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Ten Reasons It's A Terrible Time To Buy An Expensive House


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2015 Jul 11, 12:58pm   939,643 views  470 comments

by Patrick   ➕follow (61)   💰tip   ignore  



  1. Because house prices in expensive areas still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with a 20% downpayment. Landlords say a safe price is set by the rental market; annual rent should be at least 9% of the purchase price, or else the price is just too high. Yet in affluent areas, both those safety rules are still being violated. Buyers are still borrowing 6 times their income with tiny downpayments, and gross rents are still only 3% of purchase price. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that affluent neighborhoods are still in a huge housing bubble, and that bubble seems to be getting more dangerous by the day.


    2. On the other hand, in some poor neighborhoods, prices are now so low that gross rents may exceed 10% of price. Housing is a bargain for buyers there. Prices there could still fall yet more if unemployment rises or interest rates go up, but those neighborhoods have no bubble anymore.

  2. Because it's usually still much cheaper to rent than to own the same size and quality house, in the same school district. In rich neighborhoods, annual rents are typically only 3% of purchase price while mortgage rates are 4% with fees, so it costs more to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 8% of purchase price, which is more than twice the cost of renting and wipes out any income tax benefit.

    The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's pretty safe to buy for yourself because then rent could cover the mortgage and ownership expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:

    annual rent / purchase price = 3% means do not buy, prices are too high

    annual rent / purchase price = 6% means borderline

    annual rent / purchase price = 9% means ok to buy, prices are reasonable

    So for example, it's borderline to pay $200,000 for a house that would cost you $1,000 per month to rent. That's $12,000 per year in rent. If you buy it with a 6% mortgage, that's $12,000 per year in interest instead, so it works out about the same. Owners can pay interest with pre-tax money, but that benefit gets wiped out by the eternal debts of repairs and property tax, equalizing things. It is foolish to pay $400,000 for that same house, because renting it would cost only half as much per year, and renters are completely safe from falling housing prices. Subtract HOA from rent before doing the calculation for condos.

    Although there is no way to be sure that rents won't fall, comparing the local employment rate (demand) to the current local supply of available homes for rent or sale (supply) should help you figure out whether a big fall in rents could happen. Checking these factors minimizizes your risk.


  3. Because it's a terrible time to buy when interest rates are low, like now. House prices rose as interest rates fell, and house prices will fall if interest rates rise without a strong increase in jobs, because a fixed monthly payment covers a smaller mortgage at a higher interest rate. Since interest rates have nowhere to go but up, prices have nowhere to go but down. When housing falls, you lose your equity, but not your debt.

    The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates. Then you get a low price, and you get capital appreciation caused by future interest rate declines. To buy an expensive house at a time of low interest rates and high prices like now is a mistake.

    It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.



    • A low price lets you pay it all off instead of being a debt-slave for the rest of your life.


    • As interest rates fall, real estate prices generally rise.


    • Your property taxes will be lower with a low purchase price.


    • Paying a high price now may trap you "under water", meaning you'll have a mortgage debt larger than the value of the house. Then you will not be able to refinance because then you'll have no equity, and will not be able to sell without a loss. Even if you get a long-term fixed rate mortgage, when rates inevitably go up the value of your property will go down. Paying a low price minimizes your damage.


    • You can refinance when you buy at a higher interest rate and rates fall, but current buyers will never be able to refinance for a lower interest rate in the future. Rates are already as low as they can go.






  4. Because buyers already borrowed too much money and cannot pay it back. They spent it on houses that are now worth less than the loans. This means most banks are still actually bankrupt. But since the banks have friends in Washington, they get special treatment that you do not. The Federal Reserve prints up bales of new money to buy worthless mortgages from irresponsible banks, slowing down the buyer-friendly deflation in housing prices and socializing bank losses.

    The Fed exists to protect big banks from the free market, at your expense. Banks get to keep any profits they make, but bank losses just get passed on to you as extra cost added on to the price of a house, when the Fed prints up money and buys their bad mortgages. If the Fed did not prevent the free market from working, you would be able to buy a house much more cheaply.

    As if that were not enough corruption, Congress authorized vast amounts of TARP bailout cash taken from taxpayers to be loaned directly to the worst-run banks, those that already gambled on mortgages and lost. The Fed and Congress are letting the banks "extend and pretend" that their mortgage loans will get

    paid back.

    And of course the banks can simply sell millions of bad loans to Fannie and Freddie at full price, putting taxpayers on the hook for the banks' gambling losses. Heads they win, tails you lose.

    It is necessary that YOU be forced deeply into debt, and therefore forced into slavery, for the banks to make a profit. If you pay a low price for a house and manage to avoid debt, the banks lose control over you. Unacceptable to them. It's all a filthy battle for control over your labor.

    This is why you will never hear the president or anyone else in power say that we need lower house prices. They always talk about "affordability" but what they always mean is debt-slavery.


  5. Because buyers used too much leverage. Leverage means using debt to amplify gain. Most people forget that debt amplifies losses as well. If a buyer puts 10% down and the house goes down 10%, he has lost 100% of his money on paper. If he has to sell due to job loss or a mortgage rate adjustment, he lost 100% in the real world.

    The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage. Interest generally accounts for more than half of the cost of a house. The saver/renter not only pays no interest, he also gets interest on his savings, even if just a little. Leveraged housing appreciation, usually presented as the "secret" to wealth, cannot be counted on, and can just as easily work against the buyer. In fact, that leverage is the danger that got current buyers into trouble.

    The higher-end housing market is now set up for a huge crash in prices, since there is no more fake paper equity from the sale of a previously overvalued property and because the market for securitized jumbo loans is dead. Without that fake equity, most people don't have the money needed for a down payment on an expensive house. It takes a very long time indeed to save up for a 20% downpayment when you're still making mortgage payments on an underwater house.

    It's worse than that. House prices do not even have to fall to cause big losses. The cost of selling a house is kept unfairly high because of the Realtor® lobby's corruption of US legislators. On a $300,000 house, 6% is $18,000 lost even if housing prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less.


  6. Because the housing bubble was not driven by supply and demand. There is huge supply because of overbuilding, and there is less demand now that the baby boomers are retiring and selling. Prices in the housing market, even now, are entirely a function of how much the banks are willing and able to lend. Most people will borrow as much as they possibly can, amounts that are completely disconnected from their salaries or from the rental value of the property. Banks have been willing to accomodate crazy borrowers because banker control of the US government means that banks do not yet have to acknowledge their losses, or can push losses onto taxpayers through government housing agencies like the FHA.


  7. Because there is still a massive backlog of latent foreclosures. Millions of owners stopped paying their mortgages, and the banks are still not forclosing on all of them, letting the owner live in the house for free. If a bank forecloses and takes possession of a house, that means the bank is responsible for property taxes and maintenance. Banks don't like those costs. If a bank then sells the foreclosure at current prices, the bank has to admit a loss on the loan. Banks like that cost even less. So there is a tsunami of foreclosures on the way that the banks are ignoring, for now. To prevent a justified foreclosure is also to prevent a deserving family from buying that house at a low price. Right now, those foreclosures will wash over the landscape, decimating prices, and benefitting millions of families which will be able to buy a house without a suicidal level of debt, and maybe without any debt at all!


  8. Because first-time buyers have all been ruthlessly exploited and the supply of new victims is very low.

    From The Herald:

    "We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation. Houses price increases don't produce wealth, they merely transfer it from the young to the old - from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize."

    House price inflation has been very unfair to new families, especially those with children. It is foolish for them to buy at current high prices, yet government leaders never talk about how lower house prices are good for American families, instead preferring to sacrifice the young and poor to benefit the old and rich, and to make sure bankers have plenty of debt to earn interest on. Your debt is their wealth. Every "affordability" program drives prices higher by pushing buyers deeper into debt. Increased debt is not affordability, it's just pushing the reckoning into the future. To really help Americans, Fannie Mae and Freddie Mac and the FHA should be completely eliminated. Even more important is eliminating the mortgage-interest deduction, which costs the government $400 billion per year in tax revenue. The mortgage interest deduction directly harms all buyers by keeping prices higher than they would otherwise be, costing buyers more in extra purchase cost than they save on taxes. The $8,000 buyer tax credit cost each buyer in Massachusetts an extra $39,000 in purchase price. Subsidies just make the subsidized item more expensive. Buyers should be rioting in the streets, demanding an end to all mortgage subsidies. Canada and Australia have no mortgage-interest deduction for owner-occupied housing. It can be done.

    The government pretends to be interested in affordable housing, but now that housing is becoming truly affordable via falling prices, they want to stop it? Their actions speak louder than their words.



  9. Because boomers are retiring. There are 70 million Americans born between 1945-1960. One-third have zero retirement savings. The oldest are 66. The only money they have is equity in a house, so they must sell. This will add yet another flood of houses to the market, driving prices down even more.


  10. Because there is a huge glut of empty new houses. Builders are being forced to drop prices even faster than owners, because builders must sell to keep their business going. They need the money now. Builders have huge excess inventory that they cannot sell at current prices, and more houses are completed each day, making the housing slump worse.




Next Page: Eight groups who lie about the housing market »



The Housing Trap

You're being set up to spend your life paying off a debt you don't need to take on, for a house that costs far more than it should. The conspirators are all around you, smiling to lure you in, carefully choosing their words and watching your reactions as they push your buttons, anxiously waiting for the moment when you sign the papers that will trap you and guarantee their payoff. Don't be just another victim of the housing market. Use this book to defend your freedom and defeat their schemes. You can win the game, but first you have to learn how to play it.

115 pages, $12.50Kindle version available

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161   Done   2016 Feb 27, 6:12pm  

B.A.C.A.H. says

Tough, I wish your extrapolations will fulfill your predictions. But I don't think so. It's Different Here. It's Different This Time.

I absolutely agree, and my models are screaming the absolute opposite of Tough's predictions... We likely have seen the last low in the equities market for some time to come if ever, capitol flow seeking ROI and or safety into this country totally contradicts his predictions. From my frame of reference USA is the new bubble and has just started it's journey and it is very likely SF home prices will continue going up due to the general SF environment as a whole and the torrent of that capitol flow drenching this country over the next few yrs anyway. If a person has the ability to buy now would be the time however do it for the home sake only, not because your planning to some how beat the market.

GL with your decisions everybody....

162   Thatsaid   2016 Feb 28, 6:19am  

Tough is correct. It might be scary to hear it but it is true. The global economy is crashing US dollar is the only safe place right now so it is giving us a false safe feeling. Google Armstrong Economics, click on his blog and search Real Estate. He says real estate has peaked and will be on a huge decline. The question is whether it will do you any good to have all of your money stuck in your home, or to have a low mortgage you can walk away from when x hits the fan.

There are always people who will say things area great and only going to get greater, and real esate will continue to go up, but it won't and it can't. Bottom line is real estate CAN NOT continue to outpace wages.

Real estate shortage......The shortage is due to a ton of people being underwater. If they list their house for what they need to sell it for, it is priced too high. The shortage is also from people refinancing at such a low rate, they feel they can't get a better deal by moving (and their income is not on the rise) The shortage is also from baby boomers staying in their homes. The aging population used to downsize and move away but this generation is not leaving their homes. There are 70 million boomers people. When they do finally start to die off, the market will be flooded. But that is going to take another 5 years to start trickling in.

The stock market has started it's correction and will continue to drop. It takes a while for that to trickle into the economy, but it does. When companies preform poorly in the stock market, lay offs follow, but it takes about a year. So look at 2017 starting with layoffs. Job losses force people to put their house for sale, but job losses dry up buyers. So houses sit and drop in price. Mortgages become harder to attain.

Now is the very best time to sell, worse time to buy in my opinion. But yes, you do have to live somewhere and renting in the bay area is a catch 22. Thankfully, I am in the Boston area where it isn't cheap, but nothing like SF.

Trust me, everyone wants to own a home when it feels like it is hard to get one, but everyone wants to unload them when they are easy to get. Anyone feeling frustrated with the market, wait a year or two more. You can thank me later! And anyone reading all of these comments is on here because deep down, they know something is wrong with the RE cycle or they wouldn't have found this thread. Be a contrarian, don't follow the herd. Liquidate and wait.

163   Done   2016 Feb 28, 9:35am  

Thatsaid says

Tough is correct.

Now that is some funny shit.... lol Because you say he is right?... lol Sorry Thatsaid just because you say it
don't make Tough right or yourself.... It just don't work that way my friend....

Thatsaid says

US dollar is the only safe place right

Exactly, and it's looking for a ROI and it isn't in the metals.That money is not going to stay in dollar
and will be saturating our markets on every level creating opportunity and the rich will get richer while
the laymen sit on the sidelines.

Thatsaid says

Armstrong Economics

Is theory which does have bases as do many of the theories we read about today. Patnet. lol
I do respect lots of the theory as to what "can" happen. however I know in the end I am responsible
to look deeper and have my own opinions and theory to weigh against theirs. Some or all those conditions
have measure of possibility. But when? Today, tomorrow, next week, next year and etc., WHEN?.....
No one knows, what, when or where and that is a indisputable fact.

Thatsaid says

Bottom line is real estate CAN NOT continue to outpace wages

"Markets can remain irrational longer than you can remain solvent" Yep, both ways up and down...

Thatsaid says

Real estate shortage

True, but there is a market and under the current situation it absolutely can go up. Maybe not so much
in median and low markets but high end the sky is the limit and will carry the rest enough to keep the market
alive. What you need to look at is when/if the high end market turns over.
Buy to own a home not for bragging rights of buying at the low, that trade is gone. Now if you are buying
as a trader in the markets the absolute majority will fair badly because they neither know when to buy or
sell at the optimum times RE is a market like any other emotion will be the main trigger instead of applicable
market theory and knowledge making the decision....

Thatsaid says

The stock market has started it's correction

Actually the market has corrected and has issued 2 confirmations it's broke the 2 mo. range. Typically
some retest for sellers will take place before it's move up. The market has been hedged and the bets
have been placed and now most everyone is sitting on the side lines waiting to see the outcome. The
majority are frozen and won't make a trade any direction at this point and the money they are sitting on
for the most part is waiting to buy not sell. Most of their capitol will be locked up in their hedge and belief
in a crash coming any minute due to bias-confirmation not what is actually happening on the global
landscape. Think globally, trade locally.....

Thatsaid says

Now is the very best time to sell

Not if it's your home or your trade in the markets. The general public has nearly zero concept of how
to beat any market much less compete with the competition that make their living making money with RE.
That's just a true fact of life.

Thatsaid says

Trust me,

Not a chance, and your theory which seems to be parts of all the gurus theory will be tested.
Pull a coin out of your pocket and flip it remembering there are 2 sides not 1

164   ERBear   2016 Mar 7, 7:13pm  

I would like to mention another very sneaky and little noticed trick by apparently the US banks regarding the tax deduction on mortgage interest. I didn't realize this until I moved from the US to Canada and bought a house there. With a market only 10% in size compared to the US, you would imagine the Canadian banks can offer only much worse interest rates than the US. I was therefore surprised that I was able to get rates at least 30% better than the US rates. The 30% is a magic number, because with this, it make the REAL cost to the consumer of borrowing on a home mortgage SAME for both US and Canada (Canada does not have mortgage interest tax write-off). To a US consumer, there is NO REAL advantage in the tax write-off in the US tax system! You pay roughly the SAME out-of-pocket. So where does the money go? The banks, of course! The government is NOT subsidizing the home buyer with the tax write-off. It is instead encouraging the banks to raise their mortgage rates to 30% higher than the Canadian rate while making the home buyer feel as if they gained something with the write-off, whereas actually the government tax subsidy REALLY goes to the banks. It is like allowing the banks to jack up the price of a car by 30% higher than a Canadian car, then telling the car buyer "Don't worry, the Fed will reimburse you 30% of the car cost". So who got the 30% jacked-up price? The banks of course! With whose money? The FED's, or, YOU who pay the tax, of course!
I am impressed with the ingenuity of the Bank Lobby! It is no less impressive than the sub-prime lending. I was fooled all these years until I went to Canada.

165   Patrick   2016 Mar 10, 5:24pm  

ERBear says

cost to the consumer of borrowing on a home mortgage SAME for both US and Canada (Canada does not have mortgage interest tax write-off). To a US consumer, there is NO REAL advantage in the tax write-off in the US tax system! You pay roughly the SAME out-of-pocket. So where does the money go? The banks, of course!

@ERBear this is very interesting.

166   tatupu70   2016 Mar 10, 5:29pm  

I don't believe this. It's basically saying there is no competition in mortgage lending, which seems hard to believe.

167   jbat   2016 Mar 10, 7:39pm  

ERBear,
This is misleading! Canadians can't get a 30 year mortgage. They are all basically on 5/1 ARMs -- which we also have available to us in the US for that same cheap rate. Who is crazy enough to go get a 5/1 ARM when interest rates can only go up? A whole country of Canadians, that's who!

168   smartclicks   2016 Mar 13, 9:24pm  

From 2017 - 2022 prices in SF will fall, just as they will fall all over the world. The Tech companies will no longer be able to employ the vast number of employees they have because the world population will no longer be able to afford the hi tech equipment being offered. Hence, the unemployed will have to sell for 40-60% less than their property was valued at when they purchased it, or if they prefer, they can go into foreclosure.

169   Bellingham Bill   2016 Mar 14, 6:56am  

will no longer be able to afford the hi tech equipment being offered.

alternatively, we/they keep printing, and the game goes on another decade.

is the main pain-point -- penalty -- of printing, and we're back to 1980s prices now.

we're no longer in the 1800s when people had to dig certain metal ores out of the ground to expand the money supply.

there's no reason to suffer through recessions any more, other than to purge the economy of speculative risk takers.

problem is recessions take out everyone in the end.

170   ERBear   2016 Mar 14, 3:12pm  

JBAT: I was talking about my first hand experience and I stand by it. I bought a house in Canada in 2011 and was looking for refinance deals in the US at the same time. I got a low rate in Canada that was unheard of in the US. That was that. No need to discuss.

171   ERBear   2016 Mar 14, 3:16pm  

TATUPU70: I fail to follow your logic.

172   ERBear   2016 Mar 14, 3:18pm  

Let me add another piece of input: A recent study found that Canadian percentage home ownership has surpassed the US number, DESPITE the lack of government tax write-off on mortgage interest.

173   tatupu70   2016 Mar 14, 4:37pm  

ERBear says

JBAT: I was talking about my first hand experience and I stand by it. I bought a house in Canada in 2011 and was looking for refinance deals in the US at the same time. I got a low rate in Canada that was unheard of in the US. That was that. No need to discuss.

ERBear says

TATUPU70: I fail to follow your logic.

Lower rates in Canada are not because of the lack of a mortgage deduction

174   curious2   2016 Mar 15, 2:38am  

alsubr says

[url=http:/

joyce myers says

are you looking

@Patrick, a junk/spam flag for comments would help. You have one for threads, but not comments.

175   Patrick   2016 Mar 15, 8:33am  

yes, good idea. will do.

let's see how long it takes me...

176   Patrick   2016 Mar 15, 8:51am  

ok, now there should be a spam link by comments for established users. only the newest users would not see it.

please do not abuse it. if you mark things as spam simply because you don't like the thought or the user, i'll remove your spam commenting privilege.

177   ptork   2016 Mar 21, 10:13am  

Hello. We're considering buying a home in Orange County in he $1.3-1.5MM range. Do you still think its a bad time to buy?

178   anonymous   2016 Apr 7, 6:59am  

(spammer) says

Interested parties should contact the company via email for more information: Lender E -mail: (redacted)

Name of creditor: Paul Anderson

Fill the application form below:

Sweet! Can I give you my social security # too?

179   Y   2016 Apr 7, 7:03am  

when did orange county start accepting candy as currency?

ptork says

Hello. We're considering buying a home in Orange County in he $1.3-1.5MM range. Do you still think its a bad time to buy?

180   Done   2016 Apr 7, 7:44am  

ptork says

Hello. We're considering buying a home in Orange County in he $1.3-1.5MM range. Do you still think its a bad time to buy?

"home" If you have the means to buy a home buy.... Home/house prices are going up slow but steady with a mix of inflation and a strong
$$$. What some may not take into acct. is that the strong $$$ that is very likely to get a lot stronger is providing a discount in many things
and even though we see prices going up with such things as groceries, houses and ect. they are at a discount due to the strong $$$.

I think it will be a big mistake waiting for a market crash and lower house price over the next couple of years and when real inflation hits
on a weaker $$ what do you suppose is going to happen to your equity? Increase in your homes equity due to it will take more dollars to
buy your house not less like the environment is now. The bear forecasters simply have it wrong in that in the US the risk/off for anything
more then short term you will be on the wrong side of money flow..The world is looking for safe money and ROI and here is the only place
they will find it in the majority due to our having the largest and diverse markets in the world. My advice is don't try and beat the housing
market follow the global flow of money. If you don't you will be forfeiting the discounted prices you are seeing now.....

181   mikejurka   2016 Apr 9, 1:04am  

I used to read patrick.net back in 2011 and this "hard hitting" analysis scared me from buying a house. Housing prices have doubled since then.

This website has been calling the market a bubble for years. Is it really a bubble if the prices never come down?

182   anonymous   2016 Apr 15, 2:31pm  

Hello,

Should investors of HOA foreclosures be liable for tax on the "cancelled debt" COD of the mortgage since the super-priority lien foreclosure extinguishes the first deed of trust? Recently in the news - a Nevada $800,000 home was sold at auction to investors for $6,000 - this sounds like highway robbery.

Thank you.

183   anonymous   2016 Apr 15, 2:33pm  

Hello,

Could investors of HOA foreclosures be liable for tax on the "cancelled debt" COD of the mortgage since the super-priority lien foreclosure extinguishes the first deed of trust? Recently in the news, a Nevada HOA foreclosed on an $800,000 home over a $6,000 lien. Investors snagged it at auction for around $6000. Doesn't this sound like highway robbery - shouldn't investors be paying the cancellation of debt on the $800,000 mortgage?

Thank you.

184   bob2356   2016 Apr 17, 6:48am  

TAX HOA Investors says

Hello,

Could investors of HOA foreclosures be liable for tax on the "cancelled debt" COD of the mortgage since the super-priority lien foreclosure extinguishes the first deed of trust? Recently in the news, a Nevada HOA foreclosed on an $800,000 home over a $6,000 lien. Investors snagged it at auction for around $6000. Doesn't this sound like highway robbery - shouldn't investors be paying the cancellation of debt on the $800,000 mortgage?

Thank you.

bgamall4 says

Not highway robbery. It was the banks who failed to pay the HOA fees. If the bank had done the right thing, it would have not lost the house. I wrote a satire about it on my personal blog at Talkmarkets: http://www.talkmarkets.com/contributor/gary-anderson/blog/humorsatire/nevada-supreme-court-forces-us-bank-ceo-to-bend-over-and-take-it-in-the-shorts?post=70873&uid=4798

Even though this article was not one of my 48 approved articles at Talkmarkets, it still managed to accumulate almost 1000 views.

You guys are talking about a very very narrow case. This only applies to a few thousand houses/condos in Nevada. When the Nevada legislature wrote the HOA super priority law it was poorly worded and actually inadvertently (obviously not the intent of the legislature) allowed an HOA foreclosure to extinguish any other loans. The next session of the legislature (Nevada only meets every 2 years) fixed the wording. So yes investors who bought in that narrow window can theoretically extinguish all other loans, but it still hasn't happened 2 years after the statute was rewritten. The issue is still being fought hard in the courts, the current battle is if the wording of the statute was constitutional. No one has gotten quiet title on any of these properties to date.

If the courts should happen rule in favour in the investors all the way down the line some day there is no legal basis for tax liability for the investors. The auction by the HOA extinguished the loan, the investors bought at the value of the tax auction. There is no debt forgiveness involved. A foreclosure doesn't forgive the debt, the bank can still pursue you.

185   danie   2016 Apr 19, 6:23pm  

this website is so well put together, could you give me some pointers as to what tor recomend to my friend who is working on (spam redacted)

186   Maga_Chaos_Monkey   2016 Apr 25, 10:17pm  

Cortzmendal says

Cortz Mendal

Mom? Is that you?

187   anonymous   2016 Jun 2, 5:07pm  

Rajan says

BORROWERS APPLICATION DETAILS

1. Your Full names:_______

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Email Kindly Contact Him Via: powerfinance7@gmail.com

Can I give you my SSN too? Maybe after I apply I can also let you give me a swift kick to the nuts.

188   Strategist   2016 Jun 2, 6:08pm  

Rajan says

You can contact him true this (redacted) because I am now a happy woman

Don't bother Rajan. Lots of dumb people on this site, just not dumb enough to fall for your scam.

189   Heatho95   2016 Jun 24, 8:54pm  

We live in the Bay Area. Our rent is constantly going up. We are now looking to buy. We can only afford about $465k. Our mortgage will go up because of the size home we need however if we continue to rent the IRS continues to screw us in taxes every year. Talk about being trapped. We rent we pay a lot on taxes. We buy we pay more in mortgage. What do we do? I think buying now is our only hope.

190   Strategist   2016 Jun 24, 9:05pm  

Heatho95 says

We live in the Bay Area. Our rent is constantly going up. We are now looking to buy. We can only afford about $465k. Our mortgage will go up because of the size home we need however if we continue to rent the IRS continues to screw us in taxes every year. Talk about being trapped. We rent we pay a lot on taxes. We buy we pay more in mortgage. What do we do? I think buying now is our only hope.

You buy and prevent your monthly housing payments from going up.
Interest rates are 3%. If your home appreciates 3%+ you are getting paid to own a home.

191   Strategist   2016 Jun 24, 9:42pm  

Ironman says

Strategist says

Interest rates are 3%. If your home appreciates 3%+ you are getting paid to own a home.

and if your home depreciates 3%.....

192   Patrick   2016 Jun 25, 11:29am  

Heatho95 says

What do we do?

use a calculator!

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

do not fall into the trap of assuming unrealistic appreciation.

193   Sharingmyintelligencewiththedumbasses   2016 Jun 25, 11:43am  

Last time you posted this, million dollar homes in the bay area went on a tear to becoming 1.5 to 2 million dollar homes....

194   anonymous   2016 Jun 26, 10:02am  

***NEVADA STEALS HOMES****

Please DO NOT buy in NEVADA HOMEOWNERS' ASSOCIATION. Many states (like NEVADA) engage in THEFT/DEPRIVED DUE PROCESS by using SUPER-PRIORITY LIENS to FRAUDULENTLY FORECLOSE on homes.

f you want to defend your home from ILLEGAL FORECLOSURE in NEVADA, you must go through EXPENSIVE FORCED ARBITRATION.

If you cannot afford arbitration, you will lose your home. Not legal advice, so, please discuss first with an attorney. AVOID HOAs at all costs! Good luck.

195   simchaland   2016 Jun 27, 6:17pm  

Patrick,

I haven't really been on here since the crash of the last bubble. You called it, everyone here called it...

But, here we are again and it's worse this time!

Since the last time I posted I've gotten married. I have had a promotion or two and my income has increased somewhat. I still live in Oakland and I'm still renting the same apartment I rented as when I was active here. Yes, he moved in with me. We live in a small one-bedroom apartment by the Lake in Oakland. I've watched rents become completely insane since the crash and during the inflation of this bubble. At least during the last bubble, rents weren't so bad. Now rents are insane!!!

We couldn't afford to move to anything nicer in our own neighborhood. If we had to move, we wouldn't be living anywhere near where we are now. I've lived in the same building for the last 14 years. My rent is just above $1000/ mo..Yes, I know! It's insanely low by today's standards. The Rent Adjustment Ordinance has allowed me to remain where I am without breaking me financially. However, the building is 103 years old and the apartment is falling apart around us. And no, they don't want to do repairs because, yes, they would like us out of there so they could charge someone else at least $1800+/ mo even without renovating much to live there. So when we ask for repairs it takes FOREVER for them to fix something and it requires a lot of back and forth with the Property Manager.

Yes, we've been able to save some. But, he doesn't make a great income. My income is OK. Our household income is more than the median income for Oakland. And, there is no way we could afford to buy anything that wouldn't be an absolute hell hole even in the worst neighborhood in Oakland.

We would like to find a better place that isn't so old and run down. We would like to own something eventually, one day. We also don't want to live too far away from our jobs. Both of us have a 10-15 minute commute. I have never had such a short commute in my life. The time I save is invaluable to me, to us.

The thing is, I keep reading here and elsewhere that I shouldn't expect housing costs to decrease until the Baby Boomers finally start to die off. That means that we will have to wait until at least 2020-2024 to even think about moving if we want to find something that we could actually afford while saving for our retirement. We are both 46 and tomorrow is our 3rd Anniversary (and yes, we are in a same-sex marriage, we were the second couple in Alameda County to get married after the stay was lifted on June 28, 2013).

Now, as you can probably tell, I don't just move at the drop of a hat. I'm also very lucky since my husband is not wanting to move at all. He loves the neighborhood and he doesn't mind having a small place. It's just us and we aren't planning on having children for the foreseeable future. So, I have no pressure to be forced into a decision that will ensnare us in a giant mortgage. I would like to have better quality housing. That's me. He's fine with staying. However, I know my landlord. He will not fix our apartment up until after we are long gone. And he will continue delaying needed repairs as long as he can get away with it. After 14 years, I'm getting tired of the game.

Do I really have to wait until we are 50-54+ years old to be able to afford something better? Is it really worth waiting that long? You and others around here seemed to think that we would have somewhat affordable housing around here after the last crash. The thing is that it's only become more unaffordable, even for two middle-aged men with a decent household income. What happened after the crash is that rents are now extremely unaffordable and owning is beyond our reach too.

Yes, I do see that our savings is growing nicely, as well it should with our housing costs so low. And there is something to be said for that since we really do need our money to be invested wisely so that we will be able to retire at some point. However, I'm getting restless and tired of the waiting game.

Yes, I could move out of the area. But the thing is that my mother and brother moved here back in 2009 and they both live in Oakland now (from Chicago Area). I don't want to leave them here now that we all live within 1 mile of each other. My mother has a sweet deal on her apartment due to being a Property Manager there with very light duties. My brother is finally in a board and care situation that meets his needs (after too many moves to count and way too many train wrecks).

So, I am feeling kind of stuck due to the cheap rent we pay in comparison to the newer arrivals to my neighborhood who moved here to flee insanely ridiculous housing costs in San Francisco. I'm not exactly in a hurry and yet, I'm thinking we are 4-8+ years away from being able to move into any other situation close to where we live now that makes any financial sense.

I'm just feeling like rationality will never return to housing in the Bay Area. What we face here is nothing short of a housing crisis. I work with homeless individuals and those who have low income. These people are being hurt the most by the economic and financial craziness taking place all around us. Greed runs rampant here and I don't see any signs of it abating any time soon.

Do you really think we are going to see some rationality return to the Bay Area housing market ever? I'm not entirely convinced that it will ever make sense for me to own a place here in Oakland. And I can let go of that if I could afford the rent on a better place somewhere down the line. I don't have to own to be happy. I would like better quality housing that won't prevent us from being able to retire one day though.

196   Strategist   2016 Jun 27, 6:20pm  

TAX HOA Investors says

***NEVADA STEALS HOMES****

Please DO NOT buy in NEVADA HOMEOWNERS' ASSOCIATION. Many states (like NEVADA) engage in THEFT/DEPRIVED DUE PROCESS by using SUPER-PRIORITY LIENS to FRAUDULENTLY FORECLOSE on homes.

f you want to defend your home from ILLEGAL FORECLOSURE in NEVADA, you must go through EXPENSIVE FORCED ARBITRATION.

If you cannot afford arbitration, you will lose your home. Not legal advice, so, please discuss first with an attorney. AVOID HOAs at all costs! Good luck.

Just pay your damn bill, and you won't be foreclosed.

197   Strategist   2016 Jun 27, 6:31pm  

simchaland says

Do you really think we are going to see some rationality return to the Bay Area housing market ever?

I think it's you who is irrational.
You make above median income, but can barely afford $1,000 per month in rent. How the hell are you gonna afford to buy a home in the BA? It's only a matter of time before you end up paying market rent. Living at someone else's expense is free loading, and does not last for ever.
As for the bubble.....just because YOU think prices are high, does not make it a bubble. Wake up. If anything, prices in the BA are set to jumping the next few years. And yes, this time it really is different.
Get real. The only way you can afford a home is to move far away from the BA. Hope you can digest constructive criticism.

198   simchaland   2016 Jun 27, 6:46pm  

Strategist,

Gee, I never said I could barely afford our rent...

Gosh, what an assumption...

I could afford much more. I don't want to pay outrageous money for housing. It's not my priority. I would like better quality. If I can't get it here, yes I will move. But I am in no hurry. I can afford to wait and see while I invest our considerable savings. Did you miss that part? We are saving... A lot.

And it would be nice to have better digs that won't prevent us from saving for retirement.

Oh we could be like the rest of you lemmings. We could pay insanely inflated rent and or house payments and pretend it's going to last forever. But I'm a bit smarter and more prudent than that. We will save for retirement. We won't pay stupid money for better digs. We will wait this out.. I just don't know how long that will take.

We are not freeloading. This building has been in the hands of the same owners for generations. Their property taxes are insanely low thanks to Prop 13. If anything they are freeloaders for using up infrastructure that they don't pay for.

Their expenses don't go up. Ours shouldn't go up just because they are all getting greedy. And yes, it's greed. It's irrational. And I'm smart to stay where I am for a while longer, paying below market rent (because the market is stupidly overpriced for rent). Just because all of the lemmings from SF are stupid enough to pay inflated prices for rent and houses doesn't mean I have to.

So stop with your ignorance and I'll wait for Patrick to respond since I addressed my post to him.

199   Strategist   2016 Jun 27, 7:00pm  

simchaland says

And it would be nice to have better digs that won't prevent us from saving for retirement.

Really? You pay well below market rent, yet you want more for the same price.

simchaland says

I could afford much more. I don't want to pay outrageous money for housing.

Hello? market rent is not outrageous. Below market rent that you pay is outrageous.

simchaland says

We could pay insanely inflated rent and or house payments and pretend it's going to last forever.

Mortgages can last for 30 years. Try that with rent.

simchaland says

We are not freeloading.

Paying $1,000 for an $1,800 apartment is free loading, regardless of what the landlord pays.

simchaland says

And yes, it's greed. It's irrational.

Wanting a fair, market rent is not greed. Wanting below market rent is greed.

simchaland says

And I'm smart to stay where I am for a while longer

Considering the below market rent, I would stay there for ever, and not complain about repairs. Gosh, you can't get everything in life, you know.

200   simchaland   2016 Jun 27, 7:07pm  

Strategist,

You are a very disagreeable person, I can tell.

So, I'm not going back and forth with you. If you feel that I'm being a freeloader for paying below market rent in a building where I have lived for 14 years without any problems for my landlord and obeying all of the laws for Rent Adjustment in Oakland, then you are a narrow and simple minded person too. Or you are just jealous because I have found a way to save a lot of money while you cannot with paying stupidly inflated housing costs.

The market is running on stupid, immoral, insane, and outrageous greed. There is no disputing that. You haven't seen my apartment. You have no idea the condition it's in or little bit of space we have. You also don't really understand how bad things have really gotten in Oakland and how out of whack things really are here.

I would say that I'm being quite rational staying where I am until the sanity can return, or if it doesn't, eventually I will take my hard earned/saved/invested money somewhere else where I can pay rational prices for housing and save for retirement.

Meanwhile feel free to be insanely jealous and grouchy. The cortisol you are producing can't be good for you but if that's what you want, go for it.

Meanwhile I will continue to save, invest, and wait for a good opportunity to find better housing that doesn't cost so much that I cannot continue to save an invest. That's what rational people do.

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