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Thread: i'm tired of renting

  1. #26
    Banned Melonie's Avatar
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    Default Re: i'm tired of renting

    So, you buy a $200,000 house that is worth $160,000 for a year or two and then begins climbing. Who cares? The point is that nothing stays "low" forever, just like it doesn't stay "high" forever.
    From the standpoint of buying your 'dream house' and living in it forever, a potential short term real estate market decline probably doesn't mean the end of the world. However, if it were me, I'd rather continue paying out $800 a month rent for a couple of years instead of buying at today's $200k price (spending about $20,000 in the process), and then buy the same house for $160k a couple of years down the road ! But if you live in a high tax state like NY or IL or CA, you also give up two years worth of mortgage interest tax deductions in the process (assuming the AMT doesn't bite you). On the other hand, you also avoid two years worth of property and school taxes.

    However, based on Chicago's own media, the area isn't totally immune ..



    It would appear that Chicago's real estate market prices are holding because sellers aren't sufficiently motivated to be forced to accept whatever the highest offer for their property actually is ... yet. Instead, they are in a position where they can 'hold on' in hopes that better purchase offers will materialize in the future. While this does keep local on-record real estate market prices from falling, the side effect is that the inventory of local homes listed for sale keeps rising and rising ... i.e. the local real estate market stagnates due to a large gap forming between sellers' asking prices and buyers' purchase offer prices which neither party is willing to budge over. At the same time the sellers' monthly ARM payments keep increasing, property taxes keep increasing, homeowners insurance premiums keep increasing, utilities keep rising. Admittedly it's one thing to keep making mortgage, property tax, insurance and utility payments if you are actually living in the house - it's another thing if the house was purchased by 'investors' on spec, with the buyer's sole intention being to quickly 'flip' the house at a profit.

    The real question that nobody can accurately answer is which will come first - the 'holding on' homeowner's supply of cash to continue making these monthly payments running out, or a rebound in local real estate purchase offer prices to levels somewhere near the seller's asking price again. Given that 'investors' i.e. 'flippers' are estimated to comprise 25-30% of all recent home purchases, the monthly cash drain to continue 'carrying' a house they had no intention of living in themselves has got to be an area of mounting concern. If/when the 'flippers' decide that the 'carrying' costs to keep holding on to their spec house is devouring whatever profits they had ever hoped to earn on a quick flip, and decide to accept whatever best offer has actually been made in order to get out from under the 'carrying' costs, this WOULD book falling on-record local real estate prices and start the snowball effect.
    ~
    Last edited by Melonie; 08-07-2006 at 06:45 PM.

  2. #27
    Temporarily Banned Vaughn's Avatar
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    Default Re: i'm tired of renting

    Good God this ^ is fucking ridiculous! Penny DOES NOT WANT TO RENT anymore and WANTS TO BUY A HOME to live in- she isn't wanting to flip a property She is looking for input on how to accomplish that goal not be bombarded with a bunch of "Chicken Little" bullshit.

    However, if it were me, I'd rather continue paying out $800 a month rent
    Well it is NOT YOU! It's Penny. And Penny WANTS to BUY not RENT.

  3. #28
    God/dess Paris's Avatar
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    Default Re: i'm tired of renting

    Okay, it looks like a part of this thread is missing, but I didn't see anyone mention sweat equity. That is how I got my first house. I built the damn thing, hired the subcontractors and walked away with 25% equity at loan closing with $0 down!!

    It can be done, but it takes some fancy foot work (and loan work) and a lot of paitence. I had to convince the owner of the land to carry back a contract on the land deed payable on closing, and had to convince him that I was going to complete this building project. I used real estate agents, morgage lenders and real estate lawyers and had the mentoring of a long time builder in the area.

    It was very hard, but I wanted a house so bad that I was willing to jump through the hoops to get it. It all started with research and networking. I had to first meet the people that could help me, then I had to gain their confidence to get their help. It was sort of like a one woman Habitat for Humanity project!!

    I'm doing it again right now. It is easier this time because I now have a home w/ equity and experiance in completeing my first home project. When building new, that is all the lenders really want to know is that you will finish what you begin. They are in the business of leanding money, not finishing abandoned projects.

    Pretty_penny, you are able to own a home if you want it bad enough. Go for it girl!!
    Last edited by Paris; 08-08-2006 at 01:09 PM.


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  4. #29
    Banned Melonie's Avatar
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    Default Re: i'm tired of renting

    There is a not so minor problem today with the 'sweat equity' approach. If you check the current costs of concrete, steel rebar, plywood and framing lumber, plumbing fittings, copper wire, aluminum siding, and a host of other component materials needed to construct a house, you'll find that prices for these items have really skyrocketed in the last 2 years. This is the reason that corporate homebuilders have kept on constructing houses even though local markets couldn't absorb them ... because they stocked up on these materials when commodity prices first started skyrocketing knowing that building the same house next year (i.e. now) would involve much higher material costs.

    This isn't to say that it isn't possible to still derive some 'sweat equity' ... but given the higher component material costs of constructing a new house today versus the sale price available from corporate homebuilders or distressed sellers in many areas on houses constructed within the last 2-3 years when the cost of construction materials was much lower than it is today, the 'sweat equity' factor has probably been reduced to the minimum wage ballpark.


    Well it is NOT YOU! It's Penny. And Penny WANTS to BUY not RENT
    I'm not making any decisions for Penny or anybody else. I'm simply trying to provide the second side of the real estate 'story'. Given that Penny lives in Florida (according to her Club Chat posts at any rate), not mentioning the possibility (more like already a reality) of declining Florida real estate market prices would IMHO be downright irresponsible.



    In a nutshell, Florida statewide home sales are off by 29% year over year, about 1/3rd of the major Florida real estate markets did in fact experience a decline in median home sale prices year over year, and the vast majority of statistical gains in statewide average Florida real estate market prices were isolated to two 'bargain basement' areas (Gainesville +18% Ocala +24%) where median home prices under $200k created incentive for buyers to relocate to these otherwise 'less desireable' areas.

    ~
    Last edited by Melonie; 08-07-2006 at 08:40 PM.

  5. #30
    God/dess Paris's Avatar
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    Default Re: i'm tired of renting

    Quote Originally Posted by Melonie
    There is a not so minor problem today with the 'sweat equity' approach. If you check the current costs of concrete, steel rebar, plywood and framing lumber, plumbing fittings, copper wire, aluminum siding, and a host of other component materials needed to construct a house, you'll find that prices for these items have really skyrocketed in the last 2 years. This is the reason that corporate homebuilders have kept on constructing houses even though local markets couldn't absorb them ... because they stocked up on these materials when commodity prices first started skyrocketing knowing that building the same house next year (i.e. now) would involve much higher material costs.
    Huh, must be an east coast thing. I still have all my invoices from when I built in 2002-03 and many of the material costs have dropped from that time. Lumber is plentiful here in the Northwest and the concrete/foundations are just a small cost of the entire building project. I have noticed that concrete and foundation work is actually more affordable than a few years ago, too. Because of the drop in material costs, I am able to incorporate a few more extras in my new spec home like front and back landscaping, in ground sprinklers and upgrades on some of interior decor, like solid surface countertops and cherry cabinets. There has been a lot of material coming out of China and that is causing prices to drop in much of the home improvement sector.

    Where I did see a very BIG increase in cost in land values. I bought a lovely 8600 sq. ft. lot in 2002 for just under $35k. This time around my lot (including improvements) is 6200 sq. ft. and ran me $109k. Even in this "buyers market" this area has a lack of inventory, so I should be able to sell at a decent profit.

    I just have to say that on one particular item, siding, there are a lot more choices than aluminim siding. Sure, aluminum is going up, but what about other materials like wood, stucco, concrete board, OSB, or even the ICF building structures? There is also the choice of brick or stone or the "fakies" made from foam and concrete to use as siding.

    Building a home is a combination of logic and artistic creativity. If material A is unavailable or not afforadable, then start researching the other options. Here in Oregon we have someof the most strict building and land use codes in the nation. If ther builders can figure out how to work with varied and unconventional materials, I'm sure it must be a cinch in other regions.

    I'd also like to say that working a sweat equity program is NOT easy. But anything worth doing rarely is.


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