4s ranch builder price advice

[Anonymous]

Submitted by asianautica on January 24, 2008 – 12:27am.

Where did I even mentioned about being able to afford x payment? Please read Rich’s primer and come back here once you understand his point about fundamental and why we called this a bubble. I’m talking about fundamental, not being able to afford x payment. Can you be 100% sure rate won’t go up if price drop to 00-01 price? I can’t, that’s why I stick to fundamental. Wishful thinking on the way down is no different than wishful thinking on the way up. Enjoy your wishful thinking, I’ll stick to my fundamental, thanks. We can very well see 1985 price too if rates goes high enough.

asianautica, I neglected to post that you weren’t making the “payment” argument per se. Your argument was that if owning would cost you the same as rent, then why not buy? Well, my argument to that was if you buy today when prices are steadily dropping rather than waiting a year (or more) you’re gonna lose money. Period.

And I believe I did base my argument on comparable interest rates. Again, even then, with a lower price house you save on property taxes.

Reread my post.

[an]

marion, how can you be so sure that price will fall below fundamental? There are many forces at work that will affect the price. I’m sorry but I’m not smart enough to account for all the possibility. Your IF case is just as likely as IF price drops to fundamental level and stay flat for a long time and let inflation make the real price undershoot the fundamental. Or IF the FED keep on dropping interest rate, which might then cause a massive inflation and fundamental catch up to price instead of the other way around. There are infinite ways we will get back to fundamental. But all I know is that when price reach fundamental level, that’s a decent time to buy if you can truly afford the place. Do you see my recurring argument yet? If not, let me restate it again, it’s all about fundamental. Also, did I ever say today price is at fundamental? Fundamental is different for different area. That’s why I say do you own calculation for your specific case.

[an]

marion, how can you be so sure that price will fall below fundamental? There are many forces at work that will affect the price. I’m sorry but I’m not smart enough to account for all the possibility. Your IF case is just as likely as IF price drops to fundamental level and stay flat for a long time and let inflation make the real price undershoot the fundamental. Or IF the FED keep on dropping interest rate, which might then cause a massive inflation and fundamental catch up to price instead of the other way around. There are infinite ways we will get back to fundamental. But all I know is that when price reach fundamental level, that’s a decent time to buy if you can truly afford the place. Do you see my recurring argument yet? If not, let me restate it again, it’s all about fundamental. Also, did I ever say today price is at fundamental? Fundamental is different for different area. That’s why I say do you own calculation for your specific case.

[an]

marion, how can you be so sure that price will fall below fundamental? There are many forces at work that will affect the price. I’m sorry but I’m not smart enough to account for all the possibility. Your IF case is just as likely as IF price drops to fundamental level and stay flat for a long time and let inflation make the real price undershoot the fundamental. Or IF the FED keep on dropping interest rate, which might then cause a massive inflation and fundamental catch up to price instead of the other way around. There are infinite ways we will get back to fundamental. But all I know is that when price reach fundamental level, that’s a decent time to buy if you can truly afford the place. Do you see my recurring argument yet? If not, let me restate it again, it’s all about fundamental. Also, did I ever say today price is at fundamental? Fundamental is different for different area. That’s why I say do you own calculation for your specific case.

[an]

marion, how can you be so sure that price will fall below fundamental? There are many forces at work that will affect the price. I’m sorry but I’m not smart enough to account for all the possibility. Your IF case is just as likely as IF price drops to fundamental level and stay flat for a long time and let inflation make the real price undershoot the fundamental. Or IF the FED keep on dropping interest rate, which might then cause a massive inflation and fundamental catch up to price instead of the other way around. There are infinite ways we will get back to fundamental. But all I know is that when price reach fundamental level, that’s a decent time to buy if you can truly afford the place. Do you see my recurring argument yet? If not, let me restate it again, it’s all about fundamental. Also, did I ever say today price is at fundamental? Fundamental is different for different area. That’s why I say do you own calculation for your specific case.

[an]

marion, how can you be so sure that price will fall below fundamental? There are many forces at work that will affect the price. I’m sorry but I’m not smart enough to account for all the possibility. Your IF case is just as likely as IF price drops to fundamental level and stay flat for a long time and let inflation make the real price undershoot the fundamental. Or IF the FED keep on dropping interest rate, which might then cause a massive inflation and fundamental catch up to price instead of the other way around. There are infinite ways we will get back to fundamental. But all I know is that when price reach fundamental level, that’s a decent time to buy if you can truly afford the place. Do you see my recurring argument yet? If not, let me restate it again, it’s all about fundamental. Also, did I ever say today price is at fundamental? Fundamental is different for different area. That’s why I say do you own calculation for your specific case.

[an]

esmith, when you quotoed the jumbo fixed 30-year mortgage @ 5.125% , who will pay you the points???

Here ya go.

drunkle:

Then you shouldn’t be stretching to buy a house if your job is that unstable, right? Can you afford a $1400/month payment on a house when rent for a 2bed/2bath apartment goes for the same? You can get roommates, $300/room/month, that’s $1200/month. Then work at McDonald to get that extra $200/month for mortgage. Or rent out your living room for another $200/month. My point is that, if you lose your job and have no saving to keep you afloat for a year, then you shouldn’t have bought that house in the first place. What would you do with rent if you have no saving and lose your job too? Fundamental is still fundamental. We can deviate from fundamental for only so long before we revert back to it, be it above or below fundamental.

[an]

esmith, when you quotoed the jumbo fixed 30-year mortgage @ 5.125% , who will pay you the points???

Here ya go.

drunkle:

Then you shouldn’t be stretching to buy a house if your job is that unstable, right? Can you afford a $1400/month payment on a house when rent for a 2bed/2bath apartment goes for the same? You can get roommates, $300/room/month, that’s $1200/month. Then work at McDonald to get that extra $200/month for mortgage. Or rent out your living room for another $200/month. My point is that, if you lose your job and have no saving to keep you afloat for a year, then you shouldn’t have bought that house in the first place. What would you do with rent if you have no saving and lose your job too? Fundamental is still fundamental. We can deviate from fundamental for only so long before we revert back to it, be it above or below fundamental.

[an]

esmith, when you quotoed the jumbo fixed 30-year mortgage @ 5.125% , who will pay you the points???

Here ya go.

drunkle:

Then you shouldn’t be stretching to buy a house if your job is that unstable, right? Can you afford a $1400/month payment on a house when rent for a 2bed/2bath apartment goes for the same? You can get roommates, $300/room/month, that’s $1200/month. Then work at McDonald to get that extra $200/month for mortgage. Or rent out your living room for another $200/month. My point is that, if you lose your job and have no saving to keep you afloat for a year, then you shouldn’t have bought that house in the first place. What would you do with rent if you have no saving and lose your job too? Fundamental is still fundamental. We can deviate from fundamental for only so long before we revert back to it, be it above or below fundamental.

[an]

esmith, when you quotoed the jumbo fixed 30-year mortgage @ 5.125% , who will pay you the points???

Here ya go.

drunkle:

Then you shouldn’t be stretching to buy a house if your job is that unstable, right? Can you afford a $1400/month payment on a house when rent for a 2bed/2bath apartment goes for the same? You can get roommates, $300/room/month, that’s $1200/month. Then work at McDonald to get that extra $200/month for mortgage. Or rent out your living room for another $200/month. My point is that, if you lose your job and have no saving to keep you afloat for a year, then you shouldn’t have bought that house in the first place. What would you do with rent if you have no saving and lose your job too? Fundamental is still fundamental. We can deviate from fundamental for only so long before we revert back to it, be it above or below fundamental.

[an]

esmith, when you quotoed the jumbo fixed 30-year mortgage @ 5.125% , who will pay you the points???

Here ya go.

drunkle:

Then you shouldn’t be stretching to buy a house if your job is that unstable, right? Can you afford a $1400/month payment on a house when rent for a 2bed/2bath apartment goes for the same? You can get roommates, $300/room/month, that’s $1200/month. Then work at McDonald to get that extra $200/month for mortgage. Or rent out your living room for another $200/month. My point is that, if you lose your job and have no saving to keep you afloat for a year, then you shouldn’t have bought that house in the first place. What would you do with rent if you have no saving and lose your job too? Fundamental is still fundamental. We can deviate from fundamental for only so long before we revert back to it, be it above or below fundamental.

[Eugene]

Your argument was that if owning would cost you the same as rent, then why not buy? Well, my argument to that was if you buy today when prices are steadily dropping rather than waiting a year (or more) that second year and thereafter, you’re gonna lose money. Period.

The argument is this. If we’re back to fundamentals, prices may continue dropping but only at the expense of rising interest rates. You can buy a house today for $500k, agree to pay $3000/month, and live in it for 20 years, and sell it for (let’s say)$1 mil. Alternatively, you can rent for two more years, buy the same house for $400k, end up paying the same $3000/month, live in it for 18 years, and sell it for $1 mil. Net result is the same.

And if you think that you may have to sell after a few years, you should not buy a house in the first place.

[Eugene]

Your argument was that if owning would cost you the same as rent, then why not buy? Well, my argument to that was if you buy today when prices are steadily dropping rather than waiting a year (or more) that second year and thereafter, you’re gonna lose money. Period.

The argument is this. If we’re back to fundamentals, prices may continue dropping but only at the expense of rising interest rates. You can buy a house today for $500k, agree to pay $3000/month, and live in it for 20 years, and sell it for (let’s say)$1 mil. Alternatively, you can rent for two more years, buy the same house for $400k, end up paying the same $3000/month, live in it for 18 years, and sell it for $1 mil. Net result is the same.

And if you think that you may have to sell after a few years, you should not buy a house in the first place.

[Eugene]

Your argument was that if owning would cost you the same as rent, then why not buy? Well, my argument to that was if you buy today when prices are steadily dropping rather than waiting a year (or more) that second year and thereafter, you’re gonna lose money. Period.

The argument is this. If we’re back to fundamentals, prices may continue dropping but only at the expense of rising interest rates. You can buy a house today for $500k, agree to pay $3000/month, and live in it for 20 years, and sell it for (let’s say)$1 mil. Alternatively, you can rent for two more years, buy the same house for $400k, end up paying the same $3000/month, live in it for 18 years, and sell it for $1 mil. Net result is the same.

And if you think that you may have to sell after a few years, you should not buy a house in the first place.

[Eugene]

Your argument was that if owning would cost you the same as rent, then why not buy? Well, my argument to that was if you buy today when prices are steadily dropping rather than waiting a year (or more) that second year and thereafter, you’re gonna lose money. Period.

The argument is this. If we’re back to fundamentals, prices may continue dropping but only at the expense of rising interest rates. You can buy a house today for $500k, agree to pay $3000/month, and live in it for 20 years, and sell it for (let’s say)$1 mil. Alternatively, you can rent for two more years, buy the same house for $400k, end up paying the same $3000/month, live in it for 18 years, and sell it for $1 mil. Net result is the same.

And if you think that you may have to sell after a few years, you should not buy a house in the first place.

[Author]

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