In todays slow housing market, what considerations when buying? (agent, mortgages, buy)
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Not sure where the 10% appreciation figure came from. Maybe in a few select markets over short periods of time, but my house in what's considered a fairly desirable midwest market has not increased the last couple years. Nice come tax time. Over the long term I don't think home prices increase anywhere near the stock market's 10-11% average.
To any of you that want to buy a house, what factors do you consider? Do you buy a smaller, cheaper house and/or in a cheaper location and wait for house prices to keep falling? Is appreciation not on your mind anytime soon?
Appreciation is not the #1 factor in my mind when looking at houses/neighborhoods, but it is a consideration. Ideally we'd like to buy a home and stay there for the rest of our life, but realistically we'll probably buy a home that will feel a little small once we have a few children and they are adolescents. At that point, we'll probably want a larger home. I think as long as a person buys a home in a safe, clean neighborhood with decent schools, the home will most likely appreciate (real estate almost always does), although how much and how quickly is anyone's guess. I don't expect to get rich off of the appreciation of our home, I would just like it to be enough to help us upgrade when the time comes.
Good for you for staying focused on retirement planning as well. Sometimes it is so tempting to think, I could take the money I put into my retirement account every month, and put it towards our savings for a home instead. But when you retire, you can't eat your house. lol
No, but if you're home is paid off/near paid off at retirement you can tap funds with a reverse mortgage to use for groceries and other living expenses. With the abysmal US savings rate don't be surprised what people will do to get by in the near future. Inflation-indexed reverse mortgages anyone? Don't laugh, they're here already, along with many other non-traditional income producing schemes/products.
Oz, it's possible. But London has entirely different homes then we do in the U.S. A lot of people here wouldn't consider living in a house that was built 50 or 100 years ago. In England, a lot of people are living in houses that were built 500 years ago. They're just much better quality then our houses. It wouldn't be strange for someone to take out a 50 year loan there, have most of it paid for and then leave it to their children. That same house could be in the family for many generations to come and that's not the case here.
In England, a lot of people are living in houses that were built 500 years ago. They're just much better quality then our houses.
It depends on the house. A thatched roof will not last 500 yrs, especially in London's climate. In fact, few building materials will last that long. Do not buy into the myth that everything European is built better. It's not. If everything in the house has been replaced, how old is the house, really? Plus, a lot of housing stock in London was lost in WWII and replaced. I am not familiar with European mortgage policies, but I would guess there's another reason for a 50 yr mortgage, like extremely high price. Remember when car loans were for 3 yrs? Then car prices shot up, and all of a sudden, the loan term lengthened.
Something that people dont realise is they will give up nearly two million in stocks/funds in order to have a bigger, better house. I will be content with a $25k to $50k house, its big enough, why should I give up my retirement for that? Comments please.
Would you consider living in a manufactured (mobile) home or do you insist upon a stick-built home? One problem with mobile homes is that you end up paying site rent, so you still do rent unless you've purchased a plot of land and set your home down on it (but if you do that, you've probably exceeded $50,000). If you don't mind paying a couple hundred a month for site rent, you coud probably find a nice used doublewide in the $25,000-50,000 price range.
Last edited by Bhaalspawn; 03-05-2007 at 06:36 AM..
Anyone with any real estate savvy will tell you that IF you can afford it and plan to stay in the same area more than 2 years you are much better of to buy rather than rent.
That is the conventional wisdom, however, it's necessary to ask whether or not it still holds true today, especially at a time when housing prices have soared to stratospheric and irrational heights.
I don't understand enough about the expenses and tax deductions (if any) associated with home ownership, so it's hard for me to say. I also wonder about the cost of interest paid on a mortgage and whether it's possible to recoup all of that (especially when houses are so gosh'd darned expensive).
"Anyone with any real estate savvy will tell you that IF you can afford it and plan to stay in the same area more than 2 years you are much better of to buy rather than rent."
I'm just wrapping up two and a quarter years in a home I had built. Paid cash. In my case I wish I had rented a affordable efficiency apartment these past two years and sat on the sidelines. I'd be better off if I had put my home buying money in ultra short-term tax-exempt bonds and 5% in an emergency money market fund. Looking to buy now in the current housing market where I am I'd have done better. I didn't buy at the top. Too bad for people who did. I've neighbors across the street up to their eyeballs in debt who have no room to maneuver if something goes wrong in their lives. I know a couple in a home similar to mine who work at Walmart and a hair saloon with a heavy mortgage for their 175K home. They bought in mid-2005 with 5% down, and they are w-a-y over their heads with a child on the way. They have no formal education, they have a lack of financial savvy (to say the least), and they got caught up in the 'anyone can buy, prices will go go up, now is your chance' etc. They put their home on the market three weeks ago at a price w/i area comps and they got zero offers anywhere near their asking price. Their house is now off the market. I wonder how many people are in similar situations?
No one can predict what will happen in the housing market/economy in the next two years. Life changes. Even though I did due diligence at the time I built, I'm close to break even on my home at area comp prices. I want out of here now, but to do that I: lower my price to get out, lease out the place and hope the wear and tear and renter hassles don't degrade value and cause worry, or sit out the downward spiral and await a rebound in the housing market. Well anyway, reality check. Some people have real troubles. Today I mail another UNICEF check. Look before you leap.
You missed a key element of my statement. That was IF YOU CAN AFFORD IT. The examples you gave are people who bought something they could not afford. The money you pay in rent is out the door and can not be recouped. Even if you only break even when selling you are ahead by buying when you consider the money you would have spent on rent. Since the previous poster paid cash (which is an excellent idea for those that can afford it), there would not have been any income tax advantage.
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But London has entirely different homes then we do in the U.S. A lot of people here wouldn't consider living in a house that was built 50 or 100 years ago. In England, a lot of people are living in houses that were built 500 years ago. They're just much better quality then our houses. It wouldn't be strange for someone to take out a 50 year loan there, have most of it paid for and then leave it to their children. That same house could be in the family for many generations to come and that's not the case here.
