If you re forced to move in 12 months, you re right, 95% of the time renting is the way to go, but y

Home values in the Southland are now up on an annual basis across all counties.  The SoCal median home price is now up over 8 percent on an annual basis.  The best performing county?  Riverside w chicago lakeshore hotel County with prices up over 10 percent.  The real test will come as the typically w chicago lakeshore hotel slower fall and winter seasons hit.  So far the low inventory w chicago lakeshore hotel and incredibly low interest rate has definitely w chicago lakeshore hotel had an impact on home values.  Many people that are buying this summer realize that fiscally the US has some major challenges coming in 2013 while the state of California has its own budget battles ahead.  In spite of that the belief that the Fed will backstop the housing market w chicago lakeshore hotel and the tempting allure of low rates has shifted some momentum over.  I wanted to take a close look at the city of Fullerton w chicago lakeshore hotel in Orange County.
Each zip code had a median price under $400,000 and for Orange County, you would expect to have a feeding frenzy.  What was also interesting is that notice of defaults still remain elevated signifying that many households are unable to pay their mortgage:
Notice of defaults jumped from June to July but this can be from banks taking action w chicago lakeshore hotel on homes since the market is more prime for sales.  The lowering w chicago lakeshore hotel of the inventory pipeline is occurring.  It is useful to see what is actually selling in the current housing market:
This home sold for $605,000 back in 2006.  The current list price of $390,000 is a 35% drop from the peak price.  With low interest rates someone can buy with a 5 percent down payment and come out paying a monthly PITI of roughly w chicago lakeshore hotel $2,122.  A slightly bigger home a couple w chicago lakeshore hotel of blocks away is renting for $2,200 a month.  So a $20,000 down payment w chicago lakeshore hotel and you are close to rental parity here.  Sounds w chicago lakeshore hotel good right?  This seems to be the Fed's plan yet for those buying, the upside seems to be limited given the major issues facing the state budget and national economy.  For those staying put long-term, a low down payment mortgage seems like a low risk option (of course the default rates are soaring and this is a cost that will be shouldered by the public).
The above home sold for $1,313,500 back in 2005.  Today it is listed w chicago lakeshore hotel at $899,000, a drop of 31 percent.  Seems like Fullerton has a peak drop similar to the nationwide figures in the 30 percent range.  It is interesting to see that defaults are still healthy in these markets even as lending standards have tightened up.  Since many loans have shifted to FHA insured loans in the last few years, it only makes sense that these loans are souring as the overall economy is still trying to find its footing.
The goal from the Fed's perspective is to keep prices w chicago lakeshore hotel high because banks are then able to keep more collateral on their balance sheet at inflated levels.  In reality, a buyer is better off purchasing say a home at $300,000 with a higher rate than say a $500,000 home at a very low rate.  This is essentially what the battle has boiled down to on the housing front.  It has worked so far in 2012 but does it have staying power?
I think they are too high for the current job market. It is always better to have a lower balance and the resultant lower taxes from the lower prices. The current prices make little sense, in this economy. Lets see how it goes-the mortgage market can t go any lower and unless politicians grow a spine and engage in some protectionist policies, the job market will continue to suck.
Rents are high enough now and interest rates are low enough, that if someone wants to live in a house there s a good chance that their PITI will be the same amount as their rent. This is a powerful incentive to purchase. Especially among first time buyers.
I think the one caveat that many miss on the rental parity (aka rental parody) is the time commitment to the monthly payment. I am currently renting a $3000 a month overpriced 3/2 next to the beach. I can commit to $3,000 a month for the next 12 months in the current environment. I cannot commit to $3,000 a month for the next 360 months in the current environment. Forget all the other hidden costs that the rental parity crowd seems to overlook; I am not willing to commit to 30 years of an inflated payment even if we were at true rental parity.
I have two words for you, depreciating asset You assume that the asset will keep up with inflation. As I have stated in my prior posts, I am not convinced that our current macroeconomic circumstance will lead to housing keeping up with inflation going forward.
However, I think you both missed my real point regarding how employment opportunities to make a $3,000 a month payment are becoming harder to find. If I lose my job tomorrow I could make it till the end of my lease no problem. The problem starts when we talk about till the end of a 30 year mortgage…
Since I have been here the landlord has spent 4K on a heating cooling system, 400 on a refrigerator, 800.00 on a stove, 200 on a toilet, 500 on various leaking faucets, approx 400 total on annual spot termite treatment, 200 to fix the fence in the back yard and I know the house actually needs to be tented but they are waiting til I move some day. The carpet is now some 7 years old and it needs to be replaced.
This house I am renting today, if I owned free and clear would be spending 600 a month on property tax and 150 a month on property insurance and at least an average of 200 to 400 a month on maintenance when you consider remodels, roofs, termites, paint and the works. So, I currently pay rent of 2100 dollars a month on what would cost me 950 a month to 1150 a month if I owned it free and clear. Oh, did I mention as a renter I can pick up and move?
The only way it makes sense to own today, at these historically high prices is if going forward, home prices rise FASTER than inflation going forward. With interest rates at historically low levels, causing prices sub 700K to get back to peak prices, I really doubt housing prices will rise faster than inflation for years to come. However, if you do want to take that bet with someone else s money, like the FHAs, there is little risk, but I certainly wouldn t risk my own money!
If you re forced to move in 12 months, you re right, 95% of the time renting is the way to go, but you re the one that brought up the 360month commitment. But history has shown, if you can commit long-term, buying is the way to go because you can lock in your payment long-term.
I will give you a basic econ 101 lesson. Interest rates (i.e. cost of money) include what components? Answer: Anticipated inflation + default risk + interest rate risk + cost to borrow. Now, what do you think will happen to interest rates if we have higher inflation? Do you think increased w chicago lakeshore hotel inflation would have an impact on monthly payment? Then higher inflation begets higher interest rates begets higher monthly payments begets lower available money for principal. Now what is principal again? That's right the price of the house! This is exactly w chicago lakeshore hotel why inflating our way out of the current problem is not going to work
I have stated over and over that the Fed can only spark currency devaluation in our current economy due to the slack in the labor market and globalization. The Fed cannot w chicago lakeshore hotel spark wage inflation. Without wage inflation we start to crowd out local expenses (housing and services) with expenses for items that we bid for globally (food and fuel). It is no surprise to me that oil is around a hundred dollars a barrel and food costs continue to rise.
Yes, buildings are a depreciating asset the land is not. This is not new to finance. Maybe this is new to the RE industry. And when you say history, what history are you talking about? Many pick convenient starting and end points in history to argue their point. Tell me what history you use to make the statement "But history has shown, if you can commit long-term, buying is the way to go because you can lock in your payment long-term".
I am also interested in what skin you have in this game. I know that GenY just made a recent purchase and is arguing out loud to convince him/herself that it was the smart thing to do. Are you a RE agent? Did you just purchase? Are you an "investor"?
Well, the first 10 years of the 30 year loan are paying off the interest. w chicago lakeshore hotel Then the rest actually pays off the debt. So it s almost like you re paying for an option to buy 10 years in advance. The two big questions are 1) Will RE prices rise by year 10? 2)What will the purchasing power be of the USD in 10 years?
I believe this equates to a 132% real increase in value. I guess the first question w chicago lakeshore hotel is what improvements have been made to this house and do they equal 132% more benefit. The next question is has the real wealth in this neighborhood increased 132% since 1976. I think this is a great example of the math not really panning out. The only reason this house can list for $390,000 is the artificially cheap interest rates along with a good deal of artificial stimulus (over a trillion w chicago lakeshore hotel a year of deficit w chicago lakeshore hotel spending). Take away the artificial stimulants and this house wouldn't sell for $167,907.15 in the current market.
And then factor in the fact that this house is that much older, which normally means things are at the end of their life: windows, flooring, sills, plumbing, etc. Sure, cosmetic things w chicago lakeshore hotel might have been upgraded. w chicago lakeshore hotel And w/ low or zero down loans, w chicago lakeshore hotel the HO s are underwater the day they close. JMHO
The problem with California w chicago lakeshore hotel greed-estate is just that, too many forces pumping up the numbers like a political campaign. The reality is the the old, old rule of thumb number of 2 to 3 X Annual income should be the magic number for buyers.
I done it using the super high multiples and lost my A*s and I did it using the old old magic numbers and 16 years later with all the ups and downs of being self employed, I m paying down the mortage and I haven t been kicked out in the street.
You ve got to be kidding me. Did you actually read the article? The data DHB gave on the first house included the sale in 1976 for $42,500. I come from