patrick.net

RentingForHalfTheCost says

People come to this site to get the true picture of the state of the housing market.

Correct. And when you try to stop people like SFAce and Roberto from posting, you are giving a distorted view.

RentingForHalfTheCost says

Buy if you really need to and can afford a 20% drop in house price over the next few years. Maybe the benefit of owning the home will out weight this drop to some. On a 65K place 20% is not that much, but on a 1million it could mean you are cleaned out.

Or maybe housing prices won't drop 20% in the next few years.

tatupu70 says

Or maybe housing prices won't drop 20% in the next few years.

Maybe then won't. I agree. But my opinion is they will, and I am allowed to have this opinion and share it, without being attacked. Robert and SFAce can share their opinions just like the rest of us, but they can't claim everyone is a dipstick or twit for not agreeing. Then they put themselves in a class ahead of everyone. We all live, die, make mistakes, are correct at times, are miserable wrong at other times. I have an opinion that I believed is unbiased and based on sound fact of years of research and experience. That doesn't make me stupid or a dipstick. Post your opinion and lay off the attacks of others. We are all just trying to help, even though some of us will be sadly wrong in our views. I don't think it will be me.

Air conditioning is energy intensive.

So is all of the electricity involved in importing/pumping water (oh yes, sustainable water supply, but that is another story).

Getting around to work, etc. in a car-centric megapolis that was mainly laid out and developed in the car-centric age is also energy intensive.

Hopefully those buyers have factored the future energy costs into their projected ability to make the housing payments in the years to come.

Water is definitely a big problem for AZ, but air conditioning has the nice property that you need it most where the most energy is pouring down on you from the sun all day. I think solar-powered air-conditioning is definitely going to happen.

robertoaribas says

do you have a reading disability?

Let's not insult each other, even if the other guy starts it.

robertoaribas says

AND saying there aren't bidding wars in AZ. is pure BS.

Didn't say anything of the like. They can go crazy bidding in AZ if they want. I'd still warn them that if they are not getting a 20% discount from the norm then they need to make sure they don't mind going underwater in the next few years. Obviously, my take on the market and yours can vary. You can even think we are at the start of a second housing boom.

Your rent verses buy relationship in AZ is much much better than here, but I wouldn't forget to throw in a 1-2 percent depreciation of an investment that is leveraged 5 to 1 into your analysis. Use Patrick's calc if you don't like crunching the numbers yourself. It will should a picture that is not as rosy as originally thought.

bob2356 says

Who cares about depreciation if you are holding the properties long term.

Your option not to care, and long term you will recover and benefit. However, I am analyzing in detail to see when to buy. To maximum the benefit of buying, not to jump in and use time to compensate for jumping in during a down market. I'd rather maximize the profits each year during my life for the best effect when I retire. Even a 1% increase each year will be huge in the long term. To get these you crunch the numbers and make decisions each year.

If I was a landlord, I would crunch the numbers assuming we have 1-2% depreciation for the next 3 years at least. Then if after 3 years my net worth is less than if I sold today, then I would sell. If you get enjoyment aside from the financial side at being a landlord then maybe the loss is something you can take.

My thinking and analysis has done me well so far, and I am never going to not do something because over time I can work myself out of the hole I put myself. I'll just jump over the hole in the beginning to stay on top. ;)

RentingForHalfTheCost says

If I was a landlord, I would crunch the numbers assuming we have 1-2% depreciation for the next 3 years at least. Then if after 3 years my net worth is less than if I sold today, then I would sell. If you get enjoyment aside from the financial side at being a landlord then maybe the loss is something you can take.

WTF are you talking about? Don't you have closing costs in your world? How about declining interest payments? You don't just sell a house like old clothes at a garage sale. Pretty hard to maximize profits giving up 7-8% in closing/purchase costs every year or 3 years or whatever.

RentingForHalfTheCost says

However, I am analyzing in detail to see when to buy. To maximum the benefit of buying, not to jump in and use time to compensate for jumping in during a down market.

To buy for what? To rent, live in, or resell? Option 1 and 2 mean you buy for cash flow or shelter. Your 3 year time frame is meaningless in these cases. So you must be an option 3 flipper. Good call not going into a down market. Good luck, I never had the balls to play that game.

bob2356 says

Pretty hard to maximize profits giving up 7-8% in closing/purchase costs every year or 3 years or whatever.

Don't use realtards. Sell on your own. I know many that have and it was pretty easy they say. I haven't done it, but if I ever do sell again and multiple places I will.

http://www.wikihow.com/Sell-Your-Own-House

I buy to live-in and then resell or maybe rent as I buy again. I guess all three do come to mind in a decision. I still think selling for any reason right now is prudent if you are not making up the depreciation in surplus on the rental. There are many other investment that are actually appreciating at this time. Put is all in a diversified dividend group of stocks if you want something easy. Coke, GE, Comcast, Proctor&Gamble, Verizon, etc. Your make 5% a year just on the dividend and sit and watch the real estate disaster.

robertoaribas says

so the $76,000 home drops 1%?

Makes perfect sense when the 1% is really noise and can be offset by the rental income easily. Like you said, though, jack that up by 10x or even more (1.2million home) and things start getting crazy.

You sound like you got a handle on things. Mop it up out there!