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InvisibleLunarEclipse
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2015 is the new 2005
    #21727613 - 05/27/15 07:14 AM (8 years, 8 months ago)

Real estate.  Does anyone else see a similarity between 2005 and 2015?  This "hot" real estate market we are currently in, with easy money, zero down, even a return to stated income AKA liar loans!  Multiple offers, panic buyers, flippers are back in force.

The problem is, that many of the buyers are in fact cash buyers that aren't very smart in terms of value, foreign buyers with too many $$ they "need" to unload.  Money pouring out of China, Pakistan, etc. etc.  China "investors", the same folks that drove real estate there to stratospheric levels and continue to build with entire cities sitting empty.  Not very smart.

Then, there are the first time buyers who have sat on their hands the whole way up since the crash of 2008, but now have finally decided to buy.  Maybe they finally cleaned up their credit, maybe the banks finally decided to loan.  Anyway, now is their time. 

On the "flip" side, home ownership rates continue to fall to recession levels, the job situation sucks, student debts are completely out of control, and the demographics for home ownership are in fact horrible.  Interest rates are so low they can only move up, and are artificially held low and that won't last forever.  Debt is completely out of control, and that train wreck will be happening in a town near you and soon...


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Anxiety is what you make it.


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OfflineManianFHS
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Re: 2015 is the new 2005 [Re: LunarEclipse]
    #21730828 - 05/28/15 12:18 AM (8 years, 8 months ago)

yeah im noticing it too. kinda sucks cause my fiance and I really want to buy the home were living in, but it wouldnt make sense in an inflated market. However i dont know if it would make sense to pay rent for another 4 years while we wait for the market to correct itself.


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notapillow said: "you are going about this endeavor all wrong. clear your mind of useless fear and concern. buy the ticket, take the ride, and all that.... "

ChrisWho said: "It's all about the journey, not the destination."


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InvisibleLunarEclipse
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Re: 2015 is the new 2005 [Re: ManianFH]
    #21731256 - 05/28/15 05:28 AM (8 years, 8 months ago)

Lay out the particulars, how much is rent, what would you be able to buy the house for, what is the interest rate, then crunch the numbers.  If the rent is less than your mortgage, then you likely are better continuing to rent, although owning has some tax breaks.  It also depends on how long you would stay in the house.


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InvisibleStonehenge
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Re: 2015 is the new 2005 [Re: LunarEclipse]
    #21748937 - 06/01/15 02:55 PM (8 years, 7 months ago)

It makes sense to buy now to live in, not so great for investment purposes. You have to live somewhere and unless mom and dad will let you stay for free, you will have to pay rent or pay a mortgage. The mortgage is often less than rent would be, does not go up every year like rent unless you have a phony adjustable rate loan. And, you slowly build equity, you can sell after a few years and possibly make a profit. Its also a hedge against inflation.

On the minus side, it means you can't move whenever you feel like it so make sure you like the area and the neighbors. If you lose your job and can't find one nearby, it makes it hard.

I agree that interest rates will go up but not right away. When interest rates go up it means the financial collapse is near. Pay no attention to yellin's statements about higher rates later on, she knows what would happen. If our national debt had to be calculated at 6% we would be in default very soon or else tons of qe. QE is inevitable anyway, all countries are doing it and it will come. This means that inflation will take off rapidly, owning a house becomes a great investment in hindsight.

>If the rent is less than your mortgage, then you likely are better continuing to rent, although owning has some tax breaks.  It also depends on how long you would stay in the house.

If the buyer plans on staying in the area a long time, even a mortgage higher than rent would make sense given all the other advantages. But if someone is barely getting by, there is the risk of default. A solid job, good skills in demand, and money in the bank help.

Check out the house, the area, and the market very carefully before signing any documents. Get a professional inspection, pay the $100 to $400 before you commit. Get title insurance too, its mandatory with a loan anyway.


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“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

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InvisibleLunarEclipse
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Re: 2015 is the new 2005 [Re: Stonehenge]
    #21749264 - 06/01/15 04:22 PM (8 years, 7 months ago)

There are buyers that are still "upside down" from the 2006 peak and/or took out equity lines of credit that are maxed out and simply can't sell their houses.  This is one reason there isn't more inventory.  Another is a huge number of people behind on their mortgages, obviously they are just hanging on to a place to live but that won't last forever.

Further, banks even now hold a lot of foreclosed properties that are just sitting.  Investors who have bought and fixed up and are renting out houses in the up market of recent years are probably not going to sell until it becomes apparent that they are screwed as the prices drop.  Then everyone rushes for the exits just like the last time the credit markets seized up in 2008.


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InvisibleStonehenge
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Re: 2015 is the new 2005 [Re: LunarEclipse]
    #21749623 - 06/01/15 05:56 PM (8 years, 7 months ago)

Yeah, that is logical. But the elephant in the room is the world wide financial situation which could come tumbling down at any time. Very often it seems like things can't go on any farther and they limp along for years but inevitably it comes to an end.

If even 1% of our outstanding debt was presented for repayment each month, we will have to scramble to cover it. What is 1% of $18T? $180B which we don't have. If we can't borrow more to cover, it becomes a run on the bank and stuff hits the fan.

Japan is possibly in a worse situation than we are. It has few exports and must buy all its fuel needs, unlike us. Italy, spain, Portugal and of course Greece are on the ropes. Many other countries are hurt bad, Venezuela, many others. If one falls it can produce a domino like effect. If usa can't redeem its debt, the reverberations will be felt world wide. That will set off the global recession / depression. Governments will fall, people will not be paid. Our own govt workers might not be paid. They will decide who is essential and pay them, the police, a few things.

I'm not selling any real estate or precious metals either. When fiat is seen as worthless paper, how much is a house worth? How much is gold or silver worth? People have to live somewhere, rents will be high. I may have to double the rent every month if it gets really bad. But if everyone is broke, what to do? People aren't going to live in the street they will find a way to come up with the rent.


--------------------
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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InvisibleLunarEclipse
Enlil's Official Story
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Registered: 10/31/04
Posts: 21,407
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Re: 2015 is the new 2005 [Re: Stonehenge]
    #21752625 - 06/02/15 12:39 PM (8 years, 7 months ago)

Quote:

Stonehenge said:
Yeah, that is logical. But the elephant in the room is the world wide financial situation which could come tumbling down at any time. Very often it seems like things can't go on any farther and they limp along for years but inevitably it comes to an end.

If even 1% of our outstanding debt was presented for repayment each month, we will have to scramble to cover it. What is 1% of $18T? $180B which we don't have. If we can't borrow more to cover, it becomes a run on the bank and stuff hits the fan.

Japan is possibly in a worse situation than we are. It has few exports and must buy all its fuel needs, unlike us. Italy, spain, Portugal and of course Greece are on the ropes. Many other countries are hurt bad, Venezuela, many others. If one falls it can produce a domino like effect. If usa can't redeem its debt, the reverberations will be felt world wide. That will set off the global recession / depression. Governments will fall, people will not be paid. Our own govt workers might not be paid. They will decide who is essential and pay them, the police, a few things.

I'm not selling any real estate or precious metals either. When fiat is seen as worthless paper, how much is a house worth? How much is gold or silver worth? People have to live somewhere, rents will be high. I may have to double the rent every month if it gets really bad. But if everyone is broke, what to do? People aren't going to live in the street they will find a way to come up with the rent.




I've sold two houses this year.  I probably didn't get the peak, but demand is pretty strong and inventory low, so I think I did fairly well.  This fall as I have stated in other threads, I really think we will have some big problems in the markets/world.  September is of particular concern.  I think the pattern is set, and the future will happen and not in a good way.  If I'm wrong, I'm still long on a few houses, as you say, folks have to live somewhere.  They all have real jobs so I'm not relying on any govt. welfare for the rent.


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InvisibleStonehenge
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Re: 2015 is the new 2005 [Re: LunarEclipse]
    #21753923 - 06/02/15 05:48 PM (8 years, 7 months ago)

Quote:

LunarEclipse said:
Quote:

Stonehenge said:
Yeah, that is logical. But the elephant in the room is the world wide financial situation which could come tumbling down at any time. Very often it seems like things can't go on any farther and they limp along for years but inevitably it comes to an end.

If even 1% of our outstanding debt was presented for repayment each month, we will have to scramble to cover it. What is 1% of $18T? $180B which we don't have. If we can't borrow more to cover, it becomes a run on the bank and stuff hits the fan.

Japan is possibly in a worse situation than we are. It has few exports and must buy all its fuel needs, unlike us. Italy, spain, Portugal and of course Greece are on the ropes. Many other countries are hurt bad, Venezuela, many others. If one falls it can produce a domino like effect. If usa can't redeem its debt, the reverberations will be felt world wide. That will set off the global recession / depression. Governments will fall, people will not be paid. Our own govt workers might not be paid. They will decide who is essential and pay them, the police, a few things.

I'm not selling any real estate or precious metals either. When fiat is seen as worthless paper, how much is a house worth? How much is gold or silver worth? People have to live somewhere, rents will be high. I may have to double the rent every month if it gets really bad. But if everyone is broke, what to do? People aren't going to live in the street they will find a way to come up with the rent.




I've sold two houses this year.  I probably didn't get the peak, but demand is pretty strong and inventory low, so I think I did fairly well.  This fall as I have stated in other threads, I really think we will have some big problems in the markets/world.  September is of particular concern.  I think the pattern is set, and the future will happen and not in a good way.  If I'm wrong, I'm still long on a few houses, as you say, folks have to live somewhere.  They all have real jobs so I'm not relying on any govt. welfare for the rent.




Yeah, I've been tempted to sell a house or two but where will I put the money? Its not like I have a ton of red hot investment opportunities. If the world financial situation goes downhill, I might wish I could have those houses back at the price I sold them at. I simply can't see housing going down in the long run. Decades ago they said housing might never go up, I constantly hear its at a peak, that there is a bubble. Sometimes bubbles deflate and sometimes they blow up even more.

The only actual r/e bubble I've been aware of in the last 40 years or so is the one in '08 that collapsed. Banks were the bad guys behind the bubble getting too big and behind the collapse. The banks got a slap on the wrist and laughed all the way to the... bank. Banks are still trillions ahead on the illegal stuff they did and simply buy off the regulators and politicians.


--------------------
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.” (attributed to Alexis de Tocqueville political philosopher Circa 1835)

Trade list http://www.shroomery.org/forums/showflat.php/Number/18047755


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