Is now a good time to buy? Seems so... Boston area

[ricket]

Re: Is now a good time to buy? Seems so... Boston area

Next, I hire you to do some work for me. In payment for that work, I give you the same $10 you previously gave me for interest. Now I have zero and you have $100.

Then you pay me back the $100 principal. Viola. Loan and all interest fully-paid. No magic or infinite money is required.

The danger comes when interest is paid by borrowing. The laws of compound interest will quickly catch up with you -- which is of course what the government is doing.

Interesting.

So now, not only do you take the "risk" of loaning me money, with which the reward for taking that risk is receiving the interest from that loan (after all, who would loan out money at 0% interest right? right?!). So you are then entitled to use that interest for *even more* work done by the same individual? This is kind of like double taxation. Or are you admitting that money is really a claim to individual labor, ie slavery as I stated earlier? If not, then you indeed get to reap the benefits of taking your risk with your money TWICE.

Now, what do you think would happen if enough people figured out that, just by having the monopoly power to issue money (and being able to issue it at their own will) they could take advantage of this system to their advantage? They get to issue as much as they want and as much as they need to get whatever agenda across they desire (so long as they dont issue too much of a single currency and people stop believing the purchasing power, aka the claim on labor, of such a currency). This system is EXTREMELY vulnerable to corruption and is why there should never be a monopoly on control and issuance of the money supply in the first place and that power should only rest with "the people" to determine what is considered money/currency.

People obviously admit that drug cartels and the Mafia exists. It's a well documented fact. Why are people so quick to deny that others (at a higher level) are willingly and actively trying to exploit and control a financial system to their advantage, and to the extreme disadvantage of others as in the scenario in the previous paragraph? The Mafia is organized crime for control of a small territory (such as a city or a neighborhood) and for goods and money (usually drugs) that flow through that territory. Why would anyone not think there was someone trying to control an even *bigger* territory (a country) and control *all* the goods and money in the country?? To deny people like that exists and are active/willing/able to accomplish such a feat is to deny the existence of imperialist empires (subsequently led by people such as Napoleon, Hitler, Saddam Hussein, et al.)

How come people are so turned off from debate? My family is the same way. They seem to be in denial about being enslaved by the money they need to survive. Why is that? How come no one wants to sit down and have a serious discussion and dealing with people who disagree is always "futile"? Isnt that what debate is all about? Is that not why we are all here? Why do you keep reading this site, if you only want to read 100% of the posts that you agree with?

[don]

Re: Is now a good time to buy? Seems so... Boston area

This has been posted before but it's so damn useful here it is again:

http://www.nytimes.com/2007/04/10/bu...et&oref=slogin

I suggest you run your numbers first, then play around with the sliders to see how things can really get out of hand.

[ThePythonicCow]

Re: Is now a good time to buy? Seems so... Boston area

How come people are so turned off from debate? My family is the same way. They seem to be in denial about being enslaved by the money they need to survive. Why is that?

Ah - we have a failure to communicate, ricket. There may well be, and I might well agree with, the threats you sense. However we can mostly only react to the literal meanings of the specific words you write here.

Perhaps you are overly stating, in an effort to gain our attention with more dramatic and absolutist statements, the nature of these threats. By overly stating, I mean not that you are exagerating the risk, but that you might be overly specific and rigid in the exact phrasing you use, with the end result that what you write (which for most of us is but a mere shadow of all that we think, feel or perceive) is, taken literally, incorrect.

Please understand that we are reacting to the literal meaning of the words you type, and not to the more subtle and complex awareness you have behind those words. When we find the words you write are invalid, it might not mean we are denying the validity of your awareness of the situation. Rather it might mean that the words you wrote served poorly your purpose of communicating the threats you perceive.

[ricket]

Re: Is now a good time to buy? Seems so... Boston area

Because your assertion is false.

What assertion? That we can't print our own money and that such power is "given" to the Federal Reserve (in the US)?

Last time I checked, if I printed my own money and tried to use it (think Liberty Dollar), I would go to jail or be forcefully shut down by those "in charge".

Do you have proof to the contrary of the statements that I have made, because I would love to see some official documentation. The only thing that I have to go on is the fact that every aspect of my life is determined by banks, loans, and monetary transactions all denominated in a currency that is only issued by someone other than myself, with no accountability (ie Congress) for who/what/how/when that currency is issued. And funny enough, practically every penny is issued with some form of interest. Do you have proof otherwise that this is not the case? I would love to see it. But nowhere in my adult life have I ever seen a big or prevalent mechanism for borrowing money that *DID NOT* utilize interest payments.

Also, I have tried to renegotiate some of my outstanding loans, saying I would pay 100% of the principal, but at 0% interest instead of defaulting and paying back a portion of the debt to a 3rd party collector (with interest of course). The continued persistence of charging *some form* of interest throws major red flags up in my mind. There's a reason they charge interest that they cling on to so dearly, and that's because it makes loans impossible to pay back in our current monetary system. There's no other explanation, and it paints everything I see around me going on in our economy in such a way that it makes 100% sense to me.

[ricket]

Re: Is now a good time to buy? Seems so... Boston area

Please understand that we are reacting to the literal meaning of the words you type, and not to the more subtle and complex awareness you have behind those words. When we find the words you write are invalid, it might not mean we are denying the validity of your awareness of the situation. Rather it might mean that the words you wrote served poorly your purpose of communicating the threats you perceive.

Again, why would anyone sign a contract which they knew was impossible to perform?

Would you sign a contract that says you will give your children to your neighbor if you couldnt grow 5 million tomatoes in 24 hours? Probably not, because it's impossible to do. So why would you knowingly and willingly sign such a contract?

I know why you (or others) disagree and/or dont see eye to eye with me, because you don't understand the gravity of what I am telling you. The entire US economy is being scammed by the Federal Reserve, and I can not find any shred of evidence to refute the claims that I make and Ive spent days and days doing research on fractional reserve lending, how money is created, and how loans are issued by banks. It's not really a question anymore. I believe what I say, and I am on a mission to tell as many people as I can, because it's so freaking simple it's terrifying.

"The process by which money is created is so simple that the mind is repelled.” -John Kenneth Galbraith

Will you please do some research on this matter, and if you find anything that proves me wrong, then please provide, you can PM me too if you find anything. I honestly mean that because I want to believe that what I have found is wrong. If what I think is true, it's so horrifying it's not even funny. These are the things that revolutions are made of.

[ThePythonicCow]

Re: Is now a good time to buy? Seems so... Boston area

Again, why would anyone sign a contract which they knew was impossible to perform?

Because such contracts are quite possible to perform ... I know because I have lent and borrowed money at interest many times, quite successfully.

The sentence I quote of yours is plainly incorrect. You state all such contracts always fail. I state that at least some such contracts sometimes succeed. I know this is so, for I've had them succeed.

Stepping back a bit, your mental model of what's wrong with usury is well known to most of us here, if not all of us. Your mind is doing much as mine does. When I have a mental model of how things are, and the world refuses to fit it, I tend to shout and scream that the world is wrong and in danger of a terrible demise. Usually the world goes on ignoring me ;).

If I bang my head hard enough and long enough against the concrete wall, reality seeps in a tiny bit, and I learn a little more in that school of hard knocks. My mental model improves and momentarilly life is once again less threatening and frustrating.

[petertribo]

Re: Is now a good time to buy? Seems so... Boston area

Here is just another unpredictable RE factor, energy. Does the condo depend in any way on a natural gas supply? MA nat gas lines exploding:

"These blasts, killing three and injuring one, have served as a reminder of the dangers associated with the massive underground pipe system tunneling beneath streets and delivering a flammable product to nearly 1.5 million customers in the state. The system's 21,000 miles of gas main would be nearly enough to travel around the circumference of the Earth. More than a third of the system relies on old, antiquated pipes."

http://www.boston.com/news/local/mas..._of_questions/

This will not be a cheap fix. Maybe Big Dig Quality.

For CA and US West RE buyers see thread: FED GOV Cuts Off Some CA Water: 60,000 Layoffs To Come.

[Munger]

Re: Is now a good time to buy? Seems so... Boston area

Again, why would anyone sign a contract which they knew was impossible to perform?

Would you sign a contract that says you will give your children to your neighbor if you couldnt grow 5 million tomatoes in 24 hours? Probably not, because it's impossible to do. So why would you knowingly and willingly sign such a contract?

I know why you (or others) disagree and/or dont see eye to eye with me, because you don't understand the gravity of what I am telling you. The entire US economy is being scammed by the Federal Reserve, and I can not find any shred of evidence to refute the claims that I make and Ive spent days and days doing research on fractional reserve lending, how money is created, and how loans are issued by banks. It's not really a question anymore. I believe what I say, and I am on a mission to tell as many people as I can, because it's so freaking simple it's terrifying.

I think you underestimate what your fellow iTulipers understand about the nature of fiat money and fractional reserve banking. Maybe this would make things clearer.

[Basil]

Re: Is now a good time to buy? Seems so... Boston area

FWIW, I think the time to buy is not now when rates are at historical lows and values are in freefall. The time to buy will be when rates are high. If mortgage rates hit 15%, that same $1288 payment will cover about a $100k mortgage. That's when you come in and buy it for cash.

My sister was telling me how she could buy a condo at auction for for $100k and the rent will cover the payment. I told her to stop thinking about the payment and start thinking about spending ONE HUNDRED THOUSAND DOLLARS you don't have on a condo you don't even want. It's just the lingering housing bubble dogma that makes us even consider these things at a time like this. Once we all wake up from that collective brainwashing, homes will be valued for what they are- a place to live. Their values will parallel incomes. When incomes start to rise and interest rates peak we will see the bottom in housing prices.

Do whatever you want, but I'm keeping my powder dry through all these false bottoms.

Jimmy

Jimmy brings up a very good point. It really is the price. As people have become so accustomed to buying property with mortgages, prices for real estate will go down as interest rates go up. People simply do not have enough savings for it to be otherwise. So the sale price at the time you may need to sell should be considered a more dominant factor than the current monthly payment. If the majority of people are stretching to make a certain monthly payment now when interest rates are still low, as interest rates return to normal new buyers stretching to make the same payments will be able to finance less and prices will necessarily fall. (taken from Bostonbubble) So if any unforeseen developments necessitate your moving, you may be deep underwater at the time you need to move. If anything leads to condo fees escalating rapidly, this will also eat into the price, as your prospective buyer will be calculating overall monthly payments with mortgage, tax and condo fee combined.

I once owned a unit for which the monthly fees went up very rapidly and certainly ate into my profits when I sold. After that experience, I hope to never buy another condo.

Last but not least, check out this chart of price to income ratios in the Boston area. To my mind, it says that RE in the Boston area has a long way to fall before prices stabilize.

[Glenn Black]

Re: Is now a good time to buy? Seems so... Boston area

The condo owners couldn't believe it either. They lost everything. The judge said his hands were tied by the Condo Act, the condo corporation rules & bylaws that everyone had agreed to, and lack of better alternatives.

Buyer beware of condos, restrictive covenants, and the capital account.

http://www.cbc.ca/canada/british-col...nightmare.html

A long and expensive court fight over condominium repairs has ended with a Vancouver man being forced out of his paid-off home.
A B.C. Supreme Court justice ruled Craig Fraser's condo could be liquidated — along with the rest of the three-unit building — after the two other owner-investors couldn't or wouldn't pay the repair bills for a leaky roof.
"It came down to two [owners] against one," Fraser said. "So, now I'm faced with a tough economy, being self-employed and having to move and rent and start over."
An investor was allowed to purchase the entire building at 1029 West 7th Avenue for the land value, approximately $1 million, following a July 23, 2008 court decision by Justice Victor Curtis. By contrast, the court estimated the building would have been worth about $2 million fully repaired.

"It's appalling," Fraser said. "I am just absolutely appalled."


Fraser has the biggest unit in the building, which the court said would have been worth an estimated $800,000 after repairs. Instead, the self-employed single father with a three-year-old daughter said he will get a cheque from the sale for approximately $350,000. He has to be out by March 12.
'I will probably never recover'

"I will probably never recover financially — I mean I am 48 years old. It's devastating and it shouldn't happen to anybody," Fraser said.


"Judges aren't, unfortunately, accountable [for their judgments] to anybody.

:eek:

[ricket]

Re: Is now a good time to buy? Seems so... Boston area

Because such contracts are quite possible to perform ... I know because I have lent and borrowed money at interest many times, quite successfully.

That's like saying because youre the 1st person in a Ponzi scheme that in fact achieves the 25% return, that since it works for a few individuals in the very beginning, that 1) it makes it sustainable forever and 2) it makes it right and there's nothing wrong with doing it. Ponzi (and other similar scams) are illegal for a reason, because they must eventually fail and when they do, they fail miserably to the advantage of a few and the extreme detriment of most of the other people involved. This completely explains what is happening in our financial system today. All those interest bearing loans that were created that could never be performed? Well it's coming "to a head" and *of course* there isnt enough money to pay back all the mortgages, credit cards, student loans, etc because again, the money to service the debt was never created in the first place, and all previous monies that came from principal went to service previous debt (interest) and new debt (more principal) had to be created to keep the system going.

The sentence I quote of yours is plainly incorrect. You state all such contracts always fail. I state that at least some such contracts sometimes succeed. I know this is so, for I've had them succeed.

I never said all contracts fail. I've only reiterated over and over that all contracts with interest bearing loans are inherently flawed, and in a closed system such as ours, in order to make a contract "perform", some other contract that is not in your control, must default.

Stepping back a bit, your mental model of what's wrong with usury is well known to most of us here, if not all of us. Your mind is doing much as mine does. When I have a mental model of how things are, and the world refuses to fit it, I tend to shout and scream that the world is wrong and in danger of a terrible demise. Usually the world goes on ignoring me ;).

The problem with this statement isnt that the world "doesnt fit". The problem is that it *DOES* fit. 100%.That's the scary part. Painting our financial system from the perspective I have laid out makes things so shockingly clear to me about what's going on...that it terrifies me. It's like waking up from a bad dream, only to realize that it's true and you werent really asleep.

If I bang my head hard enough and long enough against the concrete wall, reality seeps in a tiny bit, and I learn a little more in that school of hard knocks. My mental model improves and momentarilly life is once again less threatening and frustrating.

That's not reality. That's blood :p. And it only temporarily improves because youve lost feeling in your forehead because youve permanently damaged some brain cells! :eek:

And simply denying that you arent threatened at *this* particular moment and saying since the "rest of the world" is going about their merry business, to mean nothing will ever happen?...well tell that to the Jewish community living in Germany in the late 1930s. You don't want to have to learn the ultimate lesson in hard knocks waking up in a police state where you have no civil liberties or your freedom left.

And, to CharlesTMungerFan, who posted a link to wikipedia's entry on Paranoia...Paranoia comes about from threats that are perceived to not be real. Debt used as a means for slavery was well documented by our founding fathers and subsequent others. I guess they were all just paranoid too huh?

[metalman]

Re: Is now a good time to buy? Seems so... Boston area

I believe property ownership http://www.itulip.com/forums/showthr...3348#post83348

did you just fall off the turnip truck or do you work for the real estate industry?

google search 'itulip housing'

[cjppjc]

Re: Is now a good time to buy? Seems so... Boston area

Agreed. In addition no one here knows how old you are, married, kids, occupation, etc. Tolerance emotionally and financially to risk. Most of the factors which would go into the decision are unknown.

I have never bought housing as speculative investments. I bought housing as a place to live and, if I had some extra money, enjoy. Both times I bought, I paid cash. That made me a Homeowner not a Homedebtor.

As far as condos, as some have posted, wow, baby. How about the condo association, your mini version of DC, who runs that? Who will vote to TAX you against your will for some building bailout or unnecessary frill? Will some sociopath take over the condo association? This level of uncontrollable and unpredictable GOVERNANCE draws a thumbs down from me. My wife worked with a naive woman who bought a condo emotionally that had only two other owners. Yes, she was odd woman out with two real party-hearties. Ah, the joys of sleepless nights in your very own condo.

Have you read numerous books about buying your own home? Watch out for FIRE books which will encourage you to buy, buy, buy!

Have you fully researched rent v buy? I made more money renting than I ever did owning housing. Sit down and crunch those numbers. There are books which will show you how to make this comparison. That would be an interesting thread rent v buy present day.

Have you considered all the housing alternatives in your area? For instance, commercial locations that could be used for housing? A lot of urban areas with lofts and commercial space have over the years been gentrified and some folks have enjoyed a unique style of living while enjoying a good investment. I once rented a very large four room unheated flat in a blue collar part of the city. Easy subway ride downtown and to work. It was cheap, cheap and I banked all the profits. I fondly remember the neighborhood and the whole lifestyle.

Without knowing more details, do not buy.

You know I always have this arguement with people. Rent V Own, as far as which is the better investment. There is an implied bias twords owning. But if you crunch the numbers, even adding back the tax deduction, Renting is not too bad. People always leave out the need for repairs and improvements. Maintanence fees on condos. Money spent maintaning the yard and snow removal. The future property taxes. How you would invest the monthly savings if you rented. How much of your profit will be taken away when you sell. These and many others should be poured over.

All these iTulipers who ask if now is the right time. I've said it before. If you want to own a home. Do it. If you think your going to buy low and sell high. Good luck.

[sishya]

Re: Is now a good time to buy? Seems so... Boston area

If Interest Rates spike up(assuming it happens due to capital flight or bond revolt), the price of houses can still fall further. I am thinking of buying a house and this one of the downside risk I see.

[flintlock]

Re: Is now a good time to buy? Seems so... Boston area

If Interest Rates spike up(assuming it happens due to capital flight or bond revolt), the price of houses can still fall further. I am thinking of buying a house and this one of the downside risk I see.

The question is how much farther can they fall. ( I still think a good bit in some areas, not so much in others). Real Estate is local. You have to remember that there are still new homes being built in America. Nowhere near the levels during the boom, but still a substantial amount. When prices fall to below the cost of building home, or even close to the break even point, construction will stop dead in its tracks. Its already happened in a lot of areas. This will reduce the glut of homes and prices will stabilize. Knowing what I do about construction costs, the prices in my area simply can't drop much farther as they are already at or below cost in many markets. Even for modest homes. Vacancy rates are still fairly low and new construction is still going on at a slow rate. Some of the more modest homes I see for sale may actually be a good deal now. Example is a home I worked on a few weeks ago. Foreclosure. 1800 sq foot ranch on one level acre, three car garage. 7 years old. Sold for $120,000. Needed about $10,000 of work to make it like new. You couldnt build the structure for that much, much less buy the lot. Just a good solid home for a family. Could be considered a good buy. PITI would cost around $700 month vs rents in the area that are at least $1300 month for the same. So it really depends on the individual circumstance. Condo values are all about the real estate the property sits on. More so than single family homes. With condos the RE costs more than the structure typically. The opposite is true of single family homes.


I think what we will see is more modest homes, costing less to build. The bigger sprawling homes will see the biggest drop. And since demand for them will probably never reach what it was, those may never recover their values. People are not as wealthy as they thought they were.

Another factor is the age of homes in a real estate market. Every year, older homes are retired, fall apart, or otherwise reach a condition where people no longer feel its worth keeping. Older homes are also less efficient and cost more to maintain. So older areas will need more new construction in the long term than newer areas.

Anyone with less than a five year window should be careful about buying in this market imo. Only buy if buying will save you money or gives you something you need out of owning a home. Don't look at it as an investment. A lot of you renters are ignoring some good reasons SOME people want to buy. Have kids? Do you want to uproot your kids from school and friends every few years when the landlord hikes the rent or decides to sell? Run a business from home? Have a workshop? Some prefer stability over the money. Every situation is unique.