First Time Buyer or F'ed Borrower?
From the Asbury Park Press:
First-time buyers face hurdles in real estate market
First-time buyers face hurdles in real estate market
Michael Knapp was eager to be the first person in his family to buy a home, but first he had to make a few concessions.
He settled for a townhouse, because he couldn't find a single-family home for less than $200,000 that didn't require a complete overhaul. He extended part of his mortgage from 30 years to 40 years. He needed roommates to help pay the mortgage, and so recruited his girlfriend, Trish Maas, and his friend, Jason Reineke, to join him.
"I could probably afford it on my own," Knapp, 24, said of the $187,000 townhouse in Brick. "But I wouldn't know where my next gallon of milk would be coming from."
After a run-up in prices, first-time home buyers in Monmouth and Ocean counties are encountering major financial hurdles in their bid to own a home. Their incomes, for example, haven't kept up with escalating home prices.
It's forced hopeful home buyers such as Knapp to lower their expectations and take greater financial risks. And even then they have to worry about their finances once they get into the home, experts said.
...
"It is really, really tough," said Drew Anlas, senior vice president of Select Mortgage Corp. in Brick. As a rule of thumb, buyers take three to three-and-a-half times their annual income to figure out how much they can afford. "If you're making $60,000 a year, that's $180,000 to $210,000. What's out there for $180,000 to $210,000?"
These days, not much. During the second quarter of 2006, the median price of a home in New Jersey was $373,900 and the average 30-year fixed-rate mortgage was 6.5 percent. That means the monthly payment on a median-price home, including principal and interest, was $1,891, according to the National Association of Realtors.
To afford that, the association said, families need to make $90,768 a year. The median family income in New Jersey during that time: $81,309.
...
He turned to a townhouse instead and began the process of getting financing. He had no savings and no equity built up from a previous house, so he signed for an unconventional loan to make his initial payments manageable.
He borrowed 80 percent of the purchase price and will pay only the interest for three years, after which the principal will be included and the monthly payment will climb. He borrowed 20 percent of the purchase price with a 40-year payout, instead of the traditional 30 years.
The hope is that prices will continue to rise, interest rates will remain reasonable and Knapp can refinance under more favorable conditions.
73 Comments:
Caveat Emptor!
http://tinyurl.com/h7xuh
Whatever happened to working hard, saving the "traditional" down payment and being patient while doing so? I am so sick of being called "old school". Old school works. Immediate gratification doesnt. It just gets you in trouble.
You guys are ignoring all the benefits of homeownership.
This enterprising young man is able to paint his walls, drive nails in the wall, change the carpet, remodel his kitchen and bath, and even have a pet.
You can't put a price on the sense of pride associated with achieving the American Dream.
CRI (aug)
.2%
SAS
From Marketwatch:
U.S. Aug CPI, core CPI up 0.2%
Consumer price inflation moderated in August as gasoline and home ownership costs rose at a slower pace, the Labor Department said Friday. The consumer price index increased 0.2% in August after a 0.4% gain in July, while prices excluding food and energy rose 0.2% for the second straight month. The 0.2% gain in the core CPI matched expectations on Wall Street. The headline CPI came in one tenth of a percentage point below expectations. The core CPI is now up 2.8% in the past year, the biggest gain since December 2001. Energy prices rose just 0.3% in August after rising 2.9% in July. Owners' equivalent rent - which accounts for 23.4% of the CPI - rose just 0.3% in August after three months at 0.4% and one at 0.6%.
Perfect example why prices need to come down about 30%.
$500,000 crapbox starter homes for $500,000.
How many first time buyers have $100k to put down and make $132k in salary at 6.20% 30 year.
Phoney loans is how they did it, but in the next 12 months massive pain is coming their way.
"You can't put a price on the sense of pride associated with achieving the American Dream."
Sounds more like a Nightmare scenario.
So you are saying going to work like a grunt everyday just to keep your head above water to make a house payment is worth it?
It gets old mighty quickly when you are like a drone worker going to work just to make monthly payments. More to life than Gottaaa make the dooughnuts.
CPI .2%
commodities dropping lately.
Some major moves in the markets in the last few weeks. Wonder what is moving this?
Something is working against fundamentals...
Keep in mind stealth inflation...you can't put that in a government statistic.
What is stealth inflation?
Lets say you have a container of Dannon yogurt. One carton on Dannon yogurt is about $1 for a 6 oz container, but a year later its still costs a dollar, but now its a 5oz container. Another year goes by, cost is still a dollar, but now its a 4 oz container. You get the idea. Prices are the same, so inflation looks tame, but that dollar has lost its purchasing power because it can't buy what it use to or buy the amount of product it use to. Make sense?
Look around your food store, ever notice why all thoe packages have gotten smaller? Food bills is a major exspense for people, especially if you have thoe little perti dishes running around.
Petri dish = Children
SAS
I would love to know the average square footage of those Bergen houses. If you were to run the same numbers for my area, you would show the same kind of crazy run up in average price. But I would also bet the average house size (for sold props)close to doubled thanks to development skewed towards McMansions. Even the townhouses are 1500-200 sf, where older capes and ranches (that were built in the post-war boom) averaged 1200 sf or so. We all need more space for our stuff--and it costs us.
"If you were to run the same numbers for my area, you would show the same kind of crazy run up in average price."
Extremely important point the RE clan hides behind.
This kid is a fool and didn't know anyone who could talk sense to him.
He's going to be paying for his mistake for a long time, but even worse than his personal situation is that the Press prints ridiculous garbage from RE pros that will get even more people in trouble.
From the article:
"During the second quarter of 2006, the median price of a home in New Jersey was $373,900 and the average 30-year fixed-rate mortgage was 6.5 percent.
...
To afford that, the association said, families need to make $90,768 a year."
Not even close. The family actually needs to make about $130K per year with that interest rate.
This is how so many people end up living beyond their means. If a guy making $90K thinks he's supposed to be living in a $373K house, he wonders what's wrong with him if he doesn't. He's not going to do the math, he's just going to go by what "they" say.
Lindsey
The reporter is off by about 20 grand on NJ's median household income.
From NPR (July 4):
Behind the Ever-Expanding American Dream House
The average American house size has more than doubled since the 1950s; it now stands at 2,349 square feet. Whether it's a McMansion in a wealthy neighborhood, or a bigger, cheaper house in the exurbs, the move toward ever large homes has been accelerating for years.
Home Sizes Revisited: Do Bigger Houses Mean Higher Costs?
It seemed fairly unmistakable to me that if typical new homes are increasing in size, and if costs per square foot are not steady or declining, then one sure reason for higher new home prices is that homes are simply bigger.
And, in fact, homes are getting bigger. According to the Census Bureau, the average home measured 1,660 square feet in 1973 and 2,434 in 2005.
"If you super-size a home by 47 percent," I said, "then even if construction expenses remained constant it's not hard to see why today's housing dreadnoughts cost more than homes in previous years."
What's remarkable about square foot numbers, of course, is that while houses are swelling, households are shrinking. In 1978 the average household had 2.81 people, according to the Census Bureau, while in 2003 that same household typically had 2.57 residents.
BTW, sometime next year or maybe 2008, somebody buys this kid's condo out of foreclosure for $110K or so, which, the kid probably could have swung if he didn't screw himself this year.
Lindsey
Real Estate: Good News for People Who Love Bad News
http://tinyurl.com/otvyz
SAS
Here is the spin from a realtor who always send me her propoganda ridden form e-mails. Note the attempted guilt trip - if buyers do not buy, then everyone loses....
"Real estate is and has always been a about give and take, although in the last few years it's been mostly take on sellers' part, give on the buyers'. Sellers who won't negotiate are plentiful these days, waiting for a sign that the current market lull is but a passing phase. Perhaps it will be.
Certainly, the health of the real estate market is important to more than sellers and their realtors. Lawyers, home inspectors, painters, builders, handymen...the food chain is a long one. Without public confidence that buying a house is an important way to accrue equity through time -- not to mention a nice place to grow as a person and a family -- lots of people lose.
It's a worrysome time. The hope is that buyers and sellers will find a meeting place a bit more sane than it has been, respecting each's other's needs. As for the fear we see in buyers' faces these days and their concomitant lack of urgency, we hope it's a passing phase."
Enjoy.
HONESTMAN
Honestman - who is the writer on those pieces you get? Was the person NAR/Realtor(TM)?
I know a lot of them are cut&paste...I was on a new RE blog for an online version of a national paper and laughed at one "blogger" who forgot to take out his cut&paste insert instructions from NAR.
I'd love to get a copy of the instructions for spamming blogs that comes along with the written text inserts.
Pat
The reporter is off by about 20 grand on NJ's median household income.
I'm trying to find the source of that number.. I've been looking for 20 minutes now and can't find any reference to that exact figure..
jb
I do not want to give names, for obvious reasons. However, it is a well known Essex County realtor. The message is clear -- if buyers do not meet these inflated prices, the whole economy will go into the crapper.....PLEASE!
HONESTMAN
"You can't put a price on the sense of pride associated with achieving the American Dream."
9/15/2006 08:23:56 AM
-Recruiting friends to help pay his mortgage???
-I/O for 3 years???
-No savings, but buying a townhouse??
-Hope that prices rise to refinance at more favorable rates??
What kind of damn dream is this?? What happens when he wakes up???
BC Bob
We all need more space for our stuff--and it costs us.
9/15/2006 08:55:13 AM
My brother has one of those really big new McMansions. He has gas and electric bills that are twice mine.
Now multiply this scenario out by a few hundred or even thousand across New Jersey.
jb
"Ford Slashes 10,000 More Jobs, 2 Plants"
http://tinyurl.com/k3qmx
Glad I don't live in Ohio or Michigan. Those states are hurting.
SAS
"First Time Buyer or F'ed Borrower?"
These two are not mutually exclusive, as this First Time F'ed Borrower illustrates.
"Just by "owning" a home in Bergen County, NJ, you have BEAT Warren Buffett as an investor since 2000."
Please, stop this nonsense!!!!!
We are really reaching with this one. Paper profits??? Hopefully the paper profits are not all sucked out with a HEL to pay for the home theatre. Come back to this board in 2008-2009 and provide us all with an update.
By the way, Warren Buffet is very concerned,putting it mildly,when he looks at the 10k filings of banks. Interest accrued and interst paid, is signaling major problems ahead. You go ahead and follow the masses in Bergen County. I went the other route and nearly got run over by everybody coming in. By the way, they said WB was old school back in the late 90's beacuase he was not invested in tech I heard electricians ,plumbers turned day traders saying that WB was out of touch with the new reality. I'll place my bets with WB anytime.
BC Bob
Warren Buffet is also very thrifty.. He is not a big spender and material goods.. .. Depreciating assets.. We could all take lessons from him..
P.S so is his new wife..
Renee
Math, like gravity, is law;
My fault, I read too fast.I should have known. DUH!!! However, with some of the posts on here, I wouldn't be suprised if some people actually feel that way. They did back in the late 90's.
BC Bob
Welcome to the new home of Garden State MLS’ public search engine. Currently, there are 32,195 properties advertised for sale in NJ on our site.
Oh No more inventory piling up.
what's the ratio now 10 sellers to 1 buyer?
Odds are looking grim.
http://www.app.com/apps/pbcs.dll/article?AID=/20060915/BUSINESS/609150329
Coming back down to earth
Buyers, sellers and real estate agents adjust to a changing market as home prices begin to stabilize.
Posted by the Asbury Park Press on 09/15/06
BY DAVID P. WILLIS
BUSINESS WRITER
Lacey residents Scott and Renee Hanula have a lot going on.
They are building a house, which is supposed to be ready in December. They have three children and are in the process of adopting a fourth. At the same time, they are trying to sell their home in a real estate market that is softening. Originally priced at $404,900, they have reduced the price of their four-bedroom Colonial-style house on Fox Hollow Drive to $399,000.
"The market being a buyer's delight right now, we wanted to price the house to sell," said Renee Hanula.
Between 2000 and 2005, home prices at the Jersey Shore skyrocketed. Owners became accustomed to seeing their homes appreciate by double-digit rates every year. The median sales price of a single-family house in the area that includes Monmouth and Ocean counties nearly doubled between 2000 and 2005, rising 99.5 percent, according to the National Association of Realtors.
For much of that time, homes were in high demand, as buyers took advantage of lower mortgage rates. Sellers reaped the benefits as bidding wars ensued, pushing prices even higher.
But that ended in 2005. Now the numbers tell a different story:
The rampant run-up in prices has stalled. The median sales price for an existing home in the region that encompasses Monmouth, Ocean, Somerset and Middlesex counties was $393,600 in the second quarter, down 0.1 percent from $394,100 in the second quarter of 2005, according to the Realtors association.
It's the first time that the association has seen a percentage decrease since prices in the region fell from $148,600 to $148,500 from 1993 to 1994. They have climbed every year since.
Sales in Monmouth and Ocean counties are down.
In Monmouth County, sales fell 25 percent in July from the same month last year, and are down 17 percent in the first seven months of the year over the same period in 2005, according to the Otteau Valuation Group in East Brunswick.
In Ocean County, sales fell 28 percent in July from July 2005 and were down 19 percent from January through July compared with the same period a year ago.
"That this slowdown comes in the midst of the prime March-to-August selling season, when home sales should still be running hot, provides compelling evidence of a market transition wherein home buyers have greater control over the selling price than at any time since 1991 — a 15-year span," according to a report by Otteau.
Inventories are up. In Monmouth and Ocean counties, there was a 10-month supply of homes between January and July, up from five months for the same period last year, according to the firm's monthly study.
"What we are into here is likely to be a two- to three-year cycle of a stagnant real estate market because it will take that long to sell out the unsold inventory that we have accumulated to this point," said Jeffrey G. Otteau, the company's president.
Experts say they are not surprised that real estate activity is slowing down.
The market could not stay "red hot," said Joel Naroff, chief economist at Commerce Bank. "You are coming off of levels that we have never really seen, and now we are slowly moving down to more stable levels."
It's become a question of affordability, Naroff said. Income levels have not kept up with the rise in prices.
"Essentially, to buy a house, you had better have a house to sell or you can't get into the market," Naroff said. "As long as you can sell your house in one place you can come and buy a house in another area."
Who's affected the most in this market? The first-time home buyer.
"They tend to be people who are starting out in life, and they are the most sensitive to these affordability crunches," Otteau said.
And what happens to them affects everyone else in the housing market, he said. The first-time home buyer allows the seller to upgrade to a second home, which allows that homeowner to buy another house. Eventually, the person at the top of the chain is the purchaser of a retirement home.
"Each first-time buyer purchase triggers five other home sales in the market simultaneously," Otteau said. "All of this happens in a 24-hour period."
Ocean Township resident Joe Corpina put his Bowne Road home on the market in August with a $599,900 price tag. He and his wife, who has started an interior design business, want to move to a smaller home.
He calls his house a "rare find." In the seven years they have owned it, the Corpinas have spent about $100,000 on upgrades, including new windows and a gourmet kitchen with granite countertops.
"Our house is definitely attractive. It just appears that the market is working against us," Corpina said. "If it wasn't for the mindset of the market, I think our house would have sold in five minutes."
The market has changed, real estate agents say.
"It was like a fire running out of control," said Ron Raimondo, broker-owner at Key Agency in Hazlet, describing the residential real estate market. "There is going to be a period where there is a quiet, ebb tide. We are in a strong adjustment period."
"The buyers are realizing that it's not a fire sale on every corner," said Lou Redbord, manager of Coldwell Banker Residential Brokerage in Holmdel. "The sellers are now starting to understand their house isn't going to appreciate into the double digits or even the high single digits like it has done."
Buyers have more choices and are asking to see more properties.
"We can take the buyer out for the same category and spend a few weekends with them and several showing trips with them," Redbord said. "Two years ago, give me a few hours on a Saturday, and we can take care of everything that is in your parameters."
While the entire region is seeing the same overall trends, there are differences when you break the market down.
NORTHERN MONMOUTH
The Bayshore region includes some towns, such as Union Beach, Keansburg and Highlands, where homeowners can still find reasonably priced homes, real estate agents say.
"You can primarily purchase a house between $250,000 and $400,000 and get a really comfortable, nice house in mint condition," said the Key Agency's Raimondo.
The less-expensive homes are smaller and are on smaller lots, he said.
Homes in towns such as Rumson and Fair Haven represent the other end of the spectrum. Of the 206 homes for sale in those two towns, 93 are priced over $1 million, said Deborah Madey, a broker with Peninsula Realty Group Inc. in Shrewsbury.
That doesn't mean they are going to sell for that much. For homes priced at $2 million to $3 million, it's not unusual for a buyer to offer 10 percent off the asking price, Madey said.
"Buyers are always more comfortble offering below ask on a higher price point," she said.
WESTERN MONMOUTH
In areas of western Monmouth County, where most of the new housing in the region is located, builders are offering incentives to help sell new homes, said Charlotte Ruden, a broker/sales associate at Re/Max Central in Manalapan.
"They are throwing in extras to become more competitive," Ruden said.
Meanwhile, she said people from New York are continuing to buy in the area because of local schools and the one-hour commute time to New York City. "We still have a very strong market in western Monmouth in spite of the fact that it is not as hot as it was," Ruden said.
COASTAL MONMOUTH
In the coastal area, there is still value in the county's waterfront properties, said Stan Kozlowski, general manager at The Mary Holder Agency, which has nine offices in Monmouth and Ocean counties.
"You can do another development in Manalapan, Marlboro and Freehold Township and develop a cornfield," Kozlowski said. "But you aren't going to develop any more waterfront property."
Those properties will hold their position in the market, he said.
But as in other areas, there are more homes for sale, he said.
"My agents are showing more and more houses to the same buyer," Kozlowski said. "There is less urgency to have to commit because of the scare of multiple offers tomorrow. They say "Honey, we have the time. Let's look at another six houses.' "
NORTHERN OCEAN
In northern Ocean County, Williamson said there are three times the amount of listings coming in than sales in towns such as Dover Township and Brick. "That is just creating a backlog of listings," he said.
As in other areas, homes are staying on the market longer as well. For instance, in Dover homes are staying on the market almost 90 days, up from 70 days last year, Williamson said.
While prices are not going to continue to escalate as they have in the past, sellers still are reaping gains, Williamson said.
"They (houses) still proved to be a heck of an investment," he said.
SOUTHERN OCEAN
In southern Ocean County, homes are traditionally less expensive than other parts of the Jersey Shore.
"People have historically gone further south because it is a bit less expensive, and they think they can get more house for their dollar," said William Donnelly, broker and owner of Re/Max at Barnegat Bay, which has three offices in Ocean County.
As in other parts of Monmouth and Ocean counties, homes are taking longer to sell, Donnelly said.
And buyers are winning concessions from sellers, who are agreeing to make home repairs and pay buyers' closing costs, he said.
Jim Joeriman, manager of Prudential Zack Shore Properties in Lacey, said he believes buyers' decisions are being affected by the high price of gasoline. Many residents work outside of Ocean County, he said.
"As the price of gas goes up, that goes right to their monthly wallet," he said. "We have heard some people say, "I want to live down here, but I can't afford the price of gas right now.' "
Schering plough buying Bristol myers????
Oh No more high paying job cuts in NJ?
It never ends.
The trend is down for years to come. Amd real esatte prices will be reflecting this reality shortly.
"As the price of gas goes up, that goes right to their monthly wallet," he said. "We have heard some people say, "I want to live down here, but I can't afford the price of gas right now.' "
If a dummy can't afford the gas then you should not be buying a house. The margin for disaster is that tight that $50-$100 a month makes a difference.
Originally priced at $404,900, they have reduced the price of their four-bedroom Colonial-style house on Fox Hollow Drive to $399,000.
"The market being a buyer's delight right now, we wanted to price the house to sell," said Renee Hanula.
When this grubber realizes that that overpriced pad is worth about $75k less she will be sobbing.
I'm not sure about the trailer park issue.
Been thinking about all the possibilities for McMansion conversions, and what industry would most likely benefit from a trend downward in American square footage.
A long time ago, not sure where, I read a farmer say that once you took good soil and built houses, and pavement, etc., on it, or otherwised developed it, you could never return it to farming. It was "soiled." I really didn't understand it at the time.
If that is true, then there is an opportunity there. Remediation opportunity.
These articles want to make a good point but they alway pick the worst examples. This is some kid with no financial sense who probably flunked 4th grade math. 40 year term instead of 30 year term on a $37400 loan - the monthly difference is maybe $20. I mean just how much is he earning if an extra $20 a month is gonna break him? The interest only portion on his loan is what? $700 a month? $700 a month and he still needs not only his gf but his best friend to chip in to make ends meet. This guy is either earning less than 20k a year or he just blows his paycheck each month partying.
What does article want to say? That this is our typical home buyer? I find that hard to believe.
Richard and "old school":
Yeah, we increased our 401(k) deferrals to 10% and 20% to try to balance what was happening in housing, but even that didn't help so much, plus our sitting equity really didn't earn that much over the last few years, in real terms down, but at least 99% of it survived.
But in the last year alone, the price drops have really compensated. We were just talking about that this morning at home.
Anyway, some people did find work- arounds instead of floundering helplessly. As Bob says, they will be rewarded if patient. There's always a hare and a turtle, always a grasshopper verses an ant.
Funny though how they learn something in those children's stories, but adults don't seem to.
"old school hasn't worked the last 5 years."
Richard,
Don't make assumptions. It's worked like a charm for me. The problem is most people's judgement is clouded by short term events. Toyota came in here in the 70's with a 10-15 year plan. The industry, GM/Ford, laughed them off. Who's laughing now?? Long term results are the answer sir, not a 5 year unstainable blip!!!
BC Bob
"the market whizzed by you so fast you probably at most heard a 'beep beep'"
You are so right. The beeps were so damn loud, it gave me a migraine. The damn beeps got me out of this insanity. How right you are.
BC Bob
I am still waiting for my paycheck....
(from yesterdays thread)
;)
SAS
Check this article out about Boston and Seattle:
http://www.bullnotbull.com/archive/good-bad-news.html
-Sapiens
What is a cynic? A man who knows the price of everything and the value of nothing.
- Oscar Wilde
Okay folks, with $400K single family homes (fixer uppers) and $10K real estate taxes I wonder if there is any value in living in NJ.
Richard,
You talk about putting your money where your mouth is; go ahead and buy. If you own, take out a damn HEL and buy more. You have a shitload of inventory to view. Must be a great time to buy. Buy multiples, you can always flip down the road.
BC Bob
Many first time buyers are interested in houses at the $300K -$250K range. Will more and better properties (right now anything in this range has an issue) become available in these price ranges in Morris as sellers adjust their asking prices? Our agent has told us price declines won't affect houses in "our price range".
you are right. grim mostly posts good stuff but once in a while he posts the fringe stuff like this article.
Define "fringe stuff".
jb
We are first time Home buyers... We have 40+% to put down in the range we are looking at 500-600K.. Its all about saving and investing we lost some dough here and there and we made some.. and we both only make a total of $120K.. and when we started saving 90K and we lived in NYC.. Its doable..
"this is our typical home buyer? I find that hard to believe."
Yup, believe it or not. It is. Not only in NJ but across the country. This is why we have the boom like never before. Hard to believe people are so stupid, buy hey they are, thankgoodness for Oprah and Katie Couric to help make us smarter.
"fringe stuff = things people don't want to admit is true or things that hit a little too close to home.
btw-
Where is my paycheck?
SAS
"Again, your agent doesn’t know what is going to happen in the market (no one knows for sure). But if I had an agent representing as fact that houses in my price range weren’t going to drop, so I should just go ahead and buy, I would ditch that person."
We were thinking of ditching, although been showed lots of places by them. Been representing as "fact" a lot of things that are downright wrong. Also seems shady with presenting our "low" offers....3 times we've had counters come in at the same time...with "stories" and pressure attached.
To those who questioned the median household income stated in this piece. Here was the reply I received from the author:
Hi James: That figure comes from the National Association of Realtors' New Jersey Home Sales Report for the second quarter 2006. I just double checked it and those are the numbers it states. Thanks for your interest. Michael
Realtors are like stock analysts.
You can not trust them because they serve 2 masters.
; 0
SAS
"if you were fiscally responsible and sacrificed to save for a traditional down payment the market whizzed by you so fast you probably at most heard a 'beep beep'."
LOL, great visual with Road Runner.
Richard,
I truly wish you the best of luck in your decision. I am not saying this sarcastically. At least you are a qualified buyer that has thought this out. All the best. By the way, I don't purposely try to "fearmonger", just trying to lay out the facts and what I feel the reprecussions will be in relation to these.
BC Bob
Our agent has told us price declines won't affect houses in "our price range".
Great, tell the agent you're excited to notice houses previously above your price range, are now entering your price range.
Then fire the liar agent.
I don't trust or believe anything that comes from NAR.
Also, if any realtor says now is the best time to buy or real estate is always a good investment ask if they will put all of that in writing (a contract) that includes a provision stating if you sell at a loss the real estate agency will cover you, then see what they say.
buying a home to live in, not an investment
I expect my home to be both.
Knowingly entering a deal to be flat on $500K for ten years, for example, is suicide (unless your net worth is $5M+).
anon
9/15/2006 01:13:12 PM
Good stuff!! I'll remember to use that. Thanks!!
BC Bob
I use to love Katie Couric. Then she started to let herself go. Would it kill her to do a sit-up or two?
SAS
No, the typical home buyer would be some married couple, 2 kids, 81k median income, buying a 374k median priced home. Such wouldn't have been a bad example. Take home pay for this family would be around 5-5.5k and housing expenses around 3k. Said family wouldn't have it easy buying a house.
Using some loser out in the boondocks as an example is not the way to give credibility to the article.
Richard, why not wait a year at least? Prices are bound to go down.
Richard;
The people whizzing by me with their "beep beep" are now falling off the cliff. Thats what happens when you blindly follow the herd and dont pay attention to what lies ahead.
Whats that tortoise and the hare story about again??
grim,
I would define fringe articles as badly researched articles. In the same way that realtors get paid to sell houses, journalists get paid writing what people want to read. Just because something gets printed doesn't mean it's all good even if it does try to make the same point you want to make.
Income numbers are available in the 2005 U.S. Census report,released 8/2006, available online. Numbers are approx.
median household $62K
mean household $81K
per capita $32K
Family median & means are considerably higher.
For gov't & NAR affordability purposes, I believe median household income
is the generally accepted metric.
Found it:
http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ACS&_submenuId=&_lang=en&_ts=
Anonymous said...
grim,
"I would define fringe articles as badly researched articles. In the same way that realtors get paid to sell houses, journalists get paid writing what people want to read"
Are you insinuating that these #'s, inventory, prices,I/O resets, etc.., are ficticious/distorted?? Was Bob Toll misqouted when he says the largest speculative inventory ever??
BC Bob
I'm saying this one particular article was badly written but I can see how what you quoted easily gives the wrong impression. That was a badly worded statement on my part.
What I wanted to say is that now that the housing bust is a big story, it's in fashion for journalist to come up with housing bust horror stories even though a lot of them have no idea what they are talking about.
This comment has been removed by a blog administrator.
Has he ever heard of renting an apartment?
"I would define fringe articles as badly researched articles. In the same way that realtors get paid to sell houses, journalists get paid writing what people want to read. Just because something gets printed doesn't mean it's all good even if it does try to make the same point you want to make"
ok, I stand corrected.
I can agree with this post.
SAS
Sorry folks I tinyurled the wrong link. Colbert Report on Caveat Emptor.
http://tinyurl.com/ec87u
"Benefits of home ownership"? Let me quote: "This enterprising young man is able to paint his walls, drive nails in the wall, change the carpet, remodel his kitchen and bath, and even have a pet."
I can paint my walls,
drive nails,
change the carpet (wait, I have 100% new hardwood floors except like-new vintage tile in the bathroom and new linoleum in the kitchen)
remodel the kitchen and bath? Why?
and my cat loves the place.
And I RENT.
What shill from the real estate industry posted that shaming and offensive screed?:
I'm in the Richard camp. I am not concerned about warm fuzzy homeowner feelings.
I just bought with 15 year fixed, 20% down and plan on staying for at least ten years. The mortgage amount is less than 2x my income.
Even if in ten years the house has not appreciated at all I will still recover what I paid and have enjoyed the house for ten years. And I will not have paid NYC rent for 10 years. Moreover,with inflation and my salary increasing every year I will have paid less and less of my income toward housing.
Not all buyers are chumps.
anon 09:41:45,
Some things to consider:
What happens in 10 years?
Is your area going to be more, less desirable, or the same in 10 years?
How solid is your job? or will some China man have it in 5?
(they import people just as easy as they export jobs too).
Where do you think property taxes are going to be in 10 years?
You and family members in good health?
You got good health insurace?
Is your net worth going to be 100% tied up in real estate?
How diversified are you?
Just some questions you should ask quietly ask yourself if you have not already.
"Not all buyers are chumps"
yes, I agree. Not all..but MOST.
SAS
"Lacey residents Scott and Renee Hanula have a lot going on.
They are building a house, which is supposed to be ready in December. They have three children and are in the process of adopting a fourth. At the same time, they are trying to sell their home in a real estate market that is softening. Originally priced at $404,900, they have reduced the price of their four-bedroom Colonial-style house on Fox Hollow Drive to $399,000."
Ready here, according to public record these 2 paid 186k for the house in 1995. the people before them paid 199k in 1988. Boo fucking hoo, drop the price and get on with life.
SAS,
Agreed. Those are good questions. However after answering those questions, there are some people out there for whom it make sense to buy. I happen to be one of them.
Notwithstanding, I completely agree with most on this blog that the market is tanking.
Just some questions you should ask quietly ask yourself if you have not already.
"Not all buyers are chumps"
yes, I agree. Not all..but MOST.
SAS
anon,
well, if its a well thought out, common sense (and not emotional) decision. Go for it. There are some deals out there, far and few, but some do exist.
But use caution. I just hate to see someone having all net worth tied in RE right now (if you fit this).
Best of luck.
SAS
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