hpid=topnews
I suggest that all homedebtors that take the tax payers bail out go to this site
ReplyDeleteSubtle Confessions and confess
their sin of taking our money to pay for your greed. How do you sleep at night!?
From anon's link:
ReplyDeleteDeal in the Works To Freeze Rates on Subprime Loans
All I can say is the law of unintended consequences. Due to the losses that will result from investing in CMBS... This will tank home prices faster than if they had left it alone. Chuckle.
Why? Its guaranteed to bankrupt most of the counties of Florida and probably the state due to their poorly invested fund. Its guaranteed to tighten up the mortgage market. Its also going to send under quite a few of the Connecticut based hedge funds... Its almost as bad as Smoot-Hawley.
http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act
This makes it wiser to wait and park money outside of the dollar. :(
Got popcorn?
Neil
Anonymous said...
ReplyDelete"I suggest that all homedebtors that take the tax payers bail out go to this site
Subtle Confessions and confess
their sin of taking our money to pay for your greed. How do you sleep at night!?
December 01, 2007 11:25 AM"
You gotta luv it! ... This from someone who was hoping to profit over other people's foreclosures!
This is like the "yell at Lance" blog. Real Lance or faux Lance. For better or worse.
ReplyDeleteI really really really like the post from 3:01 PM on 11/29. This poster is really getting at the crux of the issue: Depending on market conditions and other assumptions, owning makes more sense than renting, but as this poster clearly points out, that is NOT ALWAYS TRUE.
A useful analogy: Do you lease (rent) or buy your car? For a wide variety of reasons, most people buy their cars (and most financial advisors suggest that leasing is a sucker's bet.) But if you change the terms and/or conditions underlying car ownership vs. leasing, it is no longer clear that leasing a car is a bad deal. You may say, "That's crazy, why would you ever lease a car?" But you have to think about the assumptions/conditions underlying that evaluation.
So the upshot is, for Lance, Lance-the-imposter, and anyone else out there who stills sings the praises of buying vs. renting, at what point would YOU rent rather than buy? What conditions would make renting more sensible than buying for you? You really need to think about this b/c as 11.29/3:01 points out, the answer is not clearcut. When the market was running up at 20%/year, it was generally an easier decision since that appreciation swamped lots of the other variables. But with a flattening/downturn in the market, you have to THINK about things.
And I don't think that buying is obviously better than renting, either in general or given current conditions.
Anonymous said...
ReplyDelete“Looks like all the doomsdayers waiting for all of the subprimes to re-adjust may just be out of luck...and waiting on the sidelines for a "cheap" home forever!”
Wow! Government hand outs! Yea……everything is A OK in the housing industry! Nothing to see here folks…move along! Buynoworforeverbepricedout!Theyarentmakinganymoreland!Nowisaperficttimetobuy!
Looks like all the doomsdayers waiting for all of the subprimes to re-adjust may just be out of luck...and waiting on the sidelines for a "cheap" home forever!
ReplyDeleteWell, if you actually read the article it states the following:
"Those involved in the deal said alliance members were aware that some homeowners, no matter how much aid they receive, might never be able to afford their homes. They also do not want to help real estate speculators. The aim would be to reach homeowners who, with lower interest rates, could keep up their monthly payments."
Since the majority of subprime loans went to borrowers with ultra low teaser rates, IO, and neg am, a few percentage points is not going to help them. Also, speculators played a big part. Sorry, but the housing bubble is still going to deflate, despite a few people keeping their homes.
Hey, Sen. Clinton is talking about freezing foreclosures! Woo hoo! Free rent for everyone. :) Ok, this will bankrupt the states of Florida and Wisconsin. Which other ones?
ReplyDeletehttp://online.wsj.com/article/SB119663648146011092.html?mod=googlenews_wsj
And what about pension plans? This will bankrupt quite a few. Ouch.
401k's? Hurt.
This screams get your money out of the dollar and wait for the dust to settle. Another Smoot-Hawley act. :( But if there is one thing politicians do well, its over-react and make the problem worse.
Or does anyone really think this won't end the CMBS market? Think about how many jobs that erases. Ugh... Not many homes will trade sans mortgages. Talk about geographic lock. This won't prop up the market, it will make it so no one will risk their money lending on real estate.
Got popcorn?
Neil
People who own homes have a vested interest in their community. They care more about what goes on b/c they are tied to an area -- this is on purpose. The federal gov't provdes the mortgage interest deduction for this very reason. Homeowners like other homeowners b/c it provides stability w/in the community. That is something that renting cannot buy.
ReplyDeleteI would be interested to see if the most desirable areas to live also have a high rate of owner-occupied property.
hi lance!
ReplyDelete"I would be interested to see if the most desirable areas to live also have a high rate of owner-occupied property."
ReplyDeleteI was at Nieman Marcus yesterday, two different people, both clearly filthy rich, were talking about how nice their new apartments are...that's the thing about DC, lost of rich people, but very transient, not a lot of them stay for more than a few years = no buy.
People who own homes have a vested interest in their community. They care more about what goes on b/c they are tied to an area -- this is on purpose. The federal gov't provdes the mortgage interest deduction for this very reason. Homeowners like other homeowners b/c it provides stability w/in the community. That is something that renting cannot buy.
ReplyDeleteRight, but what happens when a large number get foreclosed and their houses sit empty and crackheads break in and squatter in the houses? That can't be good for an owner occupied community can it?
This just in on why the proposed gov't bailout won't work:
ReplyDeleteNational Mortgage News. “The big event in Washington is the Office of Thrift Supervision summit on the mortgage mess…officially, OTS is calling it National Housing Forum. The there is plenty of talk in the media about Treasury unveiling a big plan where servicers will ‘reset’ subprime ARMs.”
“One mortgage executive told us that the big problem is payment-option ARMs where the consumer has a rate of 3%. A rate that low cannot be artificially maintained by servicers. In other words, if Treasury thinks a servicer (or end investor) will roll over a 3% rate, the government is dreaming.”
“One industry veteran — requesting his name not be used — raised another issue: ‘OK, so you keep the rate the same for the subprime borrower. Then the prime borrower who has been current all along and who also has an ARM says, ‘Hey me too. Keep my rate the same.’”
“This industry vet said Treasury has to either come up with a plan where all ARM rates are frozen or none are. ‘Think about the lawsuits,’ he said.”
http://data.nationalmortgagenews.com/columns/hearing/
Anonymous said...
ReplyDelete""I would be interested to see if the most desirable areas to live also have a high rate of owner-occupied property."
I was at Nieman Marcus yesterday, two different people, both clearly filthy rich, were talking about how nice their new apartments are ... "
Anon 7:24 ... "filthy rich" does not equal "taking care of where one lives and giving back to the community in which one resides". Owners with a vested interest to do that because, well, they have a vested interest in it ... irrespective of how little or how much money they make at their jobs.
It's kind of the converse to "I rent and don't have to take care of my place ... something breaks and I just get it fixed (i.e., no incentive to see it doesn't break in the first place.) Or the "If I'm renting I can pick up and leave whenever I want!"
This just in:
ReplyDeleteDeflationary Credit Downturn Is Underway
In the U.S., credit flowing to American companies is drying up at a pace not seen in decades. This idea was discussed in Lenders Rapidly Tighten Credit. The same thing is happening in the UK there are Pleas for rate cut as interbank loans dive:
The sterling interbank market has collapsed at the fastest rate in modern history, prompting pleas for immediate rate cuts from a chorus of top British economists.
http://www.minyanville.com/articles/index/a/15091
Another drop in prices, now down to $379,900, from an all time peak of $500,000.
ReplyDeletehttp://www.housingtracker.net/askingprices/DC/Washington-Arlington-Alexandria/
Hahahaha. Click here for a humorous explanation of the subprime mortgage problem.
ReplyDeleteI went to get pre approved for a loan in September just to see what I could get. I told the bank rep I didnt want to spend more than $2,500 a month total for a mortgage. She said I could get $350,000 but with how much I make I could get much more money. I said im not comfortable with paying any more.. The moral of the story is, previous to the bubble people spent/were given by banks 26% (I need to check but this is close) of their salary on housing costs a month. Now banks give up to 45%. Im not buying a house until I find a nice house at 26% of my salary and since my household income is 50K more than the average salary in MD then I should be able to get a better house than average... Does this make sense?
ReplyDeleteI just want to say that the argument about home ownership begetting interest in your community is just propaganda bull. I know renters who are very involved in their community. I think it is a function of one's own desire to be involved. I've known plenty of hermits who owned their houses and never got involved in the community that they lived in for many, many years even in a small town. Maybe if one has kids, they might be more interested in the education system and things that revolve around that, but to say owning a house is the key to community involvement is just unsubstantiated. Perhaps as an owner you would be more interested in zoning laws and property tax issues, but other than that, a renter could be just as involved. It's a cute little propaganda slogan for realtors like Century 21but I just don't buy it.
ReplyDeleteAnon said:
ReplyDelete"Im not buying a house until I find a nice house at 26% of my salary and since my household income is 50K more than the average salary in MD then I should be able to get a better house than average... Does this make sense?"
Whenever I have to use the word should in asking myself if I am making a good decision, I have to wonder if I'm not letting a little "wishful thinking" get in the way of logic ... Yes, things should be a certain a way ... Just like everything always should be fair. But is it?
"since my household income is 50K more than the average salary in MD then I should be able to get a better house than average... Does this make sense?"
ReplyDeleteNo. This would work if every house changed hands every year - people with above average means would get above average houses. But while houses may have a calculable average value, many of them were bought 5, 10, 20, 30 years ago, and people making less money than you are making the payments comfortably. That's one of the benefits of owning longterm.
ANON said:
ReplyDelete"No. This would work if every house changed hands every year - people with above average means would get above average houses. But while houses may have a calculable average value, many of them were bought 5, 10, 20, 30 years ago, and people making less money than you are making the payments comfortably. That's one of the benefits of owning longterm."
Additionally, looking at where one's income falls on the distribution scale doesn't take into account people's relative wealth. There are many retired couple out there who have very limited income but lots in the way of savings with which to purchase a house. Ditto "move-up buyers" using their equity to get lower (or no) payments.
"begetting interest in your community is just propaganda bull. "
ReplyDeleteWhat did you expect from lance?
According to him prices are going to be moving up again very very soon. (he said that this spring)
"people making less money than you are making the payments comfortably. That's one of the benefits of owning longterm."
ReplyDeleteAs long as you didn't buy in a bubble, that would be a correct statement.
But seeing as sellers are still deluded in bubbleland and dreaming of huge profits they aren't entitled to, ain't no benefit to buying now.
Thanks for playing lance-a-lot-like
"But while houses may have a calculable average value, many of them were bought 5, 10, 20, 30 years ago, and people making less money than you are making the payments comfortably. That's one of the benefits of owning longterm."
ReplyDeleteExcellent point.
2 of my neighbors own their places outright, one is retired on a fixed income, the other is a high-tech, high-wage professional.
The retiree bought in 1974 and paid it off on schedule. The other bought in 1985 and noticed that the $60,000 in their checking account would pay off their house, so they just did it.
"As long as you didn't buy in a bubble, that would be a correct statement.
ReplyDeleteBut seeing as sellers are still deluded in bubbleland and dreaming of huge profits they aren't entitled to, ain't no benefit to buying now.
Thanks for playing lance-a-lot-like"
Wow, somebody is angry about something. I just sold a condo at a very nice profit. Now go cry.