Um, YAH!

318 properties on Craiglist between $1600 and $2000 3+ bedrooms

Where did you ever get the idea that residential real estate and U.S. denominated securities are your only two investment choices?

Contrary to your belief, there are much better hedges against a falling dollar than residential real estate….linkie

Where can you rent a DECENT house for about 1750$ a month? Please let me know :) I am paying 1400$ in rent in Redmond for an apartment (pretty new though) with just 1100sqft space! My lease is up for renewal and I dont see rates coming down!!!

Dont get me wrong. I do think both rents and real estate is WAY too high here. Consider for example a property added recently to the market:MLS #26201809. But I am curios about the following:

1. Land value in East Side esp redmond is very high. Do you see that also going down? Esp. given the scarcity of land?

2. Real estate is in a mess and is the falling US dollar. So suddenly your CD may not be worth so much. So now we are screwed both ways right? So why not enjoy the space of your own house?

Even if you can afford a $4800/mo payment on your $700K home using a conventional mortgage you still are facing a potential foreclosure.

Why?

1. The value of your home goes from 700K to 500K after 2 years causing you to be “upside down” when you attempt to sell.

2. Job loss or sickness which is a very likely scenario. You then cannot afford your payment and you are unable to sell

As far as the $4800/mo, I arrived at that figure this way:

$560,000 loan amount (after 20% dn)
7% interest @ 30 years = $ 3,726

Taxes $4000 / year (estimated)
Maintenance $ 5000 / year
Homeowners Insurance $ 2500/ year

I’m sure I’m a bit off on those numbers, but it’s a heck of a lot more than $3K month. Even with tax savings factored in, I think you’re saving a lot more than $1K a month by renting.

This house will rent for $1750/mo easily.

I can’t thank you, the honorable homeowner, enough. You allow me to sock away 75% of my salary becuase you only charge me 1/3 of the true ownership cost in rent.

You keep the economy strong by spending every last HELOC dime at Home Depot, Circuit City, and Applebees.

When all of the baby boomers try to cash out their 401Ks (oops I mean homes) in about 5 years, we shall see who lives the comfy retirement.

I think the article title says it all… last year it would have been “Red Hot Sizzling Chipotle Burn of local housing market reaches new unstoppable plateau!!!!”

Can’t stop the bum-rush Rhodester, even though your arsenal of well placed buzz-words provides the delusional fuel to keep the fires roaring… Gravity has a way of catching up

Historically true… not anymore. Recession’s looming and Seattle takes those sort of economic hits harder than the rest of the country…

All worthy advice Jon… historically speaking. The popping of the Greenspan credit bubble will undo the ‘buy now or get priced out forever’ mantra just as quickly as the ‘I got some swampland in Florida I’d like to sell ya’ went out with the Great Depression…

Renting = no Real Estate exposure

(safe as houses)

I love you all!!! There is a reason why there are books out there that stress, “The Rich get Richer.”

First off, more people, especially younger kids, are able to afford a higher down payment (borrowed from wealthy Baby Boomer parents) and pay a higher mortgage becuase they have no debt coming out of college (thank the BB mom/pop).

Secondly, those who still have a I/O or ARM are rethinking their investment, and are switching to a 30 year fixed mortgage. (BTW, if you do have an I/O or ARM, refinance!)

Thirdly, the job market in Seattle is fabulous! Lower unemployment, greater possibilities, and companies willing to take on payroll to increase production. Vacancy rates downtown for retails spaces are less than 1%.

Fourthly, owning a home is the biggest savings plan and tax shelter you can have. Huge tax benefits offset the cost of the mortgage for the most part, and you get something called an ROI… or appreciation of your home.

Frankly… you renters out there continue to pay my mortgage payment, increasing my tax deductions, and ability to purchase another property… after all, you are not only giving my pocketbook a nice reprieve, but you are guaranteeing my retirement will be fun, lucrative and filled with travel without worrying about money.

Go ahead… take your 5% CD and enjoy the interest you earn off that $100k… I will enjoy the 3-5% (conservatively) I gain with a $600k home!

Cheers!

It doesn’t, but a 30-year fixed mortgage hasn’t been the norm for the past 3 years.

More in line with synthetik’s point, it would be foolish to spend nearly $3,000/month (What it would cost to borrow the $400K you’d need to buy a house at 6%, plus the opportunity cost of $100K you could have tied up in a 5% CD) for a house you can rent for less than $2,000/month. (Admittedly, I’m leaving out the $500/month you’d be putting towards your home’s equity, but I’m also not talking about maintenance, taxes, or closing costs.)

Of course, burning $1,000 a month doesn’t guarantee that you’ll go bankrupt, it just makes it a lot more likely.

If on the other hand, you were like the financial wizards I work with, you might get an Interest Only loan for 5 years ($2,500/month), and only lose $500 per month, and then go bankrupt as your payment (based on no increase in interest rate) bounces up a grand a month.

So in a nutshell, your home-buying options now are:

* Buy on a 30-year fixed, and lose 1,000 a month until rental prices finally catch up.

* Buy on an exotic mortgage, and only lose about $500 a month until your loan adjusts, and you go bankrupt.

How exactly does buying a house you can afford on 30 year fixed rate to inevitable repossession and bankruptcy?

Loose credit created money out of thin air. Now we must celebrate each episode of monetary destruction on the way down, every BK, every foreclosure, every default. Of course it will be painful, but it is much needed medicine. The only alternative is to keep fueling the fire with more credit, which will end with the complete collapse of our monetary system, what von Mises called a “crack-up boom” (after having witnessed one).

There is no shortage of houses. There is instead a surfeit of temporary owners, who did not have the thrift nor the income to afford the inflated purchase price. With the shift in market psychology and the reining in of loose lending, nothing will save these people.

I visited my hometown of Chicago over Labor Day, and was appalled at was I saw in the Loop, where I lived 45 floors up for many years. So many former office buildings being converted to condos, including, incredibly, 55 East Monroe. I was so sad to see the proud home of so many corporate HQs transitioning to a California-style RE economy. Who needs an industrial or a even a service economy, when with asset-inflation we can just flip houses every 2 years!

Happy 2007, renter/savers! May your humble dollars still be worth something in 2008. Live debt-free, and keep your Schadenfreude dry. You’ll need it soon.

$750K median in King County … hillarious. OMG, I better buy before I’m priced out forever.

hahahahah!!! Wishful thinking if I ever saw it, the delusional optimism here is delicious!!!

Oh yes, yes, all those bad bad loans will just disappear with the winter’s snow, replaced by sound healthy loans because like somekind of ‘Wizard of Oz’ miracle, the oppressed of the Emerald City will see their epiphany, and immediately switch over to sustainable products! Neg-am’s, I/O’s all history!

Money will fall out of the skies and mana from heaven will show up in the form a of a spry leprechaun that graces the weary mortgaged with pots of gold to float their 4K monthly loan payments!

There’ll be world peace and global warming will reverse, fields of flowers and puppy dogs will reign over our weary land…. its a new era, a utopia!!!

…Good grief, again my prediction, recession Q2 2007.

This is the nail in the coffin and he doesn’t even know it. Federal lending guidelines kick in at the end of January, just in time for the “Spring Rebound.” Borrowers will now have to qualify at the fully indexed, fully amortizing payment as well at the initial teaser payment. How many people will qualify for a 50%+ higher payment when so many are at maxed out debt levels at the teaser level?

And if foreclosures really start to take off, you bet banks will go back to requiring down payments so the buyer has some skin in the game. Again, who will have this kind of money sitting around?

They’ve put “spenders” into homes when it used to be you had to prove you were a “saver” before anyone would come near you for a mortgage.