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Posted: Mon May 22, 2006 8:15 am
by CNF2002
dieziege wrote:Oh, there are plenty of those people around where I grew up/used to live...living way beyond their means.
You want the really nasty part? In 10-15 years, those rat-humpers will have more money/a greater net worth than most of us. At least, that's how it has worked out for as long as I've been alive.
Here's the trick... they do own one thing... the house. Not outright... they are making mortgage payments of course... but one whole paycheck of their two-plus-income family group is going to the mortgage. The BMWs are all leased. The boat is on credit. The furniture is all Ikea junk charged to plastic. They are leaking money like sieves...
...but their house is appreciating at 20% or more per year.
...and in 15 years they could set fire to the boat and furniture, cash out their bank accounts and set fire to all their money, return the BMWs at the ends of their leases... sell their house and walk away with $350,000+ in their pockets. All you can say is, "yeah, but they could've walked away with $700,000 in their pockets if they weren't such idiots"... shrug.
There are people who do the same thing in a rented apartment... those are the people to really shake your head about... but most of the "three bimmer" crowd has the house/condo and everything else leased.
And yeah, if the housing market has a real slump they'll all walk away like they did in the late 80s/early 90s... and buy again like they did in the late 90s/early 2Ks...
In what market does a house appreciate 20% per year???
Posted: Mon May 22, 2006 8:19 am
by dieziege
Yeah, that number is low, sorry.
Should be more like 30-50%...
Or maybe not 50%... but 30% is pretty common these days. My 'hood has been going up 29.4% per year for a while now... and I'm out in the boonies away from the real growth.
Posted: Mon May 22, 2006 8:21 am
by basshole
Well, in my neighborhood. I paid 235,000.00 in 1999. Today, my house sells for 650,000.00
Not a bad chunk of equity earned.
CNF2002 wrote:dieziege wrote:Oh, there are plenty of those people around where I grew up/used to live...living way beyond their means.
You want the really nasty part? In 10-15 years, those rat-humpers will have more money/a greater net worth than most of us. At least, that's how it has worked out for as long as I've been alive.
Here's the trick... they do own one thing... the house. Not outright... they are making mortgage payments of course... but one whole paycheck of their two-plus-income family group is going to the mortgage. The BMWs are all leased. The boat is on credit. The furniture is all Ikea junk charged to plastic. They are leaking money like sieves...
...but their house is appreciating at 20% or more per year.
...and in 15 years they could set fire to the boat and furniture, cash out their bank accounts and set fire to all their money, return the BMWs at the ends of their leases... sell their house and walk away with $350,000+ in their pockets. All you can say is, "yeah, but they could've walked away with $700,000 in their pockets if they weren't such idiots"... shrug.
There are people who do the same thing in a rented apartment... those are the people to really shake your head about... but most of the "three bimmer" crowd has the house/condo and everything else leased.
And yeah, if the housing market has a real slump they'll all walk away like they did in the late 80s/early 90s... and buy again like they did in the late 90s/early 2Ks...
In what market does a house appreciate 20% per year???
Posted: Mon May 22, 2006 8:22 am
by CNF2002
http://www.ofheo.gov/media/pdf/1q05hpi.pdf
The average increase from 2004-2005 was 12.5%.
I want to think your post was just sarcasm but I'm not sure anymore
Posted: Mon May 22, 2006 8:24 am
by -Holiday
dieziege wrote:Yeah, that number is low, sorry.
Should be more like 30-50%...
in no market over even a 5 year span are homes averaging a 30-50% increase in market value
PER YEAR.
Posted: Mon May 22, 2006 8:27 am
by dieziege
Not an answer to Holliday, but....
http://www.zillow.com/local/California/ ... /Montclair
And remember... we are in a housing slump now... it was really hot in other areas a year ago.
A friend of mine sold a condo in 2003 for 185K... the guy who bought it sold it recently for 390K... over $200K in two and a half years... and that's for a 700 sq. ft. condo.
Posted: Mon May 22, 2006 8:36 am
by basshole
Yeah So Cal real estate is INSANE! Only 14% of the residents can afford to purchase a median priced home. Most homes here are financed with variable rate loans and in the past 2 years lot's of people gamble with interest only loans or Neg Am loans. When those loans get set to adjust here in the next 2 years, you're gonna see LOT'S of people panicking. Selling toys or possibly just walking away. The only way this won't happen is if we keep interest rates in check.
Posted: Mon May 22, 2006 8:54 am
by CNF2002
basshole wrote:Yeah So Cal real estate is INSANE! Only 14% of the residents can afford to purchase a median priced home. Most homes here are financed with variable rate loans and in the past 2 years lot's of people gamble with interest only loans or Neg Am loans. When those loans get set to adjust here in the next 2 years, you're gonna see LOT'S of people panicking. Selling toys or possibly just walking away. The only way this won't happen is if we keep interest rates in check.
How can the market sustain that? You'd think if no one could afford the homes, no one would be buying them, and prices would drop.
I can't imagine anyone signing an interest only or -amoritization loan. If you cant afford the house now, how can you expect to afford it 5 years later? Once those figures readjust, your monthly payments skyrocket...people have to know this, what are they thinking?
Posted: Mon May 22, 2006 9:05 am
by camthepyro
Everywhere in California is insane, my dad's family is moving back to Northern California, and the prices there are WAY higher than georgia, they're alot worse than they were when I lived there. I lived near Sacramento until I was 9, and my parents were able to get a house new, now I don't think there was any way they could.
Posted: Mon May 22, 2006 9:16 am
by basshole
Alot of people took earned equity and bought much larger homes and payments didn'y go up much because of the large downpayment and cheap interest rate. Most people in CA stay in a home less than 5 years and most lenders will push you into a adjustable loan if you plan on staying less than 5 years in the home or the loan. I know there's no way in God's green earth I could afford to qualify to buy a house in So Cal let alone my own house if I didn't have a snot pile of equity to use. I'm trying to convince my wife to moe to somewhere like the Carolinas and we coulf buy a house free and clean with the equity in our place before it all turns to crap out here.