[no_such_reality]

Five Years.

Hmm, crystal ball time… August 2011 … I see interest rates… hmmm, little fuzzy, interest rates… fuzzy.

Will they be forced to sell, maybe, maybe not. The current 6 month T-bill is above 20 year average. Ibor is near average too.

[no_such_reality]

Principle.

Mr. Wrong, you already excluded the principle from your initial cost math.

If you want to add it back in, that’s good, but compare apples to apples. Renting $2000-$2500. Owning $2800+

First, after ten years, your cumlative principle payment is only $70,555. Of, course, that increases your monthly cost back to $2800+ the downpayment after tax deductions. Total value of down and principle: $190,555 as you stated. That is, of course, plus or minus, any gain or loss in housing value.

Secondly, the Future value of the down payment plus the principle payment at 7% is $341,012. If you go to a higher rate, it climbs higher. At 8.5% return, it’s $388K. At 10%, it’s $442K. Less taxes, hopefully long term capital gain taxes. Remember, your principle payment increases a little bit each month.

Personally, I think 7% is way too low, you have bank savings accounts paying 5%. While you may think it’s high, 10% is in reality, lower than the historical return of the stock market.

In the end, you’ll make the numbers work any way you want them to. It’s garbage in, garbage out. And assumptions in reallity, are just a form of garbage.

Basically, the difference in equity growth even at a mere 7%, means to balance, the house needs to appreciate 30% over the next 10 years.

[no_such_reality]

You’re missing the opportunity cost of your down payment.

$120,000 invested. Say, 10% a year return, that’s $12,000/yr.

So the cost of owning is really more like $3,344/month.

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NCJ, no and yes, 1/2 & 1/2.

Much of the end-result of the socialism I find repungnant. I also dislike much of the heavy government regulation.

But for marketing control targeted at children, yes. Kind of like in the US, I’m not a fan of extensive regulation, but do like the cleaner water and air we have now compared to the 70s and 80s.

Similarly, I think they have a better view of the balance for work and life, but maybe overly so. Due to worker protections, accountability is hard to enforce. It’s both good and bad.

One thing I like is the Swedish model for traffic fines and other minor offenses. They’re defined as a percentage of your reported last year income. So, Joe Rich, decides to speed through a school zone, get’s a nasty $85,000 ticket while Bill Janitor would a $50 ticket. Kind of prevents the flaunting of the basic laws we’ve have with the wealthy in the US.

While progressive fines don’t bother me, their extensive tax rates do.

So no and yes. There’s a balance between protecting what needs protection and over-dictating life trying to right everything through government control.

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The median income for a household in the city was $34,940, and the median income for a family was $42,536. Males had a median income of $31,321 versus $22,562 for females.

Sorry Darryl, $650,000 for a 4000 sq ft house is only appealing compared to related prices in California. For the housing market in Amarillo with a population of 183,000. It’s 20X median income.

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Lostkitty, you’re dead-on. Something is very wrong with our mass consumption lifestyle.

Everybody complains that they don’t make enough or the “fat cats” are greedy, but I say bunk. Even the average American’s life is quite plush.

More importantly, it isn’t a few “fat cats” that are pushing companies like Best Buy to record profits by buying large sceen LCD/Plasma HDTVs. I’m not kidding, the company literally said that the surge in big TVs was the reason along with $300 personal music players.

And while fats cats like Schwarzenegger may be riding in his Hummer, it pales in comparison to fleet of Soccor Mom & Dads driving through SoCal in huge SUVs with individual LCD DVD entertainment centers for the kid.

There is only one driver IMHO, low self-esteem. The powerful marketing engine in US Corporations has successfully defined our value in our minds as what we have and not who we are.

The sad part is, it starts very young. While it may be big brother, the Europeans are better at protecting their children from marketing through regulation. We on the other, turn over the printing of our school lunch menus to McDonalds best they do it a little cheaper since they turn into an chronic advertisement of their products.

Sorry for the rant, it’s a sore spot.

[no_such_reality]

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3-4% oh no.

I read the article and saw a renting glut coming up.

First it points out that rent growth is basically 3-4%

Then it points out that all the condo conversions and condos coming on the market are likely to go rental since they can’t be sold.

Also, pay attention to the charts, they show rent “asking” price. Not the actual rent.

[no_such_reality]

An article in the LA Times in May showed the stupidity of the problem. People can’t connect point A to point B. They rail on illegal immigration but then drive to the corner by home depot looking for someone to do day labor work for $5/hr. not noticing that’s the root of the problem.

The article was about a Government Landscaping Contractor. Couldn’t find legal residents to do the jobs at $34/hr. Of course, those required experience. Luckily, since the Government sets the payment rate, entry level, literally, ditch digger, grunt labor, was $18/hr. the problem was, any non-government contract work at competitor companies is $8-9/hr.

Hence, the owner was too dumb to draw the line to the fact that illegal workers drove down the entry level work, hard physical work in the Cali-sun to be on par with what our kids can make in McDonald’s. Hence, no legal residents with experience to fill her $34/hr. crew supervisor job. And no takers on the entry level jobs becuase most look at it, know it’s hard work, and see 90% of the companies paying $8/hr. Here’s the link http://www.latimes.com/search/la-fi-jobs18may18,0,970169.story

As for the workers wanting $20/hr. Well, people don’t have to pay it. Or counter with show me your contractors license, you’re bonded right? But it is a two way street. How much should they make for doing Joe & Jane Suburbia’s physical work of clearing brush, installing pavers, painting etc. ?

[no_such_reality]

That’s sad. Beautiful work. Three mistakes: didn’t buy deep enough discount, spent too much on the fix and took too long.

Any single one of those cripples your profit margin.

[no_such_reality]

Averages or specific units?

Keep in mind, the market is flooded with speculators that are trying to cover their mortgage on an inflated purchase.

In addition, average rents are going up in complexes, but the average is going higher-faster becuase more new complexes are going up that are geared to the “executive” or “luxury” apartment home.

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LA is in denial. So is the OC.

Median incomes and interest rates will dictate median sales price and typical property values. Otherwise they simply can’t service the debt.

If two median income earners are making $40K each, combined that’s $80K, they’re affordable house at 6.5% interest is only really $300,000 loan.

[no_such_reality]

historical reference data?

Does anybody have figures on the ratio of foreclosures & filings to home sales. I know June, OC had 3300 sales so 65 property sales isn’t much. However, we have 639 new foreclosure filings, that represents 20% of the monthly sales.

In the process of foreclosure, of the 639, is that pre-lien, lien, NOD, or notice of sale? The 65 property sales are Trustee sales correct? Bank REO would show as part of the 3300 regular sales, right?

[no_such_reality]

Interest is under $1000.

On your loan, the interest portion is less than $1000/month. Assuming you refi’d the whole $260,000 into the loan, the payment may be pushing $2000, but half of that is principle.

Where are you going to live for $1000 a month?

If you like it or can rent it, keep it. Prices may come down, but you won’t care. If you crunch price to income ratio, they’re still high, but even as they come down to reality, by 2011, the price at bottom will still be higher than the price you paid, both in nominal and inflation adjusted dollars.

[no_such_reality]

I think my bigger concern is that the housing market will become very illiquid.

People won’t be able to be sell their homes because they can’t stomach walking away with the debt. At the same time, due to the low interest rates, home owners will be stuck in homes they can make the payments on, but with lifestyles they can no longer afford to maintain.

I remember the early 90s, just as the market bottomed and how dilapidated many neighborhoods were.

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