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deltachi8
02-06-2008, 12:51 AM
Found out tonight that the offer (2nd) my fiance and I made on a house was accepted. It will be my first house (not hers) - It's a pretty good felling and kinda of scary at the same time.

I have been married and divorced and engaged again and have been raising a son. I am in a senior leadership position in my employment.

So why does buying a house seem so much more "grown up" than anything else?

919191
02-06-2008, 01:28 AM
Congratulations!


80 MPH winds a few hours ago destroyed my brick chimney. Tonight I wish I was a renter.

Bip Roberts
02-06-2008, 01:35 AM
Found out tonight that the offer (2nd) my fiance and I made on a house was accepted. It will be my first house (not hers) - It's a pretty good felling and kinda of scary at the same time.

I have been married and divorced and engaged again and have been raising a son. I am in a senior leadership position in my employment.

So why does buying a house seem so much more "grown up" than anything else?

Because it take a lot more of a commitment than any of the other things you listed.

Falls City Beer
02-06-2008, 08:58 AM
Because it take a lot more of a commitment than any of the other things you listed.

Not to me. There is no bigger commitment on this earth than having kids and being married. IMO, of course.

Houses? It's just stuff. In fact, my career is infinitely more important to me commitment-wise than a house.

oneupper
02-06-2008, 09:11 AM
Congratulations. Good Timing, too.
Prices are decent and mortgage rates are relatively low.

That said, just pay your monthy mortgage bill as if it were "rent" and don't fret over what the house is worth.

You will enjoy the mortgage interest deduction on your taxes.

SunDeck
02-06-2008, 10:27 AM
Welcome to our side of the tax code.

Ltlabner
02-06-2008, 11:05 AM
I agree with FCB, that having kids and being married are far greater of a commitment than owning a house.

That said, owning a home (or land, or condo) compared to renting an appartment is a far greater commitment. I don't know about "grown up" because far too many people act like children by buying a home they can't afford to keep up with the jones. Or by taking out a mortgage when they can never hope to make the monthly payments.

But besides those dopes, owning a home is a big responsibility. There's upkeep, maintenance, and repairs. There's beautification like keeping the lawn mowed and planting flowers. There's making sure your home doesn't impact your neighbors home (i.e. keeping a big trash/compost pile 10' outside your neighbors master-bed room). There's understanding how levies and property taxes work and not voting in every last levy just because it sounds neat. There's understanding property values and making sure your decision today doesn't cost you thousands down the road.

There's nothing wrong with apartment living, but it's a far lesser responsibility since all you really are responsible for is rent and keeping your place clean enough to keep the health department away. It's basically an extension of dorm life with nicer furniture and less 1/2 empty beer cans.

westofyou
02-06-2008, 11:09 AM
My house is so old that it was 6 years old when the Cubs last won the World Series,

15fan
02-06-2008, 11:21 AM
Going to Home Depot / Lowes / Ace is now part of your routine every weekend.

Bip Roberts
02-06-2008, 11:32 AM
Not to me. There is no bigger commitment on this earth than having kids and being married. IMO, of course.

Houses? It's just stuff. In fact, my career is infinitely more important to me commitment-wise than a house.

I didnt count the kid.

Maybe commitment isnt the right word here but people tend to think more before buying a house than getting married.

bucksfan2
02-06-2008, 11:46 AM
Congrats. My fiance and I bought a house this summer. It is quite a bit of work and I only live there part time. Luckily for me the house we bought was only 3 years old. How old is your house?

SunDeck
02-06-2008, 11:54 AM
My house is so old that it was 6 years old when the Cubs last won the World Series,

I miss my old places. Had a bungalow in Cincinnati that was built in 1915. There are so many affordable great houses in Cincinnati. But by far, my favorite house is still the first one I owned in Raleigh:

http://www.paulsetliff.com/properties/dorothea1014/dorothea1014Index.jpg

When we bought it the place was pretty much a wreck. If you follow this link (http://www.paulsetliff.com/properties.htm) there is a slide show of the house at the bottom of the page. You can see what we did with it (although this is a few owners later, the bones of the place still represent my work). Unfortunately, it doesn't seem they have done much to keep the yard up. We had renovated it completely, in addition to fixing up the old shed and laying the patio.

deltachi8
02-06-2008, 11:57 AM
Congrats. My fiance and I bought a house this summer. It is quite a bit of work and I only live there part time. Luckily for me the house we bought was only 3 years old. How old is your house?

it is 2 years old and as a relocation sell so we ended up at a good price.

I guess the feeling of "grown up" is because the others things, chief among them being a parent, have come very naturally for me. being a dad is far and away the most important thing but one I am comfortable with.

a house is just something I never felt would be in my reach.

pedro
02-06-2008, 12:00 PM
congrats deltachi8!

pedro
02-06-2008, 12:09 PM
I miss my old places. Had a bungalow in Cincinnati that was built in 1915. There are so many affordable great houses in Cincinnati. But by far, my favorite house is still the first one I owned in Raleigh:

http://www.paulsetliff.com/properties/dorothea1014/dorothea1014Index.jpg

When we bought it the place was pretty much a wreck. If you follow this link (http://www.paulsetliff.com/properties.htm) there is a slide show of the house at the bottom of the page. You can see what we did with it (although this is a few owners later, the bones of the place still represent my work). Unfortunately, it doesn't seem they have done much to keep the yard up. We had renovated it completely, in addition to fixing up the old shed and laying the patio.

That's a cool house Sundeck.

My house is a 1911 Dutch Colonial with a big wrap around porch. The inside is similar to the one you had in raleigh.

I love old houses.

pedro
02-06-2008, 12:12 PM
Congratulations!


80 MPH winds a few hours ago destroyed my brick chimney. Tonight I wish I was a renter.

that sucks.

Rojo
02-06-2008, 12:18 PM
Not big on houses myself, but congrats.

Roy Tucker
02-06-2008, 12:50 PM
I view owning a house as part of driving a stake in the ground and saying "this is who I am and where I want to be".

RichRed
02-06-2008, 01:08 PM
I miss my old places. Had a bungalow in Cincinnati that was built in 1915. There are so many affordable great houses in Cincinnati. But by far, my favorite house is still the first one I owned in Raleigh:

http://www.paulsetliff.com/properties/dorothea1014/dorothea1014Index.jpg

When we bought it the place was pretty much a wreck. If you follow this link (http://www.paulsetliff.com/properties.htm) there is a slide show of the house at the bottom of the page. You can see what we did with it (although this is a few owners later, the bones of the place still represent my work). Unfortunately, it doesn't seem they have done much to keep the yard up. We had renovated it completely, in addition to fixing up the old shed and laying the patio.

That's a great house, SunDeck. Just the kind of modest, older house with character my wife and I would like to buy. Unfortunately, not many of those exist in Va. Beach.

In the meantime, we're biding our time in our apartment at the beach with a great view of the Chesapeake Bay, and in a great neighborhood. No chance in Hades we could ever afford to buy in the neighborhood we live in now.

We love it there and while we don't want to rent forever, it beats overpaying just so we can own a home in a crappy neighborhood.

Rojo
02-06-2008, 02:19 PM
I view owning a house as part of driving a stake in the ground and saying "this is who I am and where I want to be".

And the stake is borrowed from a bank. :)

princeton
02-06-2008, 02:21 PM
my condolences

westofyou
02-06-2008, 02:22 PM
And the stake is borrowed from a bank. :)

Rent can be a drain, my mortgage is less then my rent was in Palo Alto, my house gives me equity and provides me a nice tax break.

So I may be kissing the bank, but I have my hands all over their butt too.

RedsManRick
02-06-2008, 03:08 PM
Congrats deltachi. My girlfriend has made a few offers on a condo. The whole process of shopping for places, reading the books, talking with agent and all that jazz made us both feel very "grown up. Though her family is paying for it outright, which simplifies things. I'd need to go the mortgage route which would make it a much more complicated process I imagine.

pedro
02-06-2008, 03:16 PM
Though her family is paying for it outright, which simplifies things.


no kidding



I'd need to go the mortgage route which would make it a much more complicated process I imagine.

If you have a job, can show a couple of years stable income history and have some money for down payment you'd be surprised how simple it is.

Roy Tucker
02-06-2008, 03:25 PM
And the stake is borrowed from a bank. :)


In about 5 years, that will no longer be true for us. :)

Ltlabner
02-06-2008, 03:33 PM
And the stake is borrowed from a bank. :)

In an appartment the stake goes to the landlord and you have nothing at the end of the month other than a roof over your head.

I'm not sure I see where the great advantage of avoiding dealing with the bank is.

Besides avoiding all that pesky intrest tax savings, property value increases and actrually having a tangable asset when you pay your mortgage off.

Rojo
02-06-2008, 03:34 PM
If you have a job, can show a couple of years stable income history and have some money for down payment you'd be surprised how simple it is.

Until recently all you needed was a pulse.

Rojo
02-06-2008, 03:39 PM
In an appartment the stake goes to the landlord and you have nothing at the end of the month other than a roof over your head.

I'm not sure I see where the great advantage of avoiding dealing with the bank is.

Besides avoiding all that pesky intrest tax savings, property value increases and actrually having a tangable asset when you pay your mortgage off.

Not having rent's a big advantage, but you have property taxes, interest on the loan, repairs and opportunity costs. And property values aren't looking so good right now.

pedro
02-06-2008, 03:40 PM
Until recently all you needed was a pulse.

frankly, I'm not even sure that was required.

Ltlabner
02-06-2008, 03:45 PM
Not having rent's a big advantage, but you have property taxes, interest on the loan, repairs and opportunity costs. And property values aren't looking so good right now.

Interest which is deductable on your taxes. Interest, when managed with a modcum of savy can be greatly reduced.

Yep, it's expensive to live in a home. Then again, maintaining an asset usually is. ;)

Yep, there's opportunity costs. Then again, I'm willing to fork over the dough to avoid having a neighbor be 13" away from me.

Property values ebb and flow. Then again, whether it's at the ebb or the flow it will always be bigger on the ballence sheet than the amount of money one can save paying rent.

There are tremendous advantages to owning a home if you understand how money and assets work. Now, if it's just simply your preference to rent rather than own, that's a totally different (and understandable) story. But assuming you know how to purchase wisely you'll always loose the argument that financially it makes more sense to rent.

Ltlabner
02-06-2008, 03:47 PM
frankly, I'm not even sure that was required.

No kidding. As much as I blame people who took out mortages they knew they couldn't afford, I'd like to see the mortage companies and brokers who handed out money to every Tom, Dick and Harry hung from the nearest yardarm for the mess they helped create.

And I'm not even really sure what a yardarm is.

Strikes Out Looking
02-06-2008, 03:56 PM
No kidding. As much as I blame people who took out mortages they knew they couldn't afford, I'd like to see the mortage companies and brokers who handed out money to every Tom, Dick and Harry hung from the nearest yardarm for the mess they helped create.

And I'm not even really sure what a yardarm is.

I just read an article yesterday about a couple in the Phoenix area--they have two homes, with mortgages over $600,000, and make $50,000 a year. While I'm not happy with these people, those who let them have the financing are equally responsible.

bucksfan2
02-06-2008, 03:56 PM
No kidding. As much as I blame people who took out mortages they knew they couldn't afford, I'd like to see the mortage companies and brokers who handed out money to every Tom, Dick and Harry hung from the nearest yard arm for the mess they helped create.

And I'm not even really sure what a yardarm is.

Disagree. Too many loans were given out but in our society everyone wants to blame someone besides themselves. Granted there were some people who were duped but the majority of the people effected by this mess bought what they couldn't afford. Where does the responsibility lie for a guy making $50,000 a year who drives a BMW and bought a $400,000 house? I get upset when local governments want to come down on the lenders to bail the people out who bought way more than they could afford. Its a two way street.

Strikes Out Looking
02-06-2008, 04:02 PM
Disagree. Too many loans were given out but in our society everyone wants to blame someone besides themselves. Granted there were some people who were duped but the majority of the people effected by this mess bought what they couldn't afford. Where does the responsibility lie for a guy making $50,000 a year who drives a BMW and bought a $400,000 house? I get upset when local governments want to come down on the lenders to bail the people out who bought way more than they could afford. Its a two way street.

I don't think Abner or I were saying these people who are way over their head are blameless and should get away scott free, but that there is plenty of blame to go around.

Rojo
02-06-2008, 04:13 PM
Disagree. Too many loans were given out but in our society everyone wants to blame someone besides themselves. Granted there were some people who were duped but the majority of the people effected by this mess bought what they couldn't afford. Where does the responsibility lie for a guy making $50,000 a year who drives a BMW and bought a $400,000 house? I get upset when local governments want to come down on the lenders to bail the people out who bought way more than they could afford. Its a two way street.

They were also told that houses always go up, up, up.

Rojo
02-06-2008, 04:21 PM
There are tremendous advantages to owning a home if you understand how money and assets work.

Gee thanks.

I don't think Delta's going to have a problem because he's not in a real sensitive area and he's buying in a down market, but buying a home isn't the slam dunk many think it is.

Millions got caught up in the thinking that you can't go wrong buying a house, and you can go terribly wrong.

Ltlabner
02-06-2008, 04:30 PM
Gee thanks.

I don't think Delta's going to have a problem because he's not in a real sensitive area and he's buying in a down market, but buying a home isn't the slam dunk many think it is.

Millions got caught up in the thinking that you can't go wrong buying a house, and you can go terribly wrong.

I'll leave you to continue your adgenda. It's a boring tune anyway.

Boston Red
02-06-2008, 04:37 PM
WSJ weighs in: http://www.realestatejournal.com/buysell/tactics/20070313-crook.html

SunDeck
02-06-2008, 04:50 PM
Gee thanks.

I don't think Delta's going to have a problem because he's not in a real sensitive area and he's buying in a down market, but buying a home isn't the slam dunk many think it is.

Millions got caught up in the thinking that you can't go wrong buying a house, and you can go terribly wrong.

Well, that's the problem right there. No investment is a slam dunk. It's not like people have had guns to their heads for the last decade. It's pretty simple- if you can't afford to buy a house, you can't afford to buy a house. And it's pretty easy to figure that out, but I suppose consumers can't be expected to do the math themselves and should just trust their friendly loan officer who tells them that a no-doc, interest only loan is a sure bet.

Rojo
02-06-2008, 05:00 PM
WSJ weighs in: http://www.realestatejournal.com/buysell/tactics/20070313-crook.html

Thanks, good read.

RichRed
02-06-2008, 05:05 PM
Well, that's the problem right there. No investment is a slam dunk. It's not like people have had guns to their heads for the last decade. It's pretty simple- if you can't afford to buy a house, you can't afford to buy a house. And it's pretty easy to figure that out, but I suppose consumers can't be expected to do the math themselves and should just trust their friendly loan officer who tells them that a no-doc, interest only loan is a sure bet.

No doubt, but there should be such a thing as ethical business practices (big can of worms there, I know) and encouraging someone to buy a house they can't afford is not the sort of thing that should be happening.

That said, the buyer is ultimately responsible and I am NOT in favor of any kind of bailout.

I've heard it said that your primary residence should not be thought of as an investment. If you end up making money on it, great, but it should, first and foremost, be a home.

Rojo
02-06-2008, 05:09 PM
Well, that's the problem right there. No investment is a slam dunk. It's not like people have had guns to their heads for the last decade. It's pretty simple- if you can't afford to buy a house, you can't afford to buy a house. And it's pretty easy to figure that out, but I suppose consumers can't be expected to do the math themselves and should just trust their friendly loan officer who tells them that a no-doc, interest only loan is a sure bet.

But its so hard-wired into people's heads that they have trouble seeing it. Why should sub-primers be any different?

Rojo
02-06-2008, 05:11 PM
That said, the buyer is ultimately responsible and I am NOT in favor of any kind of bailout.

I'm not either, on principle. But this may be so huge that principles get thrown out the window.

pedro
02-06-2008, 05:12 PM
I don't think we should be bailing people out either.

I have a good mortgage and I'm pretty sure if I can't pay it each month that's my problem.

Ltlabner
02-06-2008, 05:19 PM
I'll tell you this much...don't ever purchase a home with an decrotive fish pond right off the back porch.

1,500 gallons of water 2' away from your foundation is never a good thing.

SunDeck
02-06-2008, 05:20 PM
I've heard it said that your primary residence should not be thought of as an investment. If you end up making money on it, great, but it should, first and foremost, be a home.

I think that's a good philosophy to live by. Your second home, now that's an investment.

SunDeck
02-06-2008, 05:29 PM
In an appartment the stake goes to the landlord and you have nothing at the end of the month other than a roof over your head.

I'm not sure I see where the great advantage of avoiding dealing with the bank is.



Controlling your costs is a great advantage to renting. You can say with pretty near perfect certainty what your housing will cost over a five year period. With owning a house, no matter how well you maintain it, there are always things to repair and it's nice to be insulated from that by a lease.

Rojo
02-06-2008, 05:32 PM
Controlling your costs is a great advantage to renting. You can say with pretty near perfect certainty what your housing will cost over a five year period.

Especially with rent control.

SunDeck
02-06-2008, 05:39 PM
But its so hard-wired into people's heads that they have trouble seeing it. Why should sub-primers be any different?

Do you mean the firms that offered them? If so, I fail to see how they could not know what they were doing. But I will grant the point that there is a certain hard wiring to what went on.

My mother in law was a mortgage banker. She was still doing some consulting up until a year or two ago. Now, she worked in the industry for thirty years and one of her comments to me was that she really didn't get how any of these companies could promote and make those loans unless they had no conscience whatsoever. She really felt they all knew they were selling junk. That's just one person's opinion, but given my own experience in buying and selling homes, I would tend to agree with her.

Oh, and I didn't even think rent control existed anymore...that seems like something I heard on the Odd Couple or something.

Ltlabner
02-06-2008, 05:40 PM
Controlling your costs is a great advantage to renting. You can say with pretty near perfect certainty what your housing will cost over a five year period. With owning a house, no matter how well you maintain it, there are always things to repair and it's nice to be insulated from that by a lease.

True, but you are betting the cost of things that *might* go wrong will out strip the appriciation of the asset over time. Things can always go sideways and result in big expendatures, but if you purchase wisely, you'll be able to minimize unforseen costs. But yes, repairs will be needed to maintain the value of your asset.

I'd also contend that the average apreciation in the value of the home/land far outstrips the cost for normal repairs and upkeep. That is, if (1) You bought wisely (2) you don't have to call a repairman to change a lightbulb for you.

Also, you assume that people actually save up all that money that would have gone into repairs and upkeep. Knowing the average savings rate of Americans tells me people aren't in apartments just to save up a pile of cash.

SunDeck
02-06-2008, 05:43 PM
True, but you are betting the cost of things that *might* go wrong will out strip the appriciation of the asset over time. Things can always go sideways and result in big expendatures, but if you purchase wisely, you'll be able to minimize unforseen costs. But yes, repairs will be needed to maintain the value of your asset.

Also, you assume that people actually save up all that money that would have gone into repairs and upkeep. Knowing the average savings rate of Americans tells me people aren't in apartments just to save up a pile of cash.

I was raised on the west of side of Cincinnati- doesn't everyone save every penny of their disposable income?
By the way, I'm pretty sure the word for "debt" and the word for "guilt" are the same in German- Schuld. Describes the values drilled into my head pretty accurately.

Ltlabner
02-06-2008, 05:44 PM
I was raised on the west of side of Cincinnati- doesn't everyone save every penny of their disposable income?
By the way, I'm pretty sure the word for "debt" and the word for "guilt" are the same in German- Schuld. Describes the values drilled into my head pretty accurately.

:laugh:

pedro
02-06-2008, 05:49 PM
I was raised on the west of side of Cincinnati- doesn't everyone save every penny of their disposable income?
By the way, I'm pretty sure the word for "debt" and the word for "guilt" are the same in German- Schuld. Describes the values drilled into my head pretty accurately.

:lol:

RedsManRick
02-06-2008, 06:28 PM
WSJ weighs in: http://www.realestatejournal.com/buysell/tactics/20070313-crook.html

Great article. Thanks for the link!

Rojo
02-06-2008, 06:45 PM
Do you mean the firms that offered them? If so, I fail to see how they could not know what they were doing. But I will grant the point that there is a certain hard wiring to what went on.

I mean the idea that buying a house is always a solid investment.

I'm loathe to blame this on "bad actors". Yes, there were plenty of unthinking borrowers and unscrupulous lenders. But, at heart was the belief that what goes up, never comes down. If people didn't believe that, we wouldn't have half the mess.

SunDeck
02-06-2008, 06:52 PM
I mean the idea that buying a house is always a solid investment.

I'm loathe to blame this on "bad actors". Yes, there were plenty of unthinking borrowers and unscrupulous lenders. But, at heart was the belief that what goes up, never comes down. If people didn't believe that, we wouldn't have half the mess.

It's a fundamental principle- there is no such thing as reward without risk. And with all the regulations there is surely enough information that lenders have to pass on before a person can sign for a loan that should make this clear. You mean people don't read every bit of those things?

Rojo
02-06-2008, 07:01 PM
It's a fundamental principle- there is no such thing as reward without risk. And with all the regulations there is surely enough information that lenders have to pass on before a person can sign for a loan that should make this clear. You mean people don't read every bit of those things?

Apparently, there was a lot of misleading on the part of lenders.

And, yes, we all know there's a certain amount of risk. So what? I knew when I woke up this morning that there was a chance I'd get smacked by a bus. I still left the house because I figured it was unlikely.

SunDeck
02-06-2008, 07:20 PM
Apparently, there was a lot of misleading on the part of lenders.

And, yes, we all know there's a certain amount of risk. So what? I knew when I woke up this morning that there was a chance I'd get smacked by a bus. I still left the house because I figured it was unlikely.

Okay, but how about this-
You know buses are big.
You know it's hard for a bus to stop.
You know walking in front of one that is speeding down the street can cause death.
Your friend tells you there is absolutely no way a speeding bus will ever hit you, that they in fact can leap over pedestrians.
You see a speeding bus coming down the street, and believing your friend, you step into the street.
You die.

Your friend's fault?

Rojo
02-06-2008, 07:55 PM
Okay, but how about this-
You know buses are big.
You know it's hard for a bus to stop.
You know walking in front of one that is speeding down the street can cause death.
Your friend tells you there is absolutely no way a speeding bus will ever hit you, that they in fact can leap over pedestrians.
You see a speeding bus coming down the street, and believing your friend, you step into the street.
You die.

Your friend's fault?


But where were the friends? Again, the CW was the home prices keep going up. Greenspan was encouraging "exotic" mortgages, the President was talking up an "ownership society".

RBA
02-06-2008, 08:33 PM
I expect property values to decline another 25 percent. I'm looking to early 2010 to buy.

SunDeck
02-06-2008, 08:33 PM
But where were the friends? Again, the CW was the home prices keep going up. Greenspan was encouraging "exotic" mortgages, the President was talking up an "ownership society".

I'm not a member of Mensa or anything, but I know how much house I can afford. I looked here. (http://www.bankrate.com/brm/calc/newhouse/calculator.asp) Or here (http://realestate.yahoo.com/calculators/afford.html). Or here (http://cgi.money.cnn.com/tools/houseafford/houseafford.html). I can't remember, it was a year ago.

Relying on a loan officer (who has access to Alan Greenspan or the President?...as if I would ask him for advice on anything other than where to find good Barbecue in Lubbock) or a Realtor or anyone connected with the transaction (except your lawyer, your accountant or your own paid financial advisor) to tell you how much you can afford is like asking a used car salesman whether you can get a set of clubs in the trunk of a Miata. And in fact, the sell is about the same..."How much do you want to pay per month?"

But I understand what you are saying- a lot of people lied. That's absolutely true. And I believe you are saying that a lot of those people were caught up in the unrealistic expectations that no one would ever lose money in this market. That may also be true.

But the buck stops with the consumer. It's their money and if they don't know what they are getting themselves into then I have a hard time feeling sorry for them. Sure, Angelo Mozzilo should be held accountable for his part in this fiasco, but I'm not putting all of this on him, or Greenspan, or Bush, or Clinton. We are stupid, stupid people and we deserve what we get.

Ltlabner
02-06-2008, 09:05 PM
WSJ weighs in: http://www.realestatejournal.com/buysell/tactics/20070313-crook.html

After thinking about that article, I'm not sure there's much in it I agree with other than the broad principal not trying to use your home as a quick investment scheme, and rather view it as a long term asset building.

I completely dissagree with the notion that paying a mortgage is just another form of renting, therefore not adventagous. First, the principal payments do not "go down the same black hole" as rent. Rent goes in your landlords pocket. Principal payents are securing an asset that is yours. That the payments are small in the begining is besides the point.

If you want to compare the interest to paying rent, give me interest all day long and twice on Sundays. Based on the interest I'll pay on Casa DeLa Ltlabner over the life of the mortgage my monthly rent (ie. interest) works out to about $382 per month. Find me a 4 bed room appartment with 1/2 acre of land for that price. Can't be done.

The two trends where people really shot themselves in the foot, IMO, were getting into the house flipping craze (thus viewing homes as a get rich quick scheme) and using home equity to pay off credit card debt. Sorry, but generally speaking using home equity to pay off the burger you ate 3 years ago is usually a horrable idea.

Throw the match of people maxing out every available source of credit, with the fuel of unbridalded spending in the canister of poor lending practices and you get one big boom.

RedsManRick
02-06-2008, 09:31 PM
Okay, but how about this-
You know buses are big.
You know it's hard for a bus to stop.
You know walking in front of one that is speeding down the street can cause death.
Your friend tells you there is absolutely no way a speeding bus will ever hit you, that they in fact can leap over pedestrians.
You see a speeding bus coming down the street, and believing your friend, you step into the street.
You die.

Your friend's fault?

Now let's pretend that you don't know much about buses or physics -- just that you'd like to cross the street, and your friend is the expert on how to cross the street properly.

Still your fault for being uninformed and overly trusting, but your friend shouldn't get off the hook either.

I tend to side with the "don't bail people out for being stupid" argument. However, IF lenders were purposefully misleading or misrepresenting the realities of the loans they were selling, then they deserve punishment as well. As a country, we've decided that deceitful business practices are against the law.

The other side of this argument is that regardless of where the blame lies, a whole bunch of people losing their homes and defaulting on financial commitments is not good for the short term health of the economy as whole. If it's harder for me to get a loan at a reasonable rate because banks are folding and lenders are gun shy, that's hardly a "fair" outcome either.

Rojo
02-06-2008, 10:05 PM
I expect property values to decline another 25 percent. I'm looking to early 2010 to buy.

That's an emerging consensus.

westofyou
02-06-2008, 10:07 PM
That's an emerging consensus.

In California for sure.

Other places... not so much.

Boston Red
02-06-2008, 10:16 PM
If my house near Boston goes down another 25%, I think I'll have a good cry. I bought in March 2005.

Cyclone792
02-06-2008, 10:19 PM
Now let's pretend that you don't know much about buses or physics -- just that you'd like to cross the street, and your friend is the expert on how to cross the street properly.

Still your fault for being uninformed and overly trusting, but your friend shouldn't get off the hook either.

I tend to side with the "don't bail people out for being stupid" argument. However, IF lenders were purposefully misleading or misrepresenting the realities of the loans they were selling, then they deserve punishment as well. As a country, we've decided that deceitful business practices are against the law.

The other side of this argument is that regardless of where the blame lies, a whole bunch of people losing their homes and defaulting on financial commitments is not good for the short term health of the economy as whole. If it's harder for me to get a loan at a reasonable rate because banks are folding and lenders are gun shy, that's hardly a "fair" outcome either.

I worked in a bank's mortgage department for three years, mostly while I was in college. I'd be lying if I told anybody that lenders didn't do everything they could to sell loans, even duping borrowers and feeding them bits of half-truths and misinformation. They are working on commission, after all. If they're not selling these loans, they're not making any money themselves and then they can't afford their loan.

They'd slide an ARM over to somebody with that shiny low interest rate, then downplay questions about what happens when the rate adjusts. But with that shiny low interest rate, the loan can work, they say, even if you're putting minimal money down. The borrower's budget is stretched, but who cares? They've got a shiny low interest rate on an ARM. Then tack on PMI because the borrower doesn't have much money to put down, and of course the property taxes and homeowner's insurance is escrowed. Tally it up, and the borrower can just barely afford the monthly payment.

Fast forward to when the ARM adjusts, the rate goes up, the payment goes up, and the borrower goes from just barely affording the payment to not affording the payment. A late payment here, a late payment there, tack on those late fees. Suddenly a late payment turns into a 30-day, then they're really behind and the bank is getting impatient. Next thing you know the bank says enough, and it's off to foreclosure.

That's just one group, though, the group that bought more house than they could afford in the first place (and the group this thread has concentrated on). There's another group though that has gone unmentioned, and these people are even bigger idiots.

This is the group that actually does make pretty good money and actually does buy a house that they actually should be able to afford based on their income. The problem is this group of people are so financially irresponsible that they spend money on so much other crap that they suddenly cannot pay their monthly mortgage. It's nothing but swipe that credit card constantly and spend spend spend.

Don't like your current ride? Screw it, take a look at a new $30k SUV and tack on a $350/month auto payment. This is already on top of your other $30k SUV with its own $350/month auto payment. Let's go on a $400 shopping spree every month for the hell of it. Let's eat dinner out five nights a week. Let's eat lunch out at work five days a week. Let's buy new furniture because your old furniture is already a whopping four years old. Let's drop a couple grand on a nice vacation every six months.

There's a significant group of people out there who are just totally and completely financially irresponsible. There's families out there making near six figures a year who are living paycheck to paycheck with a pile of credit card debt. Lots of families out there are doing this. I simply shake my head and wonder how somebody making that much money - in southwest Ohio of all places, I mean we're not talking NYC here - has to live paycheck to paycheck. I never would have believed it to the extent that it occurs, but then I started burying myself neck-deep in loan files on a daily basis and I saw it spelled out clearly myself.

People need to learn to spend within their means. If they can't do that and they're financially irresponsible, then sadly I just have zero sympathy for them.

Rojo
02-07-2008, 12:13 AM
In California for sure.

Other places... not so much.

Except Detroit, Nevada, Florida........

There'll be some regional variations, sure. But if its gone WAY up, its going to come WAY down.

Rojo
02-07-2008, 12:23 AM
I completely dissagree with the notion that paying a mortgage is just another form of renting, therefore not adventagous. First, the principal payments do not "go down the same black hole" as rent. Rent goes in your landlords pocket. Principal payents are securing an asset that is yours. That the payments are small in the begining is besides the point.

The principle goes toward an asset but an asset that barely beats inflation historically. And if you buy or sell at the wrong time, its a killer. Diversify was the articles main point, never a bad one.

Rojo
02-07-2008, 12:25 AM
If my house near Boston goes down another 25%, I think I'll have a good cry. I bought in March 2005.

Are you in for the long haul?

Boston Red
02-07-2008, 01:02 AM
Probably. Just not a particularly good feeling to know that if you had to sell your house you'd probably still have to come out of pocket to the bank at closing.

westofyou
02-07-2008, 01:02 AM
Except Detroit, Nevada, Florida........

There'll be some regional variations, sure. But if its gone WAY up, its going to come WAY down.

3 places I'd never have bought a home myself.

pedro
02-07-2008, 01:04 AM
If property drops 25% I'll still be up 30%.

Ltlabner
02-07-2008, 06:04 AM
Except Detroit, Nevada, Florida........

There'll be some regional variations, sure. But if its gone WAY up, its going to come WAY down.

No duh. You focus on the "comming way down" as if price corrections in the market are a new thing. Try to gin up some panic if you want I suppose. Things come up, they come down, but you mysterously leave out that they tend to go up again.


The principle goes toward an asset but an asset that barely beats inflation historically. And if you buy or sell at the wrong time, its a killer. Diversify was the articles main point, never a bad one.

Yea, you could be an idiot and buy/sell at the wrong time. Who's fault is that? That someone choose to buy/sell at the wrong time doesn't change the fundemental value of ownership versus renting.

Asset that barely beats inflation? Cost of living averages 3 to 4%. Unless you are a complete dolt and buy and subsequently sell your home in a downturn you're going to do better than inflation. If you choose to live in an expensive city, with horrable property value then you ought not be shocked that ownership wasn't a great deal. But I suppose that is someone elses fault too?

Owning a home isn't the end all, be all. Smart financial management just includes it in a long-term diversified portfolio is all I'm saying. If you simply prefer an appartment over a home that's your business.

You can continue to beat your bias laden drum railing against home ownership, but unless you can get rent far lower than your mortgage payments (oh yea, don't forget the interest deduction and the appreciation in value) AND you save every last dime of it AND you invest that money wisely then, and IMO only then would it make more financial sense to rent rather than own. But we already know that very, very, very few people are doing that, don't we.

And to get an appartment that cheap you'd have to live on the collective in uniform misery. I fail to see the utopia in that.

Ltlabner
02-07-2008, 06:20 AM
The other side of this argument is that regardless of where the blame lies, a whole bunch of people losing their homes and defaulting on financial commitments is not good for the short term health of the economy as whole. If it's harder for me to get a loan at a reasonable rate because banks are folding and lenders are gun shy, that's hardly a "fair" outcome either.

Yep, but the market needs to correct itself without trying to tinker with it to be "fair". Yes, it will be painfull. Yes, it will effect people who had nothing to do with it. Yes, it's going to be ugly (something the panic mongers will reminds us off daily).

But people simply MUST learn the foolishness of their ways. They got bailed out when they responded to every credit card offer that graced their mailbox. They got bailed out when they could borrow from their homes equity to pay off credit cards and other assorted crap. They got bailed out when they could get an "interest only" loan to buy their next home. People with no financial discipline have had their lifestyles financed and propped up for a long time now.

Well, now the bubble has burst. And it's one that didn't take a financial wizzard to see comming (we started discussing it 3 years ago). Hopefully people will learn that you can't spend more than you make for long periods of time and hope to survive financially. This will likely be a painfull lesson for many, and like many children who get a spanking, I'm sure we'll hear a lot of crying and feat stomping along the way.

But, I do agree, that along the way some innocent folks are going to get denied a loan because of the millions of folks who couldn't resist the next big-screen TV. But over time the pendilum will swing back the other way, and those innocent folks will be ok.

Ltlabner
02-07-2008, 06:31 AM
If property drops 25% I'll still be up 30%.

If property drops another 25% I'll serriously be considering buying another home or (preferably) more land. I know that sounds like a vulture, but buying low usually is better than buying high.

If you are a first time home buyer, with decent to good credit, the home market is about to be your oyster.

RBA
02-07-2008, 09:33 AM
In California for sure.

Other places... not so much.

Maybe. A 25 percent drop in California is about the same amount for the house I sold in El Paso, TX. That house in El Paso would of easily been $550,000 here in San Diego.

Rojo
02-07-2008, 12:49 PM
You can continue to beat your bias laden drum railing against home ownership

Its like beat poetry.

Rojo
02-07-2008, 12:50 PM
I think another to keep in mind is that many people get into debt because of medical expenses or employment gaps.