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an.
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February 1, 2015 at 6:06 PM #782516February 1, 2015 at 6:09 PM #782518
FlyerInHi
Guest[quote=svelte]
On the other hand, unless he marries whomever he’s buying this current place with, they will force him to sell and buy something else anyway.Brides who marry a man who already owns a home usually don’t want to make their nest in the place he spent his bachelor days in.[/quote]
That seems odd. Don’t women dream of marrying a prince and move into his castle?
February 1, 2015 at 6:15 PM #782519spdrun
ParticipantEver cleaned a castle of the detritus of ten years of partying, sex, coke, and booze? Easier to clean out the Aegean stables.
February 1, 2015 at 6:29 PM #782517ParticipantYeah, it’s just starting to thaw now from what the article said…Maybe we hit the bottom for 1st time buyers last week and it’s up and up now!
Hopefully it will be a brief thaw and the twitter-twit generation will keep renting for life, as is their proper place 🙂
One week of data don’t make a trend. U-T was rather skeptical about first time buyers last week:
http://www.utsandiego.com/news/2015/jan/27/us-home-price-gains-slow-in-november-on-weaker/
February 2, 2015 at 5:23 AM #782528CA renter
Participant[quote=FlyerInHi][quote=svelte]
On the other hand, unless he marries whomever he’s buying this current place with, they will force him to sell and buy something else anyway.Brides who marry a man who already owns a home usually don’t want to make their nest in the place he spent his bachelor days in.[/quote]
That seems odd. Don’t women dream of marrying a prince and move into his castle?[/quote]
Not if his former princess was living and “nesting” there.
February 2, 2015 at 5:27 AM #782529Participant[quote=flu][quote]
Yes, you’d be right to hold on to your real estate if CD rates are <1%, but what if rates were to skyrocket to 10%, or higher? How would you feel then? And what if housing prices were likely to decline at the same time that other investments were offering much higher returns (and the potential for much higher capital gains, too), particularly if rates rise significantly?[/quote]I think you need to step back and not think in terms of "doom" and "gloom". I think the Fed has proven it likes to intervene. The "powers" won't "let" rates "skyrocket" to 10% really very quickly. Afterall, they are really good at "fixing" things. And if they did let that happen, it would end up wreaking havoc on the financial markets, on businesses,etc, and then the majority of Americans would have a much bigger problem at hand than thinking about buying real estate. Just ask the Russians.
Any sort of rate move would mostly be a slow and steady trickle up, so that it causes a little discomfort, but manageable and tolerable for most people. Just like the how rates on mortgages have already risen 1% since the bottom, slow and steady.
Has that 1% rise thus far caused a real estate meltdown?Second, what happens with CD rates might be good for my own money (or maybe not), but it doesn't affect the money from fannie I borrowed for 30 years to finance the home purchases. What does matter is my tenant's ability to help me build equity and generate some cash flow. It's not like fannie would directly lend to me money to invest in dividend stocks or 10%CD. That's what I use my own money for.
Why would I want to sell my homes and "fire" borrowed money from Fannie that I currently "employ" to work generating income for me, when I wouldn't be able to "rehire" borrowed from Fannie (or any other source) to "work" in a 10% CD? (Not to mention, as part of "firing" Fannie money, I would also have to pay capital gains taxes, depreciation recapture,etc,etc)?[/quote]
Yes, the Fed can manipulate rates for a long, long time. But what if rates were to go up?
I’m also thinking in terms of speculators/investors who’ve paid cash, like so many have done over the past few years. You’re more of a “mom and pop” kind of guy who is probably looking for ways to produce cash flow in retirement. What about the investors who have no emotional or other ties to the homes or areas? I think they would dump quickly if they thought that housing prices were going to decline and other investments were paying much higher returns (plus more opportunities for cap gains).
February 2, 2015 at 6:34 AM #782532
CoronitaParticipant[quote=CA renter]
Yes, the Fed can manipulate rates for a long, long time. But what if rates were to go up?
I’m also thinking in terms of speculators/investors who’ve paid cash, like so many have done over the past few years. You’re more of a “mom and pop” kind of guy who is probably looking for ways to produce cash flow in retirement. What about the investors who have no emotional or other ties to the homes or areas? I think they would dump quickly if they thought that housing prices were going to decline and other investments were paying much higher returns (plus more opportunities for cap gains).[/quote]
I find that planning around too many extreme “what if’s” at the macro level is just hazardous to one’s financial health, because most of the what if’s end up not really being the case, because the end up being borderline extreme scenarios. And if they did actually happen, whether you held on to a home or didn’t buy or didn’t sell doesn’t really matter, because that borderline doomsday scenario, everyone is screwed more or less in the same way, so it won’t matter.
It’s really no different than the “what if scenario” of the entire CA state falling into the ocean because of an earthquake, and you’re trying to plan for that scenario to be safe, despite still living in CA. If you live in CA, no amount of planning will make you any more safer than anyone else living in the state when the entire state falls into the ocean, unless you’re ultra-wealthy and can maintain a fleet of private pilots that spontaneously airlifts you out of CA at minute’s notice.
Same could be said about the Fed. If we get to the point that the Fed cannot (as some of you say) “manipulate” the markets to get results, we got much bigger problems at hand, and you are in no better shape than anyone else in this country (unless you are ultra-rich perhaps with those nice parachutes). So it’s meaningless to plan for these catastrophic what-if scenarios, because for almost all of us, we’re equally screwed.
Mom and pop retirees aren’t going to be buying $1million+ homes as “investments” to earn 4-5%. Show me many $1million+ homes that cash flows well…. Chances are, if they are buying $1million+ homes, it’s either for personal enjoyment (for which they have the money) or for their John or Janny child that can’t afford to buy her own home (again, which, they have the money), so they’ll buy it for them.
And I’d even most retirees don’t have the patience or time to start being a landlord if they’ve never done it before. In fact, as a retiree, if one’s done their financially planning right, they shouldn’t be going after that maximum return anyway. They should be in their wealth preservation stage and try their best not to lose money.
February 2, 2015 at 6:41 AM #782531CoronitaParticipant[quote=joec]In the UT Business section today, they are saying 1st time buyers are coming back in large percentages from before due to easier lending terms from fha/fannie/freddie…
Also, as these mid to late 20 somethings hit 30s-40s, there is huge pressure to settle down, get married, have kids. From the article, these is also talk of worst neighbors, constantly raised rents, roommates, etc…
Bottom line I took and my own view is that for a married couple, family…renting an apartment generally sucks and as we get older, having to deal with renting just sucks (for me). I “get” the single guys here loving renting and all that and can defend it all day, but I feel for most families with or without kids, renting is just ghetto.
I’d known “Asian” people (again) who looks down on renters or feel it’s pathetic that you can get knocked up with a kid, but can’t even afford to buy a house…(it’s viewed shamefully).
Just how it is…[/quote]
I keep say that….Most of you financially responsible people need to stop thinking about the logical/responsible thing YOU would do. Instead, you need start thinking they way that 70-80% of the other people in this country actually thinks and would do….
“So long as someone is willing to loan me money with payment terms that I can make, I don’t care what the loan terms is and MSRP price is right now.”
People have gotten past the “housing is evil, I’m not going to buy, banks are evil because they forced me to get bad loans” mindset. People are now back to the “banks are evil, because they aren’t giving me the credit to buy the things I deserve” mindset. And banks will give what these consumers want again.
If in doubt, look at all the new cars we have on the road here in S.D. Bunch of new bimmers, mercedes, and audi’s, a few porsches. You have people readily signing the papers to lease/loan for a BMW 335 that MSRP’s for over $50k now. That’s a 3 series BMW for $50k and it’s not even an M3. And don’t tell me most people driving these have $50k in cash that they paid for these things.
Clearly the credit spigot is turned back on. And it’s just a matter of time before that same spigot is turned back on for housing. Buy now, borrow and pay later. Good times are back.
February 2, 2015 at 10:06 AM #782536an
ParticipantI actually don’t see anything wrong with planning for extreme “what ifs”. As long as you also attribute the probability of it coming true in your planning as well You should also plan for “what ifs” at both end of the spectrum too. Not only should to plan for the Fed completely failing and you’ll get major deflation, but you should also plan for the Fed completely failing to control inflation and we’ll see a repeat of the 70s/80s. Obviously, either of those scenario are very unlikely to happen, but it’s not impossible. If you plan for it, then you won’t be blind sided and follow the heard off the cliff.
February 3, 2015 at 4:33 AM #782569Participant[quote=AN]I actually don’t see anything wrong with planning for extreme “what ifs”. As long as you also attribute the probability of it coming true in your planning as well You should also plan for “what ifs” at both end of the spectrum too. Not only should to plan for the Fed completely failing and you’ll get major deflation, but you should also plan for the Fed completely failing to control inflation and we’ll see a repeat of the 70s/80s. Obviously, either of those scenario are very unlikely to happen, but it’s not impossible. If you plan for it, then you won’t be blind sided and follow the heard off the cliff.[/quote]
Agree with this.
Also, it’s not at all extreme to consider the possibility that other investments might become more lucrative vs. real estate at some point in the future and to think about the ways this will change investor/speculator behavior.
February 3, 2015 at 7:28 AM #782573ltsddd
Participanton some rare occasions, I do hear people winning the lottery jackpot.
February 3, 2015 at 10:52 AM #782582bewildering
Participant[quote=AN]I actually don’t see anything wrong with planning for extreme “what ifs”. As long as you also attribute the probability of it coming true in your planning as well You should also plan for “what ifs” at both end of the spectrum too. Not only should to plan for the Fed completely failing and you’ll get major deflation, but you should also plan for the Fed completely failing to control inflation and we’ll see a repeat of the 70s/80s. Obviously, either of those scenario are very unlikely to happen, but it’s not impossible. If you plan for it, then you won’t be blind sided and follow the heard off the cliff.[/quote]
Fair point. But you also have to plan for “what ifs” like things continuing as they are for the next 30 years. 2-3% house appreciation/year, 2-3% rent increase per year. The economy plods along.
In this case if you are intending to stay in the same place for at least 5 years then buy.
I suspect people do not consider unrealized gains (from not investing in stock market or buying a house) as losses. This attitude is very human, and very short sighted.
Myself, I failed to follow my own rules and did not put my ROTHIRA contribution in the SP index fund last january because I thought the market was overvalued. Instead I put it in a money market acount. I LOST 20% because of that dumb decision.
February 3, 2015 at 11:05 AM #782583Participant[quote=bewildering]
Fair point. But you also have to plan for “what ifs” like things continuing as they are for the next 30 years. 2-3% house appreciation/year, 2-3% rent increase per year. The economy plods along.In this case if you are intending to stay in the same place for at least 5 years then buy.
I suspect people do not consider unrealized gains (from not investing in stock market or buying a house) as losses. This attitude is very human, and very short sighted.
Myself, I failed to follow my own rules and did not put my ROTHIRA contribution in the SP index fund last january because I thought the market was overvalued. Instead I put it in a money market acount. I LOST 20% because of that dumb decision.[/quote]Yes, you should totally plan for that “what ifs” as well. With all of these “what ifs” and various different probability of them coming true, the only way I see for me to be ready is to be diversified. Don’t put all of your eggs in one basket. Do put all in the stock market, don’t put all in the housing market, don’t put all in the money market, etc. If you’re well diversified, then you’ll win some and you’ll lose some. But you can then re-balance your various investments as the picture gets clearer.
I agree with you that if you plan to stay in the same place for at least 5 years, then buy. That’s why I brought up the point that it’s actually cheaper to rent than buy in some areas.
If you consider unrealized gain from not participating in the stock market, you should also consider unrealized loss as well. Since we don’t have a working crystal ball, we have to wait and see which one it’ll be. Then there’s also the appreciation of real estate and the leverage you’re taking with that capital. Lets say you take $100k out of your stock investment to buy a $500k house. Over 5 years, the stock market went up 40%. That mean you have $40k in unrealized gain from the stock market. But then, if the housing market went up 10%, you’d have a $50k gain from the house. There’s no way to know at the moment which will appreciate more, which is why you shouldn’t put all of your eggs in one basket.
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