patrick.net

Well done PockyClipsNow! For the next 5 years you will save $24k / year versus renting a comparable property = you save around $125k already in the first few years and therefore recoup most of your down payment. Besides that you now have a really happy girlfriend and if (God forbid!) for any reason your sexy girlfriend leaves you later on you will be in good shape as an owner of a horse property to quickly find a replacement for her. Just don't depend too much on the option to refinance later on, that was promised in the past to all subprime borrowers and made them only loose their home. There is quiet a possibility that your home in 5 years from now will have drop from $875k down to $700k or so, leaving you with no equity, but if you got another $100k cash or so to drop in the bucket you might be able to refinance. The reason I say the value might drop is because as we all know we are right now in an artificial market manipulated by banks and government. Maybe this will change sometime in the future (? or maybe not?)

Good luck to you in 5 years when your monthly turns into $6500/mth and the bank isn't returning your calls. This will be great timing, because you will probably be getting about $1500/mth in unemployment insurance, so all will be good.

War says

Bigsby,

You, Roberto and LIEWog have long since been established as liars.

And if Darrell in Phoenix says it...

Reader says

What all other? I don't know what your reading or intellectual skill level is at either that .pdf states a number of major cities not just three in decline. It lists six major citieis in decline out of eleven, that is a majority.

It's called an example, not a reference to his pdf, an out-of-date pdf at that (and it lists 10 cities not 11 - perhaps it is you who needs to improve your reading skills).

And explain to me what is happening to prices nationally. What does the Case-Shiller index say about house prices?

War says

1) The data is quarterly. It's only 3 months old. And you ran from it like a coward 3 months ago.

2) RENTAL RATES ARE FALLING in price per square foot IRRESPECTIVE OF LOCATION.

3) You are LYING to the public about housing. That is why you are known as LIEWog.

And what should we know you as? Darrell Not in Phoenix?

War says

I'm glad you like it.

It shows rental rates falling in the majority of cities.

why run from it?

There are only ten cities in the US? I thought it was bigger.

War says

Bigsby says

There are only ten cities in the US? I thought it was bigger.

Liewog...... tsk tsk.

So it's not just your own name that you are confused about.

War says

Now LieWog.... it indeed show falling rental rates in the majority of cities.

Your stunts and lies grow larger by the day.

So you use data from a report 6 months ago that shows the national average went up 4.4%, and you focus on the fact that rents declined in 6 cities. OK. Maybe you can explain why those 6 cities are more important than the national average.

Bigsby says

And explain to me what is happening to prices nationally. What does the Case-Shiller index say about house prices?

I am not concerned about "pricing" in the sales market because I know anyone can ask anything for their real estate like any other for sale item. Also a few grossly overpriced properties can and will skew an average like mad.

The listed prices both for sale and rentals will adjust, as they always do but what is going down is going down (no owner has a pecunary interest in a stat of something going down in price,) while fact is that stats showing upward movement can and are often manipulated for pecunary reasons.

It is clear to me what has and is happening, and that stated I personally am not buying any real estate right now. I do feel property has a way to go down. I feel rents are grossly inflated.

Here is where the REAL money is going

http://www.sothebys.com/en/auctions/2012/contemporary-art-evening-auction-l12024/videos.html?bctid=1901038146001&bclid=1876577103001

Reader says

I am not concerned about "pricing" in the sales market because I know anyone can ask anything for their real estate like any other for sale item. Also a few grossly overpriced properties can and will skew an average like mad.

The listed prices both for sale and rentals will adjust, as they always do but what is going down is going down (no owner has a pecunary interest in a stat of something going down in price,) while fact is that stats showing upward movement can and are often manipulated for pecunary reasons.

It is clear to me what has and is happening, and that stated I personally am not buying any real estate right now. I do feel property has a way to go down. I feel rents are grossly inflated.

Rents may or may not be 'grossly inflated' and the same for house prices, but that is irrelevant to War's claims of falling rental prices that you were defending. His own link from 6 months ago shows rents are rising nationally.

RentingForHalfTheCost says

For a lot of my high tech friends who bought in 2006-2007, yes it did. They were forced to go back to being renters. All the talk about owning gives you flexibility to paint the walls, put up pictures, etc. etc. Owning can bite you in the ass so hard you'll never be able to sit down again. As a bay area renter/ multiple owner in other countries, I see the owner greed and the damage it causes. Go ahead and throw good money after bad. Just don't be surprised if all this happens again. I promise I won't say "I told you so".

Obviously housing can bite you on the arse if you buy at the peak of a huge bubble. However, that's not what we are talking about now.

Bigsby says

Rents may or may not be 'grossly inflated' and the same for house prices, but that is irrelevant to War's claims of falling rental prices that you were defending. His own link from 6 months ago shows rents are rising nationally.

I am not talking about national averages. I have already made clear I don't believe in them. I am claiming what I see against what is out there on a case by case and region by region basis.

Reader says

Bigsby says

Rents may or may not be 'grossly inflated' and the same for house prices, but that is irrelevant to War's claims of falling rental prices that you were defending. His own link from 6 months ago shows rents are rising nationally.

I am not talking about national averages. I have already made clear I don't believe in them. I am claiming what I see against what is out there on a case by case and region by region basis.

What?

Bigsby says

What?

I guess you need to re-read it a few more times. War's claims of falling rental prices in the majority of major cities (as far as I know he listed three) but those all listed there are eleven shows six cities have declined and that is supported by the .pdf. There is nothing to dispute on that issue.

Reader says

I guess you need to re-read it a few more times. War's claims of falling rental prices in the majority of major cities (as far as I know he listed three) but those all listed there are eleven shows six cities have declined and that is supported by the .pdf. There is nothing to dispute on that issue.

There were 10 cities mentioned in that 6 month old report not 11. You focus on six cities because it supports your bearish take on real estate. That is a very questionable approach to take when 6 cities constitutes such a tiny fraction of the overall market. A more honest approach would be to accept the figures nationally with the caveat that there are some variations in particular markets. You cannot however take that data and try to spin it that rental rates are declining as War tries to do. That is obviously disingenuous.

Pocky,

I understand where you come from and I may do similarl thing here (but with much lower price and risk.) But is it true you can ALWAYS mod the loan with an ARM?

PockyClipsNow says

Its way way closer to work. (that why its so much $)
Commute now is 30 to 60m now it will be 15 max.

Maintenance is a cost. Its been remodeled, so should be low.
Im not getting flood nor quake insurance. There is no mortgage insurance, i put 20% down.

Lender does not have right to go after other assets on purchase money loan in california. so max loss if the pocky clips happens is 175k + 3k in loan fees + all maintance. But it takes 2 years to foreclose so I could rent it at 4k per month for 2 years which is 96k in rents while I play the loan mod/pretend to short sale shuffle with the bank in that scenario.

Keep in mind the risk of renting is that prices will go up. (they just did, the bottom was in 2010 and 2011). We might revisit that bottom, but not in 2013 or 2014 there is simply no inventory.

PockyClipsNow says

total: 2588
(im in 28% effective tax bracket so 2588 * .72 = 1863 'after tax write off payment')
Add fire ins of 129 per month and total pmt after tax write off = $1992

You have to add back in the amount of taxes saved from the standard deduction since you would get it no matter whether you bought a house or not. About 277 per month.

PockyClipsNow says

If rates spike in 5 years I will simply pay off the loan, refi, or get a loan mod - no worries here.

So if you have 700k in the bank to pay it off why not just pay cash and put 2k a month in the bank rather than giving it away. If you are in the 28% bracket you would have to make almost 3k a month to net 2k a month after taxes on your 700k. That means that you have to make 5.4% (really, really good returns in today's market) on your 700k year in and year out to break even. That also doesn't include any earnings from the 2k a month going in.

Sorry but I really don't understand your math or your statement that you could just pay it off, implying you have 700k in the bank, is incorrect.

Where in LA are people selling estate homes with acreage for horses at 875k? Just curious.

I believe there were eleven however if ten I will stand corrected but note as an aside if ten then the case for six in decline makes the case even stronger.

On the issue of fractions, yes as I stated I don't care about national averages. I am only looking seriously at local regional issues on a case by case basis. There are just too many factors that come into play for anyone trying to claim rising anything without equal proof because again pecuniary interest is on them rising not declining. As far as I have seen War has listed the cities clearly he states are declining and has shown proof that they are indeed declining. It would surely be disingenuous to say otherwise from what I have read. Am I missing something?

Reader says

I believe there were eleven however if ten I will stand corrected but note as an aside if ten then the case for six in decline makes the case even stronger.

You have the link. You can see how many cities were mentioned. And it doesn't make your case stronger. The proportion of cities mentioned that had declining rentals over that period is irrelevant when talking about overall rates. I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

For someone to say that rents are falling "irrespective of location" should put them on a 3 strikes and you are out list. This sort of lunacy is not conducive to learning or debate.

Reader says

On the issue of fractions, yes as I stated I don't care about national averages. I am only looking seriously at local regional issues on a case by case basis. There are just too many factors that come into play for anyone trying to claim rising anything without equal proof because again pecuniary interest is on them rising not declining. As far as I have seen War has listed the cities clearly he states are declining and has shown proof that they are indeed declining. It would surely be disingenuous to say otherwise from what I have read. Am I missing something?

Yes, you are missing something. War makes post after post generalizing out his claims. He says rents and prices are cratering. He may sometimes mention specific places in his posts but as a whole he talks in generalities, and if you don't see that, then you aren't reading his posts.

War says

And you lying realturds cherrypick a street where prices aren't falling and call it a national trend.

You liars.

There you go Reader. Still want to defend him?

War says

The truth doesn't need defense. It stands on its' own merit.

Something you might want to consider LieWog.

I see names are still confusing you. How's life now you no longer live in Phoenix?

Bigsby says

I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average? It wouldn't get published because it would make no sense. That isn't what the article at hand did, yet opened by saying on average the nation showed an increase however made clear by including major metropolitan cities showed that six of which were clearly declining.

You aren't making any sense here to me.

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average? It wouldn't get published because it would make no sense. That isn't what the article at hand did, it included major metropolitan cities and six of which were clearly declining.

You aren't making any sense here to me.

What? The report shows the national average rising by 4.4%. They only reported specifics for 10 cities that they had information for. A different report could have easily used data for 10 cities that had nothing but rising prices and that would have matched the national trend. That would have made just as much sense as this report - more in fact because it would have been more representative of the national trend. These people happened to have data for 10 cities, 6 of which showed declining rates (some time ago). Why they used those particular cities is something you'll have to ask them. Those cities clearly weren't representative because right at the start it states rates nationally had gone up 4.4%. What part of that doesn't make sense to you?

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

Bigsby says

A different report could have easily used data for 10 cities that had nothing but rising prices and that would have matched the national trend.

One that "easily" shows the opposite based on the same ten major cities? And show the same national trend? I have yet to see it. How could it be done in the first place since those ten major metropolitan regions represent a greater population than their surrounding regions?

Bigsby says

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

WTF?

Reader says

One that "easily" shows the opposite based on the same ten major cities? And show the same national trend? I have yet to see it. How could it be done in the first place since those ten major metropolitan regions represent a greater population than their surrounding regions?

Do you just enjoy changing what people say? The national trend shows a rise. I'm pretty sure it wouldn't be too difficult to find 10 cities that also have rising rentals. I could then write a report mentioning the national increase and including 10 cities with rises. The point being that it is the national trend that is more significant than individual cities when discussing the situation generally rather than in one specific locale. Again, what is so confusing about that unless you completely misunderstand the point being made and/or want to twist what is being said?

Reader says

Bigsby says

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

WTF?

Bigsby says

I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates.

Like I said, where did I say that? Where did I mention anything about averages? Here is what I said:

The proportion of cities mentioned that had declining rentals over that period is irrelevant when talking about overall rates. I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

My point once again, as it seems to have completely passed you by, is that I could select any cities I like to show rising or falling rentals. That doesn't mean I am demonstrating anything except what is happening in that particular location. If you want an overall picture of what is happening, then you look at national trends. Again, why is that so confusing to you?

Bigsby says

Do you just enjoy changing what people say?

By asking a few questions? Stop.

Reader says

Bigsby says

Do you just enjoy changing what people say?

By asking a few questions? Stop.

You aren't asking a few questions. You are changing what I said.

soopercommuter says

Down here buying is currently WAY, WAY cheaper than renting.

Can you give an example with my calculator?

This house is in the same tract as my old house (now my rental). It's the same floor plan as mine however mine is a little more upgraded inside and out.

http://www.redfin.com/CA/Moreno-Valley/25962-Deerberry-Dr-92553/home/5612749

My home currently rents for $1595/mo. Your calculator estimates the cost after 7 years to rent at $133k and to own it's $85K. This is not a cherry I picked. This is an average price in this area and the rent is also average for a 4 bedroom home in this area. My mother also has a 3 bedroom rental in the same area. The value of that home is probably around $125k and she rents it for $1350/mo.

"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."
Steve Jobs

I agree 100%.

TechGromit says

PockyClipsNow says

Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank)

Am I the only one noticing the loan? If you were making even modest payments on the principal, I'd say maybe you could afford this place. But an "Interest only ARM"?

A. Your not paying off anything, your only kicking the eventual day of reckoning farther down the road. This looks like a future walk away house to me.

B. So what happens in 5 years? Rates will not stay low forever, sooner or later they will raise and you'll be stuck with an asset you can no longer afford the payments on.

Unless you can afford a fixed rate mortgage, you really don't own anything.

11 years ago in 2001 I started in real estate. Realtors pressured me to buy asap because the super-low interest rates of just a little under 7%, saying rates can only go up, lock in now. Since 12 years now they're saying rates can only go up. Bullcrapp! Rates only go down.

PadRig, I mean Patrick, can you put a "lifetime-rent-versus-buy" calculator on your website? I mean where you enter your current age and expected age at death. So if I am for example now 35 years old and expect to die at 75 years of age I have 40 more years to either rent or buy. Your calculator would consider rent-increase equal to inflation for the 40 years compared to all cost of ownership with a 30 year or 15 year mortgage. I think a lot of people here forget that a mortgage has a final date of payment while the final date of renting is the day you die. Also, after paying 40 years of rent you (if still alive) or your kids (if you were that successful with the other gender) would also have an old little shack, worth a couple of dollars, after all at the end. Might be interesting what the total cost of renting INCLUDING INFLATION is, especially for healthy younger individuals that might have 50 or 60 years of life ahead.

Yup says

soopercommuter says

My home currently rents for $1595/mo.

Have you considered that the amount you get for rent will likely drop? With falling wages and rising taxes rents will come down to closer to the cost to own. If you have cash buyers entering the market I expect rents to come down even more as they compete with lower expectations for return on their investments.

I would not be surprised if rents fall a little. I do feel they are being driven up by all the "temporary renters" that lost homes. Once those people can buy again I expect rents to fall due to a lack of demand. But fall to what? Rents just don't move like home prices do. landlords will let units sit empty before lowering rents significantly. Look at long term rents and you will see there isn't extreme movements in rents. Just minor fluctuations to the upward trend. But on the flipside, I also expect interest rates to rise which will make the difference in renting less extreme. If the interest rates go back to around 7% or 8% then the rent/buy payment difference is almost a wash.