This chart shows it still makes sense to buy a home

  • metta

    Posts: 39166

    Feb 01, 2014 1:06 AM GMT
    This chart shows it still makes sense to buy a home
    Home prices still look reasonable compared with rents

    http://www.marketwatch.com/story/a6afc25e-eb22-457d-84a5-5dedccea80bc/stitch
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    Feb 01, 2014 2:08 AM GMT
    Eh…one of my regrets is buying a home. I live in Cleveland. Bought in my mid 20s thinking I'd fix it up and sell and move on. Then the housing collapse came. And my house is worth less than the mortgage…even with all my improvements. I'll never buy again.

    Only up side…my mortgage payment is less than most pay for rent in the area. But I'm stuck here for a bit. At some point I do want to move closer to the city center, or to another state.

    I'd recommend no on a house.
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    Feb 01, 2014 2:34 AM GMT
    CLE1979 said ... on the up side ...
    keep tabs on zillow.com, just now my house is close to what it was worth 2007. you may be able to bail from Cleveland soon.
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    Feb 01, 2014 6:34 AM GMT
    Real estate is cyclical. As a real estate broker for the last 25 years, there have been times when I recommended against buying property (2002-2006) and times when I recommended taking the plunge (2010-present).

    If you believe the age of American* empire is over, and the economy will never recover, then there may not be any good time to buy a home ever again. But if you believe the trend will continue, and America will get back on its feet, this really seems like the lowest real estate prices will go.

    *My viewpoint is that of a U.S. based broker, but I think it applies to many international localities as well.
  • metta

    Posts: 39166

    Feb 01, 2014 6:52 AM GMT
    ^
    From what I have seen, I think that it really depends on the specific area. I can't believe how much prices have gone up along the coastal/and near coastal cities in San Diego County and also West Hollywood where prices are way above the previous peak. A 2200 square foot home on a tiny lot can sell for $1.8 million. I wonder if those prices can be maintained over the long term. I could be wrong but I can't imagine them going up even more in the near future.

    The area of LA county that I live in has recovered a little but is no where near the previous peak. I still see some homes selling for less than half of what they were selling for during the previous peak. The smallest homes were hit the hardest. Some of the largest homes (over 6,000 square feet) are selling way above the previous peak. The wealthy have money to pay more.

    I bought my home in 2002. I could have saved around $100k if I could have bought it in 2001 but the house was not built until 2002. icon_smile.gif



    California Sales of Multimillion-Dollar Homes Increase
    http://www.bloomberg.com/news/2014-01-30/california-sales-of-multimillion-dollar-homes-increase.html
  • secondstartot...

    Posts: 1314

    Feb 01, 2014 8:01 AM GMT
    all I want

    tiny-house.jpg
  • metta

    Posts: 39166

    Feb 01, 2014 8:28 AM GMT
    ^
    I could certainly live in something smaller than I do now, but I don't think that I could live in something that small. It looks like it is a little bigger than my bathtub. I was thinking that I could downsize to something like this:

    1381937_527383950677301_1509984356_n.jpg
  • secondstartot...

    Posts: 1314

    Feb 01, 2014 9:40 AM GMT
    http://www.tinyhomebuilders.com/tiny-houses/tiny-living#.UuyqkvmSy9E
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    Feb 01, 2014 10:08 AM GMT
    metta8 said^
    I could certainly live in something smaller than I do now, but I don't think that I could live in something that small. It looks like it is a little bigger than my bathtub. I was thinking that I could downsize to something like this:

    1381937_527383950677301_1509984356_n.jpg


    That... is down-sizing...

    What am I doing with my life?
  • Posted by a hidden member.
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    Feb 01, 2014 10:23 AM GMT
    When I got my new job in 2010 and moved to a new town, I couldn't afford to rent a house here. I actually lived in a hotel for 5 months while I got my house sold and was able to purchase a home. My house payment on a mortgage was much cheaper than rent for a house of the same size.
  • Posted by a hidden member.
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    Feb 01, 2014 12:35 PM GMT
    I bought my place as a shell in 1992 and took several years renovating it, on my days off. Its value has risen by 230% since then, which is nice, but not really that important, as it is a place to live rather than an investment. I am due to pay my mortgage off later this month. Buying a house was the smartest move I ever made.
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    Feb 01, 2014 2:05 PM GMT
    Buying was also the best investment I've ever made.
  • metta

    Posts: 39166

    Feb 01, 2014 5:24 PM GMT
    secondstartotheright saidhttp://www.tinyhomebuilders.com/tiny-houses/tiny-living#.UuyqkvmSy9E


    It is a little bigger than I thought but even if I downsized, I need a walk in pantry for my kitchen, a large closet, and a laundry room. I could live without a bathtub but I want at least a big shower. And I want to be able to keep at least some of my favorite pieces of furniture.
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    Feb 01, 2014 5:25 PM GMT
    I have to agree with it being a great investment for many but it's really been a change in the past 5 years. Location, location, location. I bought my condo a year ago as a 'fixer upper'. I paid what many would say was an unbelievable price but it's in San Francisco and that's what you have to pay. The value has increased over 25% in the past year. I was lucky to grab it when I did, end of the year, fixer upper, low interest rates, market still depressed.

    Like Ex-Mil, the value is just that. It's only of value if I want to sell but I don't, it's my home, a place to live AND what I pay is much less than what I would pay for rent if I were renting it. Housing costs are crazy here which makes buying very different than if you're in many other cities.
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    Feb 01, 2014 5:31 PM GMT
    secondstartotheright saidhttp://www.tinyhomebuilders.com/tiny-houses/tiny-living#.UuyqkvmSy9E

    I would install some fold down seating on the walls so that you could accommodate visitors or have more open area if alone. It's pretty small but it's definitely doable. I wonder what it would cost to actually have it built, then you'd have to find a place with power, water and sewage connections.
  • HottJoe

    Posts: 21366

    Feb 01, 2014 5:34 PM GMT
    I love being a homeowner. My bf and I bought a big old house in 2010, and we've never been happier. We have a dog, privacy, plus we have endless fun sprucing the place up. I'm extremely thrifty, and I have to pinch myself to believe our luck that our mortgage is less than rent on a craptastic two bedroom apartment in the same neighborhood. I feel we were extremely lucky to find so much space for such a great value. I can't imagine ever selling, unless we have to move out of the state.
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    Feb 01, 2014 8:22 PM GMT
    I'm glad I bought my POS in 2010. Prices have climbed beyond recession levels now but how can prices continue to increase? 1,200 SF dump costs a 1 million here.
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    Feb 02, 2014 12:47 AM GMT
    metta8 saidFrom what I have seen, I think that it really depends on the specific area.

    As eb925guy also noted, you're right that there are some areas of the country -- like New York and San Francisco -- that defy any rational pricing model.

    But most of the rest of the country moves together, to a large extent.
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    Feb 02, 2014 12:52 AM GMT
    it's all been finagling by the Federal Reserve and government gimmicks, it ain't gonna hold up
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    Feb 02, 2014 1:00 AM GMT
    Ahhh, but you gotta check out the Kahn Academy's take on this:


    Renting vs. buying a home: The math of renting vs. buying a home. Challenging the notion that it is always better to buy.



  • Posted by a hidden member.
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    Feb 02, 2014 1:31 AM GMT
    It is definitely not always better to buy. It depends upon the individual and, as I stated earlier, the market.

    For example, in many metropolitan areas, the mortgage on luxury condos (my personal preference) far exceeds the rent on those same units. Unless you feel certain sale prices are going through the roof in the near future, renting one would make more economic sense.

    When I lived in Baltimore, I bought my last house in 2000 and sold it for twice what I paid just a few years later. I then rented a stunning condo overlooking the harbor for about half what my landlord was paying each month. He bought it for $425,000. When I moved out four years later, it was worth less than $200,000.

    For five years leading up to the crash, I advised against anyone buying. When I suggested prices could fall by as much as 40%, people just laughed. All the experts said prices would go up forever, so my tiny voice was lost in the crowd.
  • maxferguson

    Posts: 321

    Feb 02, 2014 3:05 AM GMT
    Yes, but that doesn't mean both aren't overpriced.
  • ChicagoSteve

    Posts: 1279

    Feb 02, 2014 3:12 AM GMT
    CLE1979 saidEh…one of my regrets is buying a home. I live in Cleveland. Bought in my mid 20s thinking I'd fix it up and sell and move on. Then the housing collapse came. And my house is worth less than the mortgage…even with all my improvements. I'll never buy again.

    Only up side…my mortgage payment is less than most pay for rent in the area. But I'm stuck here for a bit. At some point I do want to move closer to the city center, or to another state.

    I'd recommend no on a house.


    Had a similar experience with my condo, bought it in 2002 and now would take a loss if I tried to sell it and I really want to move on at this point. Also, one thing I don't like about a condo is you have the monthly condo assessment that never goes away, in addition to your mortgage. My condo fee is now at the point where it is almost equal to a rent payment. After I sell this place I never plan to buy a condo/home again, I just want to rent.
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    Feb 02, 2014 3:18 AM GMT
    secondstartotheright saidall I want

    < img src="http://tinyhouselistings.com/wp-content/uploads/2011/10/tiny-house.jpg">
    Something like that wound sell for like $800K in Santa Monica, CA. icon_lol.gif
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    Feb 02, 2014 3:19 AM GMT
    xrichx said
    secondstartotheright saidall I want

    < img src="http://tinyhouselistings.com/wp-content/uploads/2011/10/tiny-house.jpg">
    Something like that wound sell for like $800K in Santa Monica, CA. icon_lol.gif


    yeah blah blah it would be $1.2 million in Greenwich or Saddle River