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wolfboy
02-25-2009, 10:13 AM
I'm interested to see whether the new tax incentives and buyer friendly market have nudged anyone into the market. My fiancee and I had an offer accepted on a home on Monday. We're first time buyers, and the buyer friendly market combined with the new tax credit played a big part in our decision to house hunt.

I'd heard throughout our search that it's a buyer's market and great deals can be had. While I feel that's true, it felt like we had to sift through a ton of garbage to find the gem. There are so many distressed homes on the market. I'm not talking paint and carpet or even a kitchen remodel. We seriously considered a home that had taken some bad water damage from a leaking bathroom upstairs. In the end, we decided on a home with no deferred maintenance. The distressed market was a bit too frightening for us.

I think we questioned our decision to look for a home at different times, but the benefits of buying now versus later kept us going. Has anyone on the board had a similar experience? Have the buyer's incentives been enough to push you forward amidst so much economic uncertainty? If so, what have you seen out there?

(I hope that this won't become a discussion of the merits of the tax credit and stimulus in general. I think we all know that some people are in favor while others are against. Personal views on stimulus and the tax credit are best left for the Peanut Gallery.)

nate
02-25-2009, 10:15 AM
I think it's always a good time to buy a house as long as you can afford it, have no debt and enough savings to keep yourself afloat for six months should you find yourself without income.

BuckU
02-25-2009, 10:40 AM
My wife and I are looking as well, however we are not first timers, we have to seel our house first. I agree, it seems like 2/3 of the houses are short sale or bank owned, and almost all of those need 20-30k in renovations. Ironically, we looked also at a house that had water damage from an upstairs bathroom too, but figured the process of rehabbing a house with two small children is not smart. We are now focusing on houses that need minor ronovations (carpet, etc.)

Rojo
02-25-2009, 01:36 PM
I'd still wait. You don't have to time the bottom because it'll stay at the bottom for a while.

MWM
02-25-2009, 02:15 PM
I think it's always a good time to buy a house as long as you can afford it, have no debt and enough savings to keep yourself afloat for six months should you find yourself without income.


Not really. I bought in the peak month in the Twin Cities real estate. If you look at the monthly home values, the month I made my offer was the highest it ever got. But I didn't have a lot of choice. My job was moving me here and I have a family of 5. And I could afford it.

Now it's almost 3 years later and I'm under-water by a significant amount (and I didn't overspend for a house). Coming out of grad school, I didn't put a lot down, although I did do a conventional mortgage and not one of those idiotic ones you read about. The value of my home has dropped about 20% and I just read at MSN that Minneapolis is the 4th worst real estate market right now.

So I'm lucky enough to still have a good job and can afford the payment, it was not a good time to buy. But it's going to be 5 years mostly likely until I'm back to even. It could be longer. It's taken all bit of mobility away from me. Coming in, the plan was to stay 3-5 years and then look to see if I could trade in my experience here for something better somewhere else (very common in what I do). I have no options now. I'm stuck and I hate that. And on top of that, it's not all that temporary. It's going to be a while.

If I had rented instead of bought, I'd be sitting pretty right now. Unfortunately, I didn't have a crystal ball at the time. I knew the market would slow down, but I didn't think THIS would happen.

So I won't complain too much. I have a good job in a tough economy where I know plenty of people out of work. I'm grateful for that. But I wish I wouldn't have bought.

The only way I'd advise anyone to buy right now would be if you know that's the place you'll be in for a LONG time, 10 years or more. If you don't have that certainty, stay away.

oneupper
02-25-2009, 02:33 PM
If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
That mortgage is going to be your biggest asset a few years down the line.

kaldaniels
02-25-2009, 02:48 PM
If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
That mortgage is going to be your biggest asset a few years down the line.

I'll bite...what is coming...high interest rates? Superinflation? Lost Decade?

MWM
02-25-2009, 03:00 PM
If what's coming is what I think is coming...buy the house now and get a nice fixed rate mortgage.
That mortgage is going to be your biggest asset a few years down the line.

oneupper would know and has mass credibility in my eyes. You are my new hero, BTW. Just thought you might like to know.

At the risk of getting political (I hope it's not received as such), my guess is that he's referring to the level of deficits we're going to see real soon and the impact that *could* have on interest rates. It's just a matter how much of our debt will continue to be gobbled up by foreign sources. If that well starts to run dry, even a little, then we have to start looking internally to fund the deficit. That could drive interest rates WAY up (like more than we've seen in decades). Having a fixed rate with the rates where they are now might be the only way you can afford to buy that home.

GIK
02-25-2009, 03:09 PM
Not a first-time homebuyer, but my wife and I purchased a new home in the Fall. It took a few months to find the right place, but in the end, we got a great deal (~20% lower than their already reduced list price...and about 50% below their original listing). First-time homebuyers are eligible for incredible programs right now...that new tax credit would be nice! :)

bucksfan2
02-25-2009, 03:18 PM
MWM I don't know your exact situation but I dislike the way "underwater" is being thrown around. IMO the value of your house is what someone is willing to pay for it. Granted on paper you man not have the equity you want, if you aren't looking to sell then you aren't underwater. IMO equity over the past 5 years was a term loosely thrown around which got a lot of people in trouble. Just today I watched a yahoo video clip of a lady who bought a house for in the 30,000 to 50,000 range, refinanced and refinanced again as her "equity" went up and now owes in the range of 130,000. One plus for the value a house decreasing is property taxes are lower.

As for interest rates it is inevitable that they will increase. It is yet to be seen whether those rates are kept in check or the spiral out of control. It is getting a little ridiculous that my interest bearing checking account is paying around .014% interest.

nate
02-25-2009, 04:25 PM
Not really. I bought in the peak month in the Twin Cities real estate.

We're not really in the peak times any longer.

Rojo
02-25-2009, 04:47 PM
We're not really in the peak times any longer.
Yes, but we're still searching for the bottom.

Here's the Case-Shiller index. We're getting back to 2003:

YEAR QTR S&P/Case-Shiller U.S. National Home Price Index
1987 Q1 62.03
1987 Q2 64.09
1987 Q3 65.32
1987 Q4 66.18
1988 Q1 66.67
1988 Q2 69.27
1988 Q3 70.50
1988 Q4 71.22
1989 Q1 72.43
1989 Q2 74.40
1989 Q3 75.22
1989 Q4 75.37
1990 Q1 75.58
1990 Q2 76.42
1990 Q3 75.84
1990 Q4 74.59
1991 Q1 73.43
1991 Q2 74.75
1991 Q3 75.16
1991 Q4 74.65
1992 Q1 74.30
1992 Q2 75.48
1992 Q3 75.40
1992 Q4 74.74
1993 Q1 74.46
1993 Q2 75.48
1993 Q3 76.06
1993 Q4 75.91
1994 Q1 76.46
1994 Q2 78.06
1994 Q3 78.23
1994 Q4 77.89
1995 Q1 77.74
1995 Q2 79.28
1995 Q3 79.87
1995 Q4 79.51
1996 Q1 79.61
1996 Q2 81.11
1996 Q3 81.72
1996 Q4 81.18
1997 Q1 81.82
1997 Q2 83.55
1997 Q3 84.37
1997 Q4 84.80
1998 Q1 85.71
1998 Q2 88.30
1998 Q3 90.10
1998 Q4 90.81
1999 Q1 92.08
1999 Q2 94.75
1999 Q3 97.03
1999 Q4 98.29
2000 Q1 100.00
2000 Q2 103.77
2000 Q3 106.33
2000 Q4 107.90
2001 Q1 109.27
2001 Q2 112.69
2001 Q3 115.50
2001 Q4 116.23
2002 Q1 118.00
2002 Q2 122.24
2002 Q3 126.13
2002 Q4 128.58
2003 Q1 130.48
2003 Q2 134.20
2003 Q3 138.41
2003 Q4 142.29
2004 Q1 146.26
2004 Q2 152.92
2004 Q3 158.53
2004 Q4 163.06
2005 Q1 169.19
2005 Q2 176.70
2005 Q3 183.08
2005 Q4 186.97
2006 Q1 188.66
2006 Q2 189.93
2006 Q3 188.11
2006 Q4 186.44
2007 Q1 184.70
2007 Q2 182.98
2007 Q3 179.75
2007 Q4 170.16
2008 Q1 158.93
2008 Q2 155.44
2008 Q3 150.00
2008 Q4 139.14


Thing is its likely to overshoot the other way.

reds1869
02-25-2009, 05:00 PM
We owned a house when we lived in Columbus and it took us four and a half years to sell the thing. All the while we were living in Cincinnati and renting. Once we sold the house we decided to continue renting. Oh, and we lost $80,000 in the deal!

If you can afford a nice place to rent like we live in, it really beats the amount of house you can buy for the same money. We are paying $500 per month less for a two bedroom townhome with basement and two car garage than we were for our 3BR in Columbus. Not to mention there are no maintenance expenses (they've already bough us a dishwasher, garbage disposal and new furnace/heat pump since we lived here) and super mobility, which is important in a bad economy.

All that said, homeownership is the way for some people to go, especially if they have children. I think that for too long the NAR has pushed the idea of homeownership as the American Dream and being so much wiser than renting. Owning has been pushed as a risk-free investment and it's not. I used to sell real estate and got out of the business before the bust. I am extremely glad I did.

MWM
02-25-2009, 07:30 PM
I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.

Rojo
02-25-2009, 07:46 PM
If you can afford a nice place to rent like we live in, it really beats the amount of house you can buy for the same money. We are paying $500 per month less for a two bedroom townhome with basement and two car garage than we were for our 3BR in Columbus. Not to mention there are no maintenance expenses (they've already bough us a dishwasher, garbage disposal and new furnace/heat pump since we lived here) and super mobility, which is important in a bad economy.


And you have to consider what kind of life you want. Do you have to live where you don't want to live just so you can own? Are you spending two hours daily on the freeway? Are you close to babysitting relatives? Your friends?


MWM I don't know your exact situation but I dislike the way "underwater" is being thrown around.

It's thrown around a lot because its pervasive. A whole generation is caught in a wealth spiral and it ain't pretty.

GAC
02-25-2009, 07:51 PM
My wife and I refinanced our home a little over a year ago. We dropped a pt off our interest rate (which is now 5.5 fixed), and pay weekly (through our Credit Union), so we can have it paid off in 10 years or less.

It's just my own philosophy, but anymore it almost seems you're paying as much to rent as it is to own. I'm sure there are some advantages to renting; but if one can AFFORD to buy, then the investment is worth the while.

And it's a buyer's market in just about everything right now. :D

Our first home was a "fixer upper". It wasn't a shack; but needed numerous repairs and improvements. My wife and I rolled up our sleeves and did a majority of them ourselves other time. It paid off in the end when it came to sell the home and move up.

Rojo
02-25-2009, 08:13 PM
It's just my own philosophy, but anymore it almost seems you're paying as much to rent as it is to own. I'm sure there are some advantages to renting; but if one can AFFORD to buy, then the investment is worth the while.

The problem is that most people don't really account for everything. They look at a house payment vs. rent.

Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.

reds1869
02-25-2009, 08:42 PM
The problem is that most people don't really account for everything. They look at a house payment vs. rent.

Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.

What Rojo said. Most people really don't understand just how much money and work goes into maintaining a house. They look at the Principal+Interest and think that is what their monthly payment will be. The first shock comes when they see what the real number is with taxes and insurance, and the second comes when something breaks. In our case the third came when we had to move to a new city for our jobs and had to sell the thing in a declining market.

Can you tell I had a bad experience personally? My wife and I are now renters for life. :cool:

SunDeck
02-25-2009, 08:49 PM
The problem is that most people don't really account for everything. They look at a house payment vs. rent.

Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.

Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation. I've always liked having the time value of money working on my side.

And there's no comparison, depreciation wise between a house and a car.

Having said that, there are lots of situations where renting makes more sense, such as on the coast or anywhere at a time when housing prices are inflated to unreasonable levels. Lots of people would have been better off if they would have rented instead of buying lately.

oneupper
02-25-2009, 08:54 PM
oneupper would know and has mass credibility in my eyes. You are my new hero, BTW. Just thought you might like to know.

At the risk of getting political (I hope it's not received as such), my guess is that he's referring to the level of deficits we're going to see real soon and the impact that *could* have on interest rates. It's just a matter how much of our debt will continue to be gobbled up by foreign sources. If that well starts to run dry, even a little, then we have to start looking internally to fund the deficit. That could drive interest rates WAY up (like more than we've seen in decades). Having a fixed rate with the rates where they are now might be the only way you can afford to buy that home.


Thank you. You can call me "Sir". :D I expect several rounds next time we all go to GABP.

The current situation is tough to analyze. But in reality, the only way to beat deflation is with inflation and the seeds are being sown at this moment.

Exactly how all this develops isn't clear, but I do believe that 5 years down the line you will be happy with the deal, not because the house has increased in value, but because your mortgage payment will be lower than it would be otherwise.

If you bought a $200,000 house today with a 5.5% fixed, and that house is worth only $175,000 in five years but money is costing 8 or 9%, you made a good deal.

And in the meantime those interest payments are tax-deductible, while your rent is not.

Crazy as it may sound, back in the real estate frenzy they were saying "its all about the cash flow". Well now..it really is.

Just my .02.

GIK
02-25-2009, 08:58 PM
Not to mention the tax advantages of owning, plus being able to do whatever you want to the place that you live. Try building a fence for a large dog, owning a classic/summer car and properly storing it, or building a home theater with a rental. It's possible, but it's restrictive. The economy is cyclical and historically owning a home is a good investment. Renting is fine, I've done it before and, who knows, I may again - but I felt solid in the choice to buy at this time. I don't think we'll see these 5% rates forever.

Rojo
02-25-2009, 11:23 PM
Thank you. You can call me "Sir". :D I expect several rounds next time we all go to GABP.

The current situation is tough to analyze. But in reality, the only way to beat deflation is with inflation and the seeds are being sown at this moment.

Exactly how all this develops isn't clear, but I do believe that 5 years down the line you will be happy with the deal, not because the house has increased in value, but because your mortgage payment will be lower than it would be otherwise.

If you bought a $200,000 house today with a 5.5% fixed, and that house is worth only $175,000 in five years but money is costing 8 or 9%, you made a good deal.

And in the meantime those interest payments are tax-deductible, while your rent is not.

Crazy as it may sound, back in the real estate frenzy they were saying "its all about the cash flow". Well now..it really is.

Just my .02.

All good points but it could overshoot on the way down and be worth less than $175,000. And interest rates may stay low for a while.

Rojo
02-25-2009, 11:25 PM
Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation.

Not with rent control. :)

kaldaniels
02-25-2009, 11:43 PM
Subjectively, 3 years ago was a great time to buy a home...it just felt good, everyone was making a mint on their homes.

Objectively, now is the time to buy.

As tough as it may seem, unless your timing is impeccable...the best way to come out ahead on any financial/investment decision is to buck the current trend...i.e., buy low, sell high.

Good luck with your decision.

kaldaniels
02-25-2009, 11:45 PM
I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.

Great post, best wishes as well, and if I could possibly help sum it up for those who were wondering what you are talking about and were questioning you...two words.

Net worth.

That is the number that counts.

Ltlabner
02-26-2009, 06:03 AM
As tough as it may seem, unless your timing is impeccable...the best way to come out ahead on any financial/investment decision is to buck the current trend...i.e., buy low, sell high.

A winner!

3 years ago was a horrible time to buy a home unless you were very conservative and chose very wisely. The vast majority of people saw it as an opportunity to buy more home than they otherwise could afford. Now, the roosters have returned home.

Now is a decent time to buy a home as a FTHB as long as you are conservative and chose very wisely. You can accrue the tax benefits of owning plus the FTHB credit. More importantly, prices are depressed and money is still cheep.

But you must be conservative and chose wisely. That's where people fall down. They over do it, or they buy a home that will be difficult to resell. Most people buy a home for what they like. Very few buy a home considering what other people will like about it in 10 years when it's on the market. Buying stupid now is just a bad as buying stupid 5 years ago.

Oneupper is exactly right. Inflation is coming and coming in a big way. Guess what, money is going to go from 5%ish to 10+%. And at the same time, rents are going to increase as landlords fight to keep pace with inflation. So there's a huge advantage to locking in your housing costs now with low-cost money. Low fixed long-term costs always beats out rising variable short-term costs.

Just imagine the advantage you'll have with your $700/mo house payment when most others are paying $1400.

Ltlabner
02-26-2009, 06:25 AM
Not to get totally off-track but you already have a low cost home with a fixed mortgage, I'd be looking hard to buy land or precious metals.

Not a particularly creative move, but with where this thing is headed I'd want tangible assets.

SunDeck
02-26-2009, 06:46 AM
Not with rent control. :)

Ha! I had a feeling you'd say that! :beerme:

bucksfan2
02-26-2009, 08:58 AM
I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.

I meant no disrespect to you MWM. From what I understand you are like many of us who have made the right decisions yet are feeling the pinch of the economy. I believe/hope that the housing market will rebound within the next couple of years and we will see prices rise again.

bucksfan2
02-26-2009, 09:13 AM
It's thrown around a lot because its pervasive. A whole generation is caught in a wealth spiral and it ain't pretty.

Im 26 so my age group has just entered the housing cycle within the past few years. I was fortunate enough to be able to put 20% down on a house almost 2 years ago when the wife and I bought the house. As soon as we signed the papers we began to get home equity applications in the mail. They came almost weekly from 5/3 bank. They came from individual banking centers, I got phone calls from the corporate banking center, and I have a friend who is a branch manager who said that if I needed one she could set me up with one. The problem is home equity lines of credit aren't free.

BRM
02-26-2009, 10:16 AM
Not to get totally off-track but you already have a low cost home with a fixed mortgage, I'd be looking hard to buy land or precious metals.

Not a particularly creative move, but with where this thing is headed I'd want tangible assets.

Land is the reason I'm not in too bad a shape right now. My house is worth less now than last year but I'm not upside down, thanks to the land the house sits on. Of course, I could be upside down in 6 months.

wolfboy
02-26-2009, 10:28 AM
Well, I'm a little surprised by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers out there.

While I appreciate the input on housing, the economy, and life in general, it's a moot point. We put in an offer, they countered, we accepted. Every single consideration in this thread was weighed heavily by my fiancee and I. We feel completely confident that we've made the right decision. We also know that if we have not, we are prepared to live with the consequences.

bucksfan2
02-26-2009, 10:33 AM
Well, I'm a little befuddled by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers on redszone.

While I appreciate the input on housing, the economy, and life in general, it's a moot point. We put in an offer, they countered, we accepted. Every single consideration in this thread was weighed heavily by my fiancee and I. We feel completely confident that we've made the right decision. We also know that if we have not, we are prepared to live with the consequences.

Congrats.

westofyou
02-26-2009, 10:57 AM
Some markets are prime for good buys, Portland is one of them, I know my house hasn't lost a dime in worth and even if now is a bad time to sell I'd still be sitting pretty because I spent a lot of time targeting the neighborhood and the type of home I wanted s well as the price I wanted to fit in.

It's not just the house that has its worth it's the area that it exists in and the areas history, future and amenities that add value too. I would also say that value is found in craftsmanship and most newer homes that are purchased (especially in the exburbs) tend to lose value as soon as a newer area pops. I'd try and purchase an older home, they tend to be made with more care.

SunDeck
02-26-2009, 12:12 PM
Well, I'm a little surprised by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers out there.

While I appreciate the input on housing, the economy, and life in general, it's a moot point. We put in an offer, they countered, we accepted. Every single consideration in this thread was weighed heavily by my fiancee and I. We feel completely confident that we've made the right decision. We also know that if we have not, we are prepared to live with the consequences.

Well, I was a first time home buyer in 1995 and I can say that my wife and I set out on a plan to build equity, one house at a time. We started with a 2BR $93,000 home in Raleigh that we thought had a potential to resale at a good profit after five years and after some cosmetic improvements. We were right and we sold the house for $145,000 three years later. Then we did the same thing in Cincinnati, buying a place for $105K and selling it three years later for $145K. And finally, we bought a place in Bloomington for $108K and sold it five years later for $152K.

I've painted, I've installed new flooring and kitchens each time and now I have a modest, four BR home with twice the square footage of our first home in Raleigh. Luckily, the housing market has been relatively kind to us and we have been able to use the positive equity growth to have this nice place with a mortgage that costs the same per month as our original $93,000 home.

We have been very fortunate, and I don't put myself out there as a standard bearer. In fact, I'm pretty sure we would not be able to do that in today's market. But you asked for a 1st time home buyer outlook and my response is that the first home is only one part of a longer range financial picture. If I have any advice at all it is to think modestly. We have found a niche with homes in the $100-$150 price range in the midwest and it's worked out nicely for us. We have learned that there is no shortage of people who will pay at the high end of that price range for a home that is clean, updated and "move in" ready.

Good luck!

Rojo
02-26-2009, 01:16 PM
Oneupper is exactly right. Inflation is coming and coming in a big way. Guess what, money is going to go from 5%ish to 10+%. And at the same time, rents are going to increase as landlords fight to keep pace with inflation. So there's a huge advantage to locking in your housing costs now with low-cost money. Low fixed long-term costs always beats out rising variable short-term costs.

Oneupper touches on a big argument right now: inflation vs. deflation. Its a tough call. Government pump-priming and low interest rates spell inflation but Depression and unemployment spell deflation.

Interest rates might be forced up. But, at this point, they're not rising and home prices continue to fall -- rapidly. IOW, inflation is speculative and deflation is a reality.

Rojo
02-26-2009, 01:18 PM
Well, I'm a little surprised by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers out there.


If you're in the midwest the stakes aren't quite as high because houses are so cheap, and generally they don't spike up or crash as much.

As a point of contrast, where I'm from 26 isn't even close to the age for first time homebuying, that's the age where you might be able to loose the roommates.

westofyou
02-26-2009, 01:24 PM
As a point of contrast, where I'm from 26 isn't even close to the age for first time homebuying, that's the age where you might be able to loose the roommates.

Yep, I was able to shake them by 31 myself.

Rojo
02-26-2009, 02:20 PM
Yep, I was able to shake them by 31 myself.


I was 37. And the way things are going I may end up looking for roommates in my 40's.

pedro
02-26-2009, 02:37 PM
I shook roommates (for the most part) when I was 26 but didn't buy my first house (which was a financial disaster btw) until I was 31. I bought my second house when I was 35 and it has appreciated to the point that I can't ever see it dropping down to where it was when I bought it. Location, Location, Location.

wolfboy
02-26-2009, 03:51 PM
I am 31. My fiancee is 33.

Ltlabner
02-26-2009, 04:37 PM
Oneupper touches on a big argument right now: inflation vs. deflation. Its a tough call. Government pump-priming and low interest rates spell inflation but Depression and unemployment spell deflation.

Interest rates might be forced up. But, at this point, they're not rising and home prices continue to fall -- rapidly. IOW, inflation is speculative and deflation is a reality.

Will be interesting, in a sick way, to see how it plays out. My money, so to speak, is on inflation being the bigger issue.

Home prices (especially) and job losses (somewhat) are a more geographic issue.

Rojo
02-26-2009, 04:38 PM
I am 31. My fiancee is 33.

My bad, don't know where I got 26.

MWM
02-26-2009, 04:42 PM
Bought my first home at 25 years old in suburban Cincy. Just a little starter we didn't pay a lot for. Sold it 4 years later for about 19% more than we paid. Unfortunately, I didn't buy the next one until 2 years later (grad school in between). It was more than a starter, but I made sure to stay within what I could afford. So I'm not stuck with a payment way too high, but if I had to move any time in the next few years, it would be a tough hit to take. And the Twin Cities market has seen an accelerated drop in the past 4 months. MSN had it as the 4th worst market in the country behind Vegas, Phoenix, and Detroit; and right in front of San Francisco. Not a good place to be. Right now we're at April 2002 prices.

In hindsight I should have rented. I'll never buy another home unless it's somewhere where I know I'll be for a long time. When we moved here, we figured we'd be here 3 years minimum, and 5 years most likely. If we fell in love with it, it would be long term, but even then it wouldn't have been in this area (I'm out quite a ways from the city because it was more affordable). If I knew I was going to be living in this house for the next 10-15 years, I wouldn't worry at all about it. But that was never our intent. But it's a good house and we like it. So again, I'm not spending a lot of time feeling sorry for myself here. But I do wish things were different.

The only other way i'd buy is if I had some kind of protection against this kind of thing. For example, my former boss is being transferred within the company (down to Cincy, of all places). He'll be there 2-3 years before coming back here. The company has him protected both in selling here and buying there. So while he might only be there 2 years, he's going to buy a home because he's at no risk of losing money over it. Now THAT is what I wish would happen to me. :)

bucksfan
02-26-2009, 04:49 PM
I do find this an interesting discussion as we are approaching paying off our house this July. We do have a home-equity loan right now (most of which was incurred with improvements to the house) that we will begin attacking next.

IMO home ownership is an entirely personal choice. It is never the right time for some people who either want flexibility in location or simply flexibility in living environments or less responsibility (in that life aspect) or for possibly other reasons. For me it is an obvious choice. I have no desire to move and, warts and all, love our old farmhouse. But it is entirely understandable to me why some people will always rent.

By the way, somewhere in this thread it appears I was quoted, but I have had no previous posts in this thread. It was probably a quote from bucksfan2 (I figured it would happen someday!), but just want to be clear that we are and always have been 2 different and AFAIK unrelated posters. :)

Rojo
02-26-2009, 04:57 PM
Will be interesting, in a sick way, to see how it plays out. My money, so to speak, is on inflation being the bigger issue.

From wikipedia:

Deflation in Japan started in the early 1990s. On March 19, 2001, the Bank of Japan and the Japanese government tried to eliminate deflation in the economy by reducing interest rates (part of their 'quantitative easing' policy). Despite having interest rates down near zero for a long period of time, this strategy did not succeed.[4] Once the near-zero interest rates failed to stop deflation some economists, such as Paul Krugman, and some Japanese politicians, spoke of deliberately causing hyperinflation.[5] In July 2006, the zero-rate policy was ended. In 2008, the Japanese Central Bank still has the lowest interest rates in the developed world, deflation has still not been eliminated[6] and the Nikkei 225 has fallen over approximately 50% (between June 2007 and December 2008).

Systemic reasons for deflation in Japan can be said to include:

Fallen asset prices. There was a large price bubble in both equities and real estate in Japan in the 1980s (peaking in late 1989).

Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, many loans went unpaid. The banks could try to collect on the collateral (land), but due to reduced real estate values, this would not pay off the loan. Banks have delayed the decision to collect on the collateral, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks make even more loans to these companies that are used to service the debt they already have. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy.

Insolvent banks: Banks with a large percentage of their loans which are "non-performing" (loans for which payments are not being made), but have not yet written them off. These banks cannot lend more money until they increase their cash reserves to cover the bad loans. Thus the quantity of loans are reduced and less funds are available for economic growth.

Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy gold or (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices. (interesting)

Rojo
02-26-2009, 05:00 PM
By the way, somewhere in this thread it appears I was quoted, but I have had no previous posts in this thread. It was probably a quote from bucksfan2 (I figured it would happen someday!), but just want to be clear that we are and always have been 2 different and AFAIK unrelated posters. :)

That was probably me. When I put quotes from seperate posters in one post, I do the tags myself on the second and wrote your name -- sorry.

bucksfan
02-26-2009, 05:25 PM
That was probably me. When I put quotes from seperate posters in one post, I do the tags myself on the second and wrote your name -- sorry.

Oh not a problem. I don't think #2 was saying anything out-of-line ;) - probably made me look smarter. :D Just a good time to point out there are "2" of us...

Ltlabner
02-26-2009, 05:30 PM
From wikipedia:

That's all fine and dandy but you can't keep borrowing money to the point of unavoidable default and cranking out the greenbacks at breakneck pace without the effects of inflation heading it's ugly rear.

Heck, it's not umpossible for us to see both deflation and inflation at different points over the next 5 to 10 years.

Either way, it's going to suck for a lot of people for a long time.

Rojo
02-26-2009, 05:59 PM
That's all fine and dandy but you can't keep borrowing money to the point of unavoidable default and cranking out the greenbacks at breakneck pace without the effects of inflation heading it's ugly rear.

Heck, it's not umpossible for us to see both deflation and inflation at different points over the next 5 to 10 years.

Either way, it's going to suck for a lot of people for a long time.

Japan wanted to create inflation and couldn't.

Ltlabner
02-26-2009, 06:20 PM
Japan wanted to create inflation and couldn't.

Zimbabwe figured out a way to do it.

You're obviously convinced you know how this is going to play out. Bully for you.

Whether it's deflation, inflation, stagflation, depression, recession or digression doesn't really mater. End result is not a lot of fun for anybody.

Rojo
02-26-2009, 07:45 PM
You're obviously convinced you know how this is going to play out. Bully for you.

Convinced? Hardly. Recall me saying this:

"Oneupper touches on a big argument right now: inflation vs. deflation. Its a tough call. Government pump-priming and low interest rates spell inflation but Depression and unemployment spell deflation.

Interest rates might be forced up. But, at this point, they're not rising and home prices continue to fall -- rapidly. IOW, inflation is speculative and deflation is a reality."

If anything, you sound more convinced than I.

GAC
02-26-2009, 08:56 PM
Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation. I've always liked having the time value of money working on my side.

And there's no comparison, depreciation wise between a house and a car.

Having said that, there are lots of situations where renting makes more sense, such as on the coast or anywhere at a time when housing prices are inflated to unreasonable levels. Lots of people would have been better off if they would have rented instead of buying lately.

Very well said.

wolfboy
02-27-2009, 09:28 AM
Zimbabwe figured out a way to do it.

You're obviously convinced you know how this is going to play out. Bully for you.

Whether it's deflation, inflation, stagflation, depression, recession or digression doesn't really mater. End result is not a lot of fun for anybody.

It does really matter. There are big differences. Fortunately, it's a discussion for another thread. We don't have to work them out here. :D

bucksfan2
02-27-2009, 09:28 AM
Zimbabwe figured out a way to do it.

That may be the first and only comparison of Zimbabwe to Japan that I have ever seen.

wolfboy
02-27-2009, 12:07 PM
My bad, don't know where I got 26.

I think someone else mentioned that they were 26 when they bought their home.

Ltlabner
02-27-2009, 02:52 PM
It does really matter. There are big differences.

I know that deflation and inflation have different effects on the economy. I was just saying that whatever direction things go in doesn't really matter because either way is likely to be very challenging for the everyday Joe.

wolfboy
02-27-2009, 03:13 PM
I know that deflation and inflation have different effects on the economy. I was just saying that whatever direction things go in doesn't really matter because either way is likely to be very challenging for the everyday Joe.

Agreed.

cincinnati chili
02-28-2009, 09:24 PM
Well, I'm a little surprised by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers out there.

While I appreciate the input on housing, the economy, and life in general, it's a moot point. We put in an offer, they countered, we accepted. Every single consideration in this thread was weighed heavily by my fiancee and I. We feel completely confident that we've made the right decision. We also know that if we have not, we are prepared to live with the consequences.

My wife and I bought our first house on January 23rd (before the stimulus was passed, so it wasn't an incentive for us to buy). We got an FHA loan, and only put 4% down. Even when things start to break and need repair, owning a 2800 sq ft (including finished basement) home in suburban Denver is going to be about the same price as renting one floor of a 1200 square foot house in suburban Boston. At our ages (36 and 34) we need to start building equity. It was a no brainer for us.

Our rate was 4.875% fixed. Even though we'll be paying PMI for a while, that's still an effective rate of 5.5%.

As you probably know, we're going to get an $8,000 tax windfall as a result of the stimulus. The credit applies to anyone who buys a first time home in '09.

I guess the idea of the stimulus is for us to put that money into the economy and "stimulate things." Pardon us for not being patriotic, but 100% of that is going into savings.

GIK
02-28-2009, 09:36 PM
Nice work, CC! Man, I wish I could see the future. Other than knowing the winning Mega Millions numbers, I would have waited to buy my first house until all this new legislation kicked in. Lucky dogs!