[QUOTE=Wildncrazy,Oct 22 2007, 12:47 PM] If I had a nickel everytime I'd heard that one and if you'd deducted $10,000 everytime it was true I'd be rich and retired now.

There are just so many things wrong with that statement that I don't even begin to know where to begin.

 

this sentence is self-contradicting. think about it.

 

The bubble will burst...bottom of the market not to come until 2009 or 2010...

http://patrick.net/housing/crash.html

 

Ninh, if your 800k place goes to 700k in 2 years you'll only save 50k (after taking out rent) plus you'll have no equity built up. In the long run you will make money in that house if you stay in it for a while. Even losing a little value isn't bad, because if you lose 10% of the value,(I forget the exact calculation), but in a couple of years you have a break even considering the rent lost, but you have the equity still built up.

It took us a year, and I'd guess my house right now is about 10% down in value, but I bought in a nice desirable neighborhood, so I'm not worried. PLUS i have a 3 car garage!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[QUOTE=s2000raj,Oct 22 2007, 01:36 PM] Ninh, if your 800k place goes to 700k in 2 years you'll only save 50k (after taking out rent) plus you'll have no equity built up.

 

Anyone who tells you to buy an asset that you believe is going to decrease in price when you have an alternative to buying it is not someone you should listen to too often.

Renting is not the devil, but getting in to a big house that you can barely afford in the first place as its value drops steadily is pretty damn close to being in hell.

I am not an expert in real estate, but unless you have a profound understanding of the economic powers that decide how much real estate is worth, or anything that most people have to buy on credit, you aren't either.

In general, buying is superior for a multitude of reasons for the average person. Right now is not "in general" in my opinion.

 

I'll be looking at foreclosure properties as well. I'm not trying to get us into an expensive property. The goal is to find a small safe investment. I'm not really the McMansion type.

Ideally we will find something in one of the more popular areas of the city and target the "smallest house on the block". I don't expect to have 20% liquid to put on the house. My goal is 10%, which isn't half bad coming straight out of school.

 

Nashville is a "safe" market and I would not be apprehensive about price declines. At worst you're looking at a few percentage points TOPS and probably less than 5%. A good rule of thumb is that if the prices didn't skyrocket over the last few years they probably won't fall. This isn't true for Michigan, however, as the high-paying labor market there is collapsing.

My market, Central Florida, is a mess. There is well over a year of unsold inventory, school enrollment is DOWN because young families can't afford it, and prices have come down a good 25-30% already. There is more to come, too. The market here saw housing prices go up 150%-200% over the years; it got very heated. The bubble has popped here and sales are slow. Housing takes a while to come down mainly due to pride on the part of sellers...hence the large inventory.

Renting isn't bad. I rent. I save money doing so. As long as the price of the house is over 130-150x monthly rent you should stay away as renting will be the better choice. Renting in my market is a veritable bargain. You can rent a 700K+ beachside condo for under $2000. A mortgage for that amount would be over $5000 a month PLUS condo fees. Miami is worse...penthouse condos that are appraised north of $1M can rent for $2K.

The other thing I like about renting in FL is the insurance (which has more than tripled lately) is not my problem. Renter's coverage is still dirt cheap. In FL, you are on the hook for 5% of hurricane damage so factor in a few grand every few years...that's also not my problem. Insurance is the prime reason I'm not in the market honestly.

Nashville, though, is not FL. I'd say as long as the price isn't over 130x the income that it would produce it isn't out of line. As far as a house's TRUE ECONOMIC VALUE, CASH IS KING. People over the last few years lost sight of this. It's the same for stocks (except there's an upside to future dividends, but not so much rental income) yet people lose sight of that, too.

Then again most investors are idiots with no financial background it's no surprise. It's these people that make the smarter or savvier ones rich. When your hairdresser talks to you about how much stock they bought or the investment property they bought you know it's time to cash out...NOW.

 

I'm not saying you are wrong. I was giving an example.

As far as the car buying thing goes. DUDE, I am en fuego on that. I decided to put of my purchase for a year, but yes I'm going to get another sports car.

There is one more thing to think about with buying a place: Tax shelter. At the 50% tax bracket you need all the shelter you can get.

 

I own a mortgage company. Here is an email I received recently about the "housing bubble". Facts, not paper selling hype.

"The REAL foreclosure story...




A lot of people are nervous about what they are reading in the newspaper and hearing on TV. But how can you blame them?



The media is bombarding people with reports about the housing decline and the sub-prime mortgage mess.



However, Chief ECONOMIST for the National Mortgage Bankers Association, Doug Duncan decided last week to set the record straight. In a private conversation, Doug said that people have nothing to worry about inTexas.



Some of his defenses were...

The foreclosure problem in this country is really a story about 7 states
The biggest foreclosure problem is in Michigan, Ohio and Indiana. These are predominantly manufacturing states
Since 2001, Michigan has lost 300,000+ jobs
The other 4 states are California, Florida, Arizona and Nevada. In each of these states there has been significant overbuilding. 25% of the foreclosures in these states are on properties that are held by investors who were speculating
California & Florida have been hit very hard
35% of the homes in the USA do not have a mortgage
98% of the mortgages in the USA are performing
Only 9% of all mortgages are sub-prime
75% of all sub-prime mortgages are performing
In the other 43 states, foreclosures have fallen in 2007 from 2006
Right now, our local inventory levels are half the national average and well-priced homes are selling fast.

You cannot expect this type of factual information to be distributed by the news media channels. We have to be telling folks this story.

Help me spread the word..."

Oh, and as far as the renter not being on the hook for the insurance, think again. The landlord passes on all costs. You are paying his interest rate and his costs PLUS a profit.

The biggest issue to me (and I have rented) is that the house isn't yours. There are so many things you can't do. I had 70's foil wallpaper and I had to live with it. I wanted to doll up the landscaping but couldn't so I had to live in an ugly house which, like the car you drive, is a reflection on you.