Comments on: Someone forgot to refill the Real Estate ATM http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm My life as a computer/photo/sound/book/music/movie geek Sun, 14 Mar 2010 02:19:31 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Did things get as bad as I thought? | Geeky Weekly http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-17209 Did things get as bad as I thought? | Geeky Weekly Thu, 08 Jan 2009 17:02:31 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-17209 [...] in August of 2007 I wrote this post, Someone forgot to refill the Real Estate ATM, and predicted that we would see a continued drop in prices, foreclosures would go up and so on. [...] [...] in August of 2007 I wrote this post, Someone forgot to refill the Real Estate ATM, and predicted that we would see a continued drop in prices, foreclosures would go up and so on. [...]

]]> By: Andrew http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-17208 Andrew Thu, 08 Jan 2009 06:45:30 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-17208 Yeah, post is scheduled for tomorrow that points back to this post as a "year and a half in review" reference. Yeah, post is scheduled for tomorrow that points back to this post as a “year and a half in review” reference.

]]> By: nathan118 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-17207 nathan118 Thu, 08 Jan 2009 06:24:17 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-17207 I'm guessing only the google reader people will see this comment. :) I’m guessing only the google reader people will see this comment. :)

]]> By: Andrew http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-17205 Andrew Wed, 07 Jan 2009 22:00:35 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-17205 I've got a follow up post publishing tomorrow, but just wanted to reiterate why a primary residence shouldn't be considered an investment. In Denise's example she assumed housing prices never go down, but in 2009 we will see the average home price approach 2000/2001 levels. With the gains of 7 or 8 years completely wiped out it really weakens the case for owning a home for less than 15 years at a time. With the amount of interest you pay in the first quarter of a loan and the costs associated with <em>selling</em> a house, you gotta be sure you'll be there more than 7 years in a healthy market and 10-15 if there's any sort of significant decline. I’ve got a follow up post publishing tomorrow, but just wanted to reiterate why a primary residence shouldn’t be considered an investment. In Denise’s example she assumed housing prices never go down, but in 2009 we will see the average home price approach 2000/2001 levels. With the gains of 7 or 8 years completely wiped out it really weakens the case for owning a home for less than 15 years at a time.

With the amount of interest you pay in the first quarter of a loan and the costs associated with selling a house, you gotta be sure you’ll be there more than 7 years in a healthy market and 10-15 if there’s any sort of significant decline.

]]> By: Denise http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11721 Denise Fri, 31 Aug 2007 02:10:05 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11721 As I understand it, part of the reason a house is an investment--in the ideal situation--is that you can make a good return for (and this is key) comparatively low investment. In other words, say you've invested $30,000 down, you still receive interest/appreciation on the entire price of the $300,000 home. All that interest is yours, not just interest on the 30K. So if you're getting the normal california 5% appreciation a year on a 300,000 house for which you have sunk in a modest down payment and for which you make an affordable mortgage (comparable to rent), it's a good investment. After the last 5+ years when houses appreciated 15% a year instead of the normal 5%, now things are very expensive, and it's not feasible for most people to make $4000 mortgage payments. Which means other investments are better for the time being. As I understand it, part of the reason a house is an investment–in the ideal situation–is that you can make a good return for (and this is key) comparatively low investment. In other words, say you’ve invested $30,000 down, you still receive interest/appreciation on the entire price of the $300,000 home. All that interest is yours, not just interest on the 30K. So if you’re getting the normal california 5% appreciation a year on a 300,000 house for which you have sunk in a modest down payment and for which you make an affordable mortgage (comparable to rent), it’s a good investment. After the last 5+ years when houses appreciated 15% a year instead of the normal 5%, now things are very expensive, and it’s not feasible for most people to make $4000 mortgage payments. Which means other investments are better for the time being.

]]> By: jason the lover http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11720 jason the lover Fri, 31 Aug 2007 00:46:09 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11720 bling bling!!! Mansionization is where it's at. bling bling!!!
Mansionization is where it’s at.

]]> By: Andrew http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11704 Andrew Wed, 29 Aug 2007 20:39:22 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11704 Thing you also have to look at is the difference between owning and renting. If they're close then it is probably a good idea to own. Once the difference starts to grow then you really have to think about it. If it gets to the point where owning costs 2, 3 or even 4 times more than renting, would you be better off taking the difference and investing it in something like a index fund. Say renting costs $1000 but a mortgage would cost you $3000 a month, that's $2000 a month, $24000 a year you could invest. Over 30 years you could easily have well over a million dollars after your money doubles and triples. Is the house going to be worth that much? Who knows. I look at it this way, if you buy a home and you live in it, it isn't an investment, it is a monthly cost. If you buy another house and rent it out then yes that is an investment. The people who got into the market thinking they could flip their house in 2 years for a nice 20-30% profit (because home prices always go up 10-15% a year right) are the ones in real trouble. Thing you also have to look at is the difference between owning and renting. If they’re close then it is probably a good idea to own. Once the difference starts to grow then you really have to think about it. If it gets to the point where owning costs 2, 3 or even 4 times more than renting, would you be better off taking the difference and investing it in something like a index fund.

Say renting costs $1000 but a mortgage would cost you $3000 a month, that’s $2000 a month, $24000 a year you could invest. Over 30 years you could easily have well over a million dollars after your money doubles and triples. Is the house going to be worth that much? Who knows.

I look at it this way, if you buy a home and you live in it, it isn’t an investment, it is a monthly cost. If you buy another house and rent it out then yes that is an investment. The people who got into the market thinking they could flip their house in 2 years for a nice 20-30% profit (because home prices always go up 10-15% a year right) are the ones in real trouble.

]]> By: nathan118 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11703 nathan118 Wed, 29 Aug 2007 19:53:41 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11703 Trying to time the real estate market is super hard. Obviously buying right now isn't the best time if you can avoid it, but prices change over such long periods of time, it's not like you can jump in and say "Oh! Today is the bottom of a down cycle, and tomorrow it's going up!" What you want to do is put yourself in a situation where you can save up money for a down payment (whenever that may be). And when you do finally plan on purchasing a home, make sure it's something you can afford. House prices could drop 50% if they wanted to, but if people can still afford their mortgage, it simply means they'll have to stay in that house longer. The people that are screwed took out variable loans, or really bit off more house than they could afford. My house could drop to a value of $0 tomorrow (which would suck) but it wouldn't change where I'm at this moment. I still have the loan to pay off, I can still afford it, it would just mean I can't move. Of course there would be implications for the economy in general if everyone's house became worthless, but if at an individual level you've made sound financial decisions, it's not the end of the world. Trying to time the real estate market is super hard. Obviously buying right now isn’t the best time if you can avoid it, but prices change over such long periods of time, it’s not like you can jump in and say “Oh! Today is the bottom of a down cycle, and tomorrow it’s going up!”

What you want to do is put yourself in a situation where you can save up money for a down payment (whenever that may be). And when you do finally plan on purchasing a home, make sure it’s something you can afford. House prices could drop 50% if they wanted to, but if people can still afford their mortgage, it simply means they’ll have to stay in that house longer.

The people that are screwed took out variable loans, or really bit off more house than they could afford. My house could drop to a value of $0 tomorrow (which would suck) but it wouldn’t change where I’m at this moment. I still have the loan to pay off, I can still afford it, it would just mean I can’t move. Of course there would be implications for the economy in general if everyone’s house became worthless, but if at an individual level you’ve made sound financial decisions, it’s not the end of the world.

]]> By: amy http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11701 amy Wed, 29 Aug 2007 18:46:18 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11701 haha...diamond shoelaces. so, what does this mean for someone like me who has not yet taken out any kind of loan to purchase any kind of real-estate but who probably plans on it sometime within the next...whenever? haha…diamond shoelaces. so, what does this mean for someone like me who has not yet taken out any kind of loan to purchase any kind of real-estate but who probably plans on it sometime within the next…whenever?

]]> By: Denise http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm#comment-11692 Denise Wed, 29 Aug 2007 02:50:09 +0000 http://geekyweekly.com/2007/someone-forgot-to-refill-the-real-estate-atm/#comment-11692 So you're saying I shouldn't have taken out a $100,000 equity loan to buy an Escalade, 192" screen TV, and diamond shoelaces? So you’re saying I shouldn’t have taken out a $100,000 equity loan to buy an Escalade, 192″ screen TV, and diamond shoelaces?

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