Houses cost too much!

Mr_Shiftright · December 2007

That's a rough commute. It's gonna get old real fast, poor guy.

fintail · December 2007

The worst part is that the 2 hours will cover less than 20 miles. I'll keep my 10 minute commute and deal with living in an apartment, while awaiting the condo market to correct itself (already in my area condo conversions are being rented out again, as they couldn't sell)

rockylee · December 2007

Jeeze fintail, how do you guys afford it ? Does everybody in Washington State, make six figures a year ????? :surprise: I drove 91 miles one way for 3 years plus worked a 13 hour shift. I come back to Michigan, and places I thought took a long time to get to at times are like a hop, skip and a jump now.

So yeah that 2 hour drive will get very old.... trust me !!!!!

-Rocky

fintail · December 2007

People either work multiple jobs, rent out rooms, deal with a long commute, or live in a apt/condo. Of course, those who are old enough to have bought 15-20+ years ago don't face the same mess...and many of them arrogantly act like some kind of tycoon because they were around then and bought cheap. The market here is just starting to go soft, as it has in so many other areas. I was looking at a couple of condos in the summer of 06 - one of them is still on the market, for 40K less! And apartment conversions to condos are going back to rentals. Serves the speculators right.

I have a 10-15 min commute, and that is enough for me. Driving here is only tolerable on Sundays. I'll live in a smaller place to not spend 100 hours per month in crawling traffic.

rockylee · December 2007

Hey man I totally agree with the way you feel.

It still puzzles me how "our" generation is suppose to afford these meager homes that are several hundred thousand dollars. I guess at some point they will come out with generation loans to spike the housing market again where you can sign your kids and grandkids up as a promisary to pay the remaining balance owed. :P

-Rocky

fintail · December 2007

I'm waiting for the 100 year mortgage. We're already halfway there!

Once the boomers are gone, the housing market will be a bit different, as real incomes are not increasing as they did for so long, and few people will have been able to buy cheap. The only thing that might keep housing going is that so many are built so cheaply and poorly today that they will be teardowns in 25-30 years, and that will require replacement...of course, with another cardboard 'n plywood dream house.

rockylee · December 2007

Yeah they don't build em' like they use too.

My 3x great grandfather's house he built in the mid 1800's in Larvik, Norway looks as good as new.

Try to say that about a home built today 150 years from now and well it be there anymore because like you said cardboard 'n plywood only lasts so long, eh ????

-Rocky

kyfdx · December 2007

You can still build a good house out of plywood and cardboard..

The important things are a good foundation, and keeping things dry... Given those two things are done correctly, almost any house will last a hundred years...

fintail · December 2007

From my experience, the quality of housing in northern Europe far exceeds the average seen on this continent. It's also a reason why they don't have such a huge housebuilding industry - people simply renovate existing structures as needed, instead of buying something disposable and moving on when it is worn out. Even houses from the 50s here seem to be better built than newer ones.

As was mentioned, cardboard and plywood can be workable if built properly...but I don't know if many will build properly to begin with when using low grade materials. I see a lot of 70s-80s developments in my area that are really beginning to look ragged, and it is more than cosmetic neglect - the houses were just built as cheaply as possible.

PF_Flyer · December 2007

Sorry guys. Making poor financial decisions is a personal problem and not some conspiracy.

When we built our home back in 1986 it was NOT cheap as far as we were concerned, and adjustable rate mortgages were waving their seductive charms in our face just like now. I didn't take the bait then because of what COULD happen.

Are there people hurting now? Certainly. And they certainly seem to find themselves in a cleft stick of their own making. You can't budget your finanaces and want to live beyond your means? Don't cry to me when YOUR bills come due and you didn't have the foresight to plan on how you were going to pay them.

We had a "woe is me" front page story here about a guy having to file bankruptcy because of the amount he has out on credit cards. He put his kid's college tuition on a credit card. And now he's surprised he's in a finacial hole and expecting someone else to bail him out or feel sorry for him?
I'd love to have a plasma HDTV too. Where's the line of people who are gonna pay for that for me?

okko1 · December 2007

i would agree that houses really don't cost a bunch more now than they did in days gone by. if you had the money then you could buy. during the depression my grandparents bought a three bedroom ranch across corner from a school for 3200 dollars. it is not likely that 60 years later we would be working for oh let's say 3 or 4 dollars a day either. it is all about your means.

Mr_Shiftright · December 2007

I think we have to work more to buy them though. It's not as simple as adjusting for inflation. Many of our grandparents had a summer house, too, and only one parent working. Now we have two people working hard to keep one house going.

fintail · December 2007

Exactly. Houses do cost much more relative to real incomes, at least in this area.

The average 3 bedroom rambler my grandparents bought ca. 45 years ago is now worth about 30x its original price. It's not inflation, it is creative financing and speculation that creates artificial demand. It's not unlike the debt-based GDP seen here.

kyfdx · December 2007

I don't think that is related to the price of the house, though (well.. maybe where you live!).

It is more all of the extra stuff that we need now.. For instance, when was the last time you saw a one-earner household that only owned one car? That used to be the norm when I was growing up..

My cell phone bill is around $75/mo. for three phones.... pretty cheap, but we didn't need those when I was younger, either.

My wife's salary would easily pay the mortgage, utility, taxes etc. on our home, plus everything else, if we could otherwise live like we did in the '60s.. (You notice who gets to quit here, right?

).

Mr_Shiftright · December 2007

That's because the VALUE of the house has not gone up only the price. It's the same wood, stone, dirt, etc. Perhaps improvements could account for some of the big price tag today, but really it's all about speculation inside of people's heads.

tpulak · December 2007

Whats going on with the prices!?? Don't worry. I have a spare room in my house. Move to Texas, and you can share my bedroom.(lol) :P

jipster · December 2007

New housing has dropped signifiantly this year. Market soft. Good time to move up into a bigger more expensive home.

Mr_Shiftright · December 2007

The prices are nuts, irrational, crazy in California. There's no relation anymore to the price vs. the substance of what you are buying. At least a $10,000 watch is built like one and a $100K car has leather, wood, and quality throughout. But a $650K house is a pile of rotten sticks.

What you're paying for is ground, that's it.

sky23213 · December 2007

I remember recently a thing on one of the networks on the topic of falling prices in new developments. There was a woman in tears telling how she bought for 595K and now the builder is unloading the unsold properties on the same street for 395K.

stever · December 2007

At least a $10,000 watch is built like one

I dunno - I hear that a lot of the movements are the same and you are just paying for the glitter and the brand.

If anyone has gone to their big box store lately to buy a few sticks, that's one reason why houses cost so much. If you enjoy wood working as a hobby, I hope you have your own woodlot and a sawmill.

Mr_Shiftright · December 2007

We aren't talking virgin redwood here, we are talking 5/8th ply, sheetrock, 2 X4, 2X6 framing lumber and aluminum windows and some nails, some pergo, a few Home Depot fixtures and appliances, some carpeting, tile and a few light bulbs. This is not European craftsmanship we are getting here.

rockylee · December 2007

Shifty,

I do not know where Steve, was going with his post pal ??? :surprise: I totally understand what you are talking about. As Fintail, calls it Plyboard n' Cardboard homes. :P Steve, may not understand what ya'll are dealing with out their in Cali, as you can still find rock solid homes pretty cheap in Boise.

My great aunt has a McMansion, in Boise, Steve and if you put her home in California, it would cost you at least 10 times as much as it does in Boise.

I do not know how pepole on the left coast afford it ???? As I said to Fintail, who lives in Washington State, everybody must make six-figure incomes there. :confuse:

-Rocky

stever · December 2007

Everyone wants to live in beautiful, sunny California (my wife was born there and she's not ready to move back "home" yet. :P ). My mom lived out near Stockton/Antioch. Unfortunately all the relatives scattered to the four corners so we don't have anyone to freeload on now when we go to San Diego or the Sierra.

So demand plays a part in house value. But my point was that building materials have gone way up in price too (not to mention the infrastructure costs of getting water and sewer to new subdivisions), and that factors into home prices too.

Mr_Shiftright · December 2007

I wouldn't mind paying $650K for something that looked remotely like $650K, not like a $60,000 house in Arkansas.

rockylee · December 2007

Well I was born in Long Beach, and it doesn't look to expensive there. I haven't been back to see where I was born but have seen footage on TV. I hear a good crib in the hood still will cost you six figures.

As far as what you said Shifty, I totally agree. Those homes do not look like six-figure McMansion.

-Rocky

jipster · January 2008

What you're paying for is ground, that's it.

I'll probably never have enough money to understand this, but saw a program recently. The buyer of a "nice" 20 million dollar mansion was having it torn down so he could put up a 50 million dollar mansion. That's just crazy.

Mr_Shiftright · January 2008

Money is useless if you don't spend it. What are you going to do with it, eat it all?

In Aspen, we used to call $1,000,000 homes in nice locations "scrape-offs", because they would be bulldozed right after purchase. They were just little 800 sf ranch houses from an era long gone by.

jipster · January 2008

Money is useless if you don't spend it

Sounds like you've been talking with my wife. :sick:

A big difference though in tearing down a 20,000 sf mansion to build a 35,000 sf mansion... and tearing down a 800sf ranch to build something bigger.

stever · January 2008

We call them scrapers here in Boise and mine about qualifies (great view & location, big empty stretch of foothills behind us, but it's a 70's house with "issues"). I keep waiting for the realtor to drive up with an offer out of the blue - all I want is a newer place in town and ~$750k in cash. :shades:

Mr_Shiftright · January 2008

You might be waiting a spell, Steve. The 25 year run in real estate was very unusual historically speaking and was outside the usual pattern.

My "philosophy" is to rent in times of high real estate prices and buy in times of low. Works for me, maybe not for you all.

If a person literally added up ALL expenses associated with buying, insuring, maintaining, paying taxes on, paying interest on---a house---the pure profit isn't all that great for most people, matchable by other investments.

I can rent my house no problem, but I can't afford $200K down payment and a $7500 a month mortgage for the very house I'm staying in. Why should I kill myself to own it?

Landlord kicks me out? Rent the house next door---LOL!

jipster · January 2008

Buying a house is a good investment. You have something to show for it when you want to sell. To me rent is pouring money down the drain. You make someone else rich, while having nothing to show for all the years of monthly payments. I literally doubled my money on my first home purchase. Not a bad return for 5 years of ownership. Now, you got money coming out the ears... it really doesn't matter does it.

stever · January 2008

I got my first house when I was 21 or so. It was also a scraper on a great lot in an upscale neighborhood. I think it was $19.5k and I was making about $9k and making a Jeep payment too. It had been a summer cabin. It's still there, lol. Made a few grand on that one back in '77 doing a FSBO.

Then a brick house - no maintenance, yippee!. Sold that for $10k profit after three years. Then 15 years in a ranch house in Anchorage after renting a while. Spent a lot of money on fixing it up. Was upside down doing the bust of the late 80s and then "made" a little money when we moved in '00 with another FSBO. We really enjoyed living there.

Then a older well built house across town here that just didn't work, so we sold it after a year for what we paid (made enough to cover the commission and we kept the newish hot tub). Now here for 6 years - time flies. This one is up a good percentage thanks to the Boise boom, but we didn't buy it for that.

I learned years ago that you don't buy a home for an investment (sorry Jip, can't agree with you there) - you buy it to live there. Being a passive stock investor makes a lot more sense if you just want to make money. I didn't lose a bit of sleep during the 80's bust worrying how much my mortgage was vs what I could sell it for.

No issue with renting and I think the home mortgage deduction is a bad idea. I think that's another part of the appraisal and price inflation you see on house prices.

jipster · January 2008

learned years ago that you don't buy a home for an investment (sorry Jip, can't agree with you there) - you buy it to live there

Yeah.... I agree with that. Unless you are buying just to flip and turn a profit... which I don't do. But, it is nice that you can buy a home and have it's value increase significantly to where you can upgrade on equity alone in 10 years. I took out a 15 year loan when I bought my current home, had it paid off in 12 years. Pride in ownership is a wonderful thing.

stever · January 2008

Calling the landlord when the roof leaks would be nice too - spent $9k on a new roof here last year.

Mr_Shiftright · January 2008

I don't think they are such good investments. People don't add up all the real costs and then compare them to putting those mortgage payments into a successful mutual fund for 30 years.

To me, paying interest is money down the drain, too unless you are in for a long, long haul.

Rent is like leasing. You get to live in a much nicer house (or drive a much nicer car) than you could if you bought it. Why should I care if I leave the house with nothing, especially at my age?

We are all going to leave our houses with nothing anyway :P

Sure, you can leave the house to wivey and kids to live in, but then they have to pay the mortgage unless it's all paid off.

I don't see rent vs. buy as a clear-cut thing one way or the other.

stever · January 2008

I bet I've "made" more money over the last twenty years by driving my (reliable) cars forever than I have made owing a house.

I'm pretty adept at keeping my car's TCO down pretty low (within safety factors of course

).

fintail · January 2008

It's certainly that way in my area. If my apartment building was to convert to condos, the mortgage on my place would literally be double what I pay in rent right now. Luckily, the chances of a conversion taking place are pretty much zero as the local condo market is oversaturating, and a condo conversion building 2 blocks away from me has gone back to renting out the unsold units - which is something like 70% from what I hear. And those rentals too are far less than a mortgage - even after they have been tarted up with deluxe kitchens and pretentious trim etc.

I bet if I invested that half a mortgage (vs rent) for a 20 or 25 year term, I could come out ahead of the value of the condo over the same period.

fintail · January 2008

This beautiful mansionette not more than a couple blocks from me just hit the market

Yeah, the housing market here still needs a correction. I'd love to have the garage, but the house is barely larger than my studio apartment.

stever · January 2008

Your link didn't work for me but I assume you mean the Surrey Downs one. Lot of dough ....

fintail · January 2008

Yep that's it. They want like 50K over Zillow for it, I think. Insane.

Mr_Shiftright · January 2008

What a dump. Maybe the location is ????

fintail · January 2008

The location is decent, not on a street of mansions or anything however - probably not a house over 2000 sq ft and built after 1970 in the general area...and the lot isn't especially large, it wouldn't even make much of a teardown. It's just a sign of how overheated the market is in the area, thanks to a job market that has remained OK, and traffic conditions so poor that many people will take a short commute and live in a shoebox for the same price of a McMansion 30 miles (2 hours and often longer) from work....while putting 70% of their net income into a speculative mortgage.

10 years ago that house would have been under 200K I am pretty sure.

rockylee · January 2008

fintail, how do regular folks who we look at as very well paid (Boeing) folks make it in Washington, state on what appears to be meager wages when compared to the cost of living/housing ??? :surprise: :surprise: :surprise: :surprise: :surprise:

-Rocky

fintail · January 2008

Condos or commuting...or both.

Actually 15 years ago the market was very reasonable, and a lot of people (who were old enough...I was 15 years old 15 years ago and was happy to have saved a grand for my first car) bought in then, or sold their houses in California back during the exodus, and had enough equity to easily buy something. The Californicators are another force behind the inflation, everywhere from Portland to Vancouver (BC).

rockylee · January 2008

Amazing !!! :surprise:

-rockylee

michaellno · January 2008

Actually 15 years ago the market was very reasonable, and a lot of people (who were old enough...I was 15 years old 15 years ago and was happy to have saved a grand for my first car) bought in then, or sold their houses in California back during the exodus, and had enough equity to easily buy something.

The same is true here in Colorado ... lots of ex-Californians sold houses there, moved here and found they were able to get twice the house for half the money.

Now, in all fairness, I was one who moved from CA to CO, but I wasn't at a point where I could purchase a home (recent divorce, new job, etc.).

I bought my first (and so far, only) house in 2000 for $159K.

fintail · January 2008

And people are probably trying to sell houses like yours for twice that, just like here. A lot of people here consider themselves to be wealthy based on this equity...but I think it is an illusion. It's HELOC land, too.

That 560K shoebox I posted sold for 125K in 1994 and was worth under 200K as recently as 2002.

qbrozen · January 2008

I bought my first (and so far, only) house in 2000 for $159K.

It was a good time to buy. We bought our first house in 2000, also, for $155k. A tiny 60-year-old Cape Cod on a tiny 50x100 lot. Put maybe $10k of work into it and sold it 4 years later for $285k (only 10 days on the market). Not a bad return on investment!

Went 1 town south in 2004 and bought a 10-year-old 4-bedroom colonial on 1 acre for $399k. As of the appraisal last April, it was valued at $529k. Again, not bad! Who knows what the future holds, though. I ain't movin again, that's for sure. And that's probably a good thing because I'm not sure anyone is buying.

michaellno · January 2008

Yeah, when we bought, prices were going up every couple of weeks.

Last time we checked - a couple of years ago - the house appraised at $215K. I suspect that the value has come down a bit since then.

We have put our house on the market a couple of times in the past 18 months, but we didn't have any serious interest. So, we'll stay put for the next few years.

A tiny 60-year-old Cape Cod on a tiny 50x100 lot.

Funny, our house is on a 50x100 lot, as well. We bought our house when the lot was just dirt, and watched them build it. We don't look at it as small, we look at it as 'right sized'.

The nice thing for us is that we have a greenbelt behind us so only neighbors on either side. And, it's a quiet street with (surprisingly) lots of single folks.

qbrozen · January 2008

50x100 is plenty for alot of people.

Its just that I grew up on 2 acres surrounded by forest and gravel pit, so I am accustomed to space. Living in a neighborhood and seeing people just over the fence when you are outside on a summer evening drove me nuts. We had a soccer field for a grade school just behind us, but the neighbor on the one side was quite nosey AND noisey.

Oh, and the old guy across the street who stood at his door and watched everything all the time was annoying, too. I think we were the only young married couple with no kids in the immediate area.

it was just the wrong place for me. Nice enough neighborhood, but not my thing.

Now I'm back where I hardly ever see other people when I'm outside, and that's just fine by me.

Houses cost too much!

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