patrick.net

That feeling of being cheated is exactly what drove me to create this site and what keeps me working on it.

How to win? I think there are still some ways in spite of the best efforts of the Fed and the banks to enslave us to mortgages and bosses:

* Work in a high income area for 10 years, while renting and saving enough to buy for cash in a nice but low income area, maybe something like far northern CA or coastal Oregon. Kind of a race against inflation eating your savings.

* Start your own business and tell your boss goodbye. Might work, might not, but at least it's an adventure.

* Live on a boat or in a mobile home. I knew a guy who had a house in Davis, but worked in San Francisco. During the workweek he lived on his sailboat docked in SF and it was only maybe $300 per month for the dock fees.

* Own a bank, and own a few senators too, to protect your bank from any possibility of losing money due to free market forces. If you own the government, the free market doesn't apply to you.

I'm stuck in the same way. Had a bunch of money in the bank for 4 years now, theoretically I've been 3-6 months away from buying a house for those past 4 years, I was even under contract for one 2 years ago that I'm now happy I did buy.

I'd really emotionally like to buy a house, I thought fiscally that waiting would be a good thing but prices have not come down as much as I thought they would. There was a house for 215K two months ago that I now wish I had jumped on but it was under contract in a couple days. I feel like I've got a lot of my life on hold until I pick a house and settle down permanently.

All I know is I'm not losing. Sitting in a comfy apartment, bunch of money in the bank, decently secure job. I can recognize that I've got a better life than 99% of people in this world and I try to take stock of that. With so much turmoil out there in jobs, international markets, politics, it's kind of nice to know you can weather anything that happens and take advantage if any opportunities do pop up.

Goran, I am sort of with you. I used to be more so. Alas, I see it as a hopeless situation and one that is likely permanently rigged against people that think in "reasonable" terms. Knowing that, it is senseless to allow yourself to be bothered by it. Love it or hate it, it is what it is, and nothing good or productive can come out of thinking about it. The best course of action is to focus on all of the good things you already have in life and work on letting go of the house idea. We all sort of idealize many aspects of it and focus on the ways that a house is better than an apartment, while generally ignoring the aspects that aren't as great. As I like to say, it isn't necessarily BETTER, just different. You trade some headaches for others. The easiest way to deal with the unhappiness brought about from wanting something is to just stop wanting it. Easier said than done though!

As one poster says in his signature line..."No solution? NO PROBLEM!"

Finnian says

I can recognize that I've got a better life than 99% of people in this world and I try to take stock of that.

Amen!

It is so easy in this country to totally lose perspective on life. So we don't want to make large monthly payments for a single family house, boo hoo! How about wondering every day where you will find food or clean water for you and your family, or if your sons will be stolen from you to fight in some regional conflict? As I discovered after my first trip to industrial China...we have it so damn good here in the US, and all we can manage to do is complain about it!

Just keep in mind how marketing works. It operates by making you UNhappy with your life as it is now by promising greater happiness via whatever they are trying to sell. Think about all the fantasies that most of us have in our heads about how great a house will be. When emotions get put down and we actually THINK about it, it only looks like a pile of trade-offs. In some cases it is worth it, and in others it isn't. Just remember, the way things get sold is by spurring discontent in the consumers so that they come seek happiness in your product, with open wallets. Most stuff is shrouded in a disguise of why you "need" it, but a moment of rational thought will quickly show that there is in fact zero NEED involved, just want, usually driven by emotions. Keep those particular emotions under control!

There is more government intervention now in RE than EVER BEFORE in history of US. Even more than the actions that created the bubble.

Low rates have caused large REITs/small investors(even CALPERS) to buy SFR to rent out. This is new! Added with all the other bailouts/squatter stimulous/loan mods for losers/robo signing 'scandal' delaying foreclosures/principal reductions/HARP/HAMP/REO to Rental cronyism its hard to say what will happen.

Banks dragging feet on foreclosures (wating 2 years to file NOD - used to be done in 90 or 120 days no matta what) is still going on of course and wont change. Also accounting rules for banks were suspended in 2009 probably permanently.

Romney or Obama will be exactly the same on these issues. They will leave Bernanke in place and the money printing ponzi will continue. Plan accordingly.

i don't feel cheated.
mainly because i'm super patient and fairly analytical.

as long as prices keep falling or stay relatively flat i don't have a problem.
every year prices have been better - meaning lower.
i see the advantages of letting the impatient rush in first while i sit back(there's the old joke - "why run down the hill and fuck just one, when you can walk down and fuck them all?").

when i see prices start to inch up, then i'll decide if i want to commit to a house at that price.
right now, i'm satisfied with waiting, accumulating cash and growing my investments.
i could pay cash today for a house, so waiting is purely a strategic decision.

here they come:

http://www.mortgagenewsdaily.com/04262012_home_prices.asp

There is good news near the end of the article.

A= renting a home.
B= buying the same home as in A.

How can you feel cheated when B != A or vice versa? Two different things. Pick yours and pick your own time when you want to do A or B in your life time. Why do you think only B will make you happy? and why does A makes you feel you are cheated?

Goran_K says

If you don't want to live in an apartment for 20 years, you're forced to participate in a ponzi scheme and overpay for a home.

Unless you rent a single family home, buy a mobile home and rent the land, move someplace where it costs less to buy than rent, etc.

You want to live in an area without gang fights in a dirty alley behind your house every night, and have your children go to schools without metal detectors at every entrance, better be a dual income earning couple who is willing to teeter on the edge of foreclosure every month while eating ramen noodles, and going out to Jack in the Box for fine dining.

Or decide that things like avoiding gang fights and sending your children to good schools are more important than the American dream of owning a house with a white picket fence and settle for something less.

The last place I rented for $1250/month was in a neighborhood with $1.2M - $1.5M houses and if my children were young they'd have gone to the same high school as Meg Whitman's kids (assuming she found some one to breed with her and didn't send them to private schools).

I know people who bought condos and town houses with good schools instead of less expensive houses where there weren't.

Be a saver? The FED makes your money worth less and less.

That is a real problem.

bubblesitter says

A= renting a home.
B= buying the same home as in A.

How can you feel cheated when B != A or vice versa? Two different things. Pick yours and pick your own time when you want to do A or B in your life time. Why do you think only B will make you happy? and why does A makes you feel you are cheated?

I don't know a single person.. (except those on this blog). That actually rents a SFH. Most of my friends and co-workers are renters.. but they rent 1-2 bedroom apts and condos.

When I look for SFH's on craiglist.. The majority are spammers or ads trying to get you to RENT TO OWN.. which i really don't understand.

Also SFH's usually have much larger deposits required. I've seen a lot of homes asking for $3000-$5000 deposits. I'm not to fond of handing that money over to a stranger.... Atleast with a property management company you feel like you have an entity you can track down and sue easier than an individual, that may or may not be making payments on their home.

So, your A = B scenario is much rarer in the real world. Maybe that will change once more investors start buying up SFH's.

bubblesitter says

A= renting a home.
B= buying the same home as in A.
How can you feel cheated when B != A or vice versa? Two different things. Pick yours and pick your own time when you want to do A or B in your life time. Why do you think only B will make you happy? and why does A makes you feel you are cheated?DO YOUR MATH

Perfect.

There are properties for sale in my area that at these interest rates where buying = my rent. (Which is low)

Worse case: An earthquake or financial collapse where the value is half.

Best case: The value at least stays the same. I have a base in California.

Thanks for all the input (Patrick, bmwman, porky, etc).

I agree that I should be thankful for what I already have, and to tell the truth I am, I'm happy everyday. I have a beautiful wife, big growing 1 year old son, and lots of cash in the bank. I don't feel cheated in that I'm not able to buy a house, because I can, I feel cheated in that my world has been changed in a little more than 10 years into something that is unrecognizable to me.

In the 1990s when I was a college undergrad, I bought a condo on an entry analyst salary at Goldman Sachs (yes I know, I worked for the devil, irony is rich). Not a shoebox either, a real 3/2 with 1800 square feet in a nice area of Greater Los Angeles. When I left that job, I was able to get a fair price for my condo, no price gouging or low balling, just fair. It was so simple, sold in about 2 months.

Unemployment was around 5%, people could get jobs if they wanted and were motivated.

These days, things are just different. I have friends with MBA's who have been on $1,800 a month unemployment since 2010. What did these criminals do to our country?

I guess I could be happy I don't live in sub-saharan Africa, and have to carry an AK-47, but I think that it's all about perspective of where you were, and were you have come. I think things are a lot less better than before and it scares me how fast it changed.

The worst part of it is there are people who are young enough to consider this normal.

If you post on Zillow or Trulia forums, there are tons of agents/realtors. I brought up how Los Angeles prices in non-hoody neighborhoods have appreciated more than 200% in less than 10 years.

Then I'll get a REMAX agent, who will be maybe 22 at most, ask me to stop "being a cheap ass" and just accept that those neighborhoods will always be expensive because "rich people don't care about price just location."

Insanity.

Goran_K says

Insanity.

Insanity, yes.

But this scenario is correct and the systemic way of lending has not gone back to the old lender/borrower business model. Thus, mortgages are still being sliced and diced and sold off to investors.

So, I'm not quite confident prices will drop to 1999 levels, in my neck of the woods anyway.

Eff it. I used to feel that way. But walking home instead of fighting traffic is great. Being able to stop off at whatever bar has the best happy hour and cutest worm also has its charm.

If houses drop enough where I'm ok buying, so be it. If not, I'll retire in 17 years, pay cash for a home, and still be happy

Oh, of course you feel cheated. The system is punishing those economically responsible and rewarding irrational exuberance. And yes, we should feel greatful for what we have, but it used to be much better. The problem is the direction we are taking, and one can turn a blind eye to it at it's own risk.

I feel cheated because CD's used to pay 6% back in 06 now they pay 1%.

Of course the whole fraudponzconomy is managed soviet era CCCP style and 'they' want people with bags of cash to plunk it into RE or Stocks right now. Its all fake zeros and ones to them in a game.

rowemoore says

here they come:

http://www.mortgagenewsdaily.com/04262012_home_prices.asp

There is good news near the end of the article.

Reading these articles is maddening. I cannot stand how housing price recovery = a return to housing prices which can only be supported by toxic debt. To me, a housing price recovery is a return to pre-1998 prices. In some places that is happening, but not in the right places.