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HiThere Says:
> I definitely agree with TOS that anybody that bought
> before 2004 will come ahead than any renter………
Here in the Bay Area you will have to go back to 2002 to come out ahead since it costs so much more to “buy†than to rent. In the nicer parts of San Francisco you can rent a condo for a little less per month as the “owners†in the building are paying in property taxes and HOA fees.
Many $1.5mm places (like where I live) “rent†for $3K a month where the (pre tax) cost to “own†(assuming that you take your down payment of $500K out of a 5% CD and get a $1mm 7% loan and have $500/month HOA dues) is over $9K a month.
When you are renting you have the ability to move at any time (without paying almost $100K to sell the place) and it is amazing how fast your money grows when you are investing $5-$10K a month that others are paying out to banks and contractors (for home improvements).
I like the last sentence of the snippet below.
Fed: Credit Crunch Effects Limited
http://biz.yahoo.com/ap/070905/fed_economy.html?.v=6
Fed Chairman Ben Bernanke, in a speech last Friday, pledged the central bank would "act as needed" to limit any fallout on the economy from the credit crunch. He made clear, though, that the Fed's decision would be driven by what is best for the economy. The Fed would not bail out investors and lenders "from the consequences of their financial decisions," he said.
gavinin,
I spoke with an economist at a cocktail party around New Years about why people didn't simply lower their asking prices on houses that won't sell. He told me that people actually study the psychology of it. Apparently there is so much self-identification with housing that people practically need a gun put to their head to get them to conceed that they may have made an unwise financial decision around housing. People would rather walk away from the house, 'saving face', than take a hit or break even.
StuckInBA
I said "I definitely agree with TOS that anybody that bought before 2004 will come ahead than any renter………".........in the example you used the house was bought in 2004.
SFWoman,
Just a quick add-on, even assuming these people that bought in (or is it now "before" 2004) and left their equity unmolested is no assurance they're not under water!
Once again as TOS/POS inserts foot in mouth "Hi There" arrives in the nick of time to innocently do damage control. How convenient.
Randy H Says:
> Don’t fool yourself. People in Marin lie about
> their taxes as much as anyone.
Two common “Marin County†tax tricks are to not tell the IRS that the guy renting a room in your Sausalito condo is paying you $1,500 a month and going to the bank to “cash†checks for side jobs like database development or IT consulting from small firms that probably won’t send the IRS a 1099…
DINOR and StuckInBA,
FYI, do you know what was the mortgage interest rate in 2003/2004.........I don't know for sure about 2003 but I have a 5/1 AMR from JUNE 2004 at 4.06%........and that doesn't reset until June 2009 with a maximum 1.5% per year exclalation clause........that means in 2010 it will be max 5.56%.....and I am sure by then FED will decrease it lower enough for me to re-finance.....
What's the interest rate today DINOR and StuckInBA?
For DINOR, I know you like to get into details.........if you have any doubt...feel free to ask me...I will give all the information about the loan :)
JIMBO,
I think I read a couple of threads back that you use PATELCO (a northern california CU). I primarily bank with them, I have a couple of mortgage loans (the one amazingly 4.06% 5/1 ARM from June 2004) from them and they never resold them. They kept the loans with them. I am more concerned with the CDs I have with them. They run specials like 5.85% 3 year CDs and I have quite a lot in them. Now they are privately insured up to $250000. Do you think it's a good idea to move the CDs to a different bank?
That's a nice post Randy...............I agree with you 100% on that......price is the single most important factor in selling a house.
Hi There,
When the market punches through your 2004 entry point like shit through a goose (if it hasn't already) please come back and remind... all of us here... just what a great rate you have!
Wasn't that long ago people used to give themselves compliments like:
"Oh, if I had to buy my house today I couldn't afford it!"
How about trying THIS ONE on for size!?
"Oh, if I had to buy my house today I couldn't qualify for the loan!"
DINOR,
Please don't be bitter........i think the market will go down hill for the next 3-5 years and I am fine with that ....I will not sell for long long time.....I may not sell ever :) I have a stable job.....my wife has a stable job and we live comfortably in Marin like Randy.....but I bought my primary residence here in 2004. I have two investment properties in Vegas and Scottsdale, AZ that I bought in 2004 with 30 year interest only loans (I love interest only loans, they are best tools for investors) with 10% down payment each. I don't look at their prices as I will not sell them for long long time, I lose a little bit on each of them after all the expenses (around 150-200/month on each). The loss helps me a little bit with our W2 income but more importantly I have a 30 year loan so the expenses are stable and if the rent goes up by 3.4-3.6% according to HARM's data I will do fine.
No, Peter P, I live off Sir Francis Drake in fairfax..........that's marin. Do you need more info?
We talked about bail-out plans and how to prevent them. Lenders should eat their own losses, and people in too expensive houses should move out. Based on these two premises, however, I suggest an FHA rescue plans for _some_ borrowers:
The FHA determines market value at a given time and if the borrowers can pay an FHA-insured mortgage of 80%LTV with 50% of their income. Then the lender is offered a short sale to the borrower for 80% of market value - either the lender declines and must deal with a foreclosure, or the lender takes the loss, the borrower must pay for the privilege to stay in the home and gets a black point for short sale on the credit rating, and the FHA assumes some risk for further price decline below 80% (I don't like the last part though). As a compensation for the lender, they might place a lien of the outstanding loan on the house, to be paid at the selling the house or the death of the borrower. What do you think about that?
Bronco...30 Year interest only loan was widely popular during boom time. Generally you pay interest only for the 1st 10 years before it balloons.
Good God. Another troll-- or maybe the same one.
Regarding the whole Modesto thing, only someone who has never been to Modesto could argue that people there are making over $100k. No offense to Mo-Town, but the place is an armpit. The only reason Stockton and Modesto saw major increases in value were due to their proximity to the BA and the fact that people with lower incomes were able to leverage their way (temporarily) into homes there.
Peter P
2007 Sep 5, 6:30am
No, Peter P, I live off Sir Francis Drake in fairfax……….that’s marin. Do you need more info?
Are you Jack?
Then that is not a 30 year interest only loan; it is a 10 year interest only loan with a balloon payment
Peter P
2007 Sep 5, 6:31am
Welcome back, SQT. The housing market is unbelievable even in sci-fi's. :)
Hey Peter. That's why I haven't really been by much-- there really isn't much to debate anymore. The only unbelievable part is that there are still trolls like TOS hanging around....
Peter P
2007 Sep 5, 6:33am
No offense to Mo-Town, but the place is an armpit.
Sorry... I though Mil-PIT-as is an armpit. Mo-Town has to be something worse than that...
Peter P
2007 Sep 5, 6:34am
The only unbelievable part is that there are still trolls like TOS hanging around….
Kudos to their courage and thick-skin. You are so fortunate, there are not too many sci-fi trolls. I wonder what would they be like.
Bronco, you can call it whatever you want but it's marketed as 30 Year interest only loan in the same way 5/1 arm is marketed as 5/1 30 year ARM as it is amortized over 30 years.
HiThere, I really don't know how secure the insurance they use is, but there would have to be a real meltdown for something like that fail. I personally only have my savings and checking money with them and one small CD.
I have actually been moving all my spare cash to my Citibank/SmithBarney trading account, waiting for the right buying opportunity.
Peter P
2007 Sep 5, 6:39am
I wonder what a sci-fi troll would argue about? …..Kirk or Picard?
They probably root for the Romulans or the Cardassians.
Randy H
2007 Sep 5, 6:39am
Sir Francis Drake eh? I thought maybe I knew you but I thought she lived in Sleepy Hollow. I won't tell your hubby if you don't tell my wife.
Jimbo, for mortgage accounts I really don't care, if they go under water somebody else will buy it and they will have to honor the original terms. I opened my CDs there as the interest rate (5.85%) they offered that time was far above the market rate. What is the yield on your trading account?
"What the hell is a "30 year interest only loan?"
Well, exactly. Why would I or anyone else take the pains to explore that any further? Especially considering Vegas and PHX (or Scottsdale, or whatever) PEAKED in 2004! Probably should change his name to:
"Hi There, I'm Toast"
Kind of lost on him, but the reason loans like that were even available at the time was BECAUSE of the outrageous appreciation! Now that his 10% down has gone bye-bye (along with ANOTHER 20% to boot) it's sure nothing I'd be bragging about?
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I was just talking to a realtor this morning, and he said that typical prices in his area (Modesto) are down from $450K last year to $300K this year. He was lamenting the fact that there are so few buyers and wondering how he can keep making a living. I was wondering how the official statistics can be so wrong compared to numbers from someone on the front lines.
We talked about the large number of "short sales", where the property is for sale for less than the amount owed to the bank. The problem with those is the need to deal with the banks, which are infuriatingly slow and bureaucratic. It can take two weeks to get a call back about a specific property.
Even at $300K, prices are still not low enough. By traditional measures, a $300K mortgage should require a $100K income. The typical income in Modesto is definitely under $100K.
Patrick
#housing