This whole idea of playing the house market is just bad all around. When people use homes as leverage to make quick money like we did in the past decade, it really makes life hard for everybody because with these bubbles they build, it makes owning a home for the traditional purpose of having a roof over your head a pipe dream for anyone but those with large amounts of capital. We're pricing home ownership out of reach of anyone who truly needs a house and turning it into a toy for the richest among us to get richer. This is not how it should be. And thanks to the unnaturally fast increase in housing prices, people had more equity to spend on college so, guess what? College tuition goes up in response.
This whole economy is looking at a downward spiral because capitalism has people brainwashed into leveraging scarce goods seeking to attain perpetual, but ultimately unsustainable, financial growth. This is the why the middle class is disappearing. Those on the lower middle class don't have the capital to invest to become upwardly mobile and the upper middle class does. Those that do, trade, moving them into the higher and higher economic levels and those that don't have the capital fall further and further towards the poverty level. It's like the biblical parting of the Red Sea.
This whole discussion points out that there is definitely a problem. We don't have enough market regulation where it's needed and where we do, those that are regulated are corrupting the regulators in their favor. It used to be that even a poor farmer tossed to the most rural areas in the country could have a house so long as he was willing to build it. These people had less money than the most impoverished American today and yet they could have a house.
Now you can only own a house if you have a sparkling credit history, a large amount of existing capital for a down payment, and a willingness to enslave yourself to a bank for the next 30 years and ultimately pay them up to 5 times what the property is actually priced at after the loan is paid in full. How can this be sustained?
As soon as trading housing became profitable, any hope for those that just want a place to live went down the tubes. All things fair, the only factors that you should be weighing in on for housing is whether you will be putting down roots there and if you want to be responsible for upkeep.
I dont know why everyone keeps saying it will take 30 yrs to payoff a house.
I know that is the average time frame banks give you, but you can do it faster.
We bought ours in 2007 and should be paid off in 10 to 15 year range or less.
We refinanced with 4% rate and made sure our payments were not too low.
I think buying a house is easier if you are married or have some one helping you.
Like they say 2 incomes are better than 1 for sure.
When i get older and retire i dont wanna have to worry about monthly payments.
I guess also i grew up in a house and tried the apartment thing and hated it.
But i agree buying a house is not for everyone who is not ready financially.
A house is a investment and i didnt buy mine to sale it for a quick profit.
We nearly bought a 2nd home in Shanghai where my wife is from originally.
I am glad we didn't go and do that right now.
Seeing China housing bubble is about to burst really soon i read.
Once there housing market breaks and prices fall fast then i might sometime later.
hmm I don't know how old you are but your makinga huge mistake investing in homes but its your life.
I'm 37, and I can assure you that I know what I'm talking about. I'm not talking about flipping houses, I'm just saying that a foreclosed home, right now, will give me twice the square footage, and would cost me about 3/4 of what I owe right now. If a bank would accept a short sale on my home right now, I could walk out with only a loss of what I put into it. But, when the market picks up, and it will, the new house will grow in value faster than my old house. So, waiting for my house to regain it's value would be poorer investment.
Any good investor will tell you, it's better to know when to take your losses, and regain them elsewhere, than to hold a bad investment, waiting for it to recover.
I dont know why everyone keeps saying it will take 30 yrs to payoff a house.
I know that is the average time frame banks give you, but you can do it faster.
We bought ours in 2007 and should be paid off in 10 to 15 year range or less.
We refinanced with 4% rate and made sure our payments were not too low.
I think buying a house is easier if you are married or have some one helping you.
Like they say 2 incomes are better than 1 for sure.
Even with refinancing, there are other tricks to pay off the house much sooner. For instance: if your mortgage is $1200 a month, for 30 years, if you put in an extra $100 per month, giving you just one extra payment a year, you can cut the time you're paying off the house nearly in half. Kinda nuts.
Yeah, back in my school days, my Calculus class studied the algorithm the banks use for mortgages. Even adding something as small as a few bucks, can actually start taking months off your mortgage. It's mainly because the first years of your mortgage, your payments are 99% interest, so your principle doesn't move. As time passes, the % of interest you pay slowly drops in exchange for the principle. That's why most banks will sell of your mortgage after a few years. They only want to own your mortgage when they are collecting the most interest.
But paying that extra per month, will help pay off your principle, while you're making those interest payments. Then there is less principle to charge the interest for, and it snowballs from there
Even with refinancing, there are other tricks to pay off the house much sooner. For instance: if your mortgage is $1200 a month, for 30 years, if you put in an extra $100 per month, giving you just one extra payment a year, you can cut the time you're paying off the house nearly in half. Kinda nuts.
Yep pretty much what we are doing now.
Just throw in some extra money here and there.
Both cars are paid for so why not with the extra money.
But our mortgage is 15 years, we are trying to pay it off sooner.
Hell... anyone want to buy a nice home in Cary, NC? Come oooon! We're all Rockstars, right!? Go tell Epic to hire you, then buy my house. DONE. I'll give you a PoCo discount!
i think people are looking at this in entirely the wrong way.
when you considder buying a house vs renting one. you shouldn't look at "playing the market" when buying. it's a place to live, potentially for the rest of your life and is therefor a long term investment. but also remember that if you have to move due to change of circumstance, there are other doors open to you that aren't when renting. the market fluctuates, but it doesn't JUST fluctuate on YOUR property. you won't "lose" any money if you look to sell on and move to a bigger place, because that bigger place is equally affected by any downturn and its price will still be relative to yours.
you also have the option of renting your owned property for a period of time while you set up in another area, cancelling out any losses incurred and/or helping the transition.
the idea that buying a house is a bad investment is just nonsense. regardless of how the housing market fluctuates, you're investing into property that YOU own. when you rent, you're GIVING money away to someone else, for nothing, sure you get a roof over your head, but it is literally at their discretion.
that said, i understand why people who move around a lot would be hesitant or even outright refuse to purchase a house, but they have a completely different circumstance. if you're staying in one place for any more than 2 years at a time (which is how long you're tied into most mortgages before you can switch to another or sell), buying is going to be the better option the majority of the time.
yea so if you got sick of where ever you live now do you think you could uproot yourself just like that?
You still have to wait out your lease or try and break it, which normally incurs some kind of stiff penalty fee. When renting you can't wake up one morning, walk out the door and never look back, you're still reasonable for upholding your end of the contract.
The more equity you have in your house, the faster you can get away from it, you can price a house to sell for 1-2% under market value and still walk away with a profit. Whatever money you make off the house you can use as a down payment on your next house, dramatically lowering your payments per month on housing. Can't really do that through renting.
If renting is great for you and makes sense for your area, go for it! Buying a house isn't for everyone. But I don't really buy into "but renting is more freedom". Renting is less "responsibility" but not really more freedom.
Yea but is a lease really freedom? For you it might be, for your area buying a house might be a financial disaster and renting makes sense, but a lease can be a trap just as much as a mortgage and the things that enable you to get away from a lease are the somethings that enable you to get away from your mortgage.
Now you can only own a house if you have a sparkling credit history, a large amount of existing capital for a down payment, and a willingness to enslave yourself to a bank for the next 30 years and ultimately pay them up to 5 times what the property is actually priced at after the loan is paid in full.
Enslaved to a bank? I think that's overstating the case just a wee bit. When we bought our house, I didn't have an extra $300,000 stuffed under my mattress, so we took a 30-year mortgage at 4.75%. If we take the full term to pay it, it'll run us more than half a million, but that's present value dollars. Come 2039 when we make our last payment, our mortgage payments will be a fraction of our the purchasing power that they are today.
We also get a pretty hefty tax deduction for the interest we pay on the home. Considering that we've got a great place to live in a city with great schools and the like, we've no problem with that kind of commitment. It certainly not some financial horror story we've burdened ourselves with...
I don't see renting as throwing my money away. I'm paying for a service.
I can uproot at any moment in my life. I like freedom like that.
I agree. Never understood why people describe renting as 'throwing money away.' Having four walls and a roof seems like a pretty good service to have, all things considered.
I don't see renting as throwing my money away. I'm paying for a service.
I agree, renting isn't really throwing away money considering you are getting something for your money. A fair amount of money is 'thrown away' in a mortgage, to the lender. I mean, 4% APR on £100k+ is a lot of money which really is just being thrown away. I do however understand that the rest of the mortgage payments are buying into something you will own at some point.
Ok I don't want this thread to derail into an argument.
Good points have been made for both sides. I think my opinion is now, if I'm sure of my situation for at least a few years, and of course have a deposit, then buying is a sensible option with decent benefits, if not, renting may be more suitable until stability is guaranteed or at least expected.
As I mentioned, renting is the only real option for us right now. I mean, to get a 4% rate on a mortgage would cost us a deposit of 20%+... now assuming we're looking at nice 1 bed apartments, or 'ok' 2 bed apartments', that's gonna be 20% of £120-150k in this area.
The deposit is definitely the biggest barrier for me.
So I need a downpayment of at least £24k (about $40,000 for those of you in the US). With a 4% rate over 25 years, that's gonna cost me around £550 p/month.
The apartments I've been looking at renting, which are nicer than the houses I've looked at to buy, are about £575-650 p/month.
Now 650 p/month is well within our budget, so a mortgage of 550 would be no problem. However, I fall about £22000 short of a £24000 downpayment. I mean, who in the world has that kinda cash available at 26? Sure I could save it, but if I put away £550 a month, that would take 3 and a half years, and I'd rather move out now.
I think what we're going to do is rent a place and start putting a couple hundred each away each month with a view to buying in a few years when we should know what our future plans are likely to be.
When it comes down to it, the decision is really based on your lifestyle. Personally, I HATE apartments, and I don't like moving, so for me, I think a house is MY best option. The investment part of it is just one of the parts I see as a benefit, thus the reason I bring it up.
Honestly, in your case, renting is probably best. Especially if you and your gf have never lived together. Relationships can REALLY change once you're living together. Renting is the best option when starting a relationship IMO.
Yep i agree with the statement, renting is best starting out living with someone.
Once you get married or know it will work, then get one later once you know.
As i stated eariler 2 incomes are better than 1, i think this holds true.
Much easier to afford a house when 2 people save their money for a downpayment.
We also get a pretty hefty tax deduction for the interest we pay on the home.
Careful, they might close that tax loophole in order to balance the federal budget...
creationtwentytwo, that sounds like a really good plan. I don't know too many people that move out of their parents home into buying a house right away... And who knows they might start to relax those down payment restrictions in the coming years, they might meet you half way.
It's still good to be sitting on a pocket of cash once you get a house because you never know what will happen to your house or your car. Even having the 2k you have saved up now is a great cushion for renting.
I would also be paying very close attention to what's going on at the IMF and the debt crisis in Greece that doesn't seem to be going away. That could give your markets a pretty big shake and send things lower. I know in the US things are starting to stabilize and rebound so its a good time to buy... The federal reserve is talking about raising interest rates if oil and gas get their act together. But in Europe it might be a totally different story...
Honestly, in your case, renting is probably best. Especially if you and your gf have never lived together. Relationships can REALLY change once you're living together. Renting is the best option when starting a relationship IMO.
Ah we've lived together for the past 4 years. It's not an ideal situation though, basically her Aunt owns a house with 'another house' built onto it, which we lived in a paid rent to her. Thing is, it was only supposed to be temporary and ended up going on for 4 years because of convenience.
I see what you're saying though, and renting is still probably sensible because it's our first 'proper' house together, especially financially speaking.
Ah we've lived together for the past 4 years. It's not an ideal situation though, basically her Aunt owns a house with 'another house' built onto it, which we lived in a paid rent to her. Thing is, it was only supposed to be temporary and ended up going on for 4 years because of convenience.
Doh, sorry, I made some assumptions there. You may have mentioned it earlier, and I forgot several pages ago So, personally I'd lean towards getting a house, if you've moved to considering marriage (not that you have), since you've already been sharing bills. But obviously what's right for me, may not be right for you
move to england, we have some fantastic first time buyer schemes which don't require huge downpayments
Is that sarcasm? Sorry I'm crap with detecting that in real life, let alone on the internet.
Heh, I'm in the UK... I have noticed there are some FTB schemes, but the problem with most is the interest rates. I mean, Nationwide do one with a 10% LTV but the interest rate is a fixed 6.9% which not only pushes repayments up a lot, it also means I'm paying a lot more than I'd like to into the banks pocket.
One thing I was considering doing recently was buying a small apartment building. It was going for a similar price to what we were looking at in a house. And we could have rented out the other three apartments quite easily.
The thing about that is not only would it be basically making us money it would have also been very easy for us to move out in the future. Because one apartment being vacant until we could fill it wouldn't have been such a big deal.
So "owning property" isn't as simple as many assume...
there are a lot of extra costs here in Ca if one is considering buying. Property tax, HOA dues, insurance, closing costs, inspection fee's and maintenance costs. When you add it all up, it can certainly make more sense to rent.
Your math is just hilariously bad here, renting x30 years means you'll be out 540,000 total with absolutely nothing to show for it. Even if you're out that same cost on a mortgage, atleast you OWN your house at the end of it.
Not to mention that generally, you can get a nicer place for the same or less cost by owning than renting.
Extremely common, next time do 5 minutes of research and you'll see.
Sure. How about that Santa Cruz example the guy gave at the second page?
Going off of those numbers, a $589,000 house in a similar area (which is a BS comparison to begin with, it should really be the exact same area, but nevermind that). Plugging that into a simple mortgage calculator brings up the sum of $3,437.24 per month over 30 years. Which, if doing the math is $1,237,406. Which means you're paying $1.2 million (!) dollars over 30 years, to get back something that 30 years ago was worth $589k. Essentially losing $648,406 over 30 years. That's not even including all the other bullshit costs like taxes, maintenance, insurance, homeowner's association, etc etc etc...
The only way that makes any kind of logical sense is if you buy into the notion that the rent on that same house would be more than that. Like in that example of a "similar" house being $3,700 a month.
So again, IF that's the case, if you can find a place where your mortgage/month is less than rent, then hell, go for it right now. But that just won't happen.
The main reason that comparison is bullshit, is because (especially in California) prices can vary wildly from one area to another. You can have a community of houses right on the beach with retarded-high rent, where the houses are evaluated at the same price of neighboring houses. The problem is, nobody wants to sell those, because they're on the beach. So it's an unknown how much that house really would go for if someone sold it. The rent prices are just too good for people to sell.
It really has to be apples:apples comparison. And when you do that, at least in this area, the cost to rent is significantly lower per month than buying. If you buy under these conditions, you essentially lose hundreds of thousands of dollars over the course of those years.
Again, if you can actually find a place where the mortgage/month is less then rent, then everything I'm saying is moot. But that's a huge if.
looks like alot of the places I've been looking to rent are around the $100 - $120k range, I could buy a $200k and pay a little less than the rents they were asking. Plus I'm seeing decent foreclosed stuff going for $90k
all mostly 3 bed 2 bath + garage
but I'm still going to rent for at least a year to see if Austin is really as awesome as everyone says it is.
Yep 90k is a good price for foreclosed house, long as it has no damage.
When we were shopping back in 2006 we found alot of foreclosed had damage.
But we lucked into one that didnt.
A 4 bedroom and 2 and half bath with a garage back then, what we went with.
Yep a good idea to see if you like Austin or not to wait 1 yr or so.
Sure. How about that Santa Cruz example the guy gave at the second page?
Going off of those numbers, a $589,000 house in a similar area (which is a BS comparison to begin with, it should really be the exact same area, but nevermind that). .
Plugging that into a simple mortgage calculator brings up the sum of $3,437.24 per month over 30 years. Which, if doing the math is $1,237,406. Which means you're paying $1.2 million (!) dollars over 30 years, to get back something that 30 years ago was worth $589k. Essentially losing $648,406 over 30 years. That's not even including all the other bullshit costs like taxes, maintenance, insurance, homeowner's association, etc etc etc...
The only way that makes any kind of logical sense is if you buy into the notion that the rent on that same house would be more than that. Like in that example of a "similar" house being $3,700 a month.
.
It was a comparison of two houses on the same street, with the same number of bedrooms, and the same number of bathrooms. The house that was for sale had undercover carparking and a better lot - so it was probably worth more.
So again, IF that's the case, if you can find a place where your mortgage/month is less than rent, then hell, go for it right now. But that just won't happen.
The main reason that comparison is bullshit, is because (especially in California) prices can vary wildly from one area to another. You can have a community of houses right on the beach with retarded-high rent, where the houses are evaluated at the same price of neighboring houses. The problem is, nobody wants to sell those, because they're on the beach. So it's an unknown how much that house really would go for if someone sold it. The rent prices are just too good for people to sell.
It really has to be apples:apples comparison. And when you do that, at least in this area, the cost to rent is significantly lower per month than buying. If you buy under these conditions, you essentially lose hundreds of thousands of dollars over the course of those years..
The two houses were on the same street. The same street. Not a different area. They were less than half a mile apart!
there are a lot of extra costs here in Ca if one is considering buying. Property tax, HOA dues, insurance, closing costs, inspection fee's and maintenance costs. When you add it all up, it can certainly make more sense to rent.
It's rare to have an HOA in my area, and if it does, I typically don't want to live there anyway, because they have restrictions on what you can do to your home/property.
Out here, my buddy received a notice, because he took out everything from his garage, to clean it out. He only had everything out for one day, and had it back in by the night. They've had others around here, complaining about sports team and election signs.
looks like alot of the places I've been looking to rent are around the $100 - $120k range, I could buy a $200k and pay a little less than the rents they were asking. Plus I'm seeing decent foreclosed stuff going for $90k
all mostly 3 bed 2 bath + garage
Sorry, let me just confirm that...
a 3 bed/2 bath house for 100-120k DOLLARS?
That's like 60 grand UK.
Wow... sounds like I need to move to the US. I could barely buy a shed for that round here and I don't exactly live in Beverly Hills. Even in rough areas, you'd struggle to get a decent 1 bed apartment for that kinda money.
Understand that prices in the US (and everywhere really) are completely dependent on where you're looking. There are places in LA, NYC, Chicago, etc where a 3 bedroom is $600,000+. There are small towns (and Detroit) where they're $20,000. Justin's in Austin, which is around 6-700,000 people, so a bigger metro area. Larger places will always demand higher prices for real estate. If you get away from the larger metro areas, prices would be more in line with what you're thinking.
Understand that prices in the US (and everywhere really) are completely dependent on where you're looking. There are places in LA, NYC, Chicago, etc where a 3 bedroom is $600,000+. There are small towns (and Detroit) where they're $20,000. Justin's in Austin, which is around 6-700,000 people, so a bigger metro area. Larger places will always demand higher prices for real estate. If you get away from the larger metro areas, prices would be more in line with what you're thinking.
I understand that, but that house I linked in my post is in my hometown... with a population of 23,000. The price is typical of all towns in this area, and the cities are even more expensive.
Yep this is so true, we moved around 1 hr north of down town Dallas.
But the travel could be less time if you use toll roads and HOV around here.
The houses in Dallas county cost way more than Collin county.
Got a 2,600sqft house for $140,000 back in 2007 and i am in Mckinney.
It was a foreclosure house and we got lucky to get it, was in great condition.
The vaulue of the house has went up last couple of years.
Honestly that is pretty small compared to some of the house sizes many have.
Most of all our friends have 5,000sqft houses we know.
Really all the smaller towns make up the area in DFW anwyays.
Nothing is really out of the way, i like where i live.
I need to move stateside, 5,000sqft over here is like a mansion. As you can see in the ad, the house I linked in my previous post is probably not even 1000sq/ft, no garage, no garden and it's nearly 200k USD.
I need to move stateside, 5,000sqft over here is like a mansion.
Well 5,000sqft is still big to me, like a mansion as well,lol
My wife said she would still love a house that size or close to it sometime later.
We will see in due time i guess, we have done tons of upgrades to our current house.
Really we were looking for any size house back when we found this one for a good price.
Guess you should try for a job somewhere like Dallas or Austin in TX.
Well I have considered moving over there when I finish my degree if I found an offer of work over there, and seeing those kind of house prices has definitely encouraged my thoughts on doing so, I'm sure getting a mortgage over there wouldn't exactly be easy for a non-citizen though.
I guess I'll just save as much as I can while I rent and finish my degree, and see what happens in a year or so.
Well I have considered moving over there when I finish my degree if I found an offer of work over there, and seeing those kind of house prices has definitely encouraged my thoughts on doing so, I'm sure getting a mortgage over there wouldn't exactly be easy for a non-citizen though.
I guess I'll just save as much as I can while I rent and finish my degree, and see what happens in a year or so.
Good luck to you.
I agree just save all you can for when the opportunity knocks.
Right now, if we put £15k down on a place worth £150k, the mortgage payments look like they'd be about 7-800 a month. Rent on a similar property would be about 700 p/m which is in our budget. Problem is, that 700 is available now, whereas 15k is most certainly not. So I guess we could buy in 2 years if we saved that 700 a month but if we rented, we could go now.
just wondering, is a 150k-place in your area something you'd actually wanted to hold on to for a while? also what is the outlook for house prices with the gloomy outlook on the economy these days? else time to go renting something, methinks.
i do have some former colleagues who have been trapped by buying a place when the prices were at their peak just a few years ago. nice boat anchors, those houses.
Its typical for most americans to want a house. Its part of the so called "american dream" that big companies drove into your parents and your parent's parents heads generations ago.
I don't just want a house, I want two.
And I want them to be in Canada.
And I want to live in rental houses for a good long while prior to that point.
looks like alot of the places I've been looking to rent are around the $100 - $120k range, I could buy a $200k and pay a little less than the rents they were asking. Plus I'm seeing decent foreclosed stuff going for $90k
just wondering, is a 150k-place in your area something you'd actually wanted to hold on to for a while? also what is the outlook for house prices with the gloomy outlook on the economy these days?
No, those houses change occupants pretty regularly I would've thought. They're so small that I just can't see anybody living in one for any other reason than they are desperate to get on the property ladder but don't care what kinda house they start with. Which I suppose may not be the worst mentality if you can handle living in a shoebox. At least you'd be on the ladder, but I just can't fathom spending that much money on that little house.
As for the market, it's a tough call. Part of me thinks prices will rise as the economy recovers, but then again, the prices are still at a lower level than a few years back and may continue to drop.
As for the market, it's a tough call. Part of me thinks prices will rise as the economy recovers, but then again, the prices are still at a lower level than a few years back and may continue to drop.
if they rise, you'll have a harder time buying one later.
if they fall, so what? you're not planning to sell anytime soon are you?
Replies
This whole economy is looking at a downward spiral because capitalism has people brainwashed into leveraging scarce goods seeking to attain perpetual, but ultimately unsustainable, financial growth. This is the why the middle class is disappearing. Those on the lower middle class don't have the capital to invest to become upwardly mobile and the upper middle class does. Those that do, trade, moving them into the higher and higher economic levels and those that don't have the capital fall further and further towards the poverty level. It's like the biblical parting of the Red Sea.
This whole discussion points out that there is definitely a problem. We don't have enough market regulation where it's needed and where we do, those that are regulated are corrupting the regulators in their favor. It used to be that even a poor farmer tossed to the most rural areas in the country could have a house so long as he was willing to build it. These people had less money than the most impoverished American today and yet they could have a house.
Now you can only own a house if you have a sparkling credit history, a large amount of existing capital for a down payment, and a willingness to enslave yourself to a bank for the next 30 years and ultimately pay them up to 5 times what the property is actually priced at after the loan is paid in full. How can this be sustained?
As soon as trading housing became profitable, any hope for those that just want a place to live went down the tubes. All things fair, the only factors that you should be weighing in on for housing is whether you will be putting down roots there and if you want to be responsible for upkeep.
I know that is the average time frame banks give you, but you can do it faster.
We bought ours in 2007 and should be paid off in 10 to 15 year range or less.
We refinanced with 4% rate and made sure our payments were not too low.
I think buying a house is easier if you are married or have some one helping you.
Like they say 2 incomes are better than 1 for sure.
When i get older and retire i dont wanna have to worry about monthly payments.
I guess also i grew up in a house and tried the apartment thing and hated it.
But i agree buying a house is not for everyone who is not ready financially.
A house is a investment and i didnt buy mine to sale it for a quick profit.
We nearly bought a 2nd home in Shanghai where my wife is from originally.
I am glad we didn't go and do that right now.
Seeing China housing bubble is about to burst really soon i read.
Once there housing market breaks and prices fall fast then i might sometime later.
Any good investor will tell you, it's better to know when to take your losses, and regain them elsewhere, than to hold a bad investment, waiting for it to recover.
Even with refinancing, there are other tricks to pay off the house much sooner. For instance: if your mortgage is $1200 a month, for 30 years, if you put in an extra $100 per month, giving you just one extra payment a year, you can cut the time you're paying off the house nearly in half. Kinda nuts.
But paying that extra per month, will help pay off your principle, while you're making those interest payments. Then there is less principle to charge the interest for, and it snowballs from there
Yep pretty much what we are doing now.
Just throw in some extra money here and there.
Both cars are paid for so why not with the extra money.
But our mortgage is 15 years, we are trying to pay it off sooner.
when you considder buying a house vs renting one. you shouldn't look at "playing the market" when buying. it's a place to live, potentially for the rest of your life and is therefor a long term investment. but also remember that if you have to move due to change of circumstance, there are other doors open to you that aren't when renting. the market fluctuates, but it doesn't JUST fluctuate on YOUR property. you won't "lose" any money if you look to sell on and move to a bigger place, because that bigger place is equally affected by any downturn and its price will still be relative to yours.
you also have the option of renting your owned property for a period of time while you set up in another area, cancelling out any losses incurred and/or helping the transition.
the idea that buying a house is a bad investment is just nonsense. regardless of how the housing market fluctuates, you're investing into property that YOU own. when you rent, you're GIVING money away to someone else, for nothing, sure you get a roof over your head, but it is literally at their discretion.
that said, i understand why people who move around a lot would be hesitant or even outright refuse to purchase a house, but they have a completely different circumstance. if you're staying in one place for any more than 2 years at a time (which is how long you're tied into most mortgages before you can switch to another or sell), buying is going to be the better option the majority of the time.
The more equity you have in your house, the faster you can get away from it, you can price a house to sell for 1-2% under market value and still walk away with a profit. Whatever money you make off the house you can use as a down payment on your next house, dramatically lowering your payments per month on housing. Can't really do that through renting.
If renting is great for you and makes sense for your area, go for it! Buying a house isn't for everyone. But I don't really buy into "but renting is more freedom". Renting is less "responsibility" but not really more freedom.
I can uproot at any moment in my life. I like freedom like that.
Enslaved to a bank? I think that's overstating the case just a wee bit. When we bought our house, I didn't have an extra $300,000 stuffed under my mattress, so we took a 30-year mortgage at 4.75%. If we take the full term to pay it, it'll run us more than half a million, but that's present value dollars. Come 2039 when we make our last payment, our mortgage payments will be a fraction of our the purchasing power that they are today.
We also get a pretty hefty tax deduction for the interest we pay on the home. Considering that we've got a great place to live in a city with great schools and the like, we've no problem with that kind of commitment. It certainly not some financial horror story we've burdened ourselves with...
I agree. Never understood why people describe renting as 'throwing money away.' Having four walls and a roof seems like a pretty good service to have, all things considered.
I agree, renting isn't really throwing away money considering you are getting something for your money. A fair amount of money is 'thrown away' in a mortgage, to the lender. I mean, 4% APR on £100k+ is a lot of money which really is just being thrown away. I do however understand that the rest of the mortgage payments are buying into something you will own at some point.
Ok I don't want this thread to derail into an argument.
Good points have been made for both sides. I think my opinion is now, if I'm sure of my situation for at least a few years, and of course have a deposit, then buying is a sensible option with decent benefits, if not, renting may be more suitable until stability is guaranteed or at least expected.
As I mentioned, renting is the only real option for us right now. I mean, to get a 4% rate on a mortgage would cost us a deposit of 20%+... now assuming we're looking at nice 1 bed apartments, or 'ok' 2 bed apartments', that's gonna be 20% of £120-150k in this area.
The deposit is definitely the biggest barrier for me.
So I need a downpayment of at least £24k (about $40,000 for those of you in the US). With a 4% rate over 25 years, that's gonna cost me around £550 p/month.
The apartments I've been looking at renting, which are nicer than the houses I've looked at to buy, are about £575-650 p/month.
Now 650 p/month is well within our budget, so a mortgage of 550 would be no problem. However, I fall about £22000 short of a £24000 downpayment. I mean, who in the world has that kinda cash available at 26? Sure I could save it, but if I put away £550 a month, that would take 3 and a half years, and I'd rather move out now.
I think what we're going to do is rent a place and start putting a couple hundred each away each month with a view to buying in a few years when we should know what our future plans are likely to be.
Honestly, in your case, renting is probably best. Especially if you and your gf have never lived together. Relationships can REALLY change once you're living together. Renting is the best option when starting a relationship IMO.
Once you get married or know it will work, then get one later once you know.
As i stated eariler 2 incomes are better than 1, i think this holds true.
Much easier to afford a house when 2 people save their money for a downpayment.
creationtwentytwo, that sounds like a really good plan. I don't know too many people that move out of their parents home into buying a house right away... And who knows they might start to relax those down payment restrictions in the coming years, they might meet you half way.
It's still good to be sitting on a pocket of cash once you get a house because you never know what will happen to your house or your car. Even having the 2k you have saved up now is a great cushion for renting.
I would also be paying very close attention to what's going on at the IMF and the debt crisis in Greece that doesn't seem to be going away. That could give your markets a pretty big shake and send things lower. I know in the US things are starting to stabilize and rebound so its a good time to buy... The federal reserve is talking about raising interest rates if oil and gas get their act together. But in Europe it might be a totally different story...
Ah we've lived together for the past 4 years. It's not an ideal situation though, basically her Aunt owns a house with 'another house' built onto it, which we lived in a paid rent to her. Thing is, it was only supposed to be temporary and ended up going on for 4 years because of convenience.
I see what you're saying though, and renting is still probably sensible because it's our first 'proper' house together, especially financially speaking.
Ok thanks again for all the help everyone.
Is that sarcasm? Sorry I'm crap with detecting that in real life, let alone on the internet.
Heh, I'm in the UK... I have noticed there are some FTB schemes, but the problem with most is the interest rates. I mean, Nationwide do one with a 10% LTV but the interest rate is a fixed 6.9% which not only pushes repayments up a lot, it also means I'm paying a lot more than I'd like to into the banks pocket.
One thing I was considering doing recently was buying a small apartment building. It was going for a similar price to what we were looking at in a house. And we could have rented out the other three apartments quite easily.
The thing about that is not only would it be basically making us money it would have also been very easy for us to move out in the future. Because one apartment being vacant until we could fill it wouldn't have been such a big deal.
So "owning property" isn't as simple as many assume...
Sure. How about that Santa Cruz example the guy gave at the second page?
Going off of those numbers, a $589,000 house in a similar area (which is a BS comparison to begin with, it should really be the exact same area, but nevermind that). Plugging that into a simple mortgage calculator brings up the sum of $3,437.24 per month over 30 years. Which, if doing the math is $1,237,406. Which means you're paying $1.2 million (!) dollars over 30 years, to get back something that 30 years ago was worth $589k. Essentially losing $648,406 over 30 years. That's not even including all the other bullshit costs like taxes, maintenance, insurance, homeowner's association, etc etc etc...
The only way that makes any kind of logical sense is if you buy into the notion that the rent on that same house would be more than that. Like in that example of a "similar" house being $3,700 a month.
So again, IF that's the case, if you can find a place where your mortgage/month is less than rent, then hell, go for it right now. But that just won't happen.
The main reason that comparison is bullshit, is because (especially in California) prices can vary wildly from one area to another. You can have a community of houses right on the beach with retarded-high rent, where the houses are evaluated at the same price of neighboring houses. The problem is, nobody wants to sell those, because they're on the beach. So it's an unknown how much that house really would go for if someone sold it. The rent prices are just too good for people to sell.
It really has to be apples:apples comparison. And when you do that, at least in this area, the cost to rent is significantly lower per month than buying. If you buy under these conditions, you essentially lose hundreds of thousands of dollars over the course of those years.
Again, if you can actually find a place where the mortgage/month is less then rent, then everything I'm saying is moot. But that's a huge if.
holy cow, I just plugged the numbers for Austin - I'm probably going to buy a house within the year :P
Welcome to Texas where there is a house to fit anyones budget.
What kinds of numbers did you find?
all mostly 3 bed 2 bath + garage
but I'm still going to rent for at least a year to see if Austin is really as awesome as everyone says it is.
When we were shopping back in 2006 we found alot of foreclosed had damage.
But we lucked into one that didnt.
A 4 bedroom and 2 and half bath with a garage back then, what we went with.
Yep a good idea to see if you like Austin or not to wait 1 yr or so.
They were on the same street.
It was a comparison of two houses on the same street, with the same number of bedrooms, and the same number of bathrooms. The house that was for sale had undercover carparking and a better lot - so it was probably worth more.
The two houses were on the same street. The same street. Not a different area. They were less than half a mile apart!
Hey have a look around.
like I said. You'd be more convincing if you came up with some actual facts and figures and not bullshit math.
So every house in CA has HOA fees?
Mine is around $180 or less pre year.
I have planted a peach and plum tree in my yard with out any issues.
Sorry, let me just confirm that...
a 3 bed/2 bath house for 100-120k DOLLARS?
That's like 60 grand UK.
Wow... sounds like I need to move to the US. I could barely buy a shed for that round here and I don't exactly live in Beverly Hills. Even in rough areas, you'd struggle to get a decent 1 bed apartment for that kinda money.
This is what I'm looking at:
http://www.rightmove.co.uk/property-for-sale/property-29028161.html £143k
Same apartment complex, but to rent:
http://www.rightmove.co.uk/property-to-rent/property-29255692.html
This is about the cheapest house I'd get, it's out of town, but in a reasonable area (which would be fine, IF I WAS A FUCKING BORROWER):
http://www.rightmove.co.uk/property-for-sale/property-33726539.html
That house, by todays exchange rate, it $177,000 USD... I mean, w...t...f and the best bit... 'priced to attract interest'... lol what?
Understand that prices in the US (and everywhere really) are completely dependent on where you're looking. There are places in LA, NYC, Chicago, etc where a 3 bedroom is $600,000+. There are small towns (and Detroit) where they're $20,000. Justin's in Austin, which is around 6-700,000 people, so a bigger metro area. Larger places will always demand higher prices for real estate. If you get away from the larger metro areas, prices would be more in line with what you're thinking.
I understand that, but that house I linked in my post is in my hometown... with a population of 23,000. The price is typical of all towns in this area, and the cities are even more expensive.
But the travel could be less time if you use toll roads and HOV around here.
The houses in Dallas county cost way more than Collin county.
Got a 2,600sqft house for $140,000 back in 2007 and i am in Mckinney.
It was a foreclosure house and we got lucky to get it, was in great condition.
The vaulue of the house has went up last couple of years.
Honestly that is pretty small compared to some of the house sizes many have.
Most of all our friends have 5,000sqft houses we know.
Really all the smaller towns make up the area in DFW anwyays.
Nothing is really out of the way, i like where i live.
I need to move stateside, 5,000sqft over here is like a mansion. As you can see in the ad, the house I linked in my previous post is probably not even 1000sq/ft, no garage, no garden and it's nearly 200k USD.
Well 5,000sqft is still big to me, like a mansion as well,lol
My wife said she would still love a house that size or close to it sometime later.
We will see in due time i guess, we have done tons of upgrades to our current house.
Really we were looking for any size house back when we found this one for a good price.
Guess you should try for a job somewhere like Dallas or Austin in TX.
I guess I'll just save as much as I can while I rent and finish my degree, and see what happens in a year or so.
Good luck to you.
I agree just save all you can for when the opportunity knocks.
just wondering, is a 150k-place in your area something you'd actually wanted to hold on to for a while? also what is the outlook for house prices with the gloomy outlook on the economy these days? else time to go renting something, methinks.
i do have some former colleagues who have been trapped by buying a place when the prices were at their peak just a few years ago. nice boat anchors, those houses.
I don't just want a house, I want two.
And I want them to be in Canada.
And I want to live in rental houses for a good long while prior to that point.
:thumbup:
Damn you! *shakes fist*
half the price and twice the house.
This is Texas. We hav emore than enough land that house prices are great most of the time.
No, those houses change occupants pretty regularly I would've thought. They're so small that I just can't see anybody living in one for any other reason than they are desperate to get on the property ladder but don't care what kinda house they start with. Which I suppose may not be the worst mentality if you can handle living in a shoebox. At least you'd be on the ladder, but I just can't fathom spending that much money on that little house.
As for the market, it's a tough call. Part of me thinks prices will rise as the economy recovers, but then again, the prices are still at a lower level than a few years back and may continue to drop.
if they rise, you'll have a harder time buying one later.
if they fall, so what? you're not planning to sell anytime soon are you?
Infographic: The True Cost of Homeownership