patrick.net

I'm not blaming either party. Both share in the blame. So does the Fed. So do the banks. Heck, even I share some blame.

The bottom line is there is no cure for stupid, and I'm sick and tired of competing with idiots. As the old adage goes, if you can't beat them, join them.

So, I should go ahead and leverage myself to the hilt, and borrow as much as the bank will let me. If I end up upside, or loose my job, or have my arm explode, well heck... whaddaya think the TARP money is for, now that the banks are lending again... besides, I'd rather have my share of the pie, instead of just letting the greedy bankers have all of the fun.

So, from here on out I'm looking for a 8 bdrm / 5 bath, 5000+ sq. ft. house on a minimum of 40 acres.. just becuase (according the the bank) I can "afford it"...

Oh, I want my mule too.

So hold on a second: You guys support govt. involvement in health care, but not in housing? Well, I'm sorry. But you can't have it both ways. You can't have socialism when it benefits you and the free market when it benefits you.

How much do you want to bet it becomes mandatory?

HousingWatcher says

So hold on a second: You guys support govt. involvement in health care, but not in housing? Well, I’m sorry. But you can’t have it both ways. You can’t have socialism when it benefits you and the free market when it benefits you.

Why not? It works for all the elites (the rich and govt) - why don't we get to participate too?

guaranteed health care for legal tax paying residents is not socialism. Every single major first world country has it except the US.

I doubt all these government programs are going to keep housing prices high. it may delay it somewhat, but you can't fight the forces of supply and demand forever.
I've always expected that it will take until 2012 for prices in decent areas to come down to reasonable levels.
Have a little patience.

Seem like Misc Forum is turning into a group therapy for Glenn Beck these days. I actually expected this thread to have been started by RayAmerica or HonestAbe given it's evocative subject line. Thanks ECBB! Next threads:

Irritation
Love
Anger
Ennui
Rage
Grief
Joy
Panic
Acceptance
Constipation

Vicente,

I couldn't think of what else to call this thread... and I was feeling quite frustrated at the time, so it seemed to fit.

HousingWatcher - who said that I support the Government Health Care?

Providing for those less fortunately is a delicate balancing act. I think providing healthcare for the least fortunate is noble, and congruent with the universal right to "life liberty and their pursuit of happiness" I just don't like the way in which the government went about implementing it. Little good can come from a 2000+ page law. Similarly, I am NOT completely against the deferred payments or principle reduction for those that truly need it.

But, as with most other things the path to hell is paved with good intentions. The new foreclosure prevention plan is written such that anyone who overleverage themselves, independent of circumstances, would be considered for a write down. Further, what is "voluntary now" those in power will try to make mandatory, as sure as the "temporary" home buyer credit will in all likelihood be extended in perpetuity.

So in short, I am getting frustrated by my best efforts to play by the "old" rules of working tirelessly and saving diligently to get ahead. I may not agree with the new rules of the game, but If I ever want to get ahead, I darn well better follow them. If you can't beat them, join them.

HousingWatcher says

So hold on a second: You guys support govt. involvement in health care, but not in housing? Well, I’m sorry. But you can’t have it both ways. You can’t have socialism when it benefits you and the free market when it benefits you

Are you kidding? It has to be complete socialism or complete free market? Exactly why is that?

So hold on a second: You guys support govt. involvement in health care, but not in housing? Well, I’m sorry. But you can’t have it both ways. You can’t have socialism when it benefits you and the free market when it benefits you.

Don't be silly. All out Socialism is best left on the scrapheap. However, you have to take the best bits from different ideologies. It's not all or nothing. That kind of religious thinking is for fanatics or personality cults.

That said, nationalizing the mortgage market was NEVER a good move, but when over three quarters of the nation's GDP is consumer spending, the idea of people not being able to suck money out of their houses to buy designer import crap is just not a good one. This policy is designed to promote money flow. Spend spend spend. Debt bias v prudence.

It will not end well.

Time for beer.

If you can’t beat them, join them.

This rationalization very rarely doesn't read like the defense "everyone was doing it" with the benefit of hindsight.

Maybe it's just cognitive dissonance, but I think you should trust in your own instincts more and pay less attention to the 6 o'clock news.

given it’s evocative subject line. Thanks ECBB! Next threads:

Evocative? I thought it was rather prosaic, actually.

Had ECBB extracted some subversive subtext you might have something there:

frUStrAtion

US A

WHOAH!!!!

Ya'll are too deep for me...

Serpentor says

I doubt all these government programs are going to keep housing prices high.

I also doubt it. I have a suggestion about spin though. We should not refer to high housing "prices", but rather to high housing "costs".

The high cost of housing is clearly a bad thing, and I want to keep that front and center.

The point is not of course to help the homeowners, that is a side effect. The goal is to keep the hamsters on the debt wheel, running for their lives. Good post ECBB, just ribbing you a bit, you post infrequently these days.

I also doubt it. I have a suggestion about spin though. We should not refer to high housing “prices”, but rather to high housing “costs”.
The high cost of housing is clearly a bad thing, and I want to keep that front and center.

agree. I think we should all start start using "cost" instead of "prices" from now on.

At the end of the day, my instincts tell me that this may be as good as it gets. Costs will not go down much more. If anything, the ever rising taxes will force the total cost of homeownership up over the years, even if prices continue to decline. As much as I would love to see a double-dip, I don't think that will happen in my area.

My wife and I have been very selective - in our price range, most of what is out there is crap. To this point we have only made an offer on a handful of homes. Each time, we end up in a bidding war. My obstinance in not wanting to "overpay" and my desire for "value" have kept me from getting to where I want to be.

"value" is in the eye of the beholder. What is still overpriced by my calculations, is a bargain to someone else, simply because it is priced 30% less than it would have been two or three years ago.

At the end of the day, I feel like I am tilting at windmils.

For the record, I have been tracking (loosely) the number of houses listed in a given price range over the past six months.

$0-$200k: 12
$200k to $300k: 49
$300k to 400k: 82

Taxes on a $350k home are anywhere from $10k to $15k, depending on the town and school district.

So the question one asks is "how much should would one need to earn to be able to afford the typical home?

Running some quick math, I come up with an income of $126,000. Now census data indicates that the average HH income for the area is only $60,000, but I don't trust those numbers. Certainly, there are many dual income households, so it is not inconceivable that there are many young to mid-career professional types who earn this sort of money.

The problem is that, until now, I haven't been comfortable with spending much more than $250k, maybe $300k if it is the right house. However, if the government is willing to reduce the risk by serving as the backstop of last resort, (which is where it appears they are headed) then perhaps taking on a bit more debt may not be as bad of a thing as I make it out to be. If I expand what I am willing to spend, it opens up much more of the market.

It's not like my cash is doing me any good sitting in a bank at under 2.0%. It's money that I may need at a moments notice, so I am not comfortable with putting it into the market to chase higher return. It would take years to save up enough cash to buy something outright. So perhaps this is as good as it gets, and I need to challenge my perspective. Current prices may be more than I want to spend, but they are certainly better (relatively speaking) than they were.

Perhaps this is as good as it gets - market forces are once again thwarted by government intervention.

Care to explain your simple math, Is it like 3X price of income kind of math? It all depends on your downpayment and stuffs.

Yeah, 300K home in east coast back in 2000 was like a 1600sf SFH w/ small backyard, but now the same 300K can only get you a crappy 30 year old condo. So, say... you've been waiting and saving all those years... for that crappy condo? I know how you feel, but that's the reality in east coast. At least, you're not alone.

Don't be hopeless since it is spring home shopping season and bunch of government interventions are still there in the market. The market is temporarily inflated by situation I guess and I think there is a possiblity of another small dip in the market in this year. Keep your chin up, and stay sharp.

Cost versus price sounds like the core of a lot of discussion here.

I think that "cost" will trump price almost every time, except in a bubble. The "price" is what buyers are willing to pay, - and what they are willing to pay is based on the "cost" to them. If they don't do the math then a lender will do it for them, reckoning the income ratio of the "cost" to service the loan and the other costs.

EastCoastBubbleBoy says

So the question one asks is “how much should would one need to earn to be able to afford the typical home?

Correction! the question should be ... “how much can employers tolerate paying higher salaries so their employees will be able to afford the typical home?"

seaside says

Care to explain your simple math, Is it like 3X price of income kind of math? It all depends on your down payment and stuffs.

$350,000 purchase price
3.5% down (thank you FHA)
5.0% 30 year fixed
Mortgage: $1813/month
PLUS $15,000/year in taxes ($1250/month)
PLUS $200/month (Estimate of PMI and Insurance)

Total Monthly Housing Cost: $3263/month

Housing debt should be no more than 31% of gross income,

(3263/0.31) x 12 = $126,314

which is how I backed into the $126k per year.

Could I please get a decent house? I think housing should be an essential American right! I've been waiting for our government to get a hell out of home ownership game for almost 10 years. It does not seem to be happening, so I want my "Obama" house now! My parents had to wait in line for 10 years to get their apartment from Soviet Government, and since America is such a great country I do not see why I should wait any longer than they did. I could of cause lie on mortgage application and get the house that way, but why do i have to? We all know what is really happening here... I hope my keys will show up in the mail any day now... patiently waiting.

So you want a decent house? There's a great town in PA call Oil City where you can get a great house for about 30k. If you want to live where everyone else is living then you're going to pay more. The rest of us are living in a decent house somewhere in the middle.

The problem is that, until now, I haven’t been comfortable with spending much more than $250k, maybe $300k if it is the right house. However, if the government is willing to reduce the risk by serving as the backstop of last resort, (which is where it appears they are headed) then perhaps taking on a bit more debt may not be as bad of a thing as I make it out to be. If I expand what I am willing to spend, it opens up much more of the market.

It’s not like my cash is doing me any good sitting in a bank at under 2.0%. It’s money that I may need at a moments notice, so I am not comfortable with putting it into the market to chase higher return. It would take years to save up enough cash to buy something outright. So perhaps this is as good as it gets, and I need to challenge my perspective. Current prices may be more than I want to spend, but they are certainly better (relatively speaking) than they were.

Perhaps this is as good as it gets - market forces are once again thwarted by government intervention.

If there was something like the Overton Window when it comes to pricing theory/consumer behavior, then I think the activity in housing these last few years would be one of the most magnificent examples.

It would go something like this:

Push the idea that real estate never goes down, and therefor, everyone should own a house if only for this reason -- maybe even two or three houses; fuel that mania with easy credit/free money; push the envelope past price points that once looked merely insane and into the eyes-pop-out-of-your-skull territory. Finally, wind prices back down to the merely insane region, which in contrast to the eyes-pop-out-of-your-skull prices (still fresh in the house buying public's memory), seem much more reasonable, and maybe even as good as they could possibly get.

Meanwhile, none of the fundamentals have changed from when prices tracked incomes/inflation except maybe for the worse. It's all suggestion and taxpayer froth at this point, and in the case of the latter, I think short of a complete and radical overhaul in our national mortgage market, it has to be finite. They're trying to crash this thing as lightly as they can, Bubble boy. I'd hang in there.

Thanks EastCoastBubbleBoy.

I did little math for 20% downpayment and... well... If I remember correctly, you have tricky school tax up there, right? Don't know if it should be counted in DTI calculation though... I think that makes everything different.

If I assume it is pretty much unavoidable, is part of DTI calculation and amount of $15000/yr is unchangable regardless of your downpayment, that gives only $400/mo cost difference b/w two options. Then you still need need 100K/yr income at 20% DP, 80K/yr will do the job w/o the tax assuming you don't spend much on things.

"Why not? It works for all the elites (the rich and govt) - why don’t we get to participate too?"

Because we are not elites. You don't have lobbyists representing you. You don't have Wall St. CEOs on speed dial. We are just commoners.

"guaranteed health care for legal tax paying residents is not socialism."

Yes it is. It's called SOCIALIZED medicine.... Social, as in socialism.

http://en.wikipedia.org/wiki/Socialized_medicine

HousingWatcher says

“guaranteed health care for legal tax paying residents is not socialism.”
Yes it is. It’s called SOCIALIZED medicine…. Social, as in socialism.
http://en.wikipedia.org/wiki/Socialized_medicine

you can call it whatever you want. The fact is that all other first world developed country has "socialized medicine". Why is that? are they a bunch of socialists? Britain? Japan? Germany? Australia? why be like those commies and be more like Afghanistan and China and allow the citizens "freedom" to fend for themselves.

why are we even discussing this? why do you nutbaggers drag this topic into every unrelated discussion?

ECBB. be patient, housing prices don't change overnight. It took a decade for the bubble to pop, it'll take a few more years for prices to crash.

Much better charts here:

http://newobservations.net/

EastCoastBubbleBoy says

For the record, I have been tracking (loosely) the number of houses listed in a given price range over the past six months.
$0-$200k: 12

$200k to $300k: 49

$300k to 400k: 82
Taxes on a $350k home are anywhere from $10k to $15k, depending on the town and school district.

....

WOW! You got me beat, where the hell are you living? My house was just reassessed at 380k last year and my tax rate was adjusted down to $7,500 a year. I think your over estimating your property taxes,

http://www.reuters.com/article/idUSN1262761120070912

Median real estate taxes for Hunterdon County totaled $7,999 .... In New Jersey, the median value of a home was $366,600

So what's this give us, well if we divided New York Median tax rate of $7706 divided by 303400, we end up with roughly $2.54 per assessed value, total tax bill on a 400k house is $10,160. If you lived in New Jersey, in Hunterdon County, $7999 divided by $366,600 = 21.8 cents or $2.18 per $100 assessed value. So a 400k house is a $8,720 tax bill. These are the HIGHEST median tax rates on the United States, so you 10 to 15k tax estimate it too high.

Also again I haven't a clue where you live, the East Coast is really no help. Like someone here is going to track you down and kill you if you were to tell us which state you live in.

So lets look at your numbers again,
EastCoastBubbleBoy says

seaside says

Care to explain your simple math, Is it like 3X price of income kind of math? It all depends on your down payment and stuffs.

$350,000 purchase price

3.5% down (thank you FHA)

5.0% 30 year fixed

Mortgage: $1813/month

PLUS $10,000/year in taxes ($830/month)

PLUS $200/month (Estimate of PMI and Insurance)

Total Monthly Housing Cost: $2843/month
Housing debt should be no more than 31% of gross income,
(2843x12 = 34116) with is 31% of 110k per year.

@ECCB and Tech.

I am going to use the tax rate of tenafly, NJ to figure out ECCB's total tax amount. Since as far as I know of, that's one of the most heavily taxed place in NJ. Thus I can assume that ECCB may have to pay less than what tenafly residents pay. The rate is about 2.68. 350K home in tenafly, NJ if exisit, means $9380/yr tax bill.

I guess ECCB's $15K/yr estimate is too high, unless there's some other special tax like Melo-roos on top of it. Or is it a condo that has $400/mo HOA or something?

Yeah, so based on that amount, the difference b/w 20% down and 3.5% down with PMI is quite differ from my previous estimate. I am too lazy for another math though, Tech's estimate looks pretty close to mine I think. Thanks Tech for doing it for me. :)

The problem is the school tax. $15000 is about $5000 to the town and $10000 to the school system. Better school district = higher school taxes.
Even if my math is a bit off, the point remains that a household still needs a six figure income to afford the current asking prices, and the best available data indicates that most households don’t make nearly that much.
Couple that with the fact that anything even close to a “bargain” (in relative terms) either 1) sells quick to an inside deal or 2) gets put on the open market, attracts multiple offers, and gets bid up.
I guess I’m tired of competing with idiots who are willing to overpay. With the “spring buying season” starting to ramp up, (and the tax credit expiring) it isn’t getting any better.
Thanks for all the advice. In future posts, I’m going to work on my math (and my spelling)

...."I guess I’m tired of competing with idiots who are willing to overpay" ...... A - f-ing - men!!!!! Me Too!!!!

very frustrating

tatupu70 says

Are you kidding? It has to be complete socialism or complete free market? Exactly why is that?

LOL, this is exactly the same type of argument that many here have used against any conservative who was against such government intervention in health care.... I thought the conventional wisdom here was that if someone was against Federal government-run health care, they were a hypocrite if not also against local town libraries and fire departments? Why do you seem to object now?

Paralithodes says

LOL, this is exactly the same type of argument that many here have used against any conservative who was against such government intervention in health care…. I thought the conventional wisdom here was that if someone was against Federal government-run health care, they were a hypocrite if not also against local town libraries and fire departments? Why do you seem to object now?

Because despite your attempts to frame it as such, this was never mine nor others' argument. Many here have claimed things like "government is never the solution" and whatever that stupid Reagan quote was about the 5 scariest words... In response to them, it has been posted that government does have a place in society and under certain conditions can be more effective than the private sector.

In response to them, it has been posted that government does have a place in society and under certain conditions can be more effective than the private sector.

Exactly correct. But what we have now are a bunch of stodgy old corrupt career politicians who safeguard the speculators at all costs with policy designed to get the money from the little guy into the pockets of the extremely well-fed as seamlessly as possible, most often by employing some kind of populist pretext for said policy.

Private v public seems like a *choose your poison* proposition anymore.

tatupu70 says

Because despite your attempts to frame it as such, this was never mine nor others’ argument. Many here have claimed things like “government is never the solution” and whatever that stupid Reagan quote was about the 5 scariest words… In response to them, it has been posted that government does have a place in society and under certain conditions can be more effective than the private sector.

How much goverment do you want?

We have Fannie and Freddie. Their mission, with implied backing of the US Gov, is to make US homes affordable. Well as government increased it role, back in the 90s, pushed deeper into affordable housing mission, the end result only made home prices skyrocket and become even more unafforable.

And today, just look at what Goverment is saying regarding falling home prices and high level of foreclosures. Now they are justifing in sorts of ways in keeping prices from falling and keeping homes inflated beyond affordability.

How do these people in Government actually look at the 300% increase in prices over the past 10 years and justify it? Either they dont know and dont understand prices only go up at rate of inflation or they are complete idiots.

Ronald Reagan Quote:
The nine most terrifying words in the English language are, 'I'm from the government and I'm here to help.'

Politics is supposed to be the second oldest profession. I have come to realize that it bears a very close resemblance to the first.

How many actual leaders you see today saying this stuff... they are all careerists!

thomas.wong1986 says

We have Fannie and Freddie. Their mission, with implied backing of the US Gov, is to make US homes affordable. Well as government increased it role, back in the 90s, pushed deeper into affordable housing mission, the end result only made home prices skyrocket and become even more unafforable

Still wrong.

thomas.wong1986 says

Ronald Reagan "should have" Quote:

‘I’m from the plutocracy, and I'm here to trickle down on you.’

FTFY