[quote=drboom]
Among other things, a higher sales price means higher property taxes in perpetuity, a higher down payment, higher insurance (possibly), higher sales transaction costs[1], etc.–and if you contend that higher sales prices can be made more “affordable” with lower interest rates, then you’d better account for the fact that the tax benefit as a portion of your mortgage payment is correspondingly lower. You’d better also factor in the time value of money for all the higher up front costs just mentioned.
Furthermore, a higher purchase price makes it less likely that you’ll get your money back out if you sell. For a lot of people a house purchase is a leveraged bet on rising home prices, and their bet is their down payment. Leverage works both ways, right? While not falling under the head of month-to-month “affordability”, this is an important consideration that folks in the RE industry–not necessarily you, so calm down–don’t like the sheeple to think about.[/quote]
To paraphrase the Viet Cong general who was asked how his side lost every battle but ended up winning the war, your statements are true but they are also irrelevant.
I used to think this way. I couldn’t understand how home prices remained so high when all principles of economics indicated that they should fall and fall a long way. And then I realized who was buying all of these homes. Have you ever wondered why “Dancing With The Stars” is so popular? What about “The Real Housewives of Orange County?” Why is every movie these days nothing but explosions and bright colors with a techno-rock soundtrack? How many of the people that watch this stuff can calculate 10% of $100 EVEN USING THEIR SMARTPHONE? I read last week that 25% of Americans don’t know which country the US declared independence from. SOME OF THESE PEOPLE ARE BUYING HOMES.
So yes, you don’t have to be a sheeple, you can continue renting and you will probably save money vs. buying. If you have a good rental and landlord, you may get lucky and be able to stay there until values eventually return to normal. If you’re not lucky, you may have to move and find new places. If you’re really not lucky your landlord might get foreclosed on and you’ll wake up one morning with the sheriff banging on your door.
I ended up buying because I realized that people like me were maybe 5% of the population. The other 95% just cares about the monthly payment and whether or not the 80″ flatscreen that they are paying 30% CC interest will fit in the living room. I also realized that as long as the Bernanky-Panky continues, it’s going to be difficult to know the true value of anything, at least in the short term. Better to borrow some money at a fixed rate and use it to buy a useful asset if you think (as I do) that dollars will be worth less in the future.
[quote=walterwhite]my dad was pretty sure housing was overpriced in the 80’s and ensuing decdes and did not live to see the housing crash.
it is plausible to live a long time and not see things really change much.
or not.[/quote]
Markets can stay irrational longer than you can stay solvent. And as your dad’s case shows, they can even remain irrational longer than you can stay alive.
[quote=walterwhite]my dad was pretty sure housing was overpriced in the 80’s and ensuing decdes and did not live to see the housing crash.
it is plausible to live a long time and not see things really change much.
or not.[/quote]
Markets can stay irrational longer than you can stay solvent. And as your dad’s case shows, they can even remain irrational longer than you can stay alive.
[quote=walterwhite]my dad was pretty sure housing was overpriced in the 80’s and ensuing decdes and did not live to see the housing crash.
it is plausible to live a long time and not see things really change much.
or not.[/quote]
Markets can stay irrational longer than you can stay solvent. And as your dad’s case shows, they can even remain irrational longer than you can stay alive.
[quote=walterwhite]my dad was pretty sure housing was overpriced in the 80’s and ensuing decdes and did not live to see the housing crash.
it is plausible to live a long time and not see things really change much.
or not.[/quote]
Markets can stay irrational longer than you can stay solvent. And as your dad’s case shows, they can even remain irrational longer than you can stay alive.
[quote=walterwhite]my dad was pretty sure housing was overpriced in the 80’s and ensuing decdes and did not live to see the housing crash.
it is plausible to live a long time and not see things really change much.
or not.[/quote]
Markets can stay irrational longer than you can stay solvent. And as your dad’s case shows, they can even remain irrational longer than you can stay alive.
weird how discussions stick in your mind. I specifically remember a thanksgiving discussion among relatives sometime in the 80s, not sure when, where my dad was arguing housing was headed for a fall and my relatives argued it was underpriced and a good deal. i had no opinion whatsoever.
weird how discussions stick in your mind. I specifically remember a thanksgiving discussion among relatives sometime in the 80s, not sure when, where my dad was arguing housing was headed for a fall and my relatives argued it was underpriced and a good deal. i had no opinion whatsoever.
weird how discussions stick in your mind. I specifically remember a thanksgiving discussion among relatives sometime in the 80s, not sure when, where my dad was arguing housing was headed for a fall and my relatives argued it was underpriced and a good deal. i had no opinion whatsoever.
weird how discussions stick in your mind. I specifically remember a thanksgiving discussion among relatives sometime in the 80s, not sure when, where my dad was arguing housing was headed for a fall and my relatives argued it was underpriced and a good deal. i had no opinion whatsoever.
