Buying A House is a VERY BAD IDEA
 

So my married daughter is hell bent on buying a house. I have showed her stats of depreciation, mortgage tables, etc etc and still she insists. With 5% down the moment you move in you owe more than it's worth. Add in depreciation of about 8% or so and you are fucked.

Do you think it's a good idea to buy a house in today's market? I think it's dumber than dumb.

I think it totally depends on the area. I buy rental properties though and then rent the place I live in :1orglaugh

Probably depends on the area, but where I'm living now, places are still pretty much going down. Maybe in another year or two it would be a good time to buy.

That said, it probably costs less to buy than rent in most places now.

A lot depends on what area you're talking of...and other factors.

Is your daughter's husband a handyman and capable of doing work on the house to offset the depreciation? Are they thinking of perhaps renting out a room to a student boarder to help cover costs? Is it a bad house in a good neighbourhood worthy of fixing up and flipping for a profit?

Orlando, average depreciation has been like over 7% the last few years

http://www.neighborhoodscout.com/fl/orlando/rates/#data

fuck the house for the next 2-3 years

I bought a house in 2004 and have been trying to sell it since March 2010. I have already dropped it well over 30% than what I originally paid for it and still can't get rid of it. I will never ever, evverrrr buy a house again.

I hope if your daughter goes through with it she has better luck that I did.

Yeah I hear you, but doing the math, if you bought a 100k property for 93k that's gonna give you 1 year breathing room before depreciation makes it a even deal. Or a 100k house for 86k would give you two years breathing room. In either case if you look at national averages it looks bad everywhere. I was absolutely amazed when I googled this. Realtors are telling everyone that homes are going back up in value, Nothing could be further than the truth, and it's not getting any better.

I am very very disapointed in her. She sees the math and knows I'm right. The only reason, and I told her this, the only reason to buy a house right now is out of pride, so you can brag to your friends that you now own a house. I see people like this and I think, "what a fucking idiot".

A house? No.

Land? Yes.

she's going to live in the house, she's young - a house for a young person is a good thing, it's a self forced investment/savings - as a short term investment it might look bad but in 10 years unless the economy is permanently fucked, which is a possibility, she'll come out ahead, hopefully well ahead.

in Canada at least, owning a home for estate planning purposes is essential, you can pass on your house to your beneficiaries without a dime of tax. leaving your kids a 400K home versus 400K in stocks/investment funds means saving them almost 200K in taxes.

i know there are parts of the USA where the real estate market looks bleak, Florida being one of them so maybe you'll be proven right.

I think buying a house right now is a great investment. I don't think the prices could do down any lower, and in face, prices are going up. I bought a two bedroom model condo last year for the price of a new SUV - Can't beat that. I rent out it out to a good friend of mine with guaranteed income, easy money.

But yet people still go out and buy brand new cars, knowing they'll only loose money. Go figure.

Right now in USA is the best time ever to buy a house, they are so fucking cheap.

An apartment in south america is more expensive than the same apartment in MIAMI BEACH, quite crazy if you ask me...

I would like to buy a house in this neightborhood, maybe if I get into PONZI SCHEME CAMS+DATING with shitty API'S and WHITE-LABELS ewhoring, I can buy a house there, a nice car and a JEEP:

http://s15.postimage.org/4g4fbqas9/image.jpg

PIRIOD.

I hear ya, but every website I have found says the opposite, that homes are still depreciating EVERYWHERE in the US with the exception of a couple cities. The facts are showing me that homes are depreciating every quarter with no signs of stopping. If I'm wrong PLEASE show me.

If she'd rent a place she would be putting for example $1000 a month in something she doesn't own. That's $12,000 a year. in 10 years that's $120,000 wasted in rent.

If she'd buy something for like $250,000 and lives there for 10 years it would never drop $120,000 in value + there is a quite a big chance prices will eventually go up again.

Even if the economy is bad, it's still always better to buy than to rent, especially if you plan to live in the same place 10 - 20 years.

Here in Phoenix every house I have inquired about in the last few months have had multiple back up offers.

Maybe buy a house that's not in a major U.S. market? I'm just throwing that out there...

What kind of place can you rent for $1,000 a month? It costs me more than that in property taxes and utilities.

You have valid points, however what about closing costs, property taxes, insurance. maintenance etc. That adds up big time. From what I have seen you can rent for about 30% less than a new mortgage payment as property taxes, insurance is not a consideration, ad that's not including maintenance. In the last 5 years homes in orlando have depreciated on average 6.53%, the last year it was 7.12% and this last quarter is on track for it to be 7.29% for this year. So from what I see it's not getting better, actually worse. She's only doing 5% down, so when I look at amortization tables I'm seeing that the principal she will have in 10 years is far less than what the house will be worth if this depreciation does not reverse and soon.

yeah, the bleeding has stopped in Phoenix - home prices are beginning to make small gains from what i've been seeing. of course if you bought a home at the peak of the market that doesn't help.

That means people are buying houses and nothing else. Ask any Realtor and they will tell you that homes are going up. Do the research and you will see that they are not. THe US economy needs people to buy homes even if they are going down in value. SOmebody has to get the ball rolling.

According to this, Phoenix is doing worse than most of the country

http://www.neighborhoodscout.com/az/phoenix/rates/#data

Like I have said before, many many people are saying it's better but when I look at stats it's not. Is google blocking sites from me or something? LOL

I was one of those idiots that sold at the peak and bought at the peak..LOL

I am REALLY considering buying now and renting my current home.

Buy
 

The tax deduction on interest alone, makes it worthwhile. Houses don't depreciate the way cars do. If she's going to buy a house, ask a Realtor about any short sells. These are people who can't afford their house and the bank lets them live there until the house is sold. Keeps the property in good condition and the house is sold for usually much less than it's worth. Also HUD & Fannie Mae, have foreclosed properties that are huge bargains to 1st time buyers who agree to live there for 1 year.

Well for people who dont live in AZ I tend to just say Phoenix when in reality I mean east valley.. big difference

I live in metro Detroit where we were hit first with the houses losing value. Our area has a shortage of houses on the market and prices are slowly rising.

Here in Minneapolis the market seems like it's rebounding. Multiple offers on houses, some are selling for more than the asking price. The "Median Sales Price" is actually up 11.8% over this time last year.

Here's an article from yesterday suggesting the Florida market might be on it's way up:

http://www.firstcoastnews.com/topsto...g-new-strength

Now might actually be the time to buy.

My life has tough me Rent = Stupidity

Thank you for that link. According to that article more people are buying homes in Florida and the average price is up, but depreciation is still what it is. But this shows that people are buying which means demand has increased so depreciation should in theory slow down eventually?

Those articles by realtors always skew the numbers by adding in distressed sales and other shit trying to make the situation seem rosier than it actually is.

The only real estate I would be buying is (providing you get a good deal) rental properties with cash.

Owning (basically an open-ended lease from the government; one doesn't truly own property; note the word "Fee Simple" on a deed; feudalism never really went away, it's still with us - but rambling on) provides more stability.

And in many areas, rents are getting relatively expensive - a mortgage, even including property taxes, may be the same or even cheaper.

As for taking a hit on the value from the closing costs, fees, and future fees when it comes time to resell ... that may be 10% or somewhat more, but even accounting for that, ownership can still worthwhile.

A more basic question to discuss with her in-depth is how long she plans to live there ... if she's not sure / thinks likely under 5 years, then renting is probably better.

Related to the above, if there a high probability of either of them (assuming both work) having to relocate with little notice, owning could be a chain around their necks limiting their options.

My friend's parents bought (one of) their retirement homes in phoenix at the lowest dip in prices. I believe they got a $300k+ house for $150k or lower.

I remember living in the quad cities (Davenport, IA) the neighborhood I lived in was nice but it had a lot of deviants that ran around randomly breaking into houses (girl next door got robbed). Anytime you get a reputation for that it easily knocks off a good $10-15k from the typical price. i.e. good vs. bad neighborhood, in this case a bipolar neighborhood :upsidedow

It depends where & what you buy.. In FL where you live I'd probably only buy something that needs repairs so you can get a bit of sweat equity. Central FL is screwed on it's economy and it really has no "real" industry out side space & tourism.

Up where I'm at now in MA, I can buy 2 and 3 unit apt buildings in the +/- 100k mark. Average rent typically in the $700 +/- mark. Needless to say I'm buying one soon as I come across the right deal.

http://www.greaterfool.ca/

Spend a while and read some of his posts. Great blog.

I just tried to refinance recently and was shocked to find out that my house is worth a little less than when I bought it in 2001. It was GOOD time when I bought, and in the years after the value had almost doubled at one point.

If you are new home owner, then its a good time to buy. House prices are low and so are interest rates. If you already have a property to unload first, then you're probably better off renting.

If I buy a house, I don't want this in the DOOR of my home:

http://3.bp.blogspot.com/_J1guhILwGt...reHydrants.jpg

Specially in VEGAS.

PIRIOD.

I think if she plans on living in it for 7-10 years that is a good idea

its a great time to buy overall houses are going for well under the cost to build them.

assuming you know what your doing and dont get ripped off :2 cents:

so many things to consider. How solid is their marriage, jobs, incomes, family, etc?

If they decide to buy. Buy for the right price.

Buy now and pay the same amount back for the next 30 years. I*n 30 years it won't mean much. Or pay rent for the rest of your life which will go up every other year.

It's tough at first and she'll have to do without a few of the nicer things in life, like expensive holidays or designer shoes.

No brainer.

Well I'm in Denmark and circumstances forced me to buy a house in 2007. That has cost me AT LEAST $200.000 in losses if I were to sell today, so I don't.

But at least in my country, if I was outside the market right now - I'd strongly consider getting in, since prices in many areas are slowly starting to rise again.

A lot of homes in US cities are now cheaper than its equal here in Thailand. Condos too. It's insane. But we're also experiencing a housing / property bubble here, so eventually that will burst. But in the meantime, the fact that I can get something cheaper in the USA than I can here, is nuts.


The irony of that is, she won't own the house until her mortgage is paid off, which will probably be in 30 years. Even then, she won't really own the house because if she slips on her property tax (or income tax), they will take it from her. So she really doesn't own anything, especially at this stage when she has 30 more years to slave away to pay for it.

Pride is foolish, but even more so in a situation like this where she doesn't own anything. And there is actually a greater chance of her losing the home than her keeping it.

The American Dream. *sigh*