What is Digg?185 Comments
- inactive, on 10/10/2007, -2/+75HI MY NAME IS PATTY AND I'M YOUR AGENT!
I'm going to speak really loudly and excited about whatever over-priced piece of cr@p house I try to shove down your throat! Did you notice my makeup and perfume? I put WAY too much on. It's my way of trying to cover up the 45 pounds I gained after I gave birth to my kid. My husband then lost interest in me and now has sex with Thai hookers when he goes on business trips for his WIlly Lomanesque sales trips! Can I interest you in this split-level Colonial which has gone up 500% in the past six months? The markets fueled by low interest, interest only loans which will entrap you like an 18th century negro south of the Mason Dixon Line- hi, I'm Patty! - LordofShadows, on 10/10/2007, -5/+42Score, cheaper houses. Screw home investors.
- chubbybubba, on 10/10/2007, -1/+33The bad news is that I bought my house a year ago, when house prices just passed it's peak. The good news, I can trade it in for a pack of mentos and half a can of red bull. Man, I love mentos.
- idc5, on 10/10/2007, -1/+25I am a loan officer and Realtor here in Southern California. Prices out here are ridiculous. The modest home in Orange County my parents bought back in 1991 for 165,000 is now "worth" 625,000. Problem is no one wants to buy it for that price, and it's like that all over the place. Sellers generally don't want to let go of their homes for a low price, and there are way in hell that the average first time home buyer can afford a home in this area. Average home price in O.C. is around 600,000, and the average household income (last time I checked) is around 55k-60k.. A 600,000 loan has a payment of $3800 every month (assuming an interesting rate of 6.5%), and a 60,000 yearly income brings you in about $5000 monthly.. Typically your monthly payment should be 1/4 of your monthly income...
Now moving over to the topic of mortgages, values are now slowly decreasing to readjust to the current market, and many subprime homeowners are getting stuck in their adjustable mortgages with no way out as their Loan-to-Value ratio is not sufficient. Lenders are scared ***** and are strictening up their guidelines daily especially on Stated Programs. I had 3 loans which would have been golden 6 months ago rejected just this month. These people are going to lose their homes as they can't afford their payment and have no room to refinance. - dagnabbit, on 10/10/2007, -2/+26This really sucks for those of us renters that are looking to buy in the next 6-8 months (like my wife and I). Everyone says, "it's such a buyer's market!", but here's more evidence it's probably the WORST time to buy.
- m8ymerc1, on 10/10/2007, -0/+19Here in part is what is being done about it and why these prices actually got out of hand.
http://www.ag.state.oh.us/press/07/06/pr070607.asp
Ohio Attorney General Marc Dann has lodged complaints against ten companies for violating Ohio’s consumer protection laws. The complaints state that these companies have committed unconscionable acts or practices in violation of the Consumer Sales Practices Act by knowingly compensating, instructing, inducing, coercing, or intimidating appraisers for the purpose of improperly influencing the independent process. - Y0tsuya, on 10/10/2007, -2/+18That chart doesn't look right. NYT has a chart where the inflation-adjusted housing price stays at about 80-120% until 2003+:
http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2.html
Wonder what this guy's using to normalize his data. - Y0tsuya, on 10/10/2007, -0/+14That boat has sailed 6 months ago.
- humperdeath, on 10/10/2007, -0/+13A few years from now, those that have saved and lived within their means will reap the reward. Cheaper houses available to those with some savings. Those that stretched thier money too thin will be outa luck.
- annenk38, on 10/10/2007, -1/+14Good thing I held off buying a house during frenzy. If I use Japan for historic reference, the prices should drop by about 40% in the next 2-3 years.
- jmpeagle, on 10/10/2007, -1/+14here's the problem, it is in government's best interest to inflate real estate prices (local and state governments, not federal) as real estate taxes are where they get their income to pay for things such as schools. If real estate prices crash, they will need to levy a higher income tax to make up for the shortfall.
- inactive, on 10/10/2007, -1/+13The reason you buy a house is for long term financial security. When you are young you can rent and live the good life. As you get older, your health and having a job is a priority. I live in Perth, Western Australia. We are in the middle of a mining resources boom. Lack of skilled labour is the scream. Two years ago, the waiting list to build a new home was one year to eighteen months. Now it is about six months.
The real reason for house price increases have not been addressed. People are building bigger homes with all the luxuries. Go back 30 years, first home owners built basic houses in the outer suburbs. Those houses are now regarded as Mid-city living with the amenities within close proximity. In Perth they built a railway down the middle of the freeway. What was regarded as fringe dwelling is now desirable living.
Regardless where you live, cities grow. As the city grows outer city living becomes more accessible and more expensive. For first home buyers the only way you will break the cycle is to buy a small basic house to live in. Invest as much as you can into mortgage repayments. In ten years you will have enough equity to upgrade to a bigger house. If you try to do it in one step, you will end up going bankrupt. I see it all the time in Australia and the USA will be no different. The golden rule is to spent 10% less than you earn. Interest rates will always rise. The 10% buffer will stop you from going bankrupt.
There is plenty of financial advice circulating on the net. There are two types of people. Doers and talkers.
RULE NUMBER ONE: Never take financial advice from a paid broker. They work on commission and will tell you whatever you want to know from the agent paying the commission.
RULE NUMBER TWO: Don't listen to millionaires. They invest in the secure money market and not the speculative retail housing market.
RULE NUMBER THREE: The money is in holding the mortgage document not having a mortgage. A mortgage document is like having money in a secure bank account. Being a mortgagee is being subjected to market conditions and interest rate rises. - samssf, on 10/10/2007, -1/+12Theres one thing I want to clear up on this thread. No matter where you are... even in CA... it is NOT always (or even often) a better financial decision to buy a house rather than rent. I'm sick of people saying stuff like "well duh its obviously always better to buy if you can, cause you're putting that money into a house rather than throwing it away". People need to sit down and calculate rather than assume. If you get a huge mortgage with, say, 6.5% on $600,000 with no down payment (or even 20% down) you're throwing a way a buttload of money in interest... to the banks. There's maintenance costs... huge HOA fees... taxes... Sure there's a tax write-off. But people seem to think it would be cool to give someone a dollar in order to get 0.25 back.
If you're SURE it would obviously be better to buy than to rent, you might want to check your calculations again. Take everything into account and you'll be suprised. If you rent a modest place for $2500 a month and want to move into a house, then sure you'll get a bigger place and you'll "own" it. But chances are you won't own ***** for 30 years. And for many years in the beginning of the loan you'll throw away more than $2500 on interest. Don't buy anything until you can put 30% down. Wait for those home prices to fall. - CognitiveDiss, on 10/10/2007, -3/+14This is a great read, and the graphs are a very effective visual representation.
Let the market crash and then I'll get some good deals... - ahawks, on 10/10/2007, -3/+13Like a few other people here, my first response is "sweet, prices will plummet about the time I'm ready to buy! ***** everyone else!"
However, we must realize that the people who will _lose_their_homes_ said almost the same thing: "Sweet, interest rates are at an all time low! Prices are going up, so my purchase will appreciate in value! Screw the poor guy who buys it from me at 2x the price"
Point is, we're all human, we're all trying to find a place to live and support a family. I feel sorry for those who will lose their homes, but will be glad when prices go back down.
I'm just sayin, have some heart when it happens. - inactive, on 10/10/2007, -1/+10this bubble didn't start two years ago. The worst of it was started in the early 2000s by a worried Alan Greenspan.
- johndi, on 10/10/2007, -0/+9Looks like their problem is that they don't like your opinion, and chose to belittle you instead of discussing your point. Sounds like the problem is their attitude. Avoid the debt trap and you'll do fine.
- rossmcd, on 10/10/2007, -0/+9I think you and I are looking at the same graph but seeing different lines. It looks to me like on the NYT chart, housing prices start rising at about 1997 and hit 120% in 2000. By 2003 they are well past that, around 140%.
The other guys graph looks to me like it is the same overall shape as the NYT, but squashed a little bit on the Y axis. Why do his home prices not increase as dramatically as the NYT in the period since 1997? NYT says it only includes data from "standard existing houses, not new construction." Maybe the other guy includes newly built homes and condos? - hassanchop13, on 10/10/2007, -1/+10northeast is probably similar (philadelphia, jersey, nyc, and from what i hear, you can throw DC in there too)
- inactive, on 10/10/2007, -1/+10New show on TLC, "Flip that mortgage".
- samssf, on 10/10/2007, -0/+9"stupid people not only affect themselves, they affect you too."
***** stupid people. - inactive, on 10/10/2007, -0/+8The real problem is that smart people realize that it's economic suicide to have 5+ children so they may have 1 or 2, or none at all. Dumb people never consider their future or the future of their offspring, so they have as many as biology will permit. See: Idiocracy.
- chubbybubba, on 10/10/2007, -2/+10lol... lol.... awesome.
- fanclerks, on 10/10/2007, -1/+8I never said "screw the poor guys who will lose their homes." Hell, it sucks for those people. However, they dug themselves that hole. I wouldn't expect anybody to feel sorry for me if I was in that position.
- evlpanda, on 10/10/2007, -0/+7Add: "Oh wait, I'll just take this call... Hello, yes? Yes it's still available. Yes I can meet you in my office at 5. That was a professor who I showed through the house yesterday, he's gonna come down and make an offer this afternoon so you'd better be quick".
- LordofShadows, on 10/10/2007, -1/+8If I pay less for a home, I and other people like me will have more discretionary income which will then inturn be put to better economic use than a investor whose goal is to further line their own pockets.
- Y0tsuya, on 10/10/2007, -3/+10dopplerdog,
I think you're forgetting where the money comes from: Banks. The homeowners took out HELOCs to buy your company's stuff because they don't actually have the money to spend. The banks (fed reserve) created a credit bubble that inflates the housing "value" which allows them to lure homeowner into owing banks even more money. In the meantime, nobody could afford a house. Buying a house these days means a life of indentured servitude to the bank of your choice, and living on ramen noodles for the indefinite future. We're already screwed anyway. Let's just take our medicine and let this be a bitter lesson to us all. - jamesallen74, on 10/10/2007, -1/+8Pictures of hitting my video game reset button come to mind.
- fanclerks, on 10/10/2007, -1/+8I was with up until you made it political.
- michaelnew20, on 10/10/2007, -5/+12When the bubble bursts we'll see a mighty fall!
- dopplerdog, on 10/10/2007, -8/+15yeabbut..... these home investors, if they're screwed, will stop buying stuff. if they stop buying stuff, the business that employs you stops selling stuff. that means less work for you, less money for you, less shopping for you, which further compounds the problem. unfortunately, no man is an island, and we're all in this together. stupid people not only affect themselves, they affect you too.
- samssf, on 10/10/2007, -1/+8You forgot the taxes on that income =) I make a bit more than 55k and I bring home a lot less than $5000 a month. So yeah. It's pretty bad.
- vuke69, on 10/10/2007, -4/+10Bingo.
Bust the market.
Buy at pennies on the dollar.
Run the market back up.
Wash, Rinse, Repeat.
The Federal Reserve: Gaming the system since 1913. - brufleth, on 10/10/2007, -0/+6Oddly my experience finding a place to RENT was similar except it was more like "Let me show you another ***** apartment that in no way meets the description of what you want!!!!11" Ended up finding a place through a friend.
Real estate agents are so terrible. After complaining about one who repeatedly canceled appointments 10 minutes before we were supposed to be meeting him across the city (as in we got the call while driving to meet him) we received what is still the most abusive communication I've ever seen towards a customer. His boss was CC'ed on it and he immediately called us to apologize and offer to show us places. We politely declined. I understand it is a stressful profession but they really do get away with some terrible customer service. - CrimsonBlur, on 10/10/2007, -3/+8I would be able to see the bubble if those damn charts weren't so small! Honestly, at least make them large enough for the text to be legible. That aside, it's a good article. With all of the info coming out about this issue, it sounds like the ***** is about to hit the fan...
- inactive, on 10/10/2007, -0/+5irony. his comment wasn't "intelligence" at all.
Look at Texas, which is growing fast. Look at the home prices. For what would get me a 700 square foot broken down post WW2 house, I could buy a somewhat new 3000 square foot house in Sugar Land, TX. Look at the Houston area, look at the Austin area, look at the Dallas area. - redfox2600, on 10/10/2007, -0/+5Yes, that is a problem, people need to stop reproducing with stupid people.
- johnny23, on 10/10/2007, -0/+5Way to completely miss his point. "Spend a dollar to make .25 back".
WIth rent...all you have is a rent payment.
With a house you have a mortgage, HOA/condo fees, property tax, maintenance. Don't view a house as an investment or piggy bank. It's just a place to live. Even if your house appreciates at 4-5% a year, after inflation you still only gain possibly 2-3% year over year as an investment (of course this will vary from market to market). After maintenance and fees you are in the hole.
When renting, you can take half what you would have spent if you owned, make modest investments and come out on top.
It is not always a clear cut case of whether to rent or own. You are throwing money down a hole in both cases. - Auscifer, on 10/10/2007, -0/+5Right on! Sell short like there's no tomorrow. Also, buy lots of lottery tickets. You are well on your way to financial success!
- LordofShadows, on 10/10/2007, -0/+5Best way to learn. Whats wrong with my view of economics?
- Marc39, on 10/10/2007, -0/+4Except that many of these states don't have a state income tax; Texas, Florida, Nevada et al
- sjaskow, on 10/10/2007, -0/+4Don't worry about it, I started in the real world in 1987 when a good mortgage interest rate was 12%+ and we were going through a major recession. I bought my first house a few years later but I scrimped and saved to do it.
- jmpeagle, on 10/10/2007, -2/+6I bet that one uses averages instead of median.
- kazamx, on 10/10/2007, -1/+5Your friends. If they can't do basic math then they fail. everyone is wanting to blame someone else. yes the mortgage people screwed people over, but at the end of the day people should have worked it out for themselves. If I have to pay out 100% of my monthly income on the mortgage how am I going to eat.
- brufleth, on 10/10/2007, -0/+4Exactly! It is called math! Buy your friends a calculator and a piece of paper. I'm still saving for a home. I certainly do not feel sorry for people who were irresponsible and took a mortgage that was clearly not sustainable given their income. The very notion of an interest only loan blows my mind.
- johnny23, on 10/10/2007, -1/+5Hate to break the news to you, but your house ain't worth 800k any more if it's anywhere in California.
- inactive, on 10/10/2007, -2/+6I almost did the same, but the article was good.
- therightside, on 10/10/2007, -8/+12As long as you are not in California you will probably not notice a thing.
- LordofShadows, on 10/10/2007, -0/+4Good point and I would hope for a better solution to this problem than giving more money to the government to mismanage. (deregulation of schools would be interesting and scary idea)
- TubaTechno, on 10/10/2007, -0/+3Actually, it depends on the area. My wife and I are just about to close on a house next week. It's a 3bed, 2bath 1364sq ft. house. It technically IS a buyer's market because of all the foreclosures. The banks are no longer getting their paychecks and want to sell their foreclosed properties very quickly and at lower prices. Our house was appraised at 125K and it's definitely something we can afford, especially with FHA financing where the seller pay closing costs and 3% down payment. With taxes, insurance, and mortgage, it's about 1K per month.
People have been fear mongering this market for years. Just be informed and do some research and you'll do fine. -
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