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MDA
17-05-2005, 13:45:49
all my threads are.


Buying a house in Frederick, MD, USA on Thursday. I'm sure I jinxed it by posting.

Anyhow, its just a house like many others. Its our first, and a lot nicer than I thought we could afford. There are plenty of people around here with perfectly good jobs who can't afford a house because the market is ridiculous.

Starting Thursday, I'll be in more debt than I would have believed possible, and I'm actually looking forward to it.

This is happening at a good time, as over the last few months we've noticed more and more all-male groups of teenagers just standing around our apartment complex, doing nothing. Idle hands, and all that.

Oerdin
17-05-2005, 13:55:00
Yeah, the joys of home ownership include crushing debt and fixing leaky toilet valves but all in all it isn't to bad. The appreciation is a nice benefit as well.

Venom
17-05-2005, 13:56:49
If it wasn't for the appreciation, no one would buy a home.

zmama
17-05-2005, 13:57:02
BBQ TIME!!!!


WHOOOOOOOOOOOOOOOO

MDA
17-05-2005, 14:11:46
Venom needs to cough up some good Carolina BBQ recipes.

Pulled pork. Mmm.

Just hauled a propane grill back from my mother-in-law's place this weekend. It was an abandoned layaway at the Ames she used to work at - she paid 60 bucks for a good-sized propane grill with a side burner. It still needs to be assembled. I used to assemble these when I worked hardware, so I know they're a pain in the butt. I've had lots of practice, though, so I'm thinking it will be no problem.

Charcoal-grilled does taste better, but I'm not going to pass on a free grill. :beer:

House appreciation in Maryland and Northern Virginia is a beautiful thing, once you have the house. Otherwise, it just plain sucks.

Funko
17-05-2005, 14:12:48
"Pulled pork. Mmm."

:lol: :lol: :lol: :lol: :lol:

zmama
17-05-2005, 14:14:47
it's a beautiful thing :D

MDA
17-05-2005, 14:14:53
You wouldn't be laughing if you'd ever had a mouth full of pulled pork. :)

Funko
17-05-2005, 14:15:04
I don't dare google that.

zmama
17-05-2005, 14:16:05
ummmmmmmmmmmmm

I WANT

Venom
17-05-2005, 14:16:38
You think we just give out the recipe for the best BBQ in the world?

Beta1
17-05-2005, 14:17:33
Originally posted by Oerdin
Yeah, the joys of home ownership include crushing debt and fixing leaky toilet valves but all in all it isn't to badl.

dont forget painting ceilings.

zmama
17-05-2005, 14:18:37
Originally posted by Venom
You think we just give out the recipe for the best BBQ in the world?

You might if he'd cook it for you

Venom
17-05-2005, 14:21:58
Well....yeah.

King_Ghidra
17-05-2005, 14:23:29
you yankees sure have big houses :(

mr.G
17-05-2005, 14:25:50
wooden crap.

Venom
17-05-2005, 14:25:59
It's got good grass. That's the important thing.

Drekkus
17-05-2005, 14:31:03
Originally posted by mr.G
wooden crap. It's probably not in the nieuwe wonen style, but it's HUGE, compared to the teensy weensy 12 in a row houses people here pay 300.000 euro for.

MDA
17-05-2005, 14:31:38
We've got a lot more open space to put them in. This is more house than two people need, for sure. We started looking with less in mind, but things just sort of snowballed.

The smaller places we saw were former rental properties, and required massive repair work.

This place only needs the door to the furnace room replaced with one with slats to let air through, and there's a vent in the peak of the attic that needs enlarged. I can hang a new door and enlarge a vent. Laz promised to help.

Funko
17-05-2005, 14:31:47
Just means it'd take ages to clean.

Oerdin
17-05-2005, 14:31:57
Originally posted by mr.G
wooden crap.

In California nearly everyone has wooden houses because brick houses just fall apart in an earthquake. Wood bends and flexes so it is the best for earthquake prone areas.

mr.G
17-05-2005, 14:33:51
Originally posted by Drekkus
It's probably not in the nieuwe wonen style, but it's HUGE, compared to the teensy weensy 12 in a row houses people here pay 300.000 euro for.
300.000 euro hahahahahahahaha
not if it is a bVDTdesign.

Funko
17-05-2005, 14:34:22
Venom has a metal house.

Funko
17-05-2005, 14:34:58
Venom's house with 'aluminum siding'

http://www.sunsetwaste.com/dumpster.jpg

Venom
17-05-2005, 14:36:27
Can deflect some small arms fire.

Oerdin
17-05-2005, 14:38:07
Yes, but people keep throwing garbage into the living room.

MDA
17-05-2005, 14:38:17
and a load of repainting, of course.

I'm feeling positively adult. We even got a subscription to Consumer Reports so we could figure out what paints, etc. are best.

Venom
17-05-2005, 14:39:51
Originally posted by Oerdin
Yes, but people keep throwing garbage into the living room.

As with any house, you have to make some trade offs.

mr.G
17-05-2005, 14:41:11
and you can club them to death if they do....... that's the LAW

MDA
17-05-2005, 14:42:33
The grass is good. I'm tempted to get one of those 6.5 HP self propelled TORO push mowers. They're sweet, but way expensive.

Not too sure about the Tecumseh motor, we've always had Briggs and Stratton in the past.

http://www.toro.com/home/mowers/recycler/20017.html

zmama
17-05-2005, 14:48:20
just get some sheep

mr.G
17-05-2005, 14:48:30
http://www.letsmow.com/gallery/JonesAP2002.jpg

MDA
17-05-2005, 14:50:53
I wonder how much Sta-bil and NoLeak paid for advertising space on that mower?

mr.G
17-05-2005, 14:52:25
not a thing I sup pose

Drekkus
17-05-2005, 15:00:53
On that show American Shopper on Discovery they made a cool chopper out of a lawnmower engine.

mr.G
17-05-2005, 15:05:47
Hey MDA, I bet there is enough closetspace in the house for summer and winter clothes?

Venom
17-05-2005, 15:08:44
Originally posted by MDA
The grass is good. I'm tempted to get one of those 6.5 HP self propelled TORO push mowers. They're sweet, but way expensive.

Not too sure about the Tecumseh motor, we've always had Briggs and Stratton in the past.

http://www.toro.com/home/mowers/recycler/20017.html

It's a good mower though. I've got a 6.5HP Craftsman with a Briggs & Stratton and it's does ok, but Toro is better I think.

Drekkus
17-05-2005, 15:10:37
Originally posted by mr.G
Hey MDA, I bet there is enough closetspace in the house for summer and winter clothes? :lol:

Dyl Ulenspiegel
17-05-2005, 15:39:46
Originally posted by MDA

Buying a house in Frederick, MD, USA on Thursday.

Size, cost, debt? :D

Btw, appreciation - how bad is the housing bubble in that part of Maryland?

Lurker the Second
17-05-2005, 15:43:37
Goddamn that's a nice dumpster, Venom. You elitist bastard.

Funko
17-05-2005, 16:01:55
(actual Dumpster may vary from picture)

Lurker the Second
17-05-2005, 16:05:32
I grew up about 30 miles from Frederick, so MDA's truly fucked.

Funko
17-05-2005, 16:06:17
Do you see him much these days?

Venom
17-05-2005, 16:09:08
Originally posted by Lurker the Second
Goddamn that's a nice dumpster, Venom. You elitist bastard.

Well, I am working now. I have been able to make some positive life changes.

Lurker the Second
17-05-2005, 16:11:38
The form fitting roof and wheels are way out of my league.

Japher
17-05-2005, 16:12:18
not wheels, casters!

Lurker the Second
17-05-2005, 16:14:37
Japher you idiot, there's a new thread just for you.

MDA
17-05-2005, 16:21:17
Originally posted by Dyl Ulenspiegel
Size, cost, debt? :D

Btw, appreciation - how bad is the housing bubble in that part of Maryland?

Three bedrooms, two 1/2 baths, finished basement, one car garage, 0.22 acres.

IIRC, national average on housing appreciation was 9% - our area average was 22%

http://www.nbc4.com/news/4399788/detail.html

Last summer buyers were waiving home and termite inspections to get houses. "Bidding wars" were commonplace. We think we might have got lucky by buying before the schoolyear ended.

Venom
17-05-2005, 16:23:50
Originally posted by Lurker the Second
The form fitting roof and wheels are way out of my league.

Helps keep the rain out and it's always nice to change locales every couple of weeks.

MDA
17-05-2005, 16:24:16
Originally posted by mr.G
Hey MDA, I bet there is enough closetspace in the house for summer and winter clothes?

:lol: Yes. Its soooper nice.

I have this ridiculous good luck that's been with me my entire life. Its probably the only reason I've survived this long. Knock wood.

Dyl Ulenspiegel
17-05-2005, 16:28:07
Originally posted by MDA

IIRC, national average on housing appreciation was 9% - our area average was 22%


Why on earth are you buying into this accident waiting to happen?

Venom
17-05-2005, 16:28:57
What's the square footage?

MDA
17-05-2005, 16:49:16
about 1400 square feet, and I'd estimate another 300 square feet in the finished part of the basement.

Dyl - It sucks, but I need a place to live and renting does me no good at all. We're going to be here a while, we've got government jobs and the government isn't going anywhere.

jsorense
17-05-2005, 16:59:25
Congrats MDA!
How long will it take to fill the garage with 'stuff' so no car will fit?
Is Bossman's lawnmower for sale?

Dyl Ulenspiegel
17-05-2005, 17:37:30
Originally posted by MDA
about 1400 square feet

About 130 m^2?

"renting does me no good at all."

Why?

jsorense
17-05-2005, 17:46:01
Originally posted by Dyl Ulenspiegel
About 130 m^2?

"renting does me no good at all."

Why? own goal
When you rent you are paying the morgage on the landlord's/lady's vacation home.
Oh, yeah, the the intrest paid on the loan is tax deductabe.l
:bounce:
Oh, oh, hasn't appreciation been mentioned a couple of times?

Venom
17-05-2005, 17:46:21
That's about the size of my house....errr I mean dumpster.

It's a good size house. Plenty of room, yet not so much that you can't manage it.

MDA
17-05-2005, 17:57:21
130 m^2 - sounds about right at >9 sq. ft per m^2

I have zero chance of having a home to sell when I retire, if I'm renting. Renting a house isn't much cheaper than a home and I have nothing to sell when I retire. I may not make as much money as if I had invested well with any difference between rent and mortgage, but then again I just might.

The plan is to retire and move to someplace quieter with cheaper houses than Maryland.

The two rental homes we saw were very poorly maintained, as well. I can still remember how the one smelled.

22% appreciation can't last forever, but I still stand to come out ahead if/when I sell.

Dyl Ulenspiegel
17-05-2005, 18:01:54
Originally posted by jsorense
own goal
When you rent you are paying the morgage on the landlord's/lady's vacation home.
Oh, yeah, the the intrest paid on the loan is tax deductabe.l
:bounce:
Oh, oh, hasn't appreciation been mentioned a couple of times?

That's a common misconception. For a proper comparison, you have to compare the rent with the full capital costs of owning (interest, foregone interest on equity, and depreciation). And only part of that cost is tax dedcutable in the US IIRC, so it may amount to maybe 1 percentage point.

If the rent yield is say just 3 %, and you pay 3 % real interest + 2 % depreciation/maintainance, and have a risk of severe asset price declines, renting is a good idea. Appreciation without actual improvement of the asset is just a form of inflation, that reduces the real interest paid, btw.

Venom
17-05-2005, 18:04:15
Shit. I make money every year at tax time that's to my mortgage interest. Even collecting unemployment for 6 months and paying no taxes, I still got money back.

Dyl Ulenspiegel
17-05-2005, 18:04:34
Originally posted by MDA

22% appreciation can't last forever, but I still stand to come out ahead if/when I sell.

If just the 100 % appreciation of the last 4 years reverses, you'll have 18 years of 4 % appreciation just to get even in nominal terms. Appreciation will be probably zero though, inflation-adjusted.

Dyl Ulenspiegel
17-05-2005, 18:05:45
Originally posted by Venom
Shit. I make money every year at tax time that's to my mortgage interest.

How much is the annual tax advantage from the mortgage?

What is the current market value of the house?

mr.G
17-05-2005, 18:08:03
doooooooooooooooo
di
doooooooooooooooo

Dyl Ulenspiegel
17-05-2005, 18:08:55
And someone kill the dutch architect, please.

mr.G
17-05-2005, 18:09:58
you are the LAW

Dyl Ulenspiegel
17-05-2005, 18:13:22
The LAW of men and physics.

MDA
17-05-2005, 18:18:36
That's a solid, number crunching, perfectly logical argument.

There's also emotional ones: we want our own house, that we can decorate/modify as we wish, we don't have to submit to landlord inspections, if something is broken we can fix it correctly and right away instead of half-measures next week

The downsides: we have to fix things ourselves AND pay for it, there are often Homeowner's Associations/Agreements (HoA) in residential areas that take over some of the "big brother" aspects of the landlord. Fortunately, our HoA agreement doesn't forbid anything I would do, mostly because the stuff they restrict devalues my property and that of my neighbors (like leaving disabled vehicles to rust in the yard).

In the end, a house we own is ours to do with as we wish, so long as what we do doesn't harm our neighbors. That's as close to freedom as I'll probably get on a planet with billions of humans.

mr.G
17-05-2005, 18:22:07
it is a safe feeling to own a place.
that is your little piece of this planet, sounds ridiculous but it is true

Venom
17-05-2005, 18:27:43
Originally posted by Dyl Ulenspiegel
How much is the annual tax advantage from the mortgage?

What is the current market value of the house?

Current market value about $150,000. The only thing I can find out about the tax advantage is up to 20%. Not sure what the limit or categorization on that is though.

mr.G
17-05-2005, 18:31:23
Originally posted by Dyl Ulenspiegel
And someone kill the dutch architect, please. da mannie

Drekkus
17-05-2005, 18:49:53
Originally posted by Dyl Ulenspiegel
That's a common misconception. For a proper comparison, you have to compare the rent with the full capital costs of owning (interest, foregone interest on equity, and depreciation). And only part of that cost is tax dedcutable in the US IIRC, so it may amount to maybe 1 percentage point.

If the rent yield is say just 3 %, and you pay 3 % real interest + 2 % depreciation/maintainance, and have a risk of severe asset price declines, renting is a good idea. Appreciation without actual improvement of the asset is just a form of inflation, that reduces the real interest paid, btw. I think Dyl is saying the clever things about buying or renting I think about, but i never manage to formulate.

MDA
17-05-2005, 19:44:29
We didn't look at these before buying, but... according to one of those rent vs. buy calculators I should save/make between 18 and 60 thousand dollars per year buying this home vs continuing to rent a cheap, cramped apartment in a rapidly going bad neighborhood. Maintenance isn't accounted for by this calculator. I wish I could get that in cash money. Thats assuming we only stay in this house for three years. The longer we stay, the better we do.

Here's the calculator i used. (http://www.homefair.com/homefair/usr/rentbuyform.html?cid=homestorefinancervb)

Even with maintenance (and it will need a new roof sometime in the next 10 years), I should come out ahead.

Honestly though, our decision was based on the "freedom of ownership" sentiment, not the money.

Lurker the Second
17-05-2005, 20:51:30
Assume a $200,000 mortgage on a $240,000 house. 30 year term at 6% interest.

Over the term of the loan, you will make a total of $231,676 in interest payments. Assuming you are in a 30% tax bracket, the net cost to you is $162,173. That comes to just about $450 per month. That amount is fixed.

Add real estate taxes. The range here can be incredible depending on where you live, but let's assume $4,000 per year (a very conservative number in my area, but probably in line for the area in which MDA is buying). That comes to an additional $333 per month. This number will rise over the course of the loan term, but for simplicity's sake, let's assume the real estate tax increases will equal the increases in the cost of living (experience suggests the tax increases will be greater). Further, assume you could invest that money and earn 3% above the cost of living increases. Because you are in the 30% tax bracket, the net investment interest will be 2%. This means you are effectively paying an additional $80 per month in foregone investment income. (At the end of 30 years, you could have earned an after-tax total of $165,352 on that $333/month.)

Add approximately $50 per month for insurance (excess of what you would pay for renter's insurance, assuming you would get it).

Capital improvements and maintenance costs will obviously vary greatly depending on the age and condition of your home. The IRS lets you depreciate residential investment property over 27.5 years, but there are other issues there so that might not be the best guide. 2% might be a bit high for newer houses, so let's be conservative and call it 1.5%. In our example, that's about $3,600 per year, or $300/month. Using the same methodology and reasoning we did with real estate taxes, you are effectively paying an additional $72 per month in foregone investment income. (At the end of 30 years, you could have earned an after-tax total of $148,966.)

Adding it all up, in this example the monthly "costs" of home ownership are roughly as follows:

$450 + $333 + $80 + $50 +$300 +$72 = $1,285/month.

From a pure investment standpoint, the issue is can you rent equivalent housing for less than $1,285/month?

(As an aside -- that $80 and $72 in foregone investment income every year for the next 30 years would be reinvested. Since we don't need to match that up with cost of living, we can assume a simple investment rate of 4%, which amounts to 2.8% after taxes in the 30% tax bracket. That's another $7,100 in foregone income spread out over the next 30 years.)

Dyl Ulenspiegel
17-05-2005, 21:22:19
Yup.

I'd just add:

- most running costs do not need to be adjusted for lost investment income as money spent on rent has the same time structure
- 40000 $ of equity put down have to be adjusted for lost investment income
- additional costs for eg realtors have to be spread out over the time of use and adjusted for lost investment income
- "appreciation" aka asset price inflation is a plus for the owner, just as a deflating price is a minus.

Lurker the Second
17-05-2005, 21:33:17
Yes, that's right. The $80 and $72 should come out. I ignored broker's commissions and realty transfer taxes b/c those are typically paid by the seller in the U.S., so the effect is either de minimis or not inconsistent with the administrative costs of other types of investments.

Not sure about the $40,000 initial equity, though. If you are looking at this from a pure investment standpoint, you're assuming real estate will outperform other investment opportunities. If so, aren't you better off with more equity and less debt? I dunno, though.

Venom
18-05-2005, 03:13:53
Confirmed. I may write off all my mortgage interest up to 20%.

Dyl Ulenspiegel
18-05-2005, 07:48:04
Originally posted by Lurker the Second
Not sure about the $40,000 initial equity, though. If you are looking at this from a pure investment standpoint, you're assuming real estate will outperform other investment opportunities. If so, aren't you better off with more equity and less debt? I dunno, though.

Hmmm.. I only meant that if you rent, those 40k $ will perform a return that otherwise is factored into the capital income from the home, ie the service of living there.

Dyl Ulenspiegel
18-05-2005, 07:48:34
Originally posted by Venom
Confirmed. I may write off all my mortgage interest up to 20%.

So, how much is your mortgage interest? And what is your marginal tax bracket?

Venom
18-05-2005, 14:02:17
Hey, knock off all the tough questions. I have things like Turbo Tax and dorky accountants to take care of all that.

Lurker the Second
18-05-2005, 14:38:05
Originally posted by Dyl Ulenspiegel
Hmmm.. I only meant that if you rent, those 40k $ will perform a return that otherwise is factored into the capital income from the home, ie the service of living there.

You are right. I wasn't thinking clearly. It shouldn't be analyzed any differently if you reside there or purchase an investment property and lease it to others.

mr.G
18-05-2005, 15:35:55
Dyl and Lurker, go live in Reading now.

Tizzy
18-05-2005, 15:54:01
:eek:
:nervous:

Lurker the Second
18-05-2005, 16:14:48
Not enough booze there.

Venom
18-05-2005, 16:16:37
There's enough bore there, and you've brought it here.

Lurker the Second
18-05-2005, 16:33:02
It's a thankless job.

mr.G
18-05-2005, 16:33:40
go
now please

MDA
18-05-2005, 16:56:57
Scary. The online calculator strained my intellect. You two broke it.

Dyl Ulenspiegel
18-05-2005, 17:23:19
Without any real effort.

MDA
18-05-2005, 18:12:05
Oooh, nice summary of the hellish market here.

washingtonpost.com

It's a Nice Place to Work, but You Probably Can't Live There

By Roger K. Lewis
Post
Saturday, May 14, 2005; F05

It was the perfect title for Montgomery County's recent Affordable Housing Conference: "Work Here! Live Where?"

As in other places, the price of housing in Montgomery County has risen far faster than household incomes. Today many who work in the county and contribute to its quality of life -- teachers, police officers, firefighters, nurses, and thousands of government and private-sector service employees -- cannot afford to own a home in the county.

One conference participant pointed out that a company whose engineers earn $60,000 to $70,000 annually chose to locate elsewhere because the professional staff had difficulty finding homes they could afford.

Eventually half the county's workforce could be living outside the county. And while many workers will reside in relatively nearby Howard, Frederick or Prince George's counties, where real estate is less expensive, some will buy homes as far away as West Virginia and Pennsylvania.

Lack of housing affordable by fully employed, middle-class wage earners ultimately could deter businesses from locating in Montgomery County, hurting the county's long-term economic health.

And there are other problems. As county workers disperse and move ever farther in search of affordable homes, they must commute ever greater distances for ever greater amounts of time.

This will further overburden highways within the region, where traffic congestion is the nation's third worst -- behind Los Angeles and San Francisco -- according to a new study by the Texas Transportation Institute.

Longer commutes mean not only more congestion but also more energy consumption, more pollution and less time for people at home or at work.

As conference attendees noted, rising home prices are attributable to persistent, interrelated market and economic conditions: the shrinking supply of developable land and consequently higher land costs, rising costs for construction and regulatory compliance, willingness and ability of home buyers to bid up and pay more for homes because of low mortgage interest rates, and general shortfalls in housing production and supply relative to demand.

The scarcity of land for new development is exacerbated by county zoning policies and regulations that restrict uses, density and building height.

Also constraining land availability, and therefore boosting land values, is the inclination of citizens in existing neighborhoods to oppose changes in land-use regulations that would increase neighborhood density or promote socioeconomic diversity. Although understandable, such attitudes limit infill or redevelopment strategies that would increase housing supply.

Yet objections arise even when land is available.

During the conference, the pending Shady Grove master plan was mentioned frequently. Because the Shady Grove Metro station area offers a unique transit-oriented development opportunity, county planners have proposed relatively high residential densities, coupled with employment-oriented uses, shopping, recreation and open space. A high-priority goal at Shady Grove is achieving balance between homes and jobs.

But some think that the proposed Shady Grove density is too high. They fear overcrowded roads and overcrowded schools, anxieties not surprising in light of the county's budgetary and tax policies, which can slow down provision of infrastructure and public services. They also wonder if all the projected jobs will materialize, since the plan's transportation strategy depends in part on reducing the number of long commutes.

No matter what happens at Shady Grove or elsewhere, the bottom line is that the inventory of affordable homes in Montgomery County is shrinking. Even the laudable efforts of the Montgomery County Housing Opportunities Commission, which as of 2004 had developed, financed or otherwise assisted the creation of almost 30,000 moderately priced dwelling units, cannot keep pace with need.

What's the solution?

In variously subdued, pedantic and evangelical tones, conference speakers and panelists offered an array of ideas and suggestions. Among them:

Use county-owned land for affordable housing.

Reconsider the size of the Agricultural Preserve.

Increase allowable densities on underdeveloped and undeveloped land.

Find ways to keep affordable dwellings affordable.

Modify zoning ordinances to enable creation of more affordable housing.

Simplify environmental and other government regulations to reduce costs.

Motivate employers to help provide affordable housing for their employees.

Better educate voters to change perceptions and counteract "NIMBY-ism."

Support political leaders in efforts to enhance housing affordability.

All are worthwhile. But the most fundamental affordable housing problem remains: the money gap.

No matter how hard we try to trim specific costs, the aggregate development costs -- and fair market value -- of land and housing are likely to continue rising more quickly than incomes. And working families will continue to be priced out of the market.

The often unacknowledged 800-pound gorilla at every affordable housing conference and seminar I have attended is the inescapable need for subsidies to close the money gap. Why is the gorilla ignored? Because subsidies, which can be provided in many ways, ultimately require some form of public funding and more tax revenue.

In today's political and economic culture, talking about raising taxes is practically taboo. Even in affluent and politically progressive Montgomery County, voters are unlikely to support taxing themselves to boost subsidies and significantly increase affordable housing.

Yet only a substantial shift in public sentiment and changes in fiscal and land-use policies can improve Montgomery County's housing affordability outlook. Unless the money gap is narrowed, workers will have no choice but to live far from the county, even outside of Maryland. This is why next year's housing conference should focus on the 800-pound gorilla.

Roger K. Lewis is a practicing architect and a professor of architecture at the University of Maryland.

2005 The Washington Post Company

Dyl Ulenspiegel
18-05-2005, 18:16:25
Simple solution: Wait a few years.

MDA
18-05-2005, 19:21:22
They're predicting this will last through the end of the decade, and the economists crying "bubble!" are supposedly in the minority. If I can believe what I'm reading.

The general feeling I get from news articles I've seen is the annual appreciation is due to increased job creation and migration of people to the area to fill those jobs. The low mortgate rates are just extra fuel on the fire.

We *should* gradually revert to a more normal appreciation, but not crash.

If you and Lurker think that's bunk, fine. I tend to trust the judgement of people here more than I trust the news "experts".

Its too late for me if I'm making a huge mistake, but there are three new hires (five by the end of summer) at my office that pretty desperate.

My interpretation of the bits you guys wrote (that I can understand) is that I will take a beating if I'm forced to sell my home after a correction to housing prices, and that I may make better money in the long run if I rented for less and was smart about investing the difference between rent and mortgage.

One of the other things in the news here lately is the increasing number of occupied rental units that are being sold outright - tenants are given 90 days to either buy their rental (usually at a pretty fair discount) or pack and move.

jsorense
19-05-2005, 04:07:24
Did I mention that the median price of homes sold here are $1.2 MUSD?:eek: :nervous: :eek:

Dyl Ulenspiegel
19-05-2005, 08:25:06
If it was just low mortgage rates it would be a normal cyclical move in housing. But you have a complete lack of risk pricing and a lot of speculation on top of it.

MDA, if you plan to stay in your house, have enough equity to cushion a price fall, and can pay the bills - fine. The worst thing that can happen to you is that you pay maybe a few 100 $ a month more than you would have to. If instant ownership is worth it to you, fine.

As for the economists in the news, just look what they said about the stock merket well into 2000.

notyoueither
19-05-2005, 08:53:39
Originally posted by Dyl Ulenspiegel
Btw, appreciation - how bad is the housing bubble in that part of Maryland?

How big do you think the bubble is, in general?

notyoueither
19-05-2005, 08:54:52
F'r instance, how badly buttock overpriced is the average home in Manchester or Munich?

Dyl Ulenspiegel
19-05-2005, 09:25:44
For the US total, home prices have risen about 70 % from 1997, on an accelerating trend. The GDP deflator accumulates to 16 % over that perios - as it is cooked by at least 0.5 percentage points/year, let's say a bit more than 21 %. Home prices have been running ahead by about 40 %. That is quite unusual in size and regional spread. There is no evidence that homes were particularly undervalued in 1997. For regional information, eg http://www.fdic.gov/bank/analytical/fyi/2005/050205fyi.html

The UK bubble is about as worse as the US west coast bubble. Real estate prices in Germany are still depressed after the reunification bubble has burst in the early 90s.

Lurker the Second
19-05-2005, 15:31:18
MDA, I wasn't really advocating one side or the other. Frankly, if you answer the question I posed -- "From a pure investment standpoint, the issue is can you rent equivalent housing for less than $1,285" -- I suspect the answer will be no and buying a house makes perfect sense as long as you plan on living in it long enough to cover the administrative costs of buying and selling (broker's commissions, moving expenses, closing costs, etc.).

MDA
19-05-2005, 17:20:41
Originally posted by Dyl Ulenspiegel
If it was just low mortgage rates it would be a normal cyclical move in housing. But you have a complete lack of risk pricing and a lot of speculation on top of it.

MDA, if you plan to stay in your house, have enough equity to cushion a price fall, and can pay the bills - fine. The worst thing that can happen to you is that you pay maybe a few 100 $ a month more than you would have to. If instant ownership is worth it to you, fine.

As for the economists in the news, just look what they said about the stock merket well into 2000.

This is a long-term investment for us, so I guess we're OK. Worst case is we could have done a better moneywise by renting. That FDIC link seems to be saying that we can eventually expect a stagnation/correction in housing appreciation, but a crash would be a little unusual?

$1285 is about what I'm paying for an 800 square foot, 2br, 2bath apartment, the cost of renting a home is... higher. If you can find a house for rent, which can be pretty difficult. Some kind of cultural thing, I guess.

mr.G
19-05-2005, 17:21:35
go home.......please.
or post this shit in the boreforum

MDA
19-05-2005, 17:25:18
Sorry. You could try not opening the thread (or any thread I start), or putting me on ignore.

Closed on the house this morning. Crushing debt feels good!

Lurker the Second
19-05-2005, 17:28:33
Originally posted by MDA
This is a long-term investment for us, so I guess we're OK. Worst case is we could have done a better moneywise by renting.

$1285 is about what I'm paying for an 800 square foot, 2br, 2bath apartment, the cost of renting a home is... higher. If you can find a house for rent, which can be pretty difficult. Some kind of cultural thing, I guess.

Unless there's a huge crash and for some reason you're forced to sell before the market starts to go up again, you should be fine. You are obviously getting your money's worth compared to renting, even if the property doesn't appreciate $1 over the period of ownership.

mr.G
19-05-2005, 17:29:25
Lurker, we know you knows.
now get back to boreforum

Lurker the Second
19-05-2005, 17:35:10
You mean here? (http://www.counterglow.com/forum/showthread.php?s=&threadid=28665)

mr.G
19-05-2005, 17:38:09
dammit, i fell asleep

Dyl Ulenspiegel
20-05-2005, 09:16:03
Originally posted by MDA
That FDIC link seems to be saying that we can eventually expect a stagnation/correction in housing appreciation, but a crash would be a little unusual?


A nationwide crash is unusual, yes. So is the current nationwide boom.

There's a huge difference when homes get say 20 % ahead and you have 4 % general inflation. Takes 5 years of no change to equal out.

40 % ahead with more like 2-3 % inflation is a different beast.

Dyl Ulenspiegel
20-05-2005, 09:16:25
And I hope that put the dutch architect into a coma.