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It's reassuring to see one's thought process wasn't entirely illogical after all.
Now, if you talk to real estate agents, you'll be told this is "the best time to buy". jazz Quote:
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-- http://morejazzbythebay.wordpress.com/ YouTube: http://www.youtube.com/user/jazzbythebay Proud member of IV California/NorCal I was in Washington, D.C. on Sep 18th 2007 --------------------------------------------- |
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![]() ![]() Althought this is just for seattle area, this trend is more or less the same nationwide. According to this graph we need to wait out atleast one more year for the Rent - to- Price ratio to come down to the historical averages. But you get the Federal first -time home owner credit of $8000 (more in CA) only if you buy before the end of this year. So in my opinion, a good time to buy a house is in the month of december this year, if not the best time to buy. Now this is with an assumsion that mortgage rates don't rise substantially. Last edited by kak1978; 06-05-2009 at 12:54 PM. |
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Reading the article I take it that the writer is only concerned about the profitability of buying a house in the current situation. He's not of the opinion that buying a house is bad investment, ever! But a good investor does not try to time the market; it is, in my opinion, even if you tried, an art and not a science. So now maybe the best time to buy actually!
But I have also seen many ignorant, anti-capitalist, anti-government, conspiracy theorist freaks out there, blogging from their basement, and writing articles suggesting that the government is somehow brain washing the public into buy a house so that they'll become the government’s slaves for the rest of their lives. These guys have actually never ever made any real money. They come up with short sighted calculations to prove that renting for life is better than owning a home. In my opinion no one should be listening to these people. I have yet to hear from a successful investor, or a businessman, or anyone that has what you may call reasonable wealth, saying that real estate is bad in the long run. I would take these people's advice any day because they have the money to show for their sound investment strategies, one of them being investment in a house, or a piece of real estate. We as immigrants who are not sure of where we'll be in the next 5 years may want to consider the fact before investing in a house. But anyone else that has no such worries would be foolish not to buy a house thinking it is a doomed investment. Last edited by sledge_hammer; 06-05-2009 at 01:16 PM. |
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Totally agree ! To add, the decision to buy a house for people like us (who are stuck in this muck) also depends on the life situation you are in. Meaning, the decision to buy a house inspite of the uncertainity was over-weighed by the fact that my kids need to enjoy certain things. Watching them play with kids of their age in the neighborhood, riding a bicycle or playing with the water sprinkler while I sip my beer is priceless.
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Good analysis there dude!
While no one can predict future, the least we could do is prepare ourselves for good and bad times. IMO people should look at purchasing only if these conditions apply: 1) Current rent payment is more than mortgage+prop tax+other monthly fees for new home 2) Homes in relatively stable areas (where unemployment is not too high, diversity of job opportunities) 3) Homes whose prices have not risen significantly in the past 5yrs (anything > 40% since 2001..please stay away) 4) Planning to stay in the house for a MIN 2yrs One would argue why buy now if it might go lower... if above conditions are met..it would be a relatively safe buy and aboveall...people remember... time does not wait for anyone...we grow older everyday..make a decision regarding what we need for us and our family within the reasonable limits...go for it and enjoy it.. an old friend of mine always says...live life..love life...be life and i believe she is right..
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PD: Mar 05 |
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It is December 1st not November 30th. http://www.federalhousingtaxcredit.com/2009/faq.php
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Join the Ohio State Chapter Send an email to iv-ohio@googlegroups.com with your name and telephone #. Will call, verify and sign you up. It is that simple ! http://groups.google.com/group/iv-ohio |
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Sorry but no matter how you spin it, owning a home is better than renting. Renting is not smart. period. your money is gone every month. You are not getting that money back.
When you own a home, the money goes towards a mortgage, and although most of it goes to interest at first, all interest paid is tax deductible which is a huge chunk of change every year. I get more money back as an owner than a renter and in the long run I save more AND own the home. 30 year renter vs 30 year home owner? That is not rocket science. Quote:
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My friend in bay area bought his house 3 years back in a decent school district and he is more than 150K under water. He is going to be stuck in the house now till his house appreciates to the original principal. If he wants to move out of the house he will have to pay the 150k difference from his pocket. This is what scares the shit of me. I really don't care too much if the house i buy after doing all the valid calculations as described above does not appreciate for a long time. Also I am not buying the house for investment reasons. But i dont want to be in a situation where 5 years down the line after i bought the house i have lost money on the house and would need to shell out money from my pocket to move out like my friend is today. I am sure 2 years from now which will be 5 years for my friend he will still be under water. Like most Americans i would like to buy a smaller home which i can afford now since we are a small family and may be 5 years from now may want to move to a bigger home in a better location. But how things look currently it looks like i may be stuck in the house for a long long time and the standard advise of "buy a home if you plan to stay at least in the house for 5 years" may not apply. Imagine in the worst case being stuck in the same house for 30 years. May not be a big deal but just puts more pressure on you to buy that perfect house which you are sure you will be happy to live there for the next 30 years if needed. This is what spooks me the most of the current housing market. Again this concern is due to unprecedented times we are in, I am sure 5 years back this would not concern me. Any thoughts?
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Donated $200 so far. Attended San Jose Rally ![]() "It's nice to be important, but it's more important to be nice" Last edited by suavesandeep; 06-05-2009 at 02:09 PM. |
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Buying a house would be a BIG Mistake right now..
Sub-Prime losses we have been hearing in main stream media is just the begining. Wait until 2010 when Alt-A and ARMs taken in 2005/6 start resetting. It will be a big mess. and NEVER LISTEN TO REAL ESTATE AGENT'S ADVICE! |
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LOL. ![]() ![]() ![]() ![]() ![]() ![]() |
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Buy: Monthly Cost: Interest (very simplistic calculation): 5% on 180k on average over 30 years. i.e. $750 per month. After Tax deduction cost ~$700 (you lose on standard deduction if you take property tax deduction - so effective saving is wayyy lower than the marginal tax rate). Property Tax: $400 per month. Maintenance/depreciation of appliances: assume $200 per month (easily could be more). Total: 1300. Long term investment: $360k at 3% per annum (long term housing price increase trend). You pay for this saving with leverage and $1000 amortization every month for the loan principal. Loss of flexibility/Risk : Not sure how to quantify. Rent: Monthly cost = $1300. Long Term Saving (assuming you put the same $1000 every month in a normal high yeild savings account - a Reward Checking maybe) - you will get a risk free 5%. So in this case you are paying the same monthly cost for house purchase vs rent. but you are losing out on the additional 2% per month in investment return. Plus - buying gets you into a lot riskier position. I have seen the proponents of buying fails to take a couple of factors into account: 1. Real Estate, historically, is not a good investment. It is even worse than the best savings accounts available. And you could easily save your monthly amortization in better savings vehicles. 2. Tax deduction from interest means you lose on standard deduction. In the above example - a family of 3 with 1 earner will have NO saving from housing tax deduction. They would be better off using the standard deduction. If there are 2 earners - they could try to work around this by filing separately and one taking deduction for housing interest and the other taking the standard deduction. But even that will probably not save you any money since many other tax rates are stacked up against single filers. |
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First off, a house is really both an investment and a home. I would disagree with anyone that says it is one and not the other.
When you look at a house as an investment, one has to realize that there is a certain risk involved. So unless you are ready to lose some money if you made a bad decision, you should not invest. The most important thing to remember is that "investing" is never a bad decision. But investing w/o analyzing the risk involved is definitely bad. At the cost of sounding like any financial advisor, diversification is the key. Don't put all your eggs in one basket. 1. You do not want to buy a house because the real estate market may collapse. 2. You do not want to invest in stocks because the stock market could go down. 3. You do not want to buy gold because their track record for long term returns is a joke. 4. You do not want to park your money in a savings account because the interest doesn't even beat inflation. Then what is an average investor to do? The answer is "diversify" to minimize risk. Each of the above is a solid investment if you know how to play it. We need to invest in house, gold, stocks, bonds, savings account, etc, and be prepared to take a the risk of losing some money in any one. Last edited by sledge_hammer; 06-05-2009 at 02:58 PM. |
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The arguments like the following works for gc/usc only, who can stay put even after loosing job. The H1b has to leave the country.
- best time to buy - inflation level of the real high prices - lock low interest rates now. - clean/strong foreclosure houses available now. - federal incentive to buy house. - downpayment assistance. - etc.
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