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Posted by Default User on May 28, 2008, 12:19 pm
John A. Weeks III wrote:
> In article
> beliavsky@aol.com wrote:
> > I think this article on the buy vs. rent decision is good, but the
> > author ignores a factor in favor of buying -- over the long term,
> > house prices can be expected to rise at the rate of inflation, on
> > average.
> Since we are down over 14% so far this year, and 8% last year
We are? Real estate is so regional that it's hard to discuss it in
general. Many areas of the country never really had a bubble. So while
prices are somewhat down or stable, we aren't seeing the kind of drops
that you're describing.
As far as rent vs. buy, in a brief, non-rigorous, purely anecdotal
check, I couldn't find any similar houses (3bed, 2bath, 1750sf) in my
area that rent for what I pay in mortage/tax/ins/upkeep. And that's
with having a 15-year mortage. Had I selected another 30-year when I
refinanced in 2001, my totals would probably be $150 month less or so.
However, that was a small sample, those that have advertised in the
local paper recently. There weren't many comparable properties to look
at. An agency would probably have a better selection and a fuller
picture.
Brian
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Posted by joetaxpayer on May 28, 2008, 1:05 pm
Default User wrote:
> John A. Weeks III wrote:
>
>
>>In article
>> beliavsky@aol.com wrote:
>
>
>>>I think this article on the buy vs. rent decision is good, but the
>>>author ignores a factor in favor of buying -- over the long term,
>>>house prices can be expected to rise at the rate of inflation, on
>>>average.
>
>
>>Since we are down over 14% so far this year, and 8% last year
>
>
> We are? Real estate is so regional that it's hard to discuss it in
> general. Many areas of the country never really had a bubble. So while
> prices are somewhat down or stable, we aren't seeing the kind of drops
> that you're describing.
Agreed about the local aspect. Zillow.com, which seems pretty accurate
for my area, shows my house down 12% off the peak which occurred around
mid-2005. For what it's worth, we are down 4% YTD. My retirement plan is
to assume we will stay in this house. If we downsize, maintenance goes
down, and a bit of cash comes out, but I never planned the house to add
to my net worth. Fresh data sometimes lags, but I'll maintain that right
through 2005, there was no real bubble. The huge bubble was in the late
70's through early 80's. I charted this and provided supporting data
sources at http://www.joetaxpayer.com/housemort2.html
Joe
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Posted by kastnna on May 28, 2008, 7:30 pm
> Default User wrote:
> >>Since we are down over 14% so far this year, and 8% last year
>
> > We are? Real estate is so regional that it's hard to discuss it in
> > general. Many areas of the country never really had a bubble. So while
> > prices are somewhat down or stable, we aren't seeing the kind of drops
> > that you're describing.
>
> Agreed about the local aspect. Zillow.com, which seems pretty accurate
> for my area, shows my house down 12% off the peak which occurred around
> mid-2005. For what it's worth, we are down 4% YTD. My retirement plan is
> to assume we will stay in this house. If we downsize, maintenance goes
> down, and a bit of cash comes out, but I never planned the house to add
> to my net worth. Fresh data sometimes lags, but I'll maintain that right
> through 2005, there was no real bubble. The huge bubble was in the late
> 70's through early 80's. I charted this and provided supporting data
> sources athttp://www.joetaxpayer.com/housemort2.html
> Joe
Thirded! My neighborhood (three phase subdivision) is only 20%
occupied. Our phase is the oldest and only 50% sold. My wife and I
have noticed that prices haven't reduced at all. Rather, houses are
sitting on the market about twice as long and new construction has
slowed (but not stopped). Nothing solid, just our everyday
observations.
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Posted by Mark Bole on May 28, 2008, 8:26 pm
Default User wrote:
> John A. Weeks III wrote:
[...]
> As far as rent vs. buy, in a brief, non-rigorous, purely anecdotal
> check, I couldn't find any similar houses (3bed, 2bath, 1750sf) in my
> area that rent for what I pay in mortage/tax/ins/upkeep. And that's
> with having a 15-year mortage. Had I selected another 30-year when I
> refinanced in 2001, my totals would probably be $150 month less or so.
You are confusing cash flow with income/expense. Isn't part of your
mortgage payment going to principal? That's not an expense. Don't you
have equity tied up in your house? That's opportunity cost. Don't
forgot those extra transaction costs every time you took out a loan,
what if that money had been invested instead? And then there's that 6%
or more hit you'll take when you do eventually sell.
Your estimate of upkeep is probably low. It's pretty much a given that
after twenty years, even with replacing a few water heaters, kitchen
appliances, HVAC, and a new roof, parts of your house will still be
seriously out of date compared to the market. I'm talking cabinets,
flooring, countertops, fireplaces, windows, landscaping -- the big
ticket items.
No one is at the mercy of a landlord. It's much easier to leave a bad
rental situation without excess cost than a bad homeowner situation.
I've been a homeowner for nearly 25 years, also a landlord and renter on
several occasions over the years. But I have no illusions as to the
true economic costs of home ownership.
-Mark Bole
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Posted by Coffee's For Closers on May 30, 2008, 5:10 am
makbo@pacbell.net says...
> Default User wrote:
> > John A. Weeks III wrote:
> > As far as rent vs. buy, in a brief, non-rigorous, purely anecdotal
> > check, I couldn't find any similar houses (3bed, 2bath, 1750sf) in my
> > area that rent for what I pay in mortage/tax/ins/upkeep. And that's
> > with having a 15-year mortage. Had I selected another 30-year when I
> > refinanced in 2001, my totals would probably be $150 month less or so.
> You are confusing cash flow with income/expense. Isn't part of your
> mortgage payment going to principal? That's not an expense. Don't you
> have equity tied up in your house? That's opportunity cost. Don't
> forgot those extra transaction costs every time you took out a loan,
> what if that money had been invested instead? And then there's that 6%
> or more hit you'll take when you do eventually sell.
Do you mean 6% or more in agent fees? Isn't that just a form of
business overhead, that gets passed onto the end customer (I.e.
the buyer of the house)?
> Your estimate of upkeep is probably low. It's pretty much a given that
> after twenty years, even with replacing a few water heaters, kitchen
> appliances, HVAC,
Huh? "HVAC"? Oh, you must be in one of those countries with
central heating and cooling. My heating is a portable plug-in
unit, and my cooling is an open window. Could be why I get so
grumpy whenever it gets below ten degrees Celcius.
> and a new roof, parts of your house will still be
> seriously out of date compared to the market. I'm talking cabinets,
> flooring, countertops, fireplaces, windows, landscaping -- the big
> ticket items.
However, if you STAY in the house, then it doesn't matter how
fashionable your kitchen countertops are. If you are buying a
house for stable shelter that you own, then it doesn't matter so
much what somebody else thinks of the doors on your cupboards,
or the style of the bathtub, etc, etc.
> No one is at the mercy of a landlord. It's much easier to leave a bad
> rental situation without excess cost than a bad homeowner situation.
While leaving a rental is easier, there are plenty of people
renting in markets with low vacancy rates and high payments. I
have read that, in New York, people resort to paying brokers a
percentage fee (e.g. one month's rent equivalent or more) just to
find a room in a shared apartment. Plus first/last/deposit.
Which really does put many people in a vulnerable situation.
> I've been a homeowner for nearly 25 years, also a landlord and renter on
> several occasions over the years. But I have no illusions as to the
> true economic costs of home ownership.
Well, if I owned my own place, without any imminent plans to
sell, then I could let some things go pretty far. Carpet, paint,
etc looking bad. Kitchen countertop isn't fashionable. I
wouldn't prioritise that sort of thing, as long as the
electricity and plumbing worked, and the roof didn't leak. The
time to really care, would be when approaching a sale, and then
the fix-up costs are overhead. Or if the place is offered for
rental, and the fix-up costs would result in a better quality and
higher-paying tenant.
--
Get Credit Where Credit Is Due
http://www.cardreport.com/
Credit Tools, Reference, and Forum
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guidelines include a request for brevity and another for trimming posts to
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