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"Renters have no opportunity to build equity."


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2012 Sep 26, 6:43am   20,509 views  52 comments

by Patrick   ➕follow (59)   💰tip   ignore  

FALSE. Equity is just money. Renters are actually in a better position to build equity through investing in anything but housing. Renters can get rich much faster than owners, just by saving the money that owners are wasting on mortgages, taxes, and maintenance. Renters are getting paid to wait, both by the monthly savings and by watching the value of their savings increase relative to housing.

  • Owers are losing every month by paying much more in ownership costs than they would pay in rent. The income deduction does not come close to making owing competitive with renting.

  • Owers are losing principal in a leveraged way as prices decline. A 14% decline completely wipes out all the equity of "owners" who actually own only 20% of their house. Remember that the agents will take 6% if they possibly can.

  • Owers must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity. Only houses are such a guaranteed drain on cash.

  • Owers must insure a house, but not most other investments.

  • Owers must pay to repair a house, but not a stock or a bond.

More bogus arguments

#housing

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41   37108605   2012 Sep 27, 9:27pm  

JG1 says

The latest Case-Schiller report shows a national upswing:

You are so typical of an LA debtor in remorse I can smell the remorse right through my fucking screen.

42   JG1   2012 Sep 29, 5:14am  

Reader says

JG1 says

The latest Case-Schiller report shows a national upswing:

You are so typical of an LA debtor in remorse I can smell the remorse right through my fucking screen.

Reader

In other words, as usual, you have no facts to support your position, so choose to ignore all facts that are inconvenient to your preconceived beliefs.

43   37108605   2012 Sep 29, 5:36am  

JG1 says

Reader says

JG1 says

The latest Case-Schiller report shows a national upswing:

You are so typical of an LA debtor in remorse I can smell the remorse right through my fucking screen.

Reader

In other words, as usual, you have no facts to support your position, so choose to ignore all facts that are inconvenient to your preconceived beliefs.

FACTS? You are in denial big time the facts are all around you.

44   JG1   2012 Sep 29, 5:55am  

The consensus opinion of patrick.net posters does not equal a fact.

45   37108605   2012 Sep 29, 6:06am  

JG1 says

The consensus opinion of patrick.net posters does not equal a fact.

Then why are you here? To be shill?

For your information I may have one liners at times because I have been around this shite from before this mess to today. I have seen many go broke, and do so back in LA when I lived there in the early 90s with your precise mentality. I kept saying to a number of them they were going to lose their shirts and many did. But this time around double trouble and twice as many have.

I don't think you realise that grossly false inflated real estate pricing is not real and the only reason this recent fiasco happen was because the interest rates plunged and lending standards went out the door. If that wasn't the case you wouldn't have morons in West LA trying to sell small dumps for 800K and therefore nothing like this is ever sustainable.

The pricing today is grossly out of wack and I know this from both a priori and a posteriori experiences so I don't need to keep quoting outsiders facts and other people, the many charts and so-called studies all around to prove it.

I pulled an A in statistics I can make shite fly statistically if you want me to. I know what I have seen in the 80s and the crash of the early 90s from with my own eyes. No one wanted to listen to real estate not increasing or heavens forbid falling!

I have followed this list for nearly ten years and I have YET to see where the consensus of the posters has been wrong. We called out the bubble before 99.999% even could conceive of a bubble. This list's consensus has yet to be wrong.

46   Tenpoundbass   2012 Sep 29, 6:13am  

True and False.
I stayed put in 2001 when I was ready to buy because it was cheaper to rent at that time than a mortgage would have been. But make no mistake I spent 145,000 over 11 years waiting for the market to be favorable for my situation.

I did manage to build up very good credit rating, and put some money in the bank. But I would have rather have had the opportunity to have bought, back in 2001, if RE wasn't already so far out of whack in South Florida.

I was griping on the internet about prices back then, most of the rest of the country had not inflated by then. So the biggest response I got was flaming response.

"Oh well you're just in an expensive town you can't afford, you should move."

"Well it's not expensive here"

"That is just over due inflation"

Things are never a problem until it effects you.

I'm already saving $2,000 a year in taxes since I bought.
Over the course of a 30 years that will be 60K equity that I've built on top of what ever my house may be worth by then. That's not including on the money I'm saving on historic interest rates. There's no way it will be worth less than what I paid for it in 30 years. The next ten years may be questionable. But when we figure out a new way to fake our GDP, houses will inflate out of reach and interest will rise back up to 8%-12%, and property taxes will as well. Luckily I'll be grandfathered into both by then. 4.50% interest and $1900 a year property tax.

47   JG1   2012 Oct 11, 6:03pm  

Reader says

I have followed this list for nearly ten years and I have YET to see where the consensus of the posters has been wrong. We called out the bubble before 99.999% even could conceive of a bubble. This list's consensus has yet to be wrong.

I wasn't here 10 years ago, but if the consensus at that time was housing was overpriced, heading down, can't go any higher, etc., then the consensus was dead wrong in 2002/2003.

48   37108605   2012 Oct 11, 9:30pm  

Real estate WAS overpriced in 2002/2003 and if it wasn't for the interest plunge and open lending it would have gone straight down from that point but no, there had to be a make believe ghetto'esk money tree and BANG pricing went haywire over greed. The consensus was SPOT ON.

And for any simpleton thinking their dump is worth 800K here is what you can purchase in the UK right now for £800K
http://search.savills.com/property-detail/gbnorsnrs120116

So no one is going to tell me these American shacks aren't grossly overpriced.

Follow-up to above
I just sent this house to a friend in a non-English speaking European country, who is NOT on this list but lives in a country where real estate was also and still is grossly overpriced. I just sent that UK house listing link above to that manor house, with just the line, "looks very underpriced to me even today," and the response was immediate he said

"or is it the right price? Maybe we have come down to the right prices on houses now. A few years before the crisis was just insane." Right price? YES as he is speaking of £800k for a FUCKING MANSION not some 1200sq ft. shack in CA.

I rest my case.

49   JG1   2012 Oct 12, 2:14am  

Reader says

Real estate WAS overpriced in 2002/2003 and if it wasn't for the interest plunge and open lending it would have gone straight down from that point but no, there had to be a make believe ghetto'esk money tree and BANG pricing went haywire over greed. The consensus was SPOT ON.

I see your point, but if you told all your friends to sell in 2002, and they listened to you, I don't think they'd be too happy with you! And a truly accurate prediction takes into account these other factors (realities), as well, doesn't it? So a perfect prediction would have been, yeah it's a bubble without fundamental support and it's not sustainable but it's going to continue up for at least several years.

Not sure anyone can be so precise, which is why it is always striking how the current patrick.net consensus is presenting is such a black and white, no questions about it, no hedging, no it's my opinion, but rather as an indisputable law of physics or something.

50   PockyClipsNow   2012 Oct 12, 2:33am  

Politicofact says

repo4sale says

BUT 2011 WAS THE BOTTOM OF CALIFORNIA PRICES.

WRONG!

Not only was the bottom not in 2011, other years were lower.

Home prices in Califronia are still in decline.

Here is the graph

DUDE! If you are still renting after that massive decline you might never buy.

I mean this is as good as it gets probably.
Wait till they lower rates again and bring back liar loans.

51   37108605   2012 Oct 12, 2:42am  

JG1 says

which is why it is always striking how the current patrick.net consensus is presenting is such a black and white, no questions about it, no hedging, no it's my opinion, but rather as an indisputable law of physics or something.

Welcome to Patrick.net! Seriously, you have a valid point but I believe we post our strong personal opinions, and it just so happens these varied opinions often collide. In many circumstances, collide like a filter right into two camps black or white.

52   JG1   2012 Oct 12, 4:58am  

War says

Why buy when pries are falling?

Well, paraphrasing Romney's debate comment to Obama, you're entitled to your own opinion, but not your own facts. Nominal prices are rising in most markets. The graph above doesn't go out far enough to show this. If you want to make some argument that on an inflation adjusted or constant dollar basis, prices are falling, or that you think they should or will fall, fine, but your comment is nonsensical otherwise because a little Googling of news stories will show that you're wrong.

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