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noone
ParticipantIt makes you wonder if the reporters have something to gain by painting a rosy picture, or if they just want a sensational headline so that they can get their name out there.
ParticipantYes, most analysts agree that Sony could have sold 2-3 times as many units as they have available at this time. And it has been suggested that this shortage could actually help Microsoft become the dominant player in the console market. Parents who cannot get a PS3 to put under the Christmas tree may purchase an Xbox (or a Wii) just so that they won’t be empty handed. Though Sony hopes to ship an additional 600,000 units to the U.S. between now and January, you may not be able to get one at MSRP until after Q1 of 2007. By then many people may not want one.
ParticipantI like the line in that article
Almost no one is going through with a purchase without having sold their previous home, she said.
Wasn’t it just a few years ago that the sellers were stipulating that the sale would not go through unless they were successful at buying another property?
ParticipantWhile I agree that most of the drivel that comes from the RE industry is marketing propaganda, keep in mind that she is talking about California as a whole. When you look at all of California, prices are still up YOY:
The median price paid for a home last month was $466,000. That was down 1.3 percent from August’s $472,000, and up 2.4 percent from $455,000 for September a year ago.
http://www.dqnews.com/CHCA1006.shtmHowever, if the trend in price declines continues by more than 1 percent each month, the idea of only a 2 percent drop will seem ludicrous.
ParticipantFor a short-seller, a move from $5 to $2.50 is not a double. It’s a 50% gain.
Jim or PS, could you explain that logic? I don’t really know what short selling is and I am trying to understand why that is only a 50% gain.
In my mind, an example of selling short would be selling 100 shares at $5, taking in $500. You later buy those 100 shares at $2.50, paying $250. Haven’t you just doubled your $250 to $500?
What am I not understanding, or is it too complicated to explain in a forum like this? Don’t worry, I’m not about to try this, I’m just trying to understand 🙂
ParticipantWhat I got out of that article is that Mr. Sell A. Lot is an a**hole, a liar, and a crook who out to be thrown in jail, or at least the kids dad ought to punch him in the face. The number of replys on that page that say they “get it” just shows that these folks are all going to burn in hell. At least Christine on that page sees through it.
One good thing is that it gives me some insight, and lets me know what to expect when I see these range prices.
ParticipantGood points Perry.
That message started as kind of thinking out loud. I started putting numbers in a spreadsheet, but I knew I was forgetting some things. On my drive home from work, I was thinking about the fact that the renter could invest the extra money. Of course that takes discipline 😉
And I did not take into account that as things are going, the renter could probably buy the place in 5 years for less than the $500k instead of waiting 10 years for the house to come back up.
ParticipantOh yeah, I also don’t have $100k for the down payment!
But I sure hope that I’m not the guy that MH is about to evict!
Participant(Sorry for the long post)
Perry, you are probably right. But there is some truth in the B.S. that the real estate industry is shoveling. That extra $18,000 is not all gone. You have paid down some of the principle on the loan, and you get some tax breaks for the interest that you have paid.
Obviously it’s all about the amount of time that you spend in the house before you sell, and what happens in the market during that time. But I would imagine that even an overpriced $500k home today (probably really worth about $350) will be worth about $500k in 10 years.
Between now and then you haven’t completely lost that $18,000 each year. About $4,600 of that has paid down the principal in the first year (this increases each year). Since the payment is “affordable”, you are probably in a tax bracket where you will get a tax break of about $8,000 the first year.
Example:
Purchased $500k house with $100k Down and a loan of $400K.At the end of a year, and in the current market, the buyer is in bad shape compared to the renter.
Including the down payment, you’ve paid $136k, with a tax break of $8k, that can be reduced to about $128k. On top of that you still owe about $396k on the mortgage, so your total liability is about $524k (I’m not an accountant, so I don’t know if “liability” is the correct term here). Anyway, you would need to sell for about $506k + comission in order to be out the same $18k that the renter is for that same year. Not likely in the current market. Hurray for the renter!
At the end of 5 years, the buyer is doing a little better, but the renter is probably still winning. Including the down payment, the buyer has paid $248k, minus about $36k in tax breaks over the past 5 years, $212k. The buyer still owes about $374k on the mortgage, for a total liability of $586k. The renter in the same 5 years (if rent did not rise), would have been out 90k. So at the end of 5 years, the buyer would need to sell the house for $496k + comission to still be in the same boat as the renter.
Aha! At 10 years, the buyer has paid about $395k but got $70k in tax breaks. The buyer owes $338k on the mortgage, for total liability of $663. The renter has paid $180k in rent, if their rent never went up! So the buyer could sell for about $483k + commission and be in the same boat as the renter. I think this is about the break even point. If the house can sell for $500k in 2016, that ought to cover any commissions. Right?
The buyer does have some additional benefits at this point though. If the renter is just buying the house at that point, they will just be starting the 30 years it will take to pay off the mortgage. The buyer only has 20 years left on their mortgage. They could probably even refinance the $338k with a 15 year mortgage, and possibly lower their payments depending on the interest rates at that time.
That was a rough 10 years for the buyer, but at the end they seem to be better off than the renter, and it only gets better from there. Was that gamble worth it?
I’m still renting, because $3,000 is not affordable to me. That would stretch me to the limit. If anything happened in that first 10 years and I needed to sell, I would be in dire straits. Besides I have not found any house selling for $500k that I would really want to spend the next 10 years in.
Does any of that make sense, or am I still out in left field?
ParticipantI think the “it’s always a good time to buy” statement is true, but only if you add to it:
“with a 30 year fixed rate mortgage and 20% down.”
If you can find a home where you can afford to put 20% down, and can afford the payments on a 30 year fixed mortgage, plus property taxes, plus insurance, then by all means buy it.
Once you have to start changing any of those factors in order to afford it, then it’s probably not a good time for you to buy.
And once most people have to start changing any those factors, then it’s probably not a good time for most people to buy.
ParticipantI think it’s the listing agent entering the wrong data by mistake. In some cases, I’ve even seen rentals come up when I’ve clearly not selected to view rentals.
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