[BikeRider]

As others have said, if you buy at a time of historic low rates, the rates really only have one place to go and that is up. So, you’ve paid too much for the house, it will most likely drop in value and if you had to sell for any reason, you probably couldn’t. And you can’t refinance. People don’t want to think negative, but what if something in her life changes (illness, death in the family, long term disability, job loss resulting a new job with lower pay) and she can’t stay in that house. If the value has dropped, most likely foreclosure. I guess I look at things differently. A year ago I was cycling with friends and was struck by a car. I was hurt pretty bad, but have recovered fairly well and was only out of work for about eight weeks. But, it really made me think, laying in the hospital. My work provided short term disability, but I had no long term. If I had been hurt so bad I couldn’t have worked, it would have been a real financial blow. Now I have long term disability. Real eye opener that in seconds your life can really change.

[BikeRider]

doofrat, in the future the flippers might NEED to have money to enter the market if enough lenders get caught holding the bag on defaults of these 100% financing exotic loans.

I must admit that I am addicted to the shows. Property Ladder, Flip that house, Flip this house. The Trademark Realty did seem to have their act together on Flip This house. They seemed to always win, though I didn’t expect they would let the show depict them in a bad way.

I feel sorry for the newlyweds on Property Ladder that are stuck with that house in the undesireable neighborhood.

[BikeRider]

Very good words smfj. I was not lucky enough to have parents that were savy with money. I come from probably lower middle class income family. We got by, but didn’t have anything fancy. Problem with that upbringing is that I felt I wanted so much when I started earning money. I went through a phase in my early teens/twenties where I just HAD to have stuff. Kinda like I had been starved and was trying to compensate. But now I’m in my late forties. Wife and I combined bring in 160K. Material things aren’t as important. I don’t care much what I drive as long as it is reliable. I don’t care what people think. We slammed our mortgage hard and our home is paid for, as are all but one car (one more year!). The words are always true “if I only knew when I was twenty, what I know now”.
“Hind sight is 20/20”.

[BikeRider]

I am blown away at how much people are willing to pay for an automobile. Of course my tastes are different anyway. Currently my favorite car is my 1996 Dodge RAM 1500 4×4. Has 136K miles. I bought it new in 96 for $21K. It had 5 miles then:) Really fun to drive. Has been very reliable so far. Plenty of power and hauls whatever I want. Owes me nothing and I will keep it forever. Best part is that it is paid for. I am currently restoring a 1973 Ford Bronco. The early small Bronco. I guess I’ll have 10K in that when I’m done.

[BikeRider]

When I was single I didn’t hardly have two dimes to rub together. Been married 22 years and I can say, two people that work together can have more and save more, though the saving part is still really difficult. My wife and I both work, making about the same salary each. We have the same goal now that we are middle aged, still have fun, but save more for retirement. I think the hardest thing for us is to balance saving money, with trying to enjoy life by having vacations and other material things. We tried to save when we were younger, but with paying mortgage, eating and all the other things, we didn’t save as much as we should have. We are doing better now, but still have some catching up to do. Was it Mark Twain that said “life is what happens while you’re making plans”. I think that’s really true.

[BikeRider]

It is funny, my wife and I were pretty much oblivious of any kind of housing bubble, peaks, valley, whatever. It was really just the last 6-8 months that I became facinated with what was happening with housing. We bought our first house back in 1992 for $89K (small cape, 1 acre, we are on the east coast). Then, in 1997, which I guess was the end of a housing valley, we sold and upgraded to a bigger house. Made a nice profit off the first house for our area, around $25K or so. Put that into the new house, 2600 sqFT walk out basement on five acres. We slammed the mortgage hard and have actually paid off this house. I must admit I listen to Dave Ramsey, rice and beans, beans and rice. It does work and gives you freedom later on. Anyway, it was just dumb luck when we bought our house that I think our area was in a housing slump. I watched the house we ended up buying. It was a new home built by a rather new builder. His first big house and I think he had stretched his finances. The asking price was $180K. My wife and I talked and said what the heck, lets low ball the price. The house had been sitting for a year since the inital building permit (they start selling them ASAP), though it was really completely finished for only about two months. We offered $145k. The realtor told us it was an insult to the seller. I said what do I care. I don’t live with the seller and the seller isn’t paying my mortgage. The realtor submitted the contract and it came back at $155k. We were like, hey, maybe we will buy this home. So we countered with $155K and the seller (builder) pays closing costs. The realtor is like “the seller doesn’t pay closing costs at this level of home”. Again, I tell the realtor, what do I care. If they want to sell this home, they got to dance. The builder, hungry I guess, accepts our contract and we have been here ever since, happy as larks. I work with someone that wants to buy a new home, upgrade from where they live. The realtors have been taking them around, showing things. A year ago the realtors were telling my friend to hurry up, multiple contracts were on the house and he needed to bid up. He was like “no way, that is dumb. I’ll wait a while and see how it all plays out.” He was smart to wait. The people that have bid up homes because they just HAD to have it, I think are really stupid. They brought a lot of these high prices on themselves.

[BikeRider]

NCN, I see. Well, it makes sense what they did. It is extremely easy to look back at something and say what you would do, having the luxary of seeing how it all plays out. Too bad for them.

[BikeRider]

NCN, why are people you know selling at a loss? They have to sell due to job change? or they bought more house than they can afford? It really doesn’t matter what the home prices do if you are just planning to live someplace, stay and can afford the mortgage. But if you are a person that wants to live off equity, I guess in a downturn you’re screwed. Or if you have to change jobs and bought way too high, you’re screwed. Why are they selling for a loss and not just staying put?

[BikeRider]

Desmond, I’ve been married 22+ years. The first year of marriage the only fights we had were over money. Then we worked it out. Three checking accounts….a joint account for bills, and our own accounts. We both work, so we have a percentage automatically deposited to the joint account from our checks, the remainder of our checks goes into our own accounts. We’re DINKS, double income, no kids. Any large purchase we talk about. It works fine. We both have our own money and the bills (food, utilities, etc) get paid from the joint account. Our house is paid for, so the bills don’t amount to much anymore, which is nice and another factor that tends to cut down on fights. We live a rather simple life, but are happy. We have money allotted for an emergency fund in a money market account that we don’t touch (so far no big emergency). Currently we each have 15% of our before tax pay taken out for 401K and are doing some other investing. A marriage is a partnership and you share everything. You talk about everything and you should be friends and lovers. If you don’t have that kind of relationship and you don’t think it will ever be that way, end it. Life is too short. I’d give it a good shot at trying to make it work first and if it didn’t work, I’d divide everything up fairly and move on. But that’s just me.

[BikeRider]

Makes me think of AMWAY and also LAMAS. I’m about to ramble, so hold on. I remember growing up in a small town. This guy had a cabinet shop, where he made wonderful hand crafted furniture and cabinets. Anyway, an AMWAY salesman came into the town and convinced this guy to start selling AMWAY. HE closed his shop and started doing it. He came to our house and tried to get my parents to sell AMWAY. From what I remember, AMWAY was sorta a pyramid scheme, where you keep getting people to sell AMWAY and that is your goal. As my comment of LAMAS, my wife got very facinated with lamas and wanted to go into the business. I went along, being supportive. Anyway, after a few years keeping lamas, I relized that the only people buying lamas were people that wanted to start a business selling lamas. I don’t think anyone that just wanted a single or pair of lamas, that WAS NOT going into business, ever bought one. We got out of the lama business. It was interesting and I guess a bit nutty thing to do. We didn’t make any money so to speak. Well, you look at housing the last few years. The majority of people buying and selling houses, are just that, the people looking to buy the house are looking to sell the house. They aren’t looking for a home. And they have driven the prices through the roof, making it very difficult for people that just want a home. I for one do not feel at all sorry for people losing money, if that person was being greedy. I’m all for making money, but hate it when people ruin something. Greed and speculation has ruined it for anyone that wants to fix up an old vintage 70’s muscle car. Do you know that some of the old muscle cars of the 70’s, like a Cuda, or Super-Bee, sell for $200K – 1 million dollars now? It is insane. So, if you have some vintage car like that and you’d like to just fix it up as a daily driver, just for fun, you could not afford to fix it if you were involved in an accident. Investors have ruined the hobby. Investors can ruin just about anything they touch.

[BikeRider]

Flip this house show was just on. Some ‘Flipper’ in California had purchased a house for $540K. The house was 980 square feet, all torn up and mold everywhere. When the demolition started, they found walls that were just thin plywood covered with wallpaper, no sheetrock. Anyway, the guy puts $80K into fixing it up and puts it on the market for $749K. I guess I don’t understand the west coast and the weather tax, but man, that is a TON of money for 980 SF house, even with the upgrades done to it. To me it looked like it was worth around $100K max. Of course I know what it takes to build a house, so it makes me wonder how the heck the prices have gotten so crazy hight. Anyway, as long as buyers are willing to pay rediculous prices for something, it will keep selling. But I guess at some point the product (house) gets out of reach in price, then something has to give. Sorry if I am all off topic.

[BikeRider]

The housing market is really crazy now, due to the crazy people that made it that way. The questions are, 1. are you buying to invest or 2. are you buying to have a place to call your own. To invest, then now would be a crazy time, so maybe you jump right in with the other crazy people. Really though, not a good time to invest. As for a place to live, you buy whenever you are ready really. Of course, if you are one of those nuts (I call them nuts) that will be wanting to tap equity soon in the form of a HEL, now may not be a good time, since the home price will most likely drop. It is almost impossible to time the right percentage of value drop. I would buy when I felt the cost of the home, using a conventional loan, was well within my budget. And I felt I was getting something worth the money. It sounds like on the West coast, you don’t really get much bang for your bucks right now. I’m on the East coast and eight years ago we bought a 2800 square foot ranch style (walk out basement) on five acres for $155K. I consider that acceptable bang for the buck. Of course, we aren’t paying that premium for the weather. It’s a bit hot and muggy around here right now. But, hey, you get used to where you live. I can deal with a couple months of humidity. Variety is the spice of life. The heat and humidity hasn’t stopped me from riding my road bicycle any.

[BikeRider]

The housing bubble in a nut shell is “people having more money than they have sense.”. Where I live it became standard practice (until recently) to put an offer on a house several thousand dollars higher than the asking price. Now, that seems insane to me. I like to haggle. Whatever happened to expecting to pay less than the stated price? It took a lot of fools to get housing to where it’s at now. A real combined effort.

[BikeRider]

powayseller, good thoughts. Until recently I didn’t even realize that the median income is around 40K. That is pretty low. Right now my wife and I both work (we are DINKs, Double Income No Kids). Combined we are at 150K. We have no mortgage and just one car payment. That should be done in eight months. We could ride out a rather long dry spell if we had to. It took a lot of work getting here though. When we got married 22 years ago I was making $18K and I think she was making $16K. Several career changes have brought us to today. The thing is, we don’t feel rich (and know we aren’t). I wonder how in the world a family makes it on 40K . They sure as heck aren’t doing much other than paying for living expenses. I get erked when I hear what some CEOs make a year. Incredible salaries and bonuses, and some of the companies aren’t doing very well.

Thing is, not everyone WANTS to work. I know people where I grew up that are tickled pink to be on welfare. They don’t have to work and they don’t appear to want to work. It disgusts me. I know a person that was in a car accident and got on perminent disability. He actually works as a day laborer sometimes for cash (he appears to be fine physically), but doesn’t want to do anything that would cause him to lose his “check”. He actually refers to the check as his “take home pay” So, his family lives at about poverty level because they don’t want to chance losing this free money by going out and finding a job. I’m not sure the government is helping at all with all the different programs.

[BikeRider]

powayseller, I guess I hadn’t thought it all through. You are right, we need all those jobs and no, they can’t be filled by the 23 year olds. Man, very complicated subject really. I grew up hard, so I kind of know the skill involved in several different jobs. A lot of skilled labor jobs are way under paid. It takes skill to properly rebuild a car engine, but those people aren’t paid anywhere near what a programmer gets. Yet, the programmer really needs that car to get to work. Growing up I was in I’d say a lower middle class family. One Black and white TV, no A/C, small house, new clothes bought at the START of the school year and you made them last. I was a teen in the 70’s. Anyway, I kept my car running and such. So I know what is required. I realize I really don’t know the answers, but just am amazed by it all. Maybe nothing is going to change at all, but I just think that something is coming in a way of a correction to our economy and I am a bit worried.

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