Your math is flawed Choker... You don't buy a house to sell it in 2 years... A minimum of 5 is the accepted norm and most stay for 12. So that being said the market will be right back where it should be and she will make a killer profit. If she waits until the market is completely rebounded the rates won't be as low on the loan and the house might not be available at the current price.

Agreed. Buying a house is an emotional purchase and that's why so many people don't look at all the number they just look at the monthly cost, very similar to when they lease a car.

For one's main residence I see it as you're either paying off your house or someone else's.

exactly, plus you get that great deal sooner if you have a dozen + agents looking for you as opposed to just having 1... make them do the work.

paying full market for a home these days is ridiculous.

When interest and taxes cost more than rent would cost on the same place you would be stupid to buy.

I am in no hurry to buy

I moved to Fort Lauderdale a year ago and EVERYONE I've met who owns a house is upside down on it. Everywhere you turn. It's un-fucking-believable.
I know 7 people who have declared or are declaring bankruptcy and walking away from it all. All are people over 40, some over 60 who are destroying their credit to get out of it.
You work all your life to build great credit and now its ashes.

I know 1 guy who was a multi millionaire from flipping real estate and is now millions in debt and has severe depression over it. Big drinker now and pretty reckless.

I know another guy who bought a home a few years ago for $1.1 mil and its now worth like $550k. He told me they estimate it will take over 12 years before it gets back to what he paid for it.

My landlord bought the apartment I'm living in now for $176k a few years ago, now I'd say its worth like $70k. Since its just a 1 bedroom they appreciate slow it will take forever for him to get that back.

I know someone in Boston bought a condo in 2007 in a terrific neighborhood for $199k and we all thought it was a steal for this neighborhood. Today he's selling it and getting $150's for it and had to wait months to get that offer. He's going to rent now.

No thank you, I'm fine renting and in no hurry to buy.

Unless you find a really killer deal or you plan on owning that house a minimum of 10 years I say rent.

Compare apples to apples, renting or buying a $200k house for example, with 10-20% down your interest on the balance and taxes won't be that high, to rent the same house would cost you about the same.

Landlords don't lose money every month for a reason. Taxes, interest, hoa, etc etc are all factored into the rent.

If you move around all the time then sure renting makes sense, for those staying 5+ years the buying is usually the better choice.

How much you buy the house for is irrelevant. If your taxes + insurance = more $ per month than rent would be you are not only taking a risk but paying more than you should for a home. This has nothing to do with principal payment or how much you put down.

If you think this doesn't ever happen then you are either pulling numbers out of your ass or don't have the slightest clue what you are talking about. Probably both. Just because you haven't seen it happen doesn't mean it hasn't.

I assume you meant interest not insurance as you need insurance for a rental or purchase.

So $200k home with 20% down = $160k your mortgage @ 3% = $647/ mo
Property taxes are roughly 1% a year so $2k/ year = $167/ mo

Monthly payment: $813 / mo
With zero down: $1010 / mo

Rent on the same house would be $1300+ easily.

Factor in mortgage interest in the US is tax deductible and 40% of the monthly payment is going towards principal, I don't see how renting works out cheaper.

No need to be rude. I have a cash flow analysis template that I use when evaluating a potential investment property.

I know my numbers and have a few rental properties, so I'm not talking out of my ass.

Buy if it's going to be your only home.

But if the economy does stay depressed, a bottom could still be a very long way off.

Economic Collapse For Dummies

its crazy to keep renting when you can buy

It's still good to buy a house if you know how to shop, and you can afford it. Just tell her to look around for depreciated houses or houses that have been foreclosed on and owned by the bank. If you can do it, lend her the they money to buy the house cash instead of borrowing the money from the bank, or, lend her enough for a large down payment. The less she has to mortgage and the faster she can pay it off, the better off she will be.

There is a whole lot of misinformation in this thread. I really hope no one takes any real estate advice from reading GFY.

Solid advice. :thumbsup

Renting is a no-win situation no matter what.

On top of the math you pointed out above - you're also at the mercy of a landlord who may not do the upkeep, routine maintenance, upgrades, etc. Which leaves you as a miserable tenant.

In that case the payment is lower than the rent. That obviously works out in the buyers favor and has nothing to do with what I said. Let me quote myself again.

Your thinking is flawed unless she somehow found a bank that loans money with no interest rate. The $1,000 payment goes towards mostly interest. Even if it was 3% interest she would still only pay $60k against principal in 10 years. That's with a payment of $1054.

I haven't read most of this thread so I don't know if this has already been stated , but there are parts of the US where buying a house can still be a good investment. There are towns in the US that are going through these crazy oil booms where oil companies and workers are moving in en masse, and there aren't nearly enough rentals to house all of the workers. The result is apartment complexes that would normally charge $300 a month for a one bedroom are now charging over $1000 a month, and the house rental rates are just obscene. It's getting so bad you can't rent a hotel room in any of these towns, and hotels that aren't even finished being built are sold out over a year in advance.

A few examples are Bismarck, ND, Fargo, ND, Odessa, Tx, Eagle Ford, Tx, and the Mid Ohio Valley/West Virginia region (which is actually a natural gas boom). There is so little housing in Eagle Ford, Tx that these huge RV parks are popping up where thousands of workers are resorting to living in mini campers. My expedited freight company delivers a lot of mechanical supplies to Bismarck, ND and it's impossible to even get a hotel room there. As for the Mid Ohio Valley region the natural gas boom is just taking off and I've been looking at buying some mobile homes there and renting them out to oil field workers, as you can buy a mobile home in the $15,000 range and rent it out for $700 a month minimum. Pretty crazy, but keep in mind the risk is in how long the workers end up staying there. I know in Eagle Ford, Tx they are finding crazy amounts of shale oil reserves and the workers will be there for decades...

Knocking $60k off the mortgage or giving a landlord $120k and have nothing after 10 years, I know what I'd rather do.

To help make your point and that of choker we can rewind to 2006ish when so many bought homes and over the next 5 years lost way more than what they paid off. BUT many bought homes they couldn't afford in the first place with no money down, so really they lost their monthly payment and really should have rented.

Those who bought homes they loved and could afford are still in them, they go about their life, pay their mortgage and when they go to sell down the road odds are prices will be back to at least the cost to rebuild. Sure they spent the last 10 years spinning their wheels, but they have some equity built up.

Most Realtors are full of shit and uneducated A-types. Stay the hell away from them :2 cents:

Buying a house is a very bad idea.....

especially if you're the type that gets divorced a lot. :(

Most all of your comments in this thread suggest a very short sighted view when looking at renting vs buying. Looking at a longer view of 7-10 years, eventually a property that has been depreciating will at some point most likely turn around and start appreciating. In your area I would say the most a property has left in depreciation is 10%, your definitely close to the bottom. If your daughter could buy an undervalued property via short sale/foreclosure it would provide enough cushion to eliminate what I believe may be the last bit of depreciation in your area.

Also, you suggest a possible 7k/yr depreciation for a 100k home in your area, but your daughter would piss away more than 7k for the year should she rent. When you were thinking of buying in 2007 you would have been buying at the market's peak for your area, far different scenario then buying today. Homes values are not dropping in all areas of Florida and there are actually many signs that point to mild appreciation in some areas of Florida.

Buy it if you're going to live in it for a long time....

Well there's your problem, you're comparing prices from before the real estate market collapse to after. And using that same comparison to buying a house today. That would only make sense if the market were to collapse a second time, just as bad as the first - come on man....:2 cents:

Homes are still depreciating at over 7% a year here and show no signs of slowing down. In fact if last quarters depreciation continues for the rest of the year the depreciation rate is accelerating. The last 5 years depreciation has wiped out the last 15 years gains. Yes I realize depreciation HAS TO SLOW down eventualy but it is very possible it won't for another 5 years. Do the math on that. A 100k house would be worth 77,378 in 5 years with 5% depreciation, and it's actually over 7% here. Even if she got a 3% mortgage she would be in the hole big time in 5 years. Yes rent is the same as a mortgage but depreciation wipes that out plus a lot. Pay the same for rent or mortgage in 5 years you would have to bring over 15k to the table to sell your home. If you rented you could just walk away owing nothing. Does anyone else here get this?

So she can go ahead and instead pay 1200/mo to rent the same house and after 5 years have paid 72k with absolutely nothing to show for it. Whereas with buying she would have a much lower monthly payment and if after 5 years she is underwater on the house and needs to move she can simply short sale it and have saved herself thousands vs renting.

Having nothing to show for it is better than having to bring 18k to the table to close a sell on it, or like you suggest let the bank take the hit for the 18k she would be upside down on and walk away? Do you really think banks will still be doing short sells in 5 years? As far as I know it has the same effect on a debtor as a foreclosure does, if not it should in my opinion. Rent would be about $900 to $1000 for the home anyway.

I advised her to rent until there are signs of depreciation slowing down or reversing. She won't listen to me though, she's got my hard head. LOL

A bargain
 

Short Sales are a bargain. The bank knows they have a troubled property and that's the best way out. If the owner is foreclosed, the bank has to buy it at the courthouse steps at the amount of mortgage owed. Basically buying it from themselves. Then turn around and put the property on the market for a lot less than the current mortgage. Short sales means the house isn't trashed and most foreclosed houses are and the bank is willing to get what would the current price.
House behind me is appraised at $105K went for $22,500. Worth $150K a few years ago. Prices might go lower but this is a hell of a good time to buy. In 10 years you'll be going "why didn't I buy those houses?" Nobody is smart enough to know the exact moment of a bottom market, being houses or stocks. But you can see the trend.
Last year, I helped a almost homeless friend buy 2 houses for $17,200 he borrowed from family. Got him 2 houses at the tax sale. Now worth close to $100K and has a place to sleep, not a friend's sofa. Found a house for GF's brother $17,500 fixed & flipped for $85,000. He blew a $50K profit on a house I asked him to buy.

I have a feeling homes aren't depreciating at 5-7% a year anymore. The market crashed in 2008, to 2009 then 2010 then 2011, then 2012 yes I would believe that. However across the country many areas have hit bottom. There isn't a single state in the country that is still depreciating at 5-7%, not a single one.

In fact, here is an article from yesterday stating Phoenix is expected to be the highest appreciation in the country from this year to next year: http://www.huffingtonpost.com/dr-sta...b_1699455.html

http://www.zillow.com/blog/research/...2-1024x706.jpg

Weekly mortgage payments instead of monthly, increasing principal payments slightly or doing a lump sum once a year will go a long way to getting rid of that high interest you pay.

I've already knocked 9 years off my 25 year mortgage just by paying a little extra. Saves me tens of thousands of dollars in interest.

agreed...you need to pay down extra all the time.
it adds up.

I would also say that buying now to over the next year would be a great time providing they have the money to support the purchase. also make sure to go with a solid lender

Even at 1k a month over those 5 years that would be 60k she would pay in rent with nothing to show for it. Instead she can have a $600/mo mortgage payment and save 5k a year. A short sale does not have the same effect as a foreclosure. So I'm guessing since you didn't buy in 2007 you've been renting ever since, is that correct?

This will be a fun thread to re-visit 5 years down the road, we can bump this and the ones on buying silver and see how good everyone's crystal ball is.

If I had the time I'd look for pimple dog's thread in 07 or 08 on how he invested his proceeds from the sale of epic cash into real estate and stock in both fannie mae and freddie mac.

I agree. I was only trying to make the point that when you pay $1,000 for a payment you can't be under the impression that all of it goes towards the principal.

HAHAHAHAHA ROTFLMAO you owe me a coffee and new monitor, fucker! :1orglaugh :1orglaugh :1orglaugh

thing is, if you 'lose' by selling at less than what you paid, the house you move to has also 'lost' for their owners. It's not like your house loses x% and all other real estate goes up. At the end of your property ladder career, you ALWAYS come out in front, simply because you can sell and downsize - you can't do that with renting.

Short sales do effect your ability to qualify for a mortgage. After a deed-in-lieu of foreclosure, preforeclosure sale, or short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV. If the borrower can document extenuating circumstances, the waiting period for a loan with a 90% LTV drops to two years.

Back in 2008 I sold the house that I bought for $60 000 to my sister and her husband for $135 000.. Hell of a profit.

indeed. the house we bought in ottawa, they bought brand new in 1994 and sold it to us for nearly 300,000. i can only imagine what they paid...but people shouldn't view a home as an investment. its a place to live, something we all need. chances are most people will lose money one way or another, no matter if its with renovations or whatever.

The future
 

Years ago Forbes Magazine (70's or 80's) had a contest like this. Predict the Dow, price of gold etc. in a certain year never saw the results. Probably the wildest answers won.