Well, real estate is only down 10% while the stock market is down 30-40%. Tell me which would have been the better purchase in 2006?
Granted, leverage would kill most people in real estate, but if you purchased with cash then you would be better off.
Yes, I know a few people who have lost more money in the stock market this year than in the housing market. They are called renters, but for the overwhelming majority of American's the housing crash has negatively affected their wealth much more than the stock market.
A relatively typical younger baby boomer might have a house valued at $350k, which they bought for $100k and extracted $30k of equity for a their children's college (or a boat or renovations or a new car...). They still owe $60k on the first mortgage, so they have $260 in hypothetical equity. They also have a 401k or similar retirement account with $100k.
If the housing market drops 10%, that's a $35k hit to their wealth. If the stock market drops 30% it's only a $30k hit. Most people just have so much more of their wealth tied up in real estate than stocks, that the smaller housing crash is indeed worst.
Granted, I ignored a young owner who is even more crushed by a housing crash due to high leverage and a retiree who's house is paid for and lives off of stock/bond returns. So, for an individual it varies greatly, but for the country at large the housing crash is probably worse.
I agree with Alan's point. My house is down about 20% from peak although headed lower. But my 401k was down 47% last I checked. Of course, my husband's bank CDs are doing just fine.
The biggest difference between the stock market and a house is that stocks can go away. Companies can go away. We are seeing governments around the world propping up companies that should just pass away. General Motors is a great example. Even those CDs can disappear. Banks are going out of business all the time now and the FDIC, if I believe what I have read, is way over extended.
A house has little value, it's the land that is the Real Estate. If it's all funny money anyway you may as well throw it at a tangible asset, like a house.
Real estate, like any other investment should be thought of as both a place to live and a long term investment. It has no cash value until you actually want to sell it. I bought my house 10 years ago for $171k. At the peak I refinanced and had it appraised at $346k. I would say it's probably worth around $300k right now. So I'm still up about $130k on it.
Obviously there is alot of wisdom and thought into when you make any investment no matter what it is. You should be thinking about what the value is going to be 5, 10, 15 years from now. Not what it's going to be next week.
You most definitely should think about what your house value will be in the short term. What if its value drops 10% in a year putting you underwater and then you get laid off? Insisting that it will be worth more in 15 years doesn't really help in that situation (unless you're an investment banker pleading to the U.S. government).
Yeah, that's the first time I posted over there in quite a while, and almost immediately regretted it. Lar is the one who bugs me the most. As far as I can tell he's stupid, mean-spirited and smug. At least Mack and Kary have a brain, and every 100 posts or so they say something useful.
It sounds like Lar drove his mortgage company into the ground to boot.
Whatever happened to Ardell's home sale? It still shows pending on Zillow and it's been that way since August or September at least. Did she take a contingency offer on it?
At least she recognized the way the wind was blowing and began to address the declining market. I wonder if she got out in time?
A house has little value, it's the land that is the Real Estate. If it's all funny money anyway you may as well throw it at a tangible asset, like a house.
Not really. The property you "own" is actually the possession of the US government who is allowing you as a citizen in good standing all the privileges of owning that real estate (you can sit on it, you can resell it, you might be allowed to build on it if you get the right permits). They can take it away from you at anytime. Actually, the state, the county, or your city can also take it away at anytime today and all they have to do is compensate you "fair market value". Which is to say, they get to make up a number and you have to take it.
You most definitely should think about what your house value will be in the short term. What if its value drops 10% in a year putting you underwater and then you get laid off? Insisting that it will be worth more in 15 years doesn't really help in that situation (unless you're an investment banker pleading to the U.S. government).
Sorry, I phrased my response poorly.
When you buy, yes. I think it is ver necessary to heavily weigh short term economic effects to make sure you're buying at the right time. What I was trying to make the point about was that when you decide it is the right time to buy, you should be buying for long term and not necessarily for what the value will be next week.
Once you're fairly certain that prices have hit bottom and that it's time to buy, make sure that you're buying with the intention of keeping it for awhile and that once you buy it to not stress about if you drop another 3-5% in value in the next year. Buy it with the intention of it being a long term residence.
"But let's get real. A lot of what gets posted here [on SREP] is garbage - the vast majority from people who post anonymously and simply do not know what they're talking about."
Sigh. Why do I even try. I've learned a ton from The Tim, synthetik, Eleua, sniglet, Alan, RCC, Lake Hills Renter, deejayoh and other regular SB writers.
Not surprising coming from Mack. I suspect he and several others over there just don't get that it's the ideas and words that matter, not who you claim to be. I don't give a rat's ass that he calls himself a professional. I'll take Eleua's comments (as an example) over his any day of the week because Eleua has earned my resect with his ideas and comments, not because of what label he gives himself. The fact I don't know his real name is irrelevent. His words stand on their own merit. And who's ideas a person dismisses, and why, is a very valuable piece of that respect (or lack thereof). Mack has repeatedly failed that litmus miserably. I really tried to give Mack the benefit of the doubt, but I can only try so much before I give up. Larry lost me on the crying baby image.
Jillayne - you are a class act. You show integrity and intelligence. However, based on Mack's comments on the P-I blog, he appears to be lacking in both these areas. You were wise to caution him against his attacks, but I don't think he's able to understand. Pearls before swine.
But at least you tried. I'm sure Mack doesn't realize how much his own posts demean the real estate profession. And how many current and future homeowners/buyers will never use his services, based on his posted opinions.
Mack is confused in at least two ways. First, he seems to think ire is being directed at all realtors, which is patently false. People are angry with the NAR, major banks, Madoff, Lehman/BS/AIG, Greenspan/Bernake, W, loan officers, housing appraisers, the state government (for blowing a temporary tax boon), and the list goes on and on.
Notice how my list included loan officers? Well, just because a mind boggling number of brokers turned out to be unethical doesn't mean I lack any respect for S-Crow (for instance). Quite the contrary, the fact that he has been honest throughout makes me trust him even more. S-Crow is just the kind of expert I would use were I buying a house today. His honesty might have cost him some the last few years, but it will payoff in the long run as his dishonest competitors are forced from the market.
Second, when people say they are pissed at Realtors(R, TM?, C??) they have every right to be. The NAR as an organization has lied to America blatantly, publicly, and dangerously for most of this decade. Their lies have contributed to one of the most damaging speculative bubbles in US history. Meanwhile, the organization operates as a cartel with fixed (and ridiculously high) commissions, while doing what it can to prevent competition from discount brokers. That discounters are moving in despite the cartel proves just how over-priced their services as a group are. Further, the overwhelming majority of their "expert knowledge" is little but warmed over cliches and vague common knowledge sprinkled with useful tidbits that would fit easily on a three page FAQ (just to remind people of a few important details they shouldn't forget).
Actually, Tim; maybe this site should add just such an FAQ. It would be a single home-buying resource where you put bullet items people should do when buying. Like, get financed before looking or for first time buyers investigate government assistance. Then we could completely replace Mack's expert knowledge with a single mostly static page.
I don't hate real estate agents at all, I just see them for what they are -- salesmen. I get more irritated with the media treating them like objective experts than with the agents themselves. They just do what salesmen always do -- always give the positive spin and sell the product. There are some agents, however, who have proven themselves to not be worth my money and I will refuse to use them when I buy, mostly due to their online behavior and attitude.
I don't hate real estate agents at all, I just see them for what they are -- salesmen.
I wholeheartedly agree. The problem is not that they are barely useful salespeople. The problem is that the public doesn't recognize them for what they are and thus generally consider them to be real estate experts working in their best interest.
There are good Real Estate agents that most people never hear about. Ric Wall, The Ravencrofts, and the DeMartinis come immediately to mind. The DeMartinis are more main stream, but Laurie Jorgenson or Bob Melvey are hard working agents that are more self reliant.
It's actually a very long list of good people who live the business of Real Estate. Chuck Cady is to me the very best in the business, and David Rush is an extremely honorable, fair, smart, and dedicated advocate for his clients.
These are names on signs you drive by while thinking all agents are as seen on TV.
The industry as a whole is off center, that's for sure. Big Corporate handlers have been playing a numbers game of throwing people into the business. They make money on split commissions and desk fees so they don't care.
Skyline Properties is the perfect example of a couple of guys who net, net, net over One Million Dollars per year for collecting desk fees from "agents." Yes that was a Million Dollars a piece for each of the owners.
So when you relate to the Corporate talking heads they are representing the Corporation. Real Estate agents are independent contractors who work within the framework they chose. You will find good agents in every type of company.
My guess is she doesn't have much in the way of assets, and from what I recall she's mortgaged to the hilt, and there are close to 2 years of comparable homes on the market in her area. Why wouldn't she do a short sale?
She's a smart lady who understands what it will take to get one done. Beats walking away.
I am just curious if the "short sale" moniker is strictly a marketing tool or if she is really underwater in it.
She is one of the few agents that had a 180 degree change in attitude when the market turned and so I gotta give her props for not sticking her head in the sand, unlike Mack, Lar, etc.
If I was her, I would get out any way I could, but I would really hate to take the credit ding that will come with it.
The pending sale must have been a contingency and it just never materialized.
I knew she bought it for $850,000 and it doesn't look like she has refinanced since she bought it so she should only be in it for $850K minus her down (if any) and any principal payments that have been made
I don't recall if she ever posted whether she did an option ARM, but it she does have two DOT's recorded so...
If she did an Option and made payments that were less than the interest it could be a short sale by now, otherwise I don't see how she could owe more than her asking price to the bank.
Of course, what she asks and what she sells it for could be two very different numbers.
At least she should save something on the seller's commission!
She blogs about almost everything on RCG and her own blog, even very personal things. So given that she posts a lot about RE, why has she never talked about the sale of her house? Maybe she's afraid people will find that either:
She blogs about almost everything on RCG and her own blog, even very personal things. So given that she posts a lot about RE, why has she never talked about the sale of her house? Maybe she's afraid people will find that either:
Here's what I think. I think all short sales should be listed for $1.00.
I seem to recall a posting on RCG called "Selling with Ardell" where she explained she was selling her house and was going to post the whole process start to finish.
I seem to recall a posting on RCG called "Selling with Ardell" where she explained she was selling her house and was going to post the whole process start to finish.
Don't remember one way or the other whether there were more parts. Note that this was posted on February 15th of last year. I still don't get why she's selling in the first place? I thought she liked the house...
I seem to recall a posting on RCG called "Selling with Ardell" where she explained she was selling her house and was going to post the whole process start to finish.
Don't remember one way or the other whether there were more parts. Note that this was posted on February 15th of last year. I still don't get why she's selling in the first place? I thought she liked the house...
That was the post I was looking for. I thought it was last summer, guess I didn't look back far enough. I can't find a part 2.
I think part 2 of selling the house is going to come out after the house is out of her hands.
It would be a mistake to talk about any problems she is having with the market. It would greatly erode any negotiating power she might have. It might also raise red flags at the bank if she ends up doing a short sale (I don't know that for sure, but if I were a bank I would view houses getting a lot of media attention suspiciously -- I also wouldn't want to forgive debt in a high profile manner.)
I too would question any wage effect from Microsoft. When the dot-com bust occurred, the loss of all the option money didn't seem to have a great effect on prices.
Comments
Yes, I know a few people who have lost more money in the stock market this year than in the housing market. They are called renters, but for the overwhelming majority of American's the housing crash has negatively affected their wealth much more than the stock market.
A relatively typical younger baby boomer might have a house valued at $350k, which they bought for $100k and extracted $30k of equity for a their children's college (or a boat or renovations or a new car...). They still owe $60k on the first mortgage, so they have $260 in hypothetical equity. They also have a 401k or similar retirement account with $100k.
If the housing market drops 10%, that's a $35k hit to their wealth. If the stock market drops 30% it's only a $30k hit. Most people just have so much more of their wealth tied up in real estate than stocks, that the smaller housing crash is indeed worst.
Granted, I ignored a young owner who is even more crushed by a housing crash due to high leverage and a retiree who's house is paid for and lives off of stock/bond returns. So, for an individual it varies greatly, but for the country at large the housing crash is probably worse.
A house has little value, it's the land that is the Real Estate. If it's all funny money anyway you may as well throw it at a tangible asset, like a house.
Obviously there is alot of wisdom and thought into when you make any investment no matter what it is. You should be thinking about what the value is going to be 5, 10, 15 years from now. Not what it's going to be next week.
It sounds like Lar drove his mortgage company into the ground to boot.
At least she recognized the way the wind was blowing and began to address the declining market. I wonder if she got out in time?
Not really. The property you "own" is actually the possession of the US government who is allowing you as a citizen in good standing all the privileges of owning that real estate (you can sit on it, you can resell it, you might be allowed to build on it if you get the right permits). They can take it away from you at anytime. Actually, the state, the county, or your city can also take it away at anytime today and all they have to do is compensate you "fair market value". Which is to say, they get to make up a number and you have to take it.
Sorry, I phrased my response poorly.
When you buy, yes. I think it is ver necessary to heavily weigh short term economic effects to make sure you're buying at the right time. What I was trying to make the point about was that when you decide it is the right time to buy, you should be buying for long term and not necessarily for what the value will be next week.
Once you're fairly certain that prices have hit bottom and that it's time to buy, make sure that you're buying with the intention of keeping it for awhile and that once you buy it to not stress about if you drop another 3-5% in value in the next year. Buy it with the intention of it being a long term residence.
Sigh. Why do I even try. I've learned a ton from The Tim, synthetik, Eleua, sniglet, Alan, RCC, Lake Hills Renter, deejayoh and other regular SB writers.
http://blog.seattlepi.nwsource.com/real ... 158042.asp
comment number 235974
But at least you tried. I'm sure Mack doesn't realize how much his own posts demean the real estate profession. And how many current and future homeowners/buyers will never use his services, based on his posted opinions.
Notice how my list included loan officers? Well, just because a mind boggling number of brokers turned out to be unethical doesn't mean I lack any respect for S-Crow (for instance). Quite the contrary, the fact that he has been honest throughout makes me trust him even more. S-Crow is just the kind of expert I would use were I buying a house today. His honesty might have cost him some the last few years, but it will payoff in the long run as his dishonest competitors are forced from the market.
Second, when people say they are pissed at Realtors(R, TM?, C??) they have every right to be. The NAR as an organization has lied to America blatantly, publicly, and dangerously for most of this decade. Their lies have contributed to one of the most damaging speculative bubbles in US history. Meanwhile, the organization operates as a cartel with fixed (and ridiculously high) commissions, while doing what it can to prevent competition from discount brokers. That discounters are moving in despite the cartel proves just how over-priced their services as a group are. Further, the overwhelming majority of their "expert knowledge" is little but warmed over cliches and vague common knowledge sprinkled with useful tidbits that would fit easily on a three page FAQ (just to remind people of a few important details they shouldn't forget).
Actually, Tim; maybe this site should add just such an FAQ. It would be a single home-buying resource where you put bullet items people should do when buying. Like, get financed before looking or for first time buyers investigate government assistance. Then we could completely replace Mack's expert knowledge with a single mostly static page.
It's actually a very long list of good people who live the business of Real Estate. Chuck Cady is to me the very best in the business, and David Rush is an extremely honorable, fair, smart, and dedicated advocate for his clients.
These are names on signs you drive by while thinking all agents are as seen on TV.
The industry as a whole is off center, that's for sure. Big Corporate handlers have been playing a numbers game of throwing people into the business. They make money on split commissions and desk fees so they don't care.
Skyline Properties is the perfect example of a couple of guys who net, net, net over One Million Dollars per year for collecting desk fees from "agents." Yes that was a Million Dollars a piece for each of the owners.
So when you relate to the Corporate talking heads they are representing the Corporation. Real Estate agents are independent contractors who work within the framework they chose. You will find good agents in every type of company.
Anyone know if Ardell is really looking to short sale this now?
http://www.zillow.com/homedetails/127-1 ... 6514_zpid/
Say it ain't so Ardell....
This one has been pending for MONTHS and now you have dropped it to $850,000 and are listing it as a short sale!!!
Care to give us the scoop Ardell?
She's a smart lady who understands what it will take to get one done. Beats walking away.
She is one of the few agents that had a 180 degree change in attitude when the market turned and so I gotta give her props for not sticking her head in the sand, unlike Mack, Lar, etc.
If I was her, I would get out any way I could, but I would really hate to take the credit ding that will come with it.
The pending sale must have been a contingency and it just never materialized.
Property History
Date Event Price Appreciation Source
Sep 30, 2008 Off Redfin * -- Inactive NWMLS #4
Sep 28, 2008 Listed * -- Inactive NWMLS #4
Sep 22, 2008 Off Redfin * -- Inactive NWMLS #2
Sep 15, 2008 Price Changed * -- Inactive NWMLS #2
Sep 04, 2008 Off Redfin * -- Inactive Zillow #3
Aug 23, 2008 Price Changed * -- Inactive Zillow #3
Aug 20, 2008 Price Changed * -- Inactive NWMLS #2
Aug 04, 2008 Listed * -- Inactive Zillow #3
Aug 04, 2008 Listed * -- Inactive NWMLS #2
Sep 07, 2005 Sold $850,000 12.3%/yr Public Records
I knew she bought it for $850,000 and it doesn't look like she has refinanced since she bought it so she should only be in it for $850K minus her down (if any) and any principal payments that have been made
I don't recall if she ever posted whether she did an option ARM, but it she does have two DOT's recorded so...
If she did an Option and made payments that were less than the interest it could be a short sale by now, otherwise I don't see how she could owe more than her asking price to the bank.
Of course, what she asks and what she sells it for could be two very different numbers.
At least she should save something on the seller's commission!
For instance:
I seem to recall a posting on RCG called "Selling with Ardell" where she explained she was selling her house and was going to post the whole process start to finish.
I can't find it though.
Don't remember one way or the other whether there were more parts. Note that this was posted on February 15th of last year. I still don't get why she's selling in the first place? I thought she liked the house...
That was the post I was looking for. I thought it was last summer, guess I didn't look back far enough. I can't find a part 2.
As I recall, I thought she was interested in moving closer to Microsoft's Redmond campus.
It would be interesting to hear from her what she has decided to do on it.
It would be a mistake to talk about any problems she is having with the market. It would greatly erode any negotiating power she might have. It might also raise red flags at the bank if she ends up doing a short sale (I don't know that for sure, but if I were a bank I would view houses getting a lot of media attention suspiciously -- I also wouldn't want to forgive debt in a high profile manner.)
Either way, she probably owes more than 850K.
:roll: