asianinvasian_IHB
New member
acpme said:
Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.
When are we going to see mortgages rates going up to 8-10%
- Thread starter PANDA_IHB
- Start date
NEW -> Contingent Buyer Assistance Program
Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.
are you dim?
that $120k, had he bought instead, would be gone now (it went to pay interest, very little to principal in the first few years), and since the average house price is now early 2004, he would likely have lost his down payment too!
awgee realizes everything just fine. You don't seem to understand the simplest basics of consumer finance.
dim sum?
No one said anything about interest. If you don't want to pay interest then pay off the mortgage, or better yet, don't get one to begin with, like us asians!
I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?
This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.
Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.
Throwing money away is a valid claim to make when rent variance is very small compared to the morgage you would be paying for the same unit. The question is what you do with the extra savings. What is your opportunity cost. Housing is an investment just like everything else, but if its giving you a negative return while you could be placing that cash in something that gives you a positive return then you're the moron for ignoring it.
I'm in a different boat all together. I would rent the rest of my life to be honest just because my cost of placing 20% down or more is astronomical compared to what others might calculate. I don't include a 5% rate of return as my loss of opportunity on 20% down. I calculate a much higher rate compounded out 30 years. So unless the home is appreciating, I have a hard time even putting 20% down on a home that has equal rent/morgage ratio. 150K x r% x 30yr = $$$,$$$,$$$
Look at it as entertainment. Remember it's impossible to be rich if everybody viewed things intelligently. You need idiots around to #1 make yourself feel better, and #2 to profit from.
You guys are missing the point. A question of buying is very personal. A question of happiness is even more so.
For Awgee or anybody here to take upon themselves to answer it by saying to wait, wait, wait, till when? is short sighted in itself.
What is the difference between this versus somebody saying buy, buy, buy?
You shouldnt take what's happen 2 years ago as an example because you would only have to go back to 7 years ago for a counter example.
Yeah! Let's do it...that's always fun!
I think some folks need to realize that everybody has their way of doing things.
It is neither stupid nor smart, it is their way and can have the same results even
though the philosophy is different.
Back in 2005, $2500 a month could rent you a 4br/2ba. That would have probably cost you about $600k in 2005. So running the numbers through the calculator using 20% down and some conservative expenses puts monthly cost at about $3300 a month.
4 years later, you've spent about $158,400 and add your DP it comes up to $278,400.
That same house is probably worth about $520k. You've probably paid the principal down about $10k. So if you sell, you'll net out close to nothing... losing almost your entire DP.
In this case, waiting to buy nets you at the very least, $38,400. And... you wouldn't be out your $120,000 that you put down.
This is the reality that I have to deal with (with higher numbers of course)... I wish I had thought about rental parity back then.
My point is that had real estate prices progressed normally; that is, proportional to inflation and incomes, then home prices would have been much closer to rental parity during this decade and all the renters who are now sitting on large down payments would have bought homes much earlier because we would have reached those cross points long ago. Today's rent money would be building up equity in the home we would have purchased. Instead, we are throwing our money away on rent because the lenders, borrows & politicians made home ownership a losing proposition for practically this wholde decade.
They retarded the normal growth process of that small percentage of responsible people who exactly or intuitively knew that the numbers for owning a home didn't pan out.
And yet John Cambell was re-elected with 30'000 votes to spare. A big "screw you" to all the responsible renters who have been waiting a long time to buy their first home in his jurisdiction.
No, you are putting words in my mouth. I said that it is stupid to say that affordability is the only factor in response to your saying that one should buy a home when one can afford it. You are the one who did not recognize how many factors, personal and otherwise, are used to buy a home. Again, affordability is only one factor one should consider when deciding to purchase a house or anything else and to say that one should buy when one can afford it is stupid. You failed to recognize and communicate how personal a home buying decision is.
Here is your post in case you do not remember.
"For the average person,
The best time to buy is when you can afford to do so!
Dont overthink or make things more complicated than that…"
So considering anything other than affordability is too complicated for the average person and whatever personal reasons they may have other than affordability is overthinking? That is just plain stupid.
Who said I was taking the last two years as an example. You really need to stop making strawman arguments. I never said anything about the last two years. I base my analysis of the Southern California re market on the last seventy years. Do you have any idea how long the average So Cal re cycle lasts from one top to the next or from one bottom to the next?
You bring up a good example. Let's say after 30 years the value goes back to 840k, so they have that much at least. Had they instead been renting at 2.5k/month during that time they'd be down 900k, permanently.
But the key is they can afford it. No one is suggesting anyone buy a house they can't afford. During the bubble most bought when they couldn't really afford it.
You are ignoring the differential between the cost of ownership and the cost to rent. Obviously this family is paying way more to own vs. rent. If they rented the same house for cheaper, the difference between cost to own and cost to rent produces a return the compounds, and compounds, and compounds over those 30 years theortically.
$500 per month savings componding at 6% over 30 years is $500K.
Many reasons. Wall Street doesn't make gazillions, its broke, and going to jail. Thats just the tip of it, not to mention that New York is cold and I hate the cold.
FYI, I invest because it thrills me, not because of the money. I can live the rest of my life with what I have today, don't need anymore...maybe several more kids.
If you really want to know about my life, I suggest you PM me with a place/time and a cup of coffee waiting for me, and I'll spill you my life story if it really fascinates you. Just not now, and especially not on this thread as it relates to housing and not my personal life.
I'm not ignoring the difference because this is obviously an extreme example. What if their rent was 10k? If you buy an 840k house now do you think it will go down to 310k?
Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.
freedomCM_IHB
New member
asianinvasian said:
are you dim?
that $120k, had he bought instead, would be gone now (it went to pay interest, very little to principal in the first few years), and since the average house price is now early 2004, he would likely have lost his down payment too!
ipoplaya_IHB
New member
asianinvasian said:
awgee realizes everything just fine. You don't seem to understand the simplest basics of consumer finance.
asianinvasian_IHB
New member
freedomCM said:
dim sum?
No one said anything about interest. If you don't want to pay interest then pay off the mortgage, or better yet, don't get one to begin with, like us asians!
jbenko_IHB
New member
asianinvasian said:
I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?
This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.
Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.
Throwing money away is a valid claim to make when rent variance is very small compared to the morgage you would be paying for the same unit. The question is what you do with the extra savings. What is your opportunity cost. Housing is an investment just like everything else, but if its giving you a negative return while you could be placing that cash in something that gives you a positive return then you're the moron for ignoring it.
I'm in a different boat all together. I would rent the rest of my life to be honest just because my cost of placing 20% down or more is astronomical compared to what others might calculate. I don't include a 5% rate of return as my loss of opportunity on 20% down. I calculate a much higher rate compounded out 30 years. So unless the home is appreciating, I have a hard time even putting 20% down on a home that has equal rent/morgage ratio. 150K x r% x 30yr = $$$,$$$,$$$
jbenko_IHB
New member
awgee said:
Look at it as entertainment. Remember it's impossible to be rich if everybody viewed things intelligently. You need idiots around to #1 make yourself feel better, and #2 to profit from.
rickhunter_IHB
New member
trrenter said:
You guys are missing the point. A question of buying is very personal. A question of happiness is even more so.
For Awgee or anybody here to take upon themselves to answer it by saying to wait, wait, wait, till when? is short sighted in itself.
What is the difference between this versus somebody saying buy, buy, buy?
You shouldnt take what's happen 2 years ago as an example because you would only have to go back to 7 years ago for a counter example.
Gohabsgo_IHB
New member
awgee said:
Yeah! Let's do it...that's always fun!
rickhunter_IHB
New member
awgee said:
I think some folks need to realize that everybody has their way of doing things.
It is neither stupid nor smart, it is their way and can have the same results even
though the philosophy is different.
irvine_home_owner_IHB
New member
I would like to address this since it is similar to my situation.asianinvasian said:
Back in 2005, $2500 a month could rent you a 4br/2ba. That would have probably cost you about $600k in 2005. So running the numbers through the calculator using 20% down and some conservative expenses puts monthly cost at about $3300 a month.
4 years later, you've spent about $158,400 and add your DP it comes up to $278,400.
That same house is probably worth about $520k. You've probably paid the principal down about $10k. So if you sell, you'll net out close to nothing... losing almost your entire DP.
In this case, waiting to buy nets you at the very least, $38,400. And... you wouldn't be out your $120,000 that you put down.
This is the reality that I have to deal with (with higher numbers of course)... I wish I had thought about rental parity back then.
Gohabsgo_IHB
New member
blackvault_cm said:
Major Schadenfreude_IHB
New member
awgee said:
My point is that had real estate prices progressed normally; that is, proportional to inflation and incomes, then home prices would have been much closer to rental parity during this decade and all the renters who are now sitting on large down payments would have bought homes much earlier because we would have reached those cross points long ago. Today's rent money would be building up equity in the home we would have purchased. Instead, we are throwing our money away on rent because the lenders, borrows & politicians made home ownership a losing proposition for practically this wholde decade.
They retarded the normal growth process of that small percentage of responsible people who exactly or intuitively knew that the numbers for owning a home didn't pan out.
And yet John Cambell was re-elected with 30'000 votes to spare. A big "screw you" to all the responsible renters who have been waiting a long time to buy their first home in his jurisdiction.
awgee_IHB
New member
rickhunter said:
No, you are putting words in my mouth. I said that it is stupid to say that affordability is the only factor in response to your saying that one should buy a home when one can afford it. You are the one who did not recognize how many factors, personal and otherwise, are used to buy a home. Again, affordability is only one factor one should consider when deciding to purchase a house or anything else and to say that one should buy when one can afford it is stupid. You failed to recognize and communicate how personal a home buying decision is.
Here is your post in case you do not remember.
"For the average person,
The best time to buy is when you can afford to do so!
Dont overthink or make things more complicated than that…"
So considering anything other than affordability is too complicated for the average person and whatever personal reasons they may have other than affordability is overthinking? That is just plain stupid.
Who said I was taking the last two years as an example. You really need to stop making strawman arguments. I never said anything about the last two years. I base my analysis of the Southern California re market on the last seventy years. Do you have any idea how long the average So Cal re cycle lasts from one top to the next or from one bottom to the next?
asianinvasian_IHB
New member
blackvault_cm said:
You bring up a good example. Let's say after 30 years the value goes back to 840k, so they have that much at least. Had they instead been renting at 2.5k/month during that time they'd be down 900k, permanently.
But the key is they can afford it. No one is suggesting anyone buy a house they can't afford. During the bubble most bought when they couldn't really afford it.
ipoplaya_IHB
New member
asianinvasian said:
You are ignoring the differential between the cost of ownership and the cost to rent. Obviously this family is paying way more to own vs. rent. If they rented the same house for cheaper, the difference between cost to own and cost to rent produces a return the compounds, and compounds, and compounds over those 30 years theortically.
$500 per month savings componding at 6% over 30 years is $500K.
jbenko_IHB
New member
Roo said:
Many reasons. Wall Street doesn't make gazillions, its broke, and going to jail. Thats just the tip of it, not to mention that New York is cold and I hate the cold.
FYI, I invest because it thrills me, not because of the money. I can live the rest of my life with what I have today, don't need anymore...maybe several more kids.
If you really want to know about my life, I suggest you PM me with a place/time and a cup of coffee waiting for me, and I'll spill you my life story if it really fascinates you. Just not now, and especially not on this thread as it relates to housing and not my personal life.
asianinvasian_IHB
New member
ipoplaya said:
I'm not ignoring the difference because this is obviously an extreme example. What if their rent was 10k? If you buy an 840k house now do you think it will go down to 310k?
jbenko_IHB
New member
Let me clarify what I meant earlier when I talked about opportunity costs. When I re-read my post, I can see how it can be taken the wrong way.
Opportunity cost is an opportunity you are forgoing in order to pursue something else. In my case I have to take what my average yearly return is in the stock market, and use that as my opportunity cost. If I have 1M dollars, and my average return is 10% then I shouldn't take any other investment if it doesn't yield me at least 10%. Everybody has different opportunity costs and they are not always financial. If you are a lawyer working for a lawfirm, then perhaps you need to save that money and start your own firm. If you enjoy baking perhaps you should save and start your own pastry shop. If you are a MRI tech, perhaps you should start your own outpatient imaging clinic once you saved enough cash. I'm sure for awgee his opportunity cost is gold. He looks at 200K and decides if he should invest in gold today or invest in a home today.
Thats all I meant by my statement, I didn't meant sound like I return more than the 5%, I just meant that we shouldn't just apply a 5% Opp. Cost, and instead to be more creative, use your skills, and explore your possible opportunities. We all have our niche.
Opportunity cost is an opportunity you are forgoing in order to pursue something else. In my case I have to take what my average yearly return is in the stock market, and use that as my opportunity cost. If I have 1M dollars, and my average return is 10% then I shouldn't take any other investment if it doesn't yield me at least 10%. Everybody has different opportunity costs and they are not always financial. If you are a lawyer working for a lawfirm, then perhaps you need to save that money and start your own firm. If you enjoy baking perhaps you should save and start your own pastry shop. If you are a MRI tech, perhaps you should start your own outpatient imaging clinic once you saved enough cash. I'm sure for awgee his opportunity cost is gold. He looks at 200K and decides if he should invest in gold today or invest in a home today.
Thats all I meant by my statement, I didn't meant sound like I return more than the 5%, I just meant that we shouldn't just apply a 5% Opp. Cost, and instead to be more creative, use your skills, and explore your possible opportunities. We all have our niche.