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- Evan - 11-29-2007
these are the articles I was reading today
<!-- m --><a class="postlink" href="http://patrick.net/housing/crash.html">http://patrick.net/housing/crash.html</a><!-- m -->
his points definately appeal to my inner economist
- Mike - 11-29-2007
good graph
![[Image: median-income-priced-out.gif]](http://efinancedirectory.com/cimages/articles/median-income-priced-out.gif)
real estate is not a good investment:
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
- Mike - 11-29-2007
oh and the finance blogs that i read regularly:
<!-- m --><a class="postlink" href="http://www.getrichslowly.org/blog/">http://www.getrichslowly.org/blog/</a><!-- m -->
<!-- m --><a class="postlink" href="http://millionairemommynextdoor.blogspot.com/">http://millionairemommynextdoor.blogspot.com/</a><!-- m -->
<!-- m --><a class="postlink" href="http://my-wealth-builder.blogspot.com/">http://my-wealth-builder.blogspot.com/</a><!-- m -->
<!-- m --><a class="postlink" href="http://carnivalofpersonalfinance.com/">http://carnivalofpersonalfinance.com/</a><!-- m -->
enjoy!
- Steve85 - 11-29-2007
Mike Wrote:real estate is not a good investment
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
I think a more realistic case where the investor, aka landlord, prices the property in-line with current values based on what home buyers are paying would have very different results.
Are there that many landlords willing to leave 60% on the table? every month?
Personally, I feel that owning a home is very different than investing in real estate. I think it is an important distinction for many reasons one of the most important is realizing that you need to leave room for investing and saving when purchasing a home. I have heard so many people refer to their house as their retirement, an easy mistake. It also makes analyses based purely on ROI moot.
Great graph...
Seeing the price outpace income to that degree is a real eye opener to the kind of financing that was going on. Then I read an article in Money about a mortgage program not available in the US which is truly sad as it encourages saving:
As we know your interest is calculated based on the remaining principle. In an Offset mortgage your savings account balance is subtracted from your principle to calculate interest. So saving money makes your mortgage cheaper. There is apparently some weensy US tax law issue ( I have an email into the mag for clarification) that makes it illegal here. Instead, we allow qualifying at introductory short-term rates that will sink a buyer in 2 years rather than encouraging saving.
- Apoc - 11-30-2007
Mike Wrote:real estate is not a good investment:
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
I think the article is really saying that stocks are a better investment than real estate... not that real estate isn't a good one. Junk bonds aren't a good investment... there's a pretty big difference.
- Steve85 - 11-30-2007
Evan Wrote:these are the articles I was reading today
<!-- m --><a class="postlink" href="http://patrick.net/housing/crash.html">http://patrick.net/housing/crash.html</a><!-- m -->
his points definately appeal to my inner economist
I have been struggling with #2.
It seems owners will pay either way, for a bailout or in reduced equity.
Of course non-owners have nothing to gain from a bailout and everythin to gain from even lower home prices
- Evan - 11-30-2007
Steve85 Wrote:Mike Wrote:real estate is not a good investment
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
I think a more realistic case where the investor, aka landlord, prices the property in-line with current values based on what home buyers are paying would have very different results.
yes. the results would be a house sitting unrented.
sellers dont set prices, buyers do.
- Evan - 11-30-2007
Apoc Wrote:yeah, and Real Estate's one big factor is that you gotta pay to live, no matter what. So for most of us, comparing stocks to real estate is apples and oranges since we arent buying real estate as investments.Mike Wrote:real estate is not a good investment:
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
I think the article is really saying that stocks are a better investment than real estate... not that real estate isn't a good one. Junk bonds aren't a good investment... there's a pretty big difference.
a better comparison would be to compare the return on the money that you save by renting with the return on a house.
- Steve85 - 11-30-2007
Evan Wrote:Steve85 Wrote:Mike Wrote:real estate is not a good investment
<!-- m --><a class="postlink" href="http://money.cnn.com/galleries/2007/real_estate/0704/gallery.stocks_v_realestate.moneymag/index.html">http://money.cnn.com/galleries/2007/rea ... index.html</a><!-- m -->
one thing they fail to mention is the liquidity of stocks versus a home.
I think a more realistic case where the investor, aka landlord, prices the property in-line with current values based on what home buyers are paying would have very different results.
yes. the results would be a house sitting unrented.
sellers dont set prices, buyers do.
I'm not sure I get it...I referenced buyers, not sellers.
My point is if buyers are willing to shell out 2600/mo for a particular house a landlord would charge near that much in rent for a comparable house to maximize return. And depending on when he entered the market would have to just to break even. It's news to me if landlords are routinely providing a 40% discount to buying in the housing market (again, given suitable comps).
I'm not sure why the house would sit unrented if priced nearer the going rate in the neighborhood than the example provided??
- Evan - 11-30-2007
by "buyer" i meant renter, since they are buying a service.
ie- the landlord doesnt set the price, the renter does.
The landlord will always charge as much as the market will bear. In most cases, a landlord cannot charge in rent what the house monthly payment would be. if he does, the property sits unrented.
and also dont forget the cost of a house is far greater than its monthly mortgage payment.
- Apoc - 11-30-2007
Evan Wrote:Apoc Wrote:I think the article is really saying that stocks are a better investment than real estate... not that real estate isn't a good one. Junk bonds aren't a good investment... there's a pretty big difference.yeah, and Real Estate's one big factor is that you gotta pay to live, no matter what. So for most of us, comparing stocks to real estate is apples and oranges since we arent buying real estate as investments.
That the things though... that article seems to be written from the perspective of real estate as an investment, not primary residence. As you said, big difference from where most of us are at right now.
FWIW, my grandfather and dad made a lot of money in real estate over the last 30 years. They made a lot of money in the market too but it's not like real estate, as an investment, is a losing proposition.
- Maengelito - 11-30-2007
Apoc Wrote:FWIW, my grandfather and dad made a lot of money in real estate over the last 30 years. They made a lot of money in the market too but it's not like real estate, as an investment, is a losing proposition.
real estate will never be a bad investment, it just might not be good in the short term. there's only a finite amount of real estate out there and if you ask mikey or jack, there will be even less when the oceans boil and everyone is breathing smog. people have to live somewhere no matter what happens to this notion called "money".
- Steve85 - 11-30-2007
I was responding to a blog in one of mikes links and can't seem to find it now. It came up as the first entry last night comparing rent to buying. I quoted the wrong article in my first post. The article I am referring to the author finds a 425K house for 1500 rent. A typical mortgage for that house would run 2600. He compared the return on appreciation of the house for a buyer to the renter investing the difference in stocks.
Evan Wrote:by "buyer" i meant renter, since they are buying a service.
ie- the landlord doesnt set the price, the renter does.
The landlord will always charge as much as the market will bear. In most cases, a landlord cannot charge in rent what the house monthly payment would be. if he does, the property sits unrented.
So, I agree with what you're saying and I will quit commenting on an article I can't find at the moment...
My point was, as you said, real estate, a home purchase is not investment driven for most.
- .RJ - 11-30-2007
We're in month 11...
![[Image: mortgage_reset.jpg]](http://www.nsxfiles.com/images9/mortgage_reset.jpg)
- G.Irish - 12-10-2007
More fuel for the fire sale:
<!-- m --><a class="postlink" href="http://www.washingtonpost.com/wp-dyn/content/article/2007/12/09/AR2007120901197.html?hpid=topnews">http://www.washingtonpost.com/wp-dyn/co ... id=topnews</a><!-- m -->
- .RJ - 12-10-2007
G.Irish Wrote:More fuel for the fire sale:
<!-- m --><a class="postlink" href="http://www.washingtonpost.com/wp-dyn/content/article/2007/12/09/AR2007120901197.html?hpid=topnews">http://www.washingtonpost.com/wp-dyn/co ... id=topnews</a><!-- m -->
Bring it on!
Quote:There were 79 foreclosures for every 10,000 Washington area households in the third quarter, not including renters
Still a very small number on the aggregate - more media sensationalism than anything else, and these articles tend to paint these people in "trouble" as "victims" and I hate that.
Quote:Leonid Frolov may soon join their ranks. Frolov, a translator for a commercial satellite company, used what is called a piggyback mortgage to buy his first home, a small D.C. condominium, three years ago.
That means he took out two loans. The first was at a fixed rate. He later refinanced it into an adjustable loan so he could pull cash out to buy a car and pay off credit cards. The second was a smaller loan to help cover the remaining cost of the house. He now pays $2,439 a month.
Frolov felt confident he could refinance the larger loan again before it adjusted in March. But the value has fallen and he owes more than it's worth, so he can't refinance.
"I bought more stuff than I could afford and now I am le fucked". Imagine that.
- Evan - 12-10-2007
Quote:Some used them to buy homes they otherwise could not afford
and im supposed to fucking feel sorry for them because they have no fiscal responsibility or intelligence while I saved and didnt get in over my head? grrrrr
- G.Irish - 12-10-2007
I like this quote from the comments on the article:
Quote:A foreclosure on my block does NOT have any effect at all on my house? All it means is that the buyer couldn't pay for it! If me & my neighbor both bought a new Lexus and his was repossessed - how does that make MINE worth less???
If people that stupid are the ones out there buying houses...
- HAULN-SS - 12-10-2007
He's right, the foreclosure doesn't have an impact on it. It's the re-sale after the foreclosure, and how long that takes that has the impact. And if it's only one or two foreclosures it has a very minimal impact, as foreclosures aren't used as comps.
- G.Irish - 12-10-2007
HAULN-SS Wrote:He's right, the foreclosure doesn't have an impact on it. It's the re-sale after the foreclosure, and how long that takes that has the impact. And if it's only one or two foreclosures it has a very minimal impact, as foreclosures aren't used as comps.First of all, his analogy is totally wrong because of the fact that car pricing and real estate pricing have nothing to do with each other.
Secondly, while a foreclosure is not typically used in a comp it can and will affect prices when it gets sold (assuming its, you know, comparable). Not to mention the fact that right now the foreclosure are the fallout from a negative price trend.