They should just call these places "golf course towns." It would get far more hits on CNN.com if worded that way, anyway.
― donut e- (donut), Monday, 11 July 2005 19:17 (eighteen years ago) link
since it is still hilly farmland surrounding the lake, cows will sometimes come down to the water to go bathing, so you can tootle up in your boat next to them.
see here
― kingfish (Kingfish), Monday, 11 July 2005 19:21 (eighteen years ago) link
― Hurting (Hurting), Monday, 11 July 2005 21:00 (eighteen years ago) link
― Hurting (Hurting), Monday, 11 July 2005 21:03 (eighteen years ago) link
― Hurting (Hurting), Monday, 11 July 2005 21:04 (eighteen years ago) link
― teh Nü and Impröved john n chicago (frankE), Monday, 11 July 2005 21:15 (eighteen years ago) link
i know the house we almost bid on last weekend would've put us back around maybe $1600 a month and that same house on the rental market in that hood would've been more like $1800 at least. (i'm looking at craiglist.) of course, paying extra on the princple of the interest only 20% loan would throw us well over $1800.
so perhaps there is wisdom in your strategy. i think we may just need to consider living in a cheaper hood for 5 years. the schools might not be AS good, but... parents make more difference at the younger ages. there are magnet schools... but the enrollment's lottery oriented. something'll work out.
the worst part is patience.m.
― msp (mspa), Monday, 11 July 2005 21:34 (eighteen years ago) link
They're not. I've seen the finishes and fixtures in these places, and they're appalling. They most certainly are NOT built to last - I think a lot of the value is in the land, not the shitty house they bought. Also, the buyers are not taking into account aesthetic value, which adds to the long-term value of the house. Poetic justice, though, for those who live for "conspicuous consumption" and little else.
Seriously, you are better off buying a little fifties ranch house - those things can be lovely if fixed up properly. People have got to learn to do without so much space.
― VM 9001 (dymaxia), Monday, 11 July 2005 21:39 (eighteen years ago) link
Not taking into account, or failing to grasp?
― Hurting (Hurting), Monday, 11 July 2005 21:47 (eighteen years ago) link
― donut e- (donut), Monday, 11 July 2005 21:59 (eighteen years ago) link
― Hurting (Hurting), Tuesday, 12 July 2005 02:34 (eighteen years ago) link
A lot of McMansions are, at least, fairly inoffensive. Avoid the extremes of contemporary fashion, when you go to sell it down the line the new owner won't have to immediately rip everything out. Find a couple of rising yuppies just as bland as you are and it won't hurt at all.
I can't believe people are willing to blow $250-350k+ on a new house and get linoleum and carpet all over the place. Engineered wood floors (or if nothing else, cork and bamboo floors) aren't that expensive and add a ton to value and sellability (saleability, sale-a-something, whatever).
― milozauckerman (miloaukerman), Tuesday, 12 July 2005 02:53 (eighteen years ago) link
Nope. My fault for being very unclear. But the opposite. It's easy to rent a roomy one bedroom place in a "hipper" neighborhood in town for around $700 a month... but purchasing similar can produce a mortgage that's around $1400/month instead. It's a factor of 3 from rent to mortgage if we're talking about renting vs. buying a house, respectively.
And after all that, Seattle still isn't in the top 10 real estate bubble states. I don't want to even think about how much a shitty L.A. suburb house mortgage is.
― donuty! donuti! donuté! (donut), Tuesday, 12 July 2005 07:07 (eighteen years ago) link
― donuty! donuti! donuté! (donut), Tuesday, 12 July 2005 07:09 (eighteen years ago) link
That makes no sense. (I'm not saying you're wrong - just that I don't get it.) How can an investor afford to buy a property to rent it out for less than the mortgage payment? Renting should always be more expensive than buying (on a macro level.)
― geyser muffler and a quarter (Dave225), Tuesday, 12 July 2005 11:30 (eighteen years ago) link
My wife and I are in the process of selling our condo now, its been on the market for a month. No biters. Kind of sucks because there are a some nice houses in our price range in town, but they sell quickly. And we are looking for a fixer-upper, we like the old charm compared to the new McMansion shit.
We really are pleased that we bought the condo when we did 4 years ago as its gone up in value $75000 since, which gives us a great chunk to put down on a house when we step up. And our mortgage is around $600 a month, which sure as hell beats rent around here. Averages around $1000 a month for 1 bedroom.
We both have pretty bad credit as well and have been told our max purchase price is around $232000, which doesn't get you much around here. Lucky to get 1/2 acre of land...most of the houses need new roofs, updated electricity and lots more work. But all in all, i would prefer to have a mortgage rather than rent these days purely for the tax breaks.
― Lupton Pitman (Chris V), Tuesday, 12 July 2005 11:42 (eighteen years ago) link
― carbon (carbon), Tuesday, 12 July 2005 12:46 (eighteen years ago) link
― kingfish (Kingfish), Tuesday, 12 July 2005 12:54 (eighteen years ago) link
m.
― msp (mspa), Tuesday, 12 July 2005 12:57 (eighteen years ago) link
― carbon (carbon), Tuesday, 12 July 2005 13:34 (eighteen years ago) link
And this is certainly what most parents look for in a school.
― Brian Miller (Brian Miller), Tuesday, 12 July 2005 13:39 (eighteen years ago) link
― carbon (carbon), Tuesday, 12 July 2005 13:43 (eighteen years ago) link
but they get less funding. and when nearly 100% of the kids are economically disadvantaged, their parents don't always have time making ends meet to help them with their homework or to discipline them. or they've got parents who are basically fucking up hard. etc etc. so meanwhile, your kid might be one of the few in class that can read. the teacher is spending all her time with every other student or with discipline issues cause so many kids just doesn't care, or are bored, etc. there's just a deficiency.
what do you do? it's your kid's future hanging on your actions.
i personally would rather go for some middle ground. not snootyville academy. but public school in a middle class neighborhood where they will still get some diversity yet still get attention. then, on top of that, make sure my kids hang with lot's of other types of kids.
me and my wife went to ghetto schools and survived, but frankly, i KNOW i got held back. i can live with my own fate, but i want better for my kids.
i don't know if that makes me some kind of sell out to certain ideals i've always put forth. have i?m.
― msp (mspa), Tuesday, 12 July 2005 13:55 (eighteen years ago) link
It's that Elvis song. The real estate people got so mad at him after that, they had been flipping ghetto housing like crazy until he came along.
― TOMBOT, Tuesday, 12 July 2005 13:58 (eighteen years ago) link
I don't think this is true. What is true is that the value of the investment property should equal the present value of future rent cashflows. Once the mortgage is paid off, the landlord will still be able to collect rent, so that means that in the short-term, mortgage payments could exceed rent payments.
― o. nate (onate), Tuesday, 12 July 2005 13:58 (eighteen years ago) link
school district is a fairly common problem we are having as well as we are trying to start a family as well. most of the places we have seen have shitty schools...although their is always private school for mucho $$. But we figured by the time our children are old enough to start kindergarten (in 5 years time if we have one within the year), we may be able to pack up and afford a bigger home in a better district. we'll see.
― Lupton Pitman (Chris V), Tuesday, 12 July 2005 13:58 (eighteen years ago) link
― Lupton Pitman (Chris V), Tuesday, 12 July 2005 14:01 (eighteen years ago) link
Most real estate investors (ie people who buy houses and small apartment buildings to rent) think in terms of cash flow and short terms, like five years. You always assume that there will be a mortgage payment, and that the mortgage will never be paid off. Most investors don't hold property that long. So while you may find some cases to the contrary, look at it this way: If you are an investor and you want to buy a property to rent out, the immediate question is, "can I rent it for enough to cover the cost of ownership and also make some profit?" If the answer is no, then it's a bad investment.
― geyser muffler and a quarter (Dave225), Tuesday, 12 July 2005 14:07 (eighteen years ago) link
― o. nate (onate), Tuesday, 12 July 2005 14:12 (eighteen years ago) link
― geyser muffler and a quarter (Dave225), Tuesday, 12 July 2005 14:15 (eighteen years ago) link
risky. he's banking on the fact that boom or no boom, rich kids go to vanderbilt university here... and daddy will pay for the nice "condo" that's near bars, class, and all the other rich kids.m.
― msp (mspa), Tuesday, 12 July 2005 14:18 (eighteen years ago) link
But that's only in the short-term. In the long-term the rents will even out with the mortgage costs. And if there are any long-term investors in the market, they will affect the prices you can get.
― o. nate (onate), Tuesday, 12 July 2005 14:25 (eighteen years ago) link
geyser, nobody is paying attention to the rent ratio. They're paying attention to the free money. Everything just keeps appreciating, it's like magic, the prices just keep going up and up!
This paper by a couple of physicists shows the whole thing coming down on top of us in mid-2006.
― TOMBOT, Tuesday, 12 July 2005 14:27 (eighteen years ago) link
― geyser muffler and a quarter (Dave225), Tuesday, 12 July 2005 14:28 (eighteen years ago) link
― o. nate (onate), Tuesday, 12 July 2005 14:39 (eighteen years ago) link
― kingfish (Kingfish), Tuesday, 12 July 2005 14:43 (eighteen years ago) link
Calculations by The Economist show that house prices have hit record levels in relation to rents in America, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium. This suggests that homes are even more over-valued than at previous peaks, from which prices typically fell in real terms. House prices are also at record levels in relation to incomes in these nine countries.
America's ratio of prices to rents is 35% above its average level during 1975-2000 (see chart 1). By the same gauge, property is “overvalued” by 50% or more in Britain, Australia and Spain. Rental yields have fallen to well below current mortgage rates, making it impossible for many landlords to make money.
To bring the ratio of prices to rents back to some sort of fair value, either rents must rise sharply or prices must fall. After many previous house-price booms most of the adjustment came through inflation pushing up rents and incomes, while home prices stayed broadly flat. But today, with inflation much lower, a similar process would take years. For example, if rents rise by an annual 2.5%, house prices would need to remain flat for 12 years to bring America's ratio of house prices to rents back to its long-term norm. Elsewhere it would take even longer. It seems more likely, then, that prices will fall.
― teh Nü and Impröved john n chicago (frankE), Tuesday, 12 July 2005 14:49 (eighteen years ago) link
It's a renter's market because a lot of people are moving on from renting to buying, people in that echo boomer age range who all decided to settle down at once and caused a 'housing shortage' to crop up at the same time the investing populace of all ages decided condominiums were a better bet than tech stocks.
― TOMBOT, Tuesday, 12 July 2005 14:59 (eighteen years ago) link
I guess I'm a bit confused by this statement. How will the market not permit widespread losses on rent? Will owners just hold out and lose money until they can get what they need? Will renters just pay whatever landlords say? There are plenty of places that were bought years ago that don't need to get the kind of rent required to cover recent mortgages.
If the demand is not there at a given rental fee to cover mortgage costs for a certain price paid, then a loss will be generated. Since so many people are buying at inflated prices (economist cites NAR figure of 23% of houses bought in 2004 were for investment purposes), the possibility seems entirely plausible.
― teh Nü and Impröved john n chicago (frankE), Tuesday, 12 July 2005 15:00 (eighteen years ago) link
$315,000. I put 10% down, because I can, and my coworker here says he got a deal from Wells Fargo at 5.5% 30-year fixed.
That's $1,618.20 a month according to Bloomberg.com, not including the condo fee, maintenance, closing costs and all that jazz.
Right now I pay $1250 in rent, plus electricity, and that's it. That affords me the ability to put at least $400 a month into investment accounts which will hopefully weather this bullshit.
Also the building I live in is fucking old as hell, $315K? Fuck that! Sucker even covered up the hardwood with carpet.
― TOMBOT, Tuesday, 12 July 2005 15:14 (eighteen years ago) link
-- geyser muffler and a quarter (right.knewi...), July 12th, 2005.
The Economist had an article maybe 6 months ago saying the exacpt opposite -- that in MANY housing markets, right now, it's cheaper to rent than to buy. Potential rental income may be a large part of what drives value (if there is such a thing), but only supply and demand drive price.
Of course, this is for the reasons stated above -- investors buying lots of properties, property flipping, general market euphoria and/or panic.
Rental incomes are much more tied to reality, I think -- because you're not dealing with mortgage loans, people can only pay what they can actually afford to pay. And investors aren't renting, so there's not all that artificial pressure.
Also, when enough people are buying, it means those same people aren't renting, so less demand for rentals. And vice versa.
― Hurting (Hurting), Tuesday, 12 July 2005 16:07 (eighteen years ago) link
but you'll pay less in taxes if you're paying a mortgage which might more than make up for this difference; factor in the equity you gain in the condo and you could well come out ahead. but I'm not an accountant so maybe not.
― kyle (akmonday), Tuesday, 12 July 2005 16:15 (eighteen years ago) link
― Hurting (Hurting), Tuesday, 12 July 2005 16:16 (eighteen years ago) link
I pay less in FEDERAL taxes, but the county and the state could give a shit. If I factored that in, which the bloomberg calculator doesn't, I suspect my ACTUAL monthly payment would be even more.
― TOMBOT, Tuesday, 12 July 2005 16:19 (eighteen years ago) link
― Hurting (Hurting), Tuesday, 12 July 2005 16:21 (eighteen years ago) link
― Bnad (Bnad), Tuesday, 12 July 2005 16:41 (eighteen years ago) link
― Hurting (Hurting), Tuesday, 12 July 2005 16:57 (eighteen years ago) link
― Brian Miller (Brian Miller), Tuesday, 12 July 2005 17:03 (eighteen years ago) link
― Allyzay knows a little German (allyzay), Tuesday, 12 July 2005 17:05 (eighteen years ago) link
― Hurting (Hurting), Tuesday, 12 July 2005 17:37 (eighteen years ago) link
Damn. Looking back at my contributions to this thread, I was wrong enough to feel pretty ridiculous. (puts on his dunce cap)
― Aimless, Friday, 1 June 2012 16:07 (twelve years ago) link
This thread is kind of fascinating to read with hindsight. And I was mostly OTM in 2005.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 1 June 2012 16:32 (twelve years ago) link
BTW, I will make another call right now: there is a mini-bubble in Brooklyn condos, fueled by low rates and tax abatements. Prices will momentarily appear to be heating up, but then will slow down again (although I don't expect a huge drop either).
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 1 June 2012 16:43 (twelve years ago) link
I am guessing same is true in some other markets as well -- low rates are enticing buyers but overall credit is not flowing like it used to and any bump will be shortlived.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 1 June 2012 16:59 (twelve years ago) link
IT IS HAPPENING...AGAIN
http://online.wsj.com/article/SB10001424052702303296604577450810342727388.html
By NICK TIMIRAOS Federal officials are broadening their investigations of mortgage lenders that use a popular federally backed mortgage program, a move that could force more banks to pick up some of the rising tab for losses at the Federal Housing Administration.
U.S. attorneys already have reached settlements with four banks, Bank of America Corp., BAC -1.48%Deutsche Bank AG, Citigroup Inc. C +0.37%and Flagstar Bancorp Inc., FBC +0.13%recouping $1 billion for the FHA.
Last month, the inspector general for the Department of Housing and Urban Development, which oversees the FHA, issued subpoenas seeking information from additional lenders, including MetLife Inc., MET -0.17%SunTrust Banks Inc. STI -0.09%and U.S. Bancorp, USB +0.24%among others, according to people in the banking industry.
The FHA doesn't make loans but instead insures lenders against losses on mortgages that meet its standards. In the past, the FHA has looked into whether lenders ignored cases of potential fraud and failed to properly verify borrowers ability to pay. The subpoenas could be used to uncover potential violations of FHA program rules. If they discover violations, the findings could be used to strike a financial settlement with the lenders.
The moves are the latest sign that officials are trying to protect the FHA from needing a taxpayer bailout by recouping losses from lenders. Representatives for HUD and the inspector general's office declined to comment.
Representatives for the banks declined to comment. MetLife, which disclosed the receipt of two subpoenas in a federal filing last month, earlier this year said that it would exit the mortgage business.
The scrutiny also raises the possibility that lenders will become more cautious when underwriting government-backed loans. "Lenders are practicing the mortgage equivalent of defensive medicine," said Brian Chappelle, a former FHA official who runs Potomac Partners, a mortgage consultant. "Instead of requiring more tests, lenders are excluding more borrowers to protect themselves from liability that they feel they could not otherwise protect themselves from."
Last month, Wells Fargo WFC -1.12%& Co. told lenders that it would no longer purchase FHA-backed loans with credit scores below 640 beginning June 11, though it continues to make those loans available through its retail division. A bank spokesman said the change was the result of regular adjustments of credit policies.
U.S. Bancorp originated $3.3 billion in government-insured mortgages during the fourth quarter, making it the fourth-largest lender of government-insured loans during that period, according to Inside Mortgage Finance, an industry newsletter. MetLife and SunTrust ranked 12th and 15th, respectively.
The FHA wasn't heavily involved in the mortgage bubble because private lenders provided credit on easier terms. But the agency saw a surge in business beginning as the private market seized up in 2007 and later as Fannie Mae and Freddie Mac tightened standards. The FHA allows buyers to make down payments of just 3.5%, which has made it the last major outlet of low-down-payment mortgages.
Fannie and Freddie can more easily force banks to buy back delinquent loans that are found to run afoul of their lending standards, and banks have imposed tougher lending standards than what the mortgage companies require in order to deter against those costly buybacks, which have cost lenders billions of dollars.
The FHA insured more than 700,000 mortgages that were 90 days or more past due or in foreclosure at the end of March, representing about 9.4% of all mortgages it guarantees.
While the agency had $32.3 billion in reserve at the end of March, its independent audit last fall estimated that after expected losses on its current business, it would have just $2.7 billion to cover unexpected losses on more than $1 trillion in loan guarantees.
A more conservative forecast by the White House's budget office in February found that without the recent settlements, the FHA would have been short nearly $700 million, requiring a taxpayer infusion for the first time in its 78-year history.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 8 June 2012 15:50 (twelve years ago) link
great
― curmudgeon, Friday, 8 June 2012 15:58 (twelve years ago) link
From 2009:
http://www.nuwireinvestor.com/articles/the-next-subprime-mortgage-bubble-courtesy-of-the-fha-53733.aspx
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 8 June 2012 16:23 (twelve years ago) link
This seems really, really fucking bad. FHA is propping up the housing market. FHA takes huge losses on its insured loans = double whammy. (1) Taxpayers on the hook for bad loans.(2) No more FHA propping up housing market = further price declines, further defaults, same shit all over again.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 8 June 2012 16:38 (twelve years ago) link
FFS
― Convert simple JEEZ to BDSMcode (Austerity Ponies), Friday, 8 June 2012 16:39 (twelve years ago) link