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Houses cost too much!

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  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,931
    Not in the UP of Michigan. :)
  • fintailfintail Posts: 32,898
    Those of us not in the witness protection program can't take advantage of that ;)

    I have a friend who recently moved to Georgia...amazingly cheap real estate there, but the quality of the houses has me concerned - some seem kind of iffy, and older ones are often not maintained.
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,931
    We fully intended to rent for a while, but the rental stock was either in lousy shape or $900+ a month. So we decided to get a 100 year old classic Midwestern for about cost of an E Class sedan (or maybe the wagon when we update the plumbing - just did the electrical for $3k).

    Original woodwork, hardwood floors, newer detached garage, yada yada. We're the second owners. :)
  • fintailfintail Posts: 32,898
    When rent is so much higher than a mortgage, it'd be silly not to do it indeed. I can't say I've ever been in that situation, but I wouldn't mind. Someplace with a garage and some land where I can start accumulating parts cars and orphans I can save from the crusher :shades:

    Second owner? Was it out of an estate? Or just in the family?
  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,931
    Just in the family that long.

    The realtor kept showing us places with an acre, two acres, 30 acres. I couldn't keep up with the 1.5 acres we had in Boise so I kept vetoing those suggestions. This place is on a small city lot, and I could shovel the whole thing out in a couple of hours. Or mow the grass in 15 minutes.
  • MrShift@EdmundsMrShift@Edmunds Posts: 43,636
    edited December 2010
    If you include taxes, insurance and maintenance, it would be the rare house indeed that cost more to rent than to own I would think.

    I guess it depends on where you live of course but it seems to me that rental rates and house prices rise up or down together.

    I will say, though, from personal experience (lots of it) that renting in a very expensive area is always more of a bargain. I get the same view as the guy next door who owns his house, for considerably less per month.

    And when I want to move on, poof! I'm gone in 30 days tops. And when the furnace brakes, I know who to call, and they fix it for free.

    As for "equity"---that's gonna take wayyyyy longer than it used to, maybe never.
  • fintailfintail Posts: 32,898
    I'm with you on that. I mowed enough lawns when I was a kid, somehow I have no desire to do endless yardwork today.

    One family ownership probably means your house was maintained fairly well anyway. Older houses can suffer neglect, but the quality of materials is insanely better than modern buildings.
  • fintailfintail Posts: 32,898
    I agree wholeheartedly. I live in an area with similarly insane prices (although not as bad as SF area)...buying a place here seems questionable when rents are so much lower, and the promise of appreciation is sketchy at best. Rents will usually rise and fall together, but sometimes not at the same rate.
  • gagricegagrice San DiegoPosts: 28,680
    edited December 2013

    Anyone buying homes these days? Something I am seeing here is higher rents on homes than you may pay on a mortgage. A $500,000 mid range home in my area rents for about $3000 per month. Looking at 4.5% interest payments would be about $2500 if it was 100% financed. Add another $450 in property taxes and you are right at the rental level. If you make enough to pay $3000 per month rent you could surely use the interest tax write-off on an $21,000 deduction. The big problem I see is financing. I don't think you can get conventional financing with less than 20% down. Not everyone has $100k around here to put down. Add in the people with hordes of cash and it is a tough market to buy in. I have a friend with $70k for a down payment and he has been shot down twice trying to buy. Someone with cash beat his offers. It is still a buyers market here, even though a house down the street sold for $657,000 and was listed at $649k. We went through it on an open house. Nice but not that nice. It does make us antsy to sell and take our equity where we can get a lot more for the money. It would be difficult to get all we have put in this house. Then we have really enjoyed being here. So that has to be worth a few bucks. I am not used to losing money on real estate. Though I would probably rent if I moved to Hawaii. That market is more volatile than CA or AK. Unless we built on some land we own there. At 70 I may be running out of time.

  • fintailfintail Posts: 32,898
    edited December 2013

    I wonder where that money comes from, in an area with such a fractured socio-economic base. Lots of overpaid public sector or Praetorian sector leadership types? There's still a big disconnect between rent and mortgage in the nicer areas around Seattle - I can rent a 600K house for 2K no problem. I still have no real desire to buy, don't want to be tied down, and as a single person with a <100K income, I can't afford anything really decent anyway. No thanks to a 1974 condo that's an old apartment conversion, with no AC or garage, and the nicer condo market has been bid up by offshore speculators, much like the market in much of Canada. I don't mind having the extra money for savings, trips, and toys :)

    I visited a relative at Christmas, who lives in a less posh area south of Seattle. Their house bought in 2004 is still worth ~15% less than they paid. Cardboard 'n plywood 2001 tract house within walking distance to nothing...I could afford it, but no thanks.

    It'd be interesting to see what would happen if the IMO undeserved tax credits ever expired.

    @gagrice said: Anyone buying homes these days? Something I am seeing here is higher rents

  • gagricegagrice San DiegoPosts: 28,680

    I don't think you would ever see that cheap of rent here on a single family residence. Houses in the $350k range rent for $2200 a month. That barely covers expenses of owning a rental property. Looking at Seattle real estate, the prices seem very comparable to So CA. Your taxes look about the same and you have a high foreclosure rate going currently. I would assume people renting for low rents like you mentioned are just trying to keep their homes or are collecting rent until the bank actually forecloses. Around here that takes about 2 years of non payments. An amazing amount of foreclosed homes have renters paying the people that have quit making payments to the lenders. The lenders in turn have to pay the people living in the home moving expenses to get rid of them. What a country. Seattle foreclosures and Preforeclosures.

    http://www.zillow.com/homes/make_me_move/Seattle-WA/pmf,pf_pt/house,apartment_condo,duplex,mobile_type/16037_rid/0-2407_mp/priced_sort/47.818918,-122.058449,47.411129,-122.613258_rect/10_zm/

  • fintailfintail Posts: 32,898
    edited December 2013

    I think a lot of the rentals in my area are in longterm ownership. This area has CA housing prices now, but it didn't 40+ years ago when oldsters and boomers were starting out. Quite a few of the often now whiny geezer set was able to get into property ownership with a lot less work than is needed today, and now have nice portfolios to show for being lucky. Poor things. The city of Seattle isn't the same as the eastern suburbs - many parts of Seattle aren't exactly nice, and carry low prices for it. If you want something decent, you won't get it via forclosure abandonment.

    What a country indeed, when it comes to the obsession about owning a house. It isn't such a thing in much of the world. Mainly in English speaking areas, and kleptocracies like China and maybe Russia. Speaking of that, there are sold out condo developments in my neighborhood that are only maybe half occupied, due to money from those places.

    @gagrice said: I don't think you would ever see that cheap of rent here on a single family residence. Houses in the $350k range rent for $2200 a month. That barely covers expenses of owning a rental property. Looking at Seattle real estate, the prices seem very comparable to So CA. Your taxes look about the same and you have a high foreclosure rate going currently. I would assume people renting for low rents like you mentioned are just trying to keep their homes or are collecting rent until the bank actually forecloses. Around here that takes about 2 years of non payments. An amazing amount of foreclosed homes have renters paying the people that have quit making payments to the lenders. The lenders in turn have to pay the people living in the home moving expenses to get rid of them. What a country. Seattle foreclosures and Preforeclosures.

  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,931

    I thought I heard that EU country, Germany iirc, is changing some law or regulation to encourage more home ownership. But I can't find a link so perhaps I misheard.

  • gagricegagrice San DiegoPosts: 28,680

    Home ownership makes for a more stable community. Pride of ownership that does not exist in most apartment complexes. Over building condos goes back to the late 1970s and 80s. It is not uncommon for a condo high rise to be mostly unsold. Makes it real hard on those that bought in early. One of the biggest money makers in 1980 was buying condos in Honolulu that were not built. You put $1000 down and when they were completed you paid them off or got financing. I know a lot of the guys I worked with in Alaska bought 3 or 4 and sold them at completion for double the agreed on price. Sadly I did not get in on that one. I did do ok on Hawaii real estate several times over the last 25 years. Being at the right place at the right time is the key.

    I have one home for sale and will buy more when that one sells. Still better for me than the stock market crap shoot. If worst comes to worst I can always rent the homes I own. I would rather fix and sell.

  • fintailfintail Posts: 32,898

    Does it? The US has some pretty high home ownership rates, but it isn't the most stable place. If anything, home ownership often ties people to a place, and sometimes limits their chances for socio-economic mobility (say, being in an area with low housing prices but low job opportunity), which isn't always positive. Some of that sounds like realtor propaganda - there's a group as coddled and subsidized as any.

    Being in the right place at the right time, indeed. That holds true for a lot of senior property owners, especially in my area. I know very few people in my age group in my area who have bought (I can't call it "own" when there's a mortgage, not to mention tax liabilities) a detached house in a halfway decent area without being lucky enough two have two professional salaries, or parental aid (that some confuse with merit).

    In many places, houses still cost too much.

    @gagrice said: Home ownership makes for a more stable community. Pride of ownership that does not exist in most apartment complexes. Over building condos goes back to the late 1970s and 80s. It is not uncommon for a condo high rise to be mostly unsold. Makes it real hard on those that bought in early. One of the biggest money makers in 1980 was buying condos in Honolulu that were not built. You put $1000 down and when they were completed you paid them off or got financing. I know a lot of the guys I worked with in Alaska bought 3 or 4 and sold them at completion for double the agreed on price. Sadly I did not get in on that one. I did do ok on Hawaii real estate several times over the last 25 years. Being at the right place at the right time is the key.

    I have one home for sale and will buy more when that one sells. Still better for me than the stock market crap shoot. If worst comes to worst I can always rent the homes I own. I would rather fix and sell.

  • gagricegagrice San DiegoPosts: 28,680

    I think you have observed real estate in volatile areas of the USA. Many places in the USA are very stable. If you are wanting to be mobile in your ability to work where you want to and move in a hurry, owning a home is a bad idea. In the case of my daughter in Indiana homes fluctuated very little during the housing bubble implosion. Their home is still worth about what they paid for it in 2008. It was brand new and with taxes and mortgage their payments are about half of what they paid for rent in a 2 bdrm apt. Today you can still buy a brand new 3 bdrm house where they live for $135k. Payment of $650 a month with no money down. One of my big issues is cost of utilities. Her gas and electric averages $125-150 per month. In the poorly insulated apt they lived in it was close to $300 when it got real cold or hot. They do not have any illusions that their home will appreciate and make them wealthy. Also they were lucky to be transferred to Indiana. As my SIL was offered a raise to leave San Diego when they moved. Lower cost of living and better income. A Win Win except for me not seeing them as often. And after 5 years they have about 10% equity.

  • fintailfintail Posts: 32,898
    edited December 2013

    I've been observing real estate mostly in an area with a relatively good economy and lots of amenities - population growth is steady in my area, even with the dull weather. Prices did crash a bit here when most places crashed, but have recovered more than most too - at least the nicer stuff. Marginal areas and old condos have fared poorly. My mother lives in a WA state area with prices like you mention in IN - prices didn't crash, I could afford a nice house there - but unemployment is high, amenities are few, and social ills aren't exactly invisible. Location location location.

    A friend of mine lived in suburban ATL, where a nice place can be had for well under 150K and decent presentable places can be had for half that. But the developments are poorly sited, quality is low, and local wages aren't great. He moved back here - can't buy a house, but ended up with a 50% raise for a lesser position.

    A raise to live in a low cost of living area is like winning a lottery. Your relative got very lucky. And you can still visit them as much as you want - an excuse to take a road trip in the new car ;)

    No money down, eh? It seems people never learn. Shouldn't be legal.

    @gagrice said: I think you have observed real estate in volatile areas of the USA. Many places in the USA are very stable. If you are wanting to be mobile in your ability to work where you want to and move in a hurry, owning a home is a bad idea. In the case of my daughter in Indiana homes fluctuated very little during the housing bubble implosion. Their home is still worth about what they paid for it in 2008. It was brand new and with taxes and mortgage their payments are about half of what they paid for rent in a 2 bdrm apt. Today you can still buy a brand new 3 bdrm house where they live for $135k. Payment of $650 a month with no money down. One of my big issues is cost of utilities. Her gas and electric averages $125-150 per month. In the poorly insulated apt they lived in it was close to $300 when it got real cold or hot. They do not have any illusions that their home will appreciate and make them wealthy. Also they were lucky to be transferred to Indiana. As my SIL was offered a raise to leave San Diego when they moved. Lower cost of living and better income. A Win Win except for me not seeing them as often. And after 5 years they have about 10% equity.

  • gagricegagrice San DiegoPosts: 28,680
    edited December 2013

    No money down is not likely from any bank. When dad holds the 1st anything is possible. They would have financed through a bank with a nice down, if I had not made them a better offer. It is a win for us both. I am getting 4.5% on money that would bring less than half a percent in the bank. They are saving a lot and putting it away for my grandson's college. So it makes me money and likely saves me money. :p

  • gagricegagrice San DiegoPosts: 28,680

    @fintail said: **A raise to live in a low cost of living area is like winning a lottery. ** Your relative got very lucky. And you can still visit them as much as you want - an excuse to take a road trip in the new car

    That is for sure. They were struggling here living in a junkie $1200 per month apartment. Apartments in Indiana were not less, just nicer for the same money. In the 5 years since they left apartment rents went up here for those that work. You and I pay the difference on 1000s of Section8 apartments being put up at breakneck speed. They would likely be still living in a cheap apartment. As no way they could ever afford to buy a home in San Diego.

    One time many years ago I considered a job offer in Ocala Florida. I was sent to school for 2 months and really liked central FL. Cost of living was far less than most places I like. I would have made about 2/3rds what I was making in Alaska. But lived a lot less expensive. In retrospect not taking the job paid off. That company got bought out and downsized. I would have a lot less in my pension. My advice is to go where you can make the most money and save, save, save, because one day you will be glad you did.

  • Stever@EdmundsStever@Edmunds YooperlandPosts: 38,931

    Seems a better plan to move to where you want to live and not move for a job (unless your job is your life). If you scramble too hard to be able to afford where you live, you won't have the energy left to enjoy the surroundings. Or if you make a lot of money but don't like where you live, what's the point of that? We always moved first then found jobs.

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