patrick.net

don't forget the 4-6k tax bill plus HOA fees this adds another $500 month easy to any monthly budget.

I always hear from my Brazilian friends how the US will one day invade them for their fresh water.

I sigh, and try and explain that there is no water shortage here, as soon as we put an actual price on water, that usage will go down over night. Fix a few pipes and we're down another 20%.

Water and Electricity usage are so obscenely cheap, just like gas, we won't do anything until it hurts us in the pocket book.

Two Points:
1) In my area, craigslist.org rental listings seem to be significantly higher than real rents paid. There was a time when good deals could be found on craigslist. Apparently, as craigslist.org grew in popularity it became a place to make money. I pay about 2/3 of the typical comprable rents listed there. It did take a few weeks of searching though, and I didn't find it on craigslist.

2) Ok, you really want to buy a "home", and you don't care if maybe you would be a little better off renting. To gauge the value of the prospective home, you need to know how much it would cost to build the same thing from scratch. In my neighborhood, it costs about $120 per square foot to build an average house. Add the cost of the land, plus any major infrastructure (power poles, water source, septic system). That would be a brand new, 5 star energy efficient home, ready for the first owner. The older the home, the lower the cost per square foot because the older the home the more work it would need to bring it up to modern standards.

Short Answer: If you plan on averaging $125,000 per year income for the next 20 years and if the house has 2600+ sq feet with top quality fit and finish throughout with virtually no improvements needed, it's probably a safe bet. Otherwise, NO.

How about putting down 50% like everyone is doing and make P&I ~$1000/month?

I'd buy, but not at 20% down.

1. location? Good, bad or so so?
2. The condition of the home?
3. How much the house can be rented for?

depends on the location.

if it's in palo alto, doesn't matter what the rent or the size is, 3 bedrooms for $400k is a bargain.

Why does an older couple with no kids living at home need three bedrooms?

Shouldn't they go for something smaller? A selling price of about 180 months' rent is iffy given how high California property taxes are.

I have done my part on the energy efficiency issue. I built a new ICF home about a year ago and it was tested by an Energy Star tester. Not only did I get the Energy Star Sticker on my electrical box, the house scored a 50 on the HERS. This is a very good score. I will never have to worry about the walls rotting or degrading since they are rebar reinforced concrete walls that are air tight and knock down outdoor noise to nothing. The best part is that it is covered in a veneer of plastic siding and that fake rock shit in order to keep the HOA pleased. Looking at it from the outside would give you no clues on how it was built. It looks like the same framed house as everyone else.

I live in Northern Ohio and It is now about 20 degrees outside. I am running my furnace, which is 56,000 BTUH, for a long period of time. After about 40 minutes to an hour of heating, it turns off and the temperature will slowly lower over about 2 hours. This slow but steady heat uses much less energy than blasting it on and off with a large furnace and the smaller one maintains the home in a very narrow temperature band. This is all for a ranch style house of about 2144 ft^2. If you count the basement, it is 4284 ft^2 of conditioned space.

Making homes like this is not cheap, although it was a lot cheaper than buying a shitbox in California. It still cost me about 2 &1/2 years of my gross wages to build this home.

If you want to make energy efficiency a priority, you need to tax the shit out of energy. AS long as it is cheap, nothing will change. Even with high energy bills, the cost to replace an existing home far exceeds the higher monthly costs of an energy hog. Houses that a real old should be shown the working end of a bull dozer if it would be cheaper to build a new home.

Retrofitting an old home to be tight with lots of insulation and wrap is not good either. If the home is sufficiently old, it can become a mold nightmare after an "upgrade". I have seen homes where the dew point of the outside air occurs in the middle of an outside wall. When that air becomes saturated and condenses on the inside of a wall, you are toast. You will have a mold issue that will make the house unhealthy to live in.

Imagine all those people that bought homes that looked pretty but were not well engineered. They are stuck with a high house payment for a shitbox that costs them a lot to maintain. I don't feel bad for them one bit. They could have taken the time to research it and find a well built home. A set of codes that raise the bar would help. That would also raise the cost.

thenuttyneutron says

I have done my part on the energy efficiency issue. I built a new ICF home about a year ago

ICF isn't that much more expensive on the builder side but they charge a premium because not many of them are doing it. If more people got into that business the price would drop dramatically. The only problem with ICF is that cell phones don't work well (or at all) inside ;)

The sound reduction is actually unbelievable - you have to experience it to understand how much noise is coming from your neighbors crappy ass air conditioner.

EightBall,

I have noticed that the cell phones can have issues inside here. I use that straight talk and bought some CDMA phones to get on the Verizon network and they work well. I gave up on GSM and AT&T because those signals could not get through.

I did not pay that much of a premium for the ICF as I thought I would. I bought the lot just after the panic of late 2008 and signed the build contract during the depressing summer of 2009. I went to other builders and got quotes for the same home with similar stuff. In all I spent about what a frame house would cost, maybe a small premium. For some reason the costs to build a new home here are a lot larger than other parts of the country. I did put more money in during the construction for things like better flooring, Quartz counters, an ERV, better cabinets, bigger driveway, and lots of electrical upgrades (I hate making new drops).

It does not have the snaz of some of the other homes in my area like cathedral ceilings, sky lights, or an entrance foyer fit for a king of suburbia.

are ya gonna live in it or rent it out? are prices stable in that particular area? is there any adverse problem (drainage, canyon winds, fire danger, crime, etc)?

You gave very little info. can't even begin to guess,

thenuttyneutron says

It does not have the snaz of some of the other homes in my area like cathedral ceilings, sky lights, or an entrance foyer fit for a king of suburbia.

wine cellar? granite countertops in bizarre places? niches? five car climate controlled garage? built in bbq/outdoor kitchen?

seriously, do you even watch Hgtv/fine living networks? (elliemae shakes her head in disbelief)

You're talking about going from 0% efficiency to 100% efficiency. We only need to reduce our usage to a more reasonable level, clean up some energy efficiency issues and wastage and people will be far better off. Re-insulating houses, and better windows go a long ways. Better furnace/air conditioner/fridge/cfl make a huge difference! Cars that get 10mpg going to 35mpg would be massive. We don't need to go from 10mpg to 200mpg or 100% electric.

Then there are the more obvious ones. Vampire devices, which are supposed to consume waste 7% in standby power, or vampire usage. http://www.sciencedaily.com/releases/2002/09/020926065912.htm

Then the obvious ones. Turn down your furnace temp, turn down your ac temp, turn down your fridge and freezer temps, turn off lights when you leave a room.

Troy says

I’m pretty confident that within 50 years we’ll be totally off imported energy for 80% of our needs — buses, cars, A/C.

I don't know about that, the predicted amount of energy in the United States that comes from non-hydro alternative energy sources is predicted to be less than 16%. Germany has a very aggressive renewable energy policy and it predicts to be up to 33% in 2020, and 50% by 2030 and 100% by 2050. Despite all the talk behind the United States developing alternative energy sources, there's not a lot of government backing for it.

pkennedy says

Then the obvious ones. Turn down your furnace temp, turn down your ac temp, turn down your fridge and freezer temps, turn off lights when you leave a room.

Unfortunately conservation only gets you so far, we can't conserve ourselves out of foreign energy dependence.

Well, someone needs to go out with a Cashier's check at this one when it is auctioned at the court house steps.

http://lansner.ocregister.com/2010/12/08/o-c-housewife-tries-to-beat-foreclosure/91628/

seaside says

1. location? Good, bad or so so?

2. The condition of the home?

3. How much the house can be rented for?

See, there's the crux of the problem for me. Much of the housing stock I see CA is just crappy, crappy construction/architecture. Sure, the numbers work out in this example, in fact that is close to my situation. However, the rental property 'equivalent' is actually a much, much better place to live than the POS house for $400k. So, since I have certain standard of living expectations, it's still a choice for renting.

pkowen says

See, there’s the crux of the problem for me. Much of the housing stock I see CA is just crappy, crappy construction/architecture. Sure, the numbers work out in this example, in fact that is close to my situation. However, the rental property ‘equivalent’ is actually a much, much better place to live than the POS house for $400k. So, since I have certain standard of living expectations, it’s still a choice for renting.

well put,.. the thing we forget is over the last ten years the quality of build has decrease as the price increased. Total value has suffered.
see it isn't like The Building materials got better or even stayed the same. everyone took and offered the low bid. and if that meant using thinner walled ABS or Any other plastic pipe, or one less coating of stucco or a few less nails or glue they did it. It wasn't just the sellers end That messed with value. The Builders where building with low grade swag. It's Houses built with out rain gutters, electrical systems that are just enough power, 15 amps only to a unattached three car garage, are you kidding? , nope standard. out here in The IE of CA.
125 amp total for a 2600sq/ft house. WTF!
people don't even look for this crap IMO.

Zlxr says

Monolithic Dome Homes has the ICF equivalent of a cabin or trailer unit for about $25,000 - $45,000 or so plus shipping and set up. They are built slightly differently than the block ICF - but same idea (concrete and foam).

They're built out of triangles, which is the strongest shape. The only problem is many areas don't think they're pretty enough.

Interesting, I had never read all this stuff about ICF, which I see now stands for Insulating Concrete Foam. So the Domes are the same construction just a different shape? The advantage of boxes is that's how people are used to seeing them and frankly "curb appeal" favors the traditional crackerbox so a dome could be a hard sell if you have to sell.

Seems like the concrete construction would be more problematic in terms of modifications and changing needs. Like with old plaster homes around here you want to retrofit modern wiring you can't just hide the wires in the drywall you know what I mean.

Anyhow this concrete stuff seems quite interesting, but in the LONG term is it really all that? I mean we know stucco cracks and goes to poop after enough time. I've seen older concrete structures and they do fall apart under exposure. Everything does eventually. What measures are taken to mitigate that?

I think a couple in their 50s should not be mortgaging 80% of a home purchase.

If a couple is ten to fifteen years to retirement and they want to purchase their last home, they should be mortgaging less than 50% of the price IMHO. This is based on my belief that retirees should not have mortgage debt. Their home should be owned outright or they should rent.
Somebody please feel free to convince me that it is prudent for someone relying on pensions and investments to have a debt obligation that may outlive him.

E-man says

Which first time home buyer has a quarter million dollars sitting in the bank?

/raises hand

Though the thought of moving out of state and just paying all cash for a really nice house has crossed my mind.

Nutty, Glad to hear you were able to build your dream home. I must admit, I'm disappointed you didn't put in floor radiant heat with a geothermal heat pump. I suppose there could be issues (?) with having to heat the whole thermal mass (entire house) versus just the floor slab in more conventional construction? And that whole upfront cost thing...

@TechGromit

Depends on what you consider imported energy. If you include Canada/Mexico as part of the US, which is fairly reasonable, then conserving energy could take us off imports. Imported oil accounts for about 30% of the oil used. 60% is US based. 15/15 comes from Mexico/Canada, with another 15/15 from Venezuela/Saudi Arabia, more or less. That doesn't include imported natural gas and what not, which I believe mostly comes from Canada.

Bring up energy efficiency in cars, which is supposed to be up to 35mpg from like 25mpg now? And trucks are supposed to go from like 9 to 16 or thereabouts? That is a huge amount of savings right there.

That doesn't take us off fossil fuels, just energy independence.

Zlxr says

Monolithic Dome Homes are not built out of triangles.

Oops - I meant geodesic domes. It's too bad that people don't see (any) domes as beautiful, just because they don't fit the mold of the regular home.

elliemae says

Zlxr says

Monolithic Dome Homes are not built out of triangles.

Oops - I meant geodesic domes. It’s too bad that people don’t see (any) domes as beautiful, just because they don’t fit the mold of the regular home.

I went to Italy, TX several times to see those homes (grew up in DFW). I bought many of his books but could not sell the wife on it. I tried to get her to like the giant Caterpillar. http://www.monolithic.com/

I had to go with the furnace because $15k for a heat pump is just not going to pay for itself. Gas will be cheap for a while longer and if all else fails, I can put on a sweater. In theory this home should not drop below 55 F no matter how cold it is outside (assumes ground heat from basement stays constant). The concrete is actually pretty well cured with the ICF system. It is wet cured the entire time and will almost be twice as strong after a year. I did not get the good fly ash stuff because it was getting too cold for it to set correctly. I am also not sure it won't off gas some nasty stuff like the Chinese sheet rock. With the #4 rebar in there protected, I will be long gone before I have to make any repairs ( a new roof perhaps?). I will probably be dead before anything major comes up.

Shakes Head about my uncool home. No I have no idea what is the popular thing now is for a home. I did not go with granite because it is not NFS approved. My garage does have a drain in the floor and a door. Does that count as being a cool garage? I guess I could make a still in the basement because I am not cool enough to have a wine cellar :) Most people will probably not value the things that I like.

The irony is, it may take 30 years to save up enough to buy in cash...

Payoff2011 says

Somebody please feel free to convince me that it is prudent for someone relying on pensions and investments to have a debt obligation that may outlive him.

A friend of mine is a loan officer at BofA. The other day she made a 30-yr amortizing loan to a gentleman in his 80ies.

What can she do?

A bank cannot discriminate based on age. "Fair Housing/ Equal Opportunity/ etc"

Katy, 125 amperes sounds excessive but I agree with the point you're making about many people not thinking about this stuff. When my future wife and I first moved in together in her apartment, we quickly discovered that the default 15 amps wasn't nearly enough; we couldn't run the lights, TV, fridge, and microwave at the same time and were always calculating how much power we were using. It was something right off the set of the "Apollo 13" movie!

Now we have 30 amperes (and the electric company is happy to adjust it upward if we ever need it), and no longer have any problems. Fifteen amps per occupant should be a good guideline. Otherwise the power cuts out and you're stuck fumbling in the dark for the circuit panel!

Katy Perry says

It’s Houses built with out rain gutters, electrical systems that are just enough power, 15 amps only to a unattached three car garage, are you kidding? , nope standard. out here in The IE of CA.
125 amp total for a 2600sq/ft house. WTF!
people don’t even look for this crap IMO.

That's because they like the dog & pony show, the pretty stuff and miss the "little things" like power supply, drainage, estimated heating/cooling costs, etc. My little place isn't fancy but it works just fine, even when it was 10 degrees below zero (yep, I meant that) my place only cost $140 in heating costs. It'll be less once I get the wood stove put in, hoping for next winter. My neighbor's house is $350/mo in the winter and it's the same size as mine. ugh.

thenuttyneutron says

No I have no idea what is the popular thing now is for a home.

in the deserts of southern utah, this is the classic "perfect" home. Even in the mountains, where it snows. One good solid storm and the flat roof is stuck with a couple of feet of snow, and it's damn hard to drive up the steep roads to the steeper driveways in order to get someone to shovel it for them. But they're pretty. One house near me has copper garage doors that cost well over ten grand.

Michinaga says

Now we have 30 amperes (and the electric company is happy to adjust it upward if we ever need it), and no longer have any problems. Fifteen amps per occupant should be a good guideline. Otherwise the power cuts out and you’re stuck fumbling in the dark for the circuit panel!

I don't think you have a full understanding of electricity. A typical lighting circuit is 15 amps, a Typical Kitchen / Washer circuit is 20 amps, (the washer and the refrigerator must be on there own separate 20 amp circuit) there is no such thing as a 30 Amp circuit to
"run the lights, TV, fridge, and microwave at the same time", if that's the case this isn't a legal setup. The problem with your "default 15 amps wasn’t nearly enough" was there was way too many things on the same circuit. I believe the code for a typical 15 amp lighting circuit is 10 outlets max (this includes fans and lights). I take it this was an older apartment / house, unless your Microwave and refrigerator was in your living room, there no way something new would pass inspection, and it if did, I'd complain, any electrical inspector that not of the take would fail this setup.

I'd I had the same problems with my first house, WAY too many things where on the same circuit, I ran some additional lines to the panel and broke the each circuit into 2 or 3 separate circuits. The problem with just replacing a 15 amp breaker with 30 amp breaker is the wiring isn't rated for that kind of load, the wires could get so hot that they metal the installation and cause a fire.

While a new construction house might short you on ceiling fans and some outlets in the garage, but they have to pass the minimum national electrical standards to get an electrical inspector to sign off on there permit. There has to be 1 outlet every 6 feet of wall space, the washer and Refrigerator must be on there own circuit, outlets within 6 feet of a water source must be GFI protected outlet (kitchen and bathrooms) the only exception is the refrigerator.

elliemae says

My little place isn’t fancy but it works just fine, even when it was 10 degrees below zero (yep, I meant that) my place only cost $140 in heating costs. It’ll be less once I get the wood stove put in, hoping for next winter. My neighbor’s house is $350/mo in the winter and it’s the same size as mine. ugh.

I had a similar situation, when I moved into my first house, I added a separate electrical circuit for my computer and I was shocked to find there was none, I mean ZERO installation in the exterior walls. That first winter was brutal, I could actually feel a breeze in the house when the wind blew against the house, not a draft, but a breeze. In the spring, I added foam installation inside all the exterior walls and replaced all the windows over the next few years. The heating bills dropped and comfortably increase dramatically. It could be as simple as lousy insulation for your neighbors house, a modest investment in insulation will pay off big. In my case i beleive I paid $3,000 to get the form insulation and each window cost $200 each (I replaced them myself), for a total of 7 windows.

pkennedy says

@TechGromit
Depends on what you consider imported energy. If you include Canada/Mexico as part of the US, which is fairly reasonable, then conserving energy could take us off imports. Imported oil accounts for about 30% of the oil used. 60% is US based. 15/15 comes from Mexico/Canada, with another 15/15 from Venezuela/Saudi Arabia, more or less. That doesn’t include imported natural gas and what not, which I believe mostly comes from Canada.
Bring up energy efficiency in cars, which is supposed to be up to 35mpg from like 25mpg now? And trucks are supposed to go from like 9 to 16 or thereabouts? That is a huge amount of savings right there.
That doesn’t take us off fossil fuels, just energy independence.

Turning off lights save electrical energy, the bulk of electricity comes for Natural Gas and Coal power plants, NOT from Oil. With the major increase in the Natural gas supply with new extraction methods, we have more than enough resources to keep the electrical grid powered for centuries. We might have to build additional power plants to keep up with demand, but electricity really isn't an issue.

The problem is 99.9% of automotive transportation uses oil, weather it's diesel or gas, there isn't enough supplies in the country to meet demand. Something like 65% or our oil needs are imported into into the United States every year. Unless we can switch at least 65% of them over to electric vehicles, we will not be off imported oil any time soon. I guess if we could improve all the vehicles fuel efficiency by 65% that would have the same results, but for a 35 MPG Honda your talking 23 MPG increase, and a fully loaded tractor trailer, which gets 6 MPG, would have to get 10 MPG. (actually refrigerated tractor trailers get as little as 1 MPG fully loaded) While we can push the limits of cars Fuel efficiency with Hybrid cars, 20% of the fuel consumed by vehicles in the country are large trucks and buses to transport
goods and people across the country and they only account for 4% of the total vehicles.

ptiemann, do you think that the $1m PA / Saratoga buyers will rent them out? Or remodel and sell? The latter seems better, since rent hasn't covered the mortgage in those areas for a very long time.

Michinaga says

now that I no longer have to waste money on rent!

How one's thinking change after becoming an owner.

Shrek's BS argument is utterly destroyed by the 8 countries with better CDS costs as us -- Norway, Finland, Sweden, the usual gang of high-tax high-service quasi-socialist states.

The kicker is that the more you TAX and spend, the healthier the economy is since taxes come out of rents and land values.

But the standard school of economics simply refuses to see this. The dogma is that taxes crowd out "private investment" without realizing that most of this investment is just rich people chasing the easy rents of real estate.

If there were any adults in charge, in 2009 they would have taken care of the deficit with a 10 year TAX rise plan that would have hit Clintonian rates in 2015 and then kept going into 2020 to start taking care of the SS shortfall and give new SS payees a lower retirement age.

Unfortunately the electorate is not savvy enough to elect honest operators, so we're going in the opposite direction.

I had Hope two years ago, now it's 100% dread. This country is going down and Bellingham might not be isolated enough. Then again if it gets Mad Max enough it might have an economy serving the masses trying to escape into Canada, just like Tijuana does today.

bubblesitter says

Michinaga says

now that I no longer have to waste money on rent!

How one’s thinking change after becoming an owner.

Well, buying a house for cash really IS removing rent from your outgo stream. You're replacing it with a (in theory) much smaller tax payment, as opposed to replacing it with a rental payment on the money PLUS a tax payment.

shrekgrinch says

The only thing that increases the debt is excessive spending.

Eh? So having less money coming in doesn't affect anything?... "Excessive spending" only exists in the context of not having the income to support it, so if you remove the income... ... Your arguments are all based in contextual maneuvering and half truths.

But why are you even bothering to argue this? You pretend that republican party cares about the deficit while they've shown time after time they don't. What they care about is funneling more money to the rich & to the corporations, and about dragging Obama down. Period.

Any discussion they have about taxes or rates or whatever is purely a tool in the service of that. Like your arguments: If Obama increases taxes he's a liar and a failure. If he lowers them he's caving in to republicans and is a failure.

Contextual maneuvering and half truths...

EastCoastBubbleBoy says

The irony is, it may take 30 years to save up enough to buy in cash

when you finance (30 year @5%-6%) you buy the house nearly twice. In cash you only buy it once. try to explain away that fact.
most Morgage holders like to sweep this one under the rug.

sfbubblebuyer says

bubblesitter says

Michinaga says

now that I no longer have to waste money on rent!

How one’s thinking change after becoming an owner.

Well, buying a house for cash really IS removing rent from your outgo stream. You’re replacing it with a (in theory) much smaller tax payment, as opposed to replacing it with a rental payment on the money PLUS a tax payment.

Got it. Somehow I missed the cash purchase part. I am all for a cash only purchase.