patrick.net

PockyClipsNow says

total: 2588
(im in 28% effective tax bracket so 2588 * .72 = 1863 'after tax write off payment')
Add fire ins of 129 per month and total pmt after tax write off = $1992

You have to add back in the amount of taxes saved from the standard deduction since you would get it no matter whether you bought a house or not. About 277 per month.

PockyClipsNow says

If rates spike in 5 years I will simply pay off the loan, refi, or get a loan mod - no worries here.

So if you have 700k in the bank to pay it off why not just pay cash and put 2k a month in the bank rather than giving it away. If you are in the 28% bracket you would have to make almost 3k a month to net 2k a month after taxes on your 700k. That means that you have to make 5.4% (really, really good returns in today's market) on your 700k year in and year out to break even. That also doesn't include any earnings from the 2k a month going in.

Sorry but I really don't understand your math or your statement that you could just pay it off, implying you have 700k in the bank, is incorrect.

Where in LA are people selling estate homes with acreage for horses at 875k? Just curious.

I believe there were eleven however if ten I will stand corrected but note as an aside if ten then the case for six in decline makes the case even stronger.

On the issue of fractions, yes as I stated I don't care about national averages. I am only looking seriously at local regional issues on a case by case basis. There are just too many factors that come into play for anyone trying to claim rising anything without equal proof because again pecuniary interest is on them rising not declining. As far as I have seen War has listed the cities clearly he states are declining and has shown proof that they are indeed declining. It would surely be disingenuous to say otherwise from what I have read. Am I missing something?

Reader says

I believe there were eleven however if ten I will stand corrected but note as an aside if ten then the case for six in decline makes the case even stronger.

You have the link. You can see how many cities were mentioned. And it doesn't make your case stronger. The proportion of cities mentioned that had declining rentals over that period is irrelevant when talking about overall rates. I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

For someone to say that rents are falling "irrespective of location" should put them on a 3 strikes and you are out list. This sort of lunacy is not conducive to learning or debate.

Reader says

On the issue of fractions, yes as I stated I don't care about national averages. I am only looking seriously at local regional issues on a case by case basis. There are just too many factors that come into play for anyone trying to claim rising anything without equal proof because again pecuniary interest is on them rising not declining. As far as I have seen War has listed the cities clearly he states are declining and has shown proof that they are indeed declining. It would surely be disingenuous to say otherwise from what I have read. Am I missing something?

Yes, you are missing something. War makes post after post generalizing out his claims. He says rents and prices are cratering. He may sometimes mention specific places in his posts but as a whole he talks in generalities, and if you don't see that, then you aren't reading his posts.

War says

And you lying realturds cherrypick a street where prices aren't falling and call it a national trend.

You liars.

There you go Reader. Still want to defend him?

War says

The truth doesn't need defense. It stands on its' own merit.

Something you might want to consider LieWog.

I see names are still confusing you. How's life now you no longer live in Phoenix?

Bigsby says

I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average? It wouldn't get published because it would make no sense. That isn't what the article at hand did, yet opened by saying on average the nation showed an increase however made clear by including major metropolitan cities showed that six of which were clearly declining.

You aren't making any sense here to me.

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average? It wouldn't get published because it would make no sense. That isn't what the article at hand did, it included major metropolitan cities and six of which were clearly declining.

You aren't making any sense here to me.

What? The report shows the national average rising by 4.4%. They only reported specifics for 10 cities that they had information for. A different report could have easily used data for 10 cities that had nothing but rising prices and that would have matched the national trend. That would have made just as much sense as this report - more in fact because it would have been more representative of the national trend. These people happened to have data for 10 cities, 6 of which showed declining rates (some time ago). Why they used those particular cities is something you'll have to ask them. Those cities clearly weren't representative because right at the start it states rates nationally had gone up 4.4%. What part of that doesn't make sense to you?

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

Bigsby says

A different report could have easily used data for 10 cities that had nothing but rising prices and that would have matched the national trend.

One that "easily" shows the opposite based on the same ten major cities? And show the same national trend? I have yet to see it. How could it be done in the first place since those ten major metropolitan regions represent a greater population than their surrounding regions?

Bigsby says

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

WTF?

Reader says

One that "easily" shows the opposite based on the same ten major cities? And show the same national trend? I have yet to see it. How could it be done in the first place since those ten major metropolitan regions represent a greater population than their surrounding regions?

Do you just enjoy changing what people say? The national trend shows a rise. I'm pretty sure it wouldn't be too difficult to find 10 cities that also have rising rentals. I could then write a report mentioning the national increase and including 10 cities with rises. The point being that it is the national trend that is more significant than individual cities when discussing the situation generally rather than in one specific locale. Again, what is so confusing about that unless you completely misunderstand the point being made and/or want to twist what is being said?

Reader says

Bigsby says

Reader says

It wouldn't be a similar report. How would any article only present four cities increasing and specifically say that the figures represent everything on average?

You'll have to explain where I said that in my post.

WTF?

Bigsby says

I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates.

Like I said, where did I say that? Where did I mention anything about averages? Here is what I said:

The proportion of cities mentioned that had declining rentals over that period is irrelevant when talking about overall rates. I could do a similar report and only include the 4 cities mentioned there that had an increase in rental rates. And lo and behold suddenly 100% of places covered have rental increases. What does that mean as an indicator of rates overall? Nothing, and as I asked before, what exactly would your response be to such an article?

My point once again, as it seems to have completely passed you by, is that I could select any cities I like to show rising or falling rentals. That doesn't mean I am demonstrating anything except what is happening in that particular location. If you want an overall picture of what is happening, then you look at national trends. Again, why is that so confusing to you?

Bigsby says

Do you just enjoy changing what people say?

By asking a few questions? Stop.

Reader says

Bigsby says

Do you just enjoy changing what people say?

By asking a few questions? Stop.

You aren't asking a few questions. You are changing what I said.

soopercommuter says

Down here buying is currently WAY, WAY cheaper than renting.

Can you give an example with my calculator?

This house is in the same tract as my old house (now my rental). It's the same floor plan as mine however mine is a little more upgraded inside and out.

http://www.redfin.com/CA/Moreno-Valley/25962-Deerberry-Dr-92553/home/5612749

My home currently rents for $1595/mo. Your calculator estimates the cost after 7 years to rent at $133k and to own it's $85K. This is not a cherry I picked. This is an average price in this area and the rent is also average for a 4 bedroom home in this area. My mother also has a 3 bedroom rental in the same area. The value of that home is probably around $125k and she rents it for $1350/mo.

"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary."
Steve Jobs

I agree 100%.

TechGromit says

PockyClipsNow says

Loan: 5/1 Interest Only ARM at 2.875 with .25 points (union bank)

Am I the only one noticing the loan? If you were making even modest payments on the principal, I'd say maybe you could afford this place. But an "Interest only ARM"?

A. Your not paying off anything, your only kicking the eventual day of reckoning farther down the road. This looks like a future walk away house to me.

B. So what happens in 5 years? Rates will not stay low forever, sooner or later they will raise and you'll be stuck with an asset you can no longer afford the payments on.

Unless you can afford a fixed rate mortgage, you really don't own anything.

11 years ago in 2001 I started in real estate. Realtors pressured me to buy asap because the super-low interest rates of just a little under 7%, saying rates can only go up, lock in now. Since 12 years now they're saying rates can only go up. Bullcrapp! Rates only go down.

PadRig, I mean Patrick, can you put a "lifetime-rent-versus-buy" calculator on your website? I mean where you enter your current age and expected age at death. So if I am for example now 35 years old and expect to die at 75 years of age I have 40 more years to either rent or buy. Your calculator would consider rent-increase equal to inflation for the 40 years compared to all cost of ownership with a 30 year or 15 year mortgage. I think a lot of people here forget that a mortgage has a final date of payment while the final date of renting is the day you die. Also, after paying 40 years of rent you (if still alive) or your kids (if you were that successful with the other gender) would also have an old little shack, worth a couple of dollars, after all at the end. Might be interesting what the total cost of renting INCLUDING INFLATION is, especially for healthy younger individuals that might have 50 or 60 years of life ahead.

Yup says

soopercommuter says

My home currently rents for $1595/mo.

Have you considered that the amount you get for rent will likely drop? With falling wages and rising taxes rents will come down to closer to the cost to own. If you have cash buyers entering the market I expect rents to come down even more as they compete with lower expectations for return on their investments.

I would not be surprised if rents fall a little. I do feel they are being driven up by all the "temporary renters" that lost homes. Once those people can buy again I expect rents to fall due to a lack of demand. But fall to what? Rents just don't move like home prices do. landlords will let units sit empty before lowering rents significantly. Look at long term rents and you will see there isn't extreme movements in rents. Just minor fluctuations to the upward trend. But on the flipside, I also expect interest rates to rise which will make the difference in renting less extreme. If the interest rates go back to around 7% or 8% then the rent/buy payment difference is almost a wash.

Interest only loan is basically a tax deductible rent (based on the amount the exceeds the standard deduction). While it may allow you to "rent" a bigger place than the outright rental, you still have to commit to a significant downpayment and more importantly, the ultimate goal of being rent free/mortgage free as soon as possible in this lifetime is no closer to being realized.

It might be a little closer if the house appreciates. If you did buy a house 40 years ago with an interest-only loan you still have the same $175.00 payment and maybe still owe the $25k principal that you never paid off, but I would rather have that on my neck than a $2,000 rent payment and immediate eviction if I miss one payment.

dublin hillz says

significant downpayment

That was my thought, whether the price of the house goes up or down, I'm sure the bank is very appreciative of the 175K.

Where can you rent a house these days for half of $175 that in this case the buyer from 40 years ago is paying?

In 1973 median house was $25k. Gas price sky rocketed to 39 cents. 40 years later median house is $150k, just where it was 30 years later (in 2003). If we manage to avoid hyperinflation and keep having regular inflation of 3-4% than the median will be something like $500k in 30-40 years. PockyClipsNow will then sell his house to YOUR kids for $3,000,000.00 Also remember guys, life expectancy keeps going up, you might not die until you are 90 or 95 years old. Do you still want to pay rent at that age when rent will most likely cost you $6k a month in the year 2052? Will your retirement fund support that?

Hey if rates go up and house prices go down I have clearly made a financial blunder.

I'm placing my money where my mouth is and betting on future low rates plus future higher house price.

Why buy when you can rent the same house for half the cost? Because I did the math: If you rent today at $2,000 / month with regular inflation at 3.5% you pay a total of $3,253,988.09 after 50 years when you die. If you pay now $4,000 with a 30 year mortgage you pay less than half ("only" $1,444,000) and that already in the first 30 years, after that you live rent/mortgage free for the other 20 years and your kids will then sell your old shack in the year 2062 to some "tired of renting" kids for a few million dollars at whatever the median home price will be. Don't think only about today, look at history and then calculate the future.

YUP: yes I noticed that we have wage inflation, but we have it together with inflation. That inflation just don't want to go away. Everything you need is only getting more expensive. Maybe not every single year, but looking long-term, yes it is all going up.

The same jackasses that bid up housing on the other side of the bubble are now relegated to bidding up rents. If you're into taking advantage of these simple simon motherfuckers by being a RE huckster, jump in, the water is warm.

People seem to ignore some of the layered implications involved in the rent vs buy calculations. First, the renters take no risk beyond their current lease. If/when the market tanks again, renters aren't tied to yesteryears inflated valuations and the leverage and tax bill that oft comes along. This imo is the reason why renting seems "more expensive" then buying currently, because people seem to simply compare monthly payments

Then you have the transaction cost to exit the trade. For a renter, it costs about 30$ to rent a truck to move all your stuff, and you sign a new lease with a deposit + 1st months rent, whereas the guy selling the 750k crib gets banged in the head upwards of 50k

Disclosure, I am a mortgageholding house owner, but I'm not silly enough to get duped into cheerleading on higher prices, because I understand that higher house prices make us all collectively poorer and crush the economy

Being that RE is local, I tend to pay by far most attention to my local area. The market here continues on the positive trend of lower prices, with flat rents. I'm seeing a girl that is a property manager for a large corp. She said that against her reccomendations, her higher ups forced an across the board rent increase of 100$ per month in the units she manages, and vacancy rates doubled immediately

War: you answered without reading (or understanding?) my comment. I agree that it might be cheaper at the moment to rent and I even calculated a mortgage payment 100% higher than today's rent!!!! Have your wife explain my calculations to you please.

PockyClipsNow says

Hey if rates go up and house prices go down I have clearly made a financial blunder.

I'm placing my money where my mouth is and betting on future low rates plus future higher house price.

In theory this sounds good, but, what about the unpredictability of future "foreclosures" and their consequences? They may reward defaulters now, but who knows what may happen.

What if the gov passes legislation with HUGE penalities for unpaid debt (deficiency)? Double taxation? Debt - prisons? Who knows? We live in unprecedented times...

I also totally agree that today house prices in many markets are artificially inflated with unsustainable methods. I assume that house price in the short-term will further fall in many markets, even though they are increasing at the moment.

Anybody who buys a house today with the expectation or re-selling it within the next 10 years for a decent profit might as well go and gamble in Las Vegas for a quicker profit (or loss). Or just throw the money out the window, maybe more money will fly back in?

War: check the S&P/Case-Shiller Home Price Indices. Maybe your neighborhood is going down the gutter, but nationwide the market going slightly up (artificially manufactured by banks+government).

War: I think they have some English classes as well as reading classes for free on youtube. Maybe you can ask someone to help you to access them.

Sure, if you adjust it it can go down. I am talking straight numbers without adjusting them.

Actually the seasonal adjusted numbers have gone up too, but they have not reached the level of inflation.