patrick.net

SubOink says

Schizlor says

I think the past 5 years have more than adequately proven this point (and why this site exists in the first place) but since you need it spoon fed to you, here it is.

To clarify my point…look back in real estate. How is everybody doing that bought a house from 1950-2000?

So I guess in essence you are framing your argument in the context of "The housing bubble and it's effects are well behind us at this point."

I know things were rational and between 1950-2000 you definitely could reasonably expect your scenario to play out. I was in that camp too. Where we differ is, I still think we are deeply entrenched in this mess and are NOWHERE NEAR a point where we can confidently say, "Ahhh...well...that was 5 years ago, we've moved on" and pretend were back to normal. THAT is the part that I say is nonsense (actually I used a more colorful term)

I'm not debating that was sound logic for half a century up until the year 2000. I'm saying, to claim that's still sound logic is ridiculous.

If everyone had looked at what they can afford, we would never have had a bubble like this in the first place.

If you don't want to buy a house because you think you can get laid off, then fine. Don't buy a house. I am not saying its for everyone. But I am saying that if you get laid off, get sick etc...you still have to live somewhere, eat somewhere. So you are not getting around having to spend money every month for a place to live. If you choose a payment that is comfortable then part of the common sense is also that you should have a years worth of reserve saved (or more) in case you don't have a job.

I don't know why you are fighting me on this, with the horseshit, you are a realtor speech.

SubOink says

Using the monthly payment IS the way to determine what you can afford as its directly linked to the purchase price.

I suggest you read up on the recent housing bubble in the United States. The fact that you could read dodgerfanjohn's point, miss it by a mile, and argue against it is mind-boggling.

Everybody that bought into it used your rationale. At least they had the excuse of not living through a precedent.

klarek says

Everybody that bought into it used your rationale. At least they had the excuse of not living through a precedent.

The point is really, that they did NOT use my rationale. They went to the bank, said...I need a million bucks and the bank said...how much you make?...and they said...uh?..hm...well...300k/year...and the bank said...DEAL! No Doc, required...lets roll.

Far from my rationale...

SubOink says

klarek says

Everybody that bought into it used your rationale. At least they had the excuse of not living through a precedent.

The point is really, that they did NOT use my rationale. They went to the bank, said…I need a million bucks and the bank said…how much you make?…and they said…uh?..hm…well…300k/year…and the bank said…DEAL! No Doc, required…lets roll.
So far from my rationale.

What they did is what you are shamelessly advocating: buy based on what you can pay per month. Read what dodgerfan said. Making a 6-figure purchase with no more thoughtfulness than the monthy payment is beyond idiotic. Why any of this needs to be said in 2011 is beyond anyone's comprehension. It's embarrassing. This is exactly the type of bullshit that realtors want people to be dumb enough to believe.

klarek says

What they did is what you are shamelessly advocating: buy based on what you can pay per month.

No, what I am advocating is buying what you can pay per month and locking it in. NOBODY did that.

People lied left and right about how much many they make, without making it. Jee, do I really have to go over this???
They barely bought what they could REALLY afford. If at all, they bought what they could afford that year and took out a teaser rate loan...then 3 years later the rate changed and they could NOT afford it anymore. The theme was not...be reasonable but get as big of a house you can possibly swindle yourself into. How is that what I am advocating????

You clearly are the master of misinterpretation.

Let's put it this way Klarek...

What's your rationale? Fill us in.

I want to buy a house...so smart Klarek, advise me...what's the rationale?

You just constantly throw out useless and wrong criticism, let's actually hear your solutions. It's easy to say...that's crap, that's what realtors say..

Let's hear it...

SubOink says

Let’s put it this way Klarek…
What’s your rationale? Fill us in.
I want to buy a house…so smart Klarek, advise me…what’s the rationale?
You just constantly throw out useless and wrong criticism, let’s actually hear your solutions. It’s easy to say…that’s crap, that’s what realtors say..
Let’s hear it…

Rent parity is only one of the factors for making the buying decision. One has to consider job security and possible further house price depreciation.

To me, in today's new economic reality below are the only people who should buy
1. One who has plenty of assets, can pay all cash and still have other liquid investment in the portfolio
2. Singe income earner who works in the public sector or union protected field
3. Dual income family that live close to job centers, while only 1 person's income is sufficient to cover the mortgage payment if the other gets laid off.

APOCALYPSEFUCK says

If you can’t buy a house for cash, fuck it, squat or camp out in a car until you’ve saved up enough.
Debt = slavery.

Everything is slavery. Having a job is slavery. Paying taxes is slavery. Camping out in a car is living like a slave. You are a slave to something, one way or another...

For now, I'll be a slave in a nice big house and enjoy slavery in my pool while you camp out in that car and save money for 50 years. :) You'll be a slave to saving...

Future Cash Buyer says

One has to consider job security and possible further house price depreciation.

Also consider time horizon. If you only plan to live somewhere 3-5 years, it may not make sense to buy because of high transaction costs and low liquidity. If you need to move because of job, family situation, etc., this needs to be factored in. There are also slightly more intangible factors, e.g. ability to absorb risk or desire to take risk.

The "starter home" is a very dangerous concept. The used house salesman industry marketed this concept to increase transactions, so that used house salesmen get more commissions. Instead of buying a house that will surely underserve them in the future, most people would be better served by saving a larger downpayment and waiting a few years to buy a house that makes more sense, and they'll probably make at least slightly more in salary in the future too.

Buying a crappy starter house that won't meet your needs in the near future only makes sense if you have bubble appreciation that will overpower the massive transaction costs. It made sense if you bought in 2004 and sold in 2006, but rarely makes sense otherwise. This is one reason why 1BR condos have poor marketability in some cases.

SubOink says

For now, I’ll be a slave in a nice big house and enjoy slavery in my pool while you camp out in that car and save money for 50 years. :) You’ll be a slave to saving…

I think APOCALYPSEFUCK is asking us all to look inside ourselves to the place where we want freedom to reside.

Hurry up and own something! That's the point of living!

FunTime says

Hurry up and own something! That’s the point of living!

Right, that's the mentality that caused people to buy ridiculous "starter homes." Poor location? No problem. Won't suit me for more than a few years? No problem. Needs to be sold if I want a job out of the area? No problem. I just wanted to buy instead of piss away rent!

SubOink says

For now, I’ll be a slave in a nice big house and enjoy slavery in my pool while you camp out in that car and save money for 50 years. :) You’ll be a slave to saving…

Before you purchased, did you look at rental comps for a house like that with a pool? I'll bet you didn't, because "hey I can afford this monthly payment".

This country is so fucking dumb it's pathetic.

klarek says

SubOink says

For now, I’ll be a slave in a nice big house and enjoy slavery in my pool while you camp out in that car and save money for 50 years. You’ll be a slave to saving…

Before you purchased, did you look at rental comps for a house like that with a pool? I’ll bet you didn’t, because “hey I can afford this monthly payment”.

This country is so fucking dumb it’s pathetic.

No, I didn't check anything of course. I loved the house and I can easily afford it. This house is a palace compared to our last rental (rental had no pool). Now, it happens that our neighbors are renting for 500/month more than what we pay in mortgage but I won't tell them that..I promise. And their house is 300sqft smaller and no pool.

I think I just saw their nametag on the mailbox...it said "Klareks"

:)

klarek says

when he stares at the McDonalds combo meal options before making an order. Pretty sure you spent more time doing the latter.

Yes! How did you know that? I spent hours looking at the combo's. And when I am ready to have you ring up my order, I often change my mind last minute because the choices are so tough. :) :) :)

Oh, and here is my rationale about job security. There is no such thing as job security.

Job security should be your education and your skills!! Good people are always wanted and will always have a job.

SubOink says

Oh, and here is my rationale about job security. There is no such thing.

Oh but there is! It's called Teacher Tenure.

sybrib says

SubOink says

Oh, and here is my rationale about job security. There is no such thing.

Oh but there is! It’s called Teacher Tenure.

Let's not go there :)

SubOink says

Oh, and here is my rationale about job security. There is no such thing as job security.
Job security should be your education and your skills!! Good people are always wanted and will always have a job.

I agree. But you can bring your education and skills with you a lot easier than the house you purchased when you move.

SubOink says

No, I didn’t check anything of course. I loved the house and I can easily afford it.

I didn't ask if your neighbors were paying more in rent, I asked if you looked at the rental comps. I didn't even make the presumption that you're paying more or less by owning rather than renting, just that you based your purchase on such pathetic thresholds that you didn't even bother to look at craigslist.

Thank you for proving my point, as well as points made by Schizlor and dodgerfan. Your decision was 100% emotional. Your "I can afford it" threshold is set by the lenders. You didn't make any decision there. You would have accepted whatever they told you that you could afford.

Had you been born a few years earlier in this world, you would have purchased at the height of the bubbe, and used the exact same rationale. We've all tried to point out to you how dumb this is, why our country is full of idiots who make six-figure purchases without a care or thought in the world, only to the benefit of their scumbag realtors and mortgage pushers. But you relent every step of the way.

SubOink says

APOCALYPSEFUCK says

If you can’t buy a house for cash, fuck it, squat or camp out in a car until you’ve saved up enough.

Debt = slavery.

Everything is slavery. Having a job is slavery. Paying taxes is slavery. Camping out in a car is living like a slave. You are a slave to something, one way or another…
For now, I’ll be a slave in a nice big house and enjoy slavery in my pool while you camp out in that car and save money for 50 years. You’ll be a slave to saving…

you rock man- I agree. I'm on my way to be out of all these slaveries in next 10 years. That's my goal

SubOink you rock :-))

SubOink says

Oh, and here is my rationale about job security. There is no such thing as job security.
Job security should be your education and your skills!! Good people are always wanted and will always have a job.

With the way you talk, you should not even need a job.
You sounds like that you are richer than Bill Gates.

The other important aspect of this low is that this low is actually incredibly high. When a house forecloses, the price it forecloses is usually on the owed amount (which is much above its value). These are recorded as sales, without actual sale taking place.

You can even verify that on trulia. Averages get completely skewed by Foreclosures of 1.2 million and 700,000 houses in a 250,000 neighborhood.

If foreclosures were not considered, there would be almost no sales listed. which is why I think we are a long way from the bottom, at least in our area.

SubOink says

To clarify my point…look back in real estate. How is everybody doing that bought a house from 1950-2000?

Like me, doing well.
WE didnt buy into inflated prices.
WE didnt buy more house than we can afford.
WE didnt buy into the hype.
WE learned high home prices kill jobs in local industries.

xenogear3 says

SubOink says
Oh, and here is my rationale about job security. There is no such thing as job security.
Job security should be your education and your skills!! Good people are always wanted and will always have a job.
With the way you talk, you should not even need a job.
You sounds like that you are richer than Bill Gates.

With the way you talk, you think Bill Gates was just born rich?

Bill Gates is a perfect example that "another banker's son becomes richer" story.
I cannot believe how many people keep saying "Bill Gates starts with nothing, ends with everything".

You really don't have to start with 1 billion dollars or something.
However, you DO need to start with something so you don't have to worry about "working to pay the mortgage/bill".

You need the free time to invent something while other people too busy to find a job.

"His family was upper middle class; his father was a prominent lawyer, his mother served on the board of directors for First Interstate BancSystem and the United Way, and her father, J. W. Maxwell, was a national bank president."

source: http://en.wikipedia.org/wiki/Bill_Gates

Another stupid, pointless, and potentially libelous thread.

And yet another reason Patrick needs to close down this forum of useless chatter.

Bill Gates' family was MORE than upper middle class, his was upper class.

When Bill Gates was born, he already had a $3M trust fund set up for him, that was in the 1960s. $3M trust fund baby and only UMC?

His dad was the founding partner of the LARGEST law firm in Seattle. He was born into privilege, and blessed with far more opportunities compared to average Joe.

Steve Jobs, on the other hand, was born into middle class.

Bill Gates made lots regular software programmers rich.
The technology boom made lots regular workers rich.

This upsets the normal rich people.
So they team up with the Chinese corrupted government officials.
Now everything is made in China.

APOCALYPSEFUCK says

And you will notice where he got his intro to computers: Hewlett Packard, in some kind of internship program. HP culture back then was very engineering centric and had a broader sense of mission than the start-ups of today who’ve got an exit plan before they have funding.

it's a new way of doing business. a lot of companies are started with idea of being acquired by a larger entity.

i know what you mean. with easy money it's cake to run competition out of business. if I want to run local businesses out of competition all I would have to do is give the equivalent to their product for free for a few month until they close doors and than its game over.

but it isn't just that. I remember years ago our first venture had the same business plan, we wanted to be bought by a larger corporation to cash out. It didn't work out, we were stupid, we were foolishly chasing easy non-existant money because we bought into the hype.

SubOink says

Job security should be your education and your skills!! Good people are always wanted and will always have a job.

There's a storm brewing in the price point of 1mm - 2.5mm.

Plenty of people make enough money and/or have enough savings to afford a million dollar home. Most of them already own homes.

We'll have homes in this category flooding the market from the following sources:
-New construction spec homes, built by developers
-Bought in 05/06/07 by someone who could afford the teaser period (5yrs) of their 5/1 ARM, Pay-Option-Arm and/or Interest-Only loan, but not the fully indexed payment.
-Refinanced in 05/06/07 in order to take out equity
-Existing REO/Foreclosures not yet listed for a number of reasons (for instance, many all-cash buyers of REO/FCLR can spend 250k but far fewer can write a check for 800k)

All of the sellers above are slightly more sophisticated and resourced. They can wait-it-out or buy time with:
-More intelligent negotiation/stalling with lenders
-Savings and other financial assets
-Significant, but insufficient, incomes
-For mortgage servicers and banks, political cover for delaying foreclosures

Example:
Existing owner
Earns 150k/year (~110k after taxes)
70k in savings
850k mortgage at 6.5% (too underwater to refi)
Between mortgage/taxes/insurance, paying ~6k/mo (before maintenance and opportunity costs)

You can see that this borrower can scrape by for a few years, but they would really need to make ~300k/year to comfortably afford this situation.

Lets think about all these expensive houses that need to change hands and try to brainstorm what kind of person:
-Makes 300k - 600k annually
-Has confidence in stability of income
-Has 200k - 600k to put down
-Doesn't already own a million dollar house

Food for thought:
-A young lawyer or doctor, just finished paying off their loans, probably only makes ~200k-275k and has very little savings
-Many high earners (finance, real estate, technology) can have very volatile careers and incomes
-All-cash and foreign buyers make great anecdotes but can't support the housing market

Education and skills are job stability, but I can't think of too many jobs where you can hit a rough patch, get fired or switch firms without potentially getting stretched thin owning a giant cash suck like one of these places.

It hasn't even begun. There are not enough rich renters to buy all these rich houses from not-rich people.

So next question. When would this end? We still have
foreclosure up to wazoo. And people are still defaulting
at an alarming rate. The jobs are scarce. The price of
basic living is getting more expensive. FED and US
Government are in denial of inflation. Did I miss anything?

OO says

Bill Gates’ family was MORE than upper middle class, his was upper class.

I agree with the fact that having the money to get an education is a great way to start. But most people here sound like...if I only had the money, I woulda been like Bill Gates. You still have to do the work, you still have to put things together. I remember having friends that had rich rich parents and guess what...they didn't do jackshit with it but smoke pot all day and play videogames, drive Dad's car and go out all night.

Don't forget, growing up with a lot of money also takes the pressure of to do anything in life because you don't need a job. It's not easy to get motivated when there is no pressure. That's why its often the most broke person that comes up with great stuff because they have to - to survive.

I don't take away from people that have come up with great stuff alla Steve Jobs, regardless if they grew up rich or not. Some people just got that secret sauce going. Not everybody is a genius. Some people play first violin and others play second violing and some don't play at all. That's life.

Okay...I am going to back to practicing that violin now...:)

Apocalypse,
The solution to your problem is easy. Move to Arizona, buy a property with a well, plant your garden, install solar power and arm yourself to the tooth and read the american free press all day. Just like the other nutty Arizonians. In that paper you will find all the conspiracy theories ever invented. You will find the doom and gloom you seek. You will find proof that Obama made a deal with the Aliens and the Chinese to take over the country, that there are concentration camps tunneled in the AZ desert..Oh yeah, as a matter of fact...they are already here!! Get your guns!! NOW!!

My concern is how many people actually believe this shit! Stupidity never bottoms. Also the reason, why Sarah Palin will probably be the next president :)

Okay, so I just glanced through this wonderful endless chat. What love is in the air! Here's the thing; you're ALL being played by ego, the fed, greed, and fear. If you are all (presumably) middle aged, ONE of you will most likely be dead within 5 to 10 years. Maybe sooner. So, go ahead, focus your precious life energy on QE3, REO's, and the gold stashed in the paint cans in your garage. "...Gnashing of teeth...", a biblical metaphor, you'd better hope. I have to go take a shower now.

SubOink says

The solution to your problem is easy. Move to Arizona, buy a property with a well, plant your garden, install solar power and arm yourself to the tooth and read the american free press all day.

You should read the Zombie Survival Guide. Deserts aren't very good places to live in the apocalypse. Harsh conditions for human survival, easy visibility for zombies/bandits, and a lack of arable terrain. You're pretty much assuring a painful death no matter what.

APOCALYPSEFUCK says

AZ is grossly overpopulated. Northern Yukon more likely.

Somebody read the Zombie Survival Guide.^^^

APOCALYPSEFUCK says

SubO,

AZ is grossly overpopulated. Northern Yukon more likely.

Can’t wait to see President Palin leading jumping jacks on the morning presidential exercise show!

Good call :)