What to do about a house?

[zoog]

Re: What to do about a house?

Good credit may not be good enough

Thanks for the link.

I wonder if sometime in the next 10 years, lenders will go to requiring 20% down no matter what.

Did I say 10 years? I meant 10 months. :eek:

[c1ue]

Re: What to do about a house?

HOMEOWNERSHIP RATES

	2000	1990	1980	1970	1960	1950	1940	1930	1920	1910	1900
United States	66.2%	64.2%	64.4%	62.9%	61.9%	55.0%	43.6%	47.8%	45.6%	45.9%	46.5%

You left out the other half of this graph...

http://www.cepr.net/index.php/data-b...-debt-burdens/

As a result, the ratio of equity to home value is falling sharply. At the end of the fourth quarter of 2006, the ratio of equity to home value stood at 53.1 percent, down from 54.3 percent at the end of 2005. By contrast, it stood at 57.9 percent as recently as 2000, and was close to 70 percent until the nineties.

Check this Dr. Steven Keen presentation out:

http://www.science.ase.ro/Real/Prese...RecordDebt.ppt

[Guest]

Re: What to do about a house?

Is there any information out there on expectations of just how long 30 yr fixed rate mortgage rates will remain at around this level? 3 months? 1 year? ???

By level I mean within 1% or so.

If one rents now and saves but 5 years later they have to get an 18% mortgage that would effectively price them out of home ownership, wouldn't it? Home prices can only fall so far, I suppose.

[Ant]

Re: What to do about a house?

I maintain a number of charts on housing data, mostly Portland but also some national, you've seen me post one or another occasionally. I won't load this up with charts, but I will post the inventory chart for Portland, because I think it pretty much tells the story.

Hey zoog,

Congrats on the sale!

Do you maintain these charts in one particular place? I, for one, would be very interested in seeing the Portland data.

Thanks,
Ant

[zoog]

Re: What to do about a house?

Hey zoog,

Congrats on the sale!

Do you maintain these charts in one particular place? I, for one, would be very interested in seeing the Portland data.

Thanks,
Ant

They've just been all over the place in various threads, mostly in the housing bubble section. I've noticed in the new Photoplog there is a section called Member Charts and Graphs, so maybe it would be alright to post a couple or three there. A question I would have for FRED is can the images be replaced without creating a new entry? I'd hate to have ten updated versions of the same chart.

The March RMLS Market Action Report comes out in the next few days I think, I'll be able to update the inventory chart with the new data. Saw on a local realtor's website a preliminary estimate that sales are down nearly 40% from a year ago, while median/average prices are about flat.

Give the Portland Housing Blog a try, they've recently been adding charts from both RMLS and Case-Shiller data. The links are over on the top of the sidebar.

[santafe2]

Re: What to do about a house?

Great thread. I'm not sure how so many have enough time to keep up with all the good threads on iTulip. Between work and family, I know I don't. We live in a small town so the ride up and down will not be as dramatic as it has been in some locations but we did scale down in mid 2004, (a little too early), and again in mid 2006, (a little too late), when we opted for land value over house value. We bought to develop but it's clear that the current real estate market with 12 months of product for sale is not clamoring for new product so we'll be content to let the kids have a lot of room to ride bikes, hike and have places to play without adults hovering over them.

Since this is the second time we've been through a strong downturn in real estate, (the first time was Los Angeles 1989-1995), we have a much different attitude about it and have been more proactive about finding a place in which we're happy while we wait for the bubble to unwind and can re-focus on what we want to accomplish here. Until then, it will be all about forts, tree houses and secret hiding places. That doesn't seem like such a bad trade off for profit.

[Ant]

Re: What to do about a house?

Cool - I had not seen PHB before. Thanks zoog!

[c1ue]

Re: What to do about a house?

Is there any information out there on expectations of just how long 30 yr fixed rate mortgage rates will remain at around this level? 3 months? 1 year? ???

By level I mean within 1% or so.

If one rents now and saves but 5 years later they have to get an 18% mortgage that would effectively price them out of home ownership, wouldn't it? Home prices can only fall so far, I suppose.

It depends on your cash flow practices.

If you take rent the same house as you would have bought 2 years ago and saved the cash delta, the loan you would have to take out could be appreciably smaller.

For example in the Bay Area: Buying a house would have cost me twice as much per month as renting does.

I take the $3K/month, times 12 months, times 7 years = $250K+ even assuming zero interest growth and equal expenses between rent maintenance and house maintenance.

So even if prices stay the same at around $500K, I'll be paying on a loan of 1/2 the size. Worst case I may be paying the same amount of interest, but my outstanding debt will be low and can be further discounted by additional capital.

Compare to if I had bought: $6K/month of which 80%+ will still be interest payments.

Again, not clear to me that even in 18% interest rate scenarios, that I'll wind up better off. Keep in mind that with 18% interest rates, the assumption that prices stay the same will be absolutely wrong.

In a scenario of 18% interest rates, it would be safe to assume a 40% average price drop. Then the cash at hand will pretty much buy out the house in question.

[FRED]

Try this Rent versus own calculator

Try this Rent vs Own Calculator

You like it. Don't forget to put a minus in the appreciation rate field. :eek:

[Jayhawk]

Re: What to do about a house?

I was curious if anyone who replied ended up selling their home.


We just put ours on this past month. I priced it just slightly above (10K) what we paid. We kind of figured it would pretty much take the perfect buyer in this market to get a sale. Last weekend, we had a couple in town from CA look at our house and 30 others. I guess ours came up number one on their list, so we will see. He has an offer in town with a new hospital.

[RebbePete]

Re: What to do about a house?

Relocation situations are about the only house purchases that are happening. Anyone know if there are companies out there who will buy your old house for you if they ask you to move to a new position in a new location?

- Pete

[World Traveler]

Re: What to do about a house?

I think you were able to sell, because you were very reasonable about your price and house's worth in today's market.

I once had to sell a home in a very tough market, Houston early '90's. I first did a survey of all homes for sales in my sub-division to find out their asking prices. I then priced my home slightly below the lowest asking price I found (homes all of similar size and style). Which came to slightly below price we had paid for the house.

Finally, to save money, I acted as my own realtor. Advertised in local Greensheet and newspaper, created and put flyers in a box in front of house, did all the showings myself, etc.

I had 2 offers and house sold in a month and a half. Which was all I really wanted.

[blazespinnaker]

Re: What to do about a house?

Peak Gold has dropped more than peak RE prices have.

Everyone's situation is different.

Ignore the glib answers, and read the answers that give you nuance (ie, pros / cons).

[grapejelly]

Re: What to do about a house?

i sold mine in 2005 and have happily rented.

[jpatter666]

Re: What to do about a house?

I live in the Virginia (Reston) suburbs of DC. While the outer burbs have been crushed, inside the Beltway (Arlington/Alexandria) and DC itself haven't been hit so hard -- that's a major discussion point on the Northern Virginia Housing blog http://novabubblefallout.blogspot.com

I bought my townhouse in late 1996 on a 15 year loan. Nearly paid off (I could do so any day, but I've got better things to do with the cash). So far, rent is larger than my mortgage + taxes + insurance, even before the tax writeoff.

I certainly considered selling the place and renting, but I like the idea of having a place that is mine (yeah, yeah, with the "rental" fee from Fairfax county). More importantly, my wife likes being able to paint the walls (she's got a taste for colors) and change things.

Sometimes the intangibles are worth it....at least at the price we paid. ;)