Equity Inmates Trapped In Homes They Cannot Sell
The Star Tribune reports from Wyoming. “For the past few years Rebecca Thomas has struggled to find affordable, quality housing to rent. A single parent to 6-year-old Jordyn, Thomas lived in low-income housing in 2007, but earned too much money during her first year living there to qualify to stay. A small business owner, Thomas has worked two jobs in addition to her massage therapy business just to keep up with bills. Thomas is living with her boyfriend’s family while trying to save enough to buy a house in the next six months. Tired of renting, Thomas said buying a house with her boyfriend seems more sensible than throwing money away on rent.”
“‘We’re trying to save for a house,’ Thomas said. ‘We just think we’ll be financially stable to buy then.’”
“Hoping to take advantage of the tax credit now available to first-time home buyers, Thomas is just one of many Gillette residents helping keep the community’s housing market stable. After a slow second quarter, real estate sales are picking up again, Re/Max broker/owner Ryan Conklin said.”
“Also the owner of three rentals, Conklin said the rental market has loosened up in the last few months compared to the last three years, when the vacancy rate hovered around zero percent. ‘It’s taking a little longer to rent something out, and rents have come down a little,’ Conklin said.”
“The vacancy rate is now 6.1 percent. Gillette Public Information Officer Joe Lunne said new apartments and the first-time home buyer tax credit are helping to ease the rental market that for the past two years has seen a .1 percent vacancy rate.In 2006 there were just 1,351 apartments in the community, and today there are about 1,800. ‘It’s easier for the young people trying to find a place to live,’ Lunne said. ‘It takes some of the stress off.’”
“The lack of affordable housing, often cited as a negative factor in enticing new workers into Campbell County, is now slowly easing. Now, the recruitment efforts are being hampered by other issues, including the difficulty people are having in selling homes in other states so they can relocate to Wyoming. ‘They can’t sell their house in other states,’ Lunne said. ‘That’s really the struggle for us now.’”
“While the Campbell County housing market continues to stay clear of many of the struggles plaguing the rest of the nation, the number of new housing permits issued in 2009 stayed steady. By the end of October, 434 permits had been issued in Gillette, while by the end of November 2008 only 372 permits had been issued. ‘It doesn’t look to me like anyone is slowing up,’ Lunne said.”
The Spokesman Review. “Greenstone’s acquisition of Kendall Yards revives a project expected to model New Urbanism just across the Monroe Street Bridge from the old. In 15 years, its 78 acres will be covered with housing clusters, commercial centers and parks within easy walking distance of downtown. That’s the plan, anyway. But plans go awry, as former owner Marshall Chesrown knows too well.”
“Chesrown envisioned a $1 billion urban version of the luxury developments he was creating in Idaho when be bought the property in 2004. A mini-core of high-end shops and residential towers would fill the space between Monroe and Maple streets. More housing – for a total 2,600 units – would extend the project west of Maple.”
“At a festive groundbreaking, complete with balloons, refreshments and song, officials manned the traditional golden shovels. Chesrown likened the work done and the work ahead to swimming the English Channel. That was May 17, 2007. He did not make it.”
“The financial tides were turning, inundating upscale developments such as the Yellowstone Club in Montana, the Tamarack Resort in Idaho, and Kendall Yards. After a multimillion-dollar environmental cleanup of the former railroad yard, the bulldozers left. The corner of West Ide Avenue and North Monroe Street at the bridge’s north end has become a shabby parking lot, not a showpiece.”
“Greenstone will move forward with a more modest project that is still expected to take a decade-plus. The vision may be less grandiose, but it may be one that better suits the adjacent West Central neighborhood and a city that has difficulty digesting $1 million homes and $500,000 condominiums. It was going to take a horde of ‘equity refugees’ from California to fill those boxes. Many of those potential buyers are now equity inmates trapped in homes they cannot sell.”
“Wheaton says there may eventually be pricey abodes at Kendall Yards. Greenstone has succeeded because its developments in Liberty Lake and Coeur d’Alene offer homes at all price points, he says. But Spokane-area residents can more easily live with, and in, the $175,000 to $250,000 townhouses that will start going up late next year.”
The Bonner County Daily Bee in Idaho. “Bonner County’s homeless and hungry come from a cross-section of circumstances. And in many cases, the situation they find themselves in is through no fault of their own, according to Blue Haven program manager Tammie Martison. Many of those who are now in need have not previously needed help. Blue Haven is receiving telephone calls from people ‘who have never found themselves in this position before.’”
“Calls are coming from professional people who want advice because they face losing their homes after a job loss. ‘It’s across the board now, it’s not just low-wage earners,’ Martinson said.”
Oregon Public Broadcasting. “Oregon’s unemployment rate held steady at 11.3 percent in October – one of the highest in the country. And in a report released Monday by the U.S. Department of Agriculture, Oregon ranked as one of the worst states in terms of food security – or, in simple terms, households that go hungry.”
“The stats show that over the past three years, more than 6 percent of Oregonians reported that they ate less for financial reasons. And Oregon State University research says the real number is actually worse. And yet, according to federal officials and the state, Oregon has one of the most-effective food stamp programs in the country. So, why does the state rank second-worst, behind only Mississippi, in terms of ‘very low food security’?”
“Researchers say while unemployment is a factor, the state has had high hunger rates even during boom times. Mark Edwards is a sociology professor at OSU. Edwards: ‘Even ten years ago, we found that Oregon had high hunger rates, even among people who were working – and had full-time, year-round jobs. So there’s something else going on in Oregon that I suspect has to do with the cost of housing compared to the income people are bringing in.’”
The Mail Tribune in Oregon. “A federal program designed to stabilize communities hit hard by foreclosures has left one Medford couple at their wits’ end trying to find a lender so they can buy a house. ‘It is a very unstable program,’ said Jaymi Bowers, a 26-year-old mother of two. ‘I want the public who is trying to use this program to know what they are in for.’”
“The Bowerses discovered that lenders are reluctant to loan through this program because it has changed frequently, it requires more paperwork and the federal government pays a substantial amount of the down payment. Her husband said the program is great for people to get into if they’ve got the patience. He said they will have to come up with $2,800 to qualify with the federal program kicking in about $38,000. ‘It’s a program that’s really good, but it’s not working,’ he said.”
“Karen Cooper, who is a broker for American Pacific Mortgage Banker and represents the Bowerses, said the program is frustrating for her clients and everyone else involved. ‘They’ve felt like they’ve been stuck through a ringer, and so have I,’ she said. ‘There have been so many changes that I don’t think the underwriter knows what is up.’”
‘In February, the program allowed for the paying of repairs on a foreclosed house before the sale was concluded. ‘That’s gone now,’ she said.”
“To qualify for the program, a family of four would have to earn a maximum of 120 percent of the Jackson County median income, or $66,500, she said. Lenders are wary of families that earn about $50,000 because they may be at risk of defaulting on their mortgages if one of the wage earners is laid off.”
“As he drove through downtown Medford this past weekend, Duane Hill saw signs of trouble that were hard to miss. ‘There was a ‘Space for rent’ sign just about every block,’ observed Hill, the former owner of KRWQ radio who now lives in Sunriver, near Bend.”
“For Hill, it was a reminder of his own status as the owner of a half-rented, three-story office building in northeast Medford near Costco. ‘Lots of space and no prospects,’ said Hill, summing up the picture for many Rogue Valley commercial building owners.”
“It doesn’t stop with retail and office space. Manufacturing has fallen off as well, creating vacancies at the industrial level. ‘Without a doubt, orders aren’t what they used to be,’ said Tom Fischer, one of the owners of Coldwell Banker Commercial NW Real Estate. ‘We have an oversupply of manufacturing capacity. The only places I’ve heard where there is increasing business and more employees is in Internet sales and fulfillment offices — bicycle parts, motorcycle parts, things like that.’”
“Whether retail or industrial, Fischer said, falling consumer demand is draining cash flow and forcing business owners to make tough calls. ‘The reality is that people are not going out to lunch and dinner like they used to and not buying consumer goods — from radios to cars. Go down Riverside Avenue and you will see a half-dozen restaurants with two or three cars in the parking lot instead of a dozen at dinner time.’”
The World in Oregon. “A visitor’s comment while passing down Central Avenue last month epitomizes the challenge that Melvin Lesher says face business owners in downtown Coos Bay. The 73-year-old owner of Little Coyote Cafe watched as the woman pointed to the plywood-covered windows on the Chandler Hotel across the street. She told her companion they must be in the bad part of town.”
“He quickly corralled her and invited her into his cafe. He wanted to explain. Yes, the building is in need of structural repairs, but the area is generally good, he told her. She left satisfied with her meal and a better appreciation for downtown, Lesher said. But some business owners feel like the cards are stacked against them, when they have to woo customers in the shadow of empty buildings and deteriorating exteriors.”
“‘This business cannot survive without investing money into the appearance of the general area,’ Lesher said.”
The Gresham Outlook in Oregon. “The ‘Come Home to Gresham’ home loan program, implemented by Community Vision Inc., helps qualified buyers purchase foreclosed homes in certain parts of the city, said Michael Parkhurst, an associate planner with the city of Gresham. Gresham’s program gives out $10,000 loans instead of $50,000 loans to get more families into more foreclosed houses, said Mayor Shane Bemis. With roughly $400,000 available for the Gresham program, the city could award 40 loans, versus about eight if the cap was $50,000.”
“But not all foreclosed houses in Gresham are the byproduct of lost jobs, questionable loans or household budgets being stretched to the breaking point. ‘Many are new townhouses that were built right before the bubble burst,’ Parkhurst said.”
The News Review in Oregon. “Home sales in Douglas County increased slightly in September, with the 102 pending sales during the month representing 14 percent of the total for the year. ‘Obviously, the $8,000 tax credit for first-time home buyers and low interest rates have helped considerably,’ said Neil Hummel, owner of Century 21-The Neil Company Real Estate in Roseburg.”
“The average price for a home sold in September was $147,000, down $32,000 from a year earlier. The decrease was even more dramatic compared with August, when the average sales price was $195,900. The median price, where half sold for more and half sold for less, was $130,000 in September. For the same month a year earlier, it was $170,000. The median price was $162,500 in August.”
“‘I advise my sellers to take a look at the comparable sales in their neighborhood and price their home 15 percent to 20 percent below the competition and they will more than likely generate an offer sooner than if they price it with the competition,’ Hummel said.”
“New listings fell nearly 14 percent in September. However, the total was 12 more than what was added to the market in September 2008. At September’s rate of sales, the 1,240 active residential listings would last about 15.3 months. That’s down nearly 50 percent from the 30.3-month inventory in January.”
“‘That is good news: Either sellers are deciding to rent their properties or they are taking them off the market waiting for things to improve,’ Hummel said.”
The Juneau Empire in Alaska. “Local builders say their business is in a downturn, but not the depression that has hit their counterparts in the building industry elsewhere in the nation. ‘We’re on the way up out of the bottom of the recession, but we didn’t hit rock bottom like they did elsewhere,’ said Russ McDougal, past president of the Alaska State Home Building Association.”
“Builder Alan Wilson said in contrast to some other places, Southeast’s bankers have been lending responsibly and have money available. ‘If you are a solid borrower, you aren’t having any problems,’ he said.”
“Wilson said the only people he’s heard of having difficulty are those seeking second mortgages and 100-percent equity mortgages. ‘We can use our homes as credit cards any more, but that may not be a bad thing,’ he said.”
The Vancouver Sun in Canada. “In aggregate, British Columbians racked up the highest number of home sales for the month of October since 2003, the B.C. Real Estate Association reported Tuesday, but in the details it still looks more like a South Coast story. ‘Certainly the recession is impacting the resource-oriented communities much harder than the large urban centres that have a much larger service component [to their economies],’ Cameron Muir, the B.C. Real Estate Association’s chief economist, said in an interview.”
“However, Muir said many of B.C.’s interior markets rely heavily on the activity of recreational-property purchasers, most of whom stayed out of the market during last winter’s collapse in sales and have yet to return.”
“Muir said he expects that South Coast markets will not maintain the pace of sales they’ve seen over the past several months. Sales in those markets — Metro Vancouver, the Fraser Valley and Victoria — are largely driven by the ‘pent-up’ demand of buyers who sat out last fall and are now being drawn in by current low interest rates. Muir said that demand that built up is quickly being satisfied, and as prices in the Lower Mainland and Victoria rise, that will help to squeeze more buyers out of the market later in 2010 and act to slow sales.”
“On a provincial basis, the average MLS home price was $493,328 in October, up 17 per cent from the same month a year ago. In Metro Vancouver, the average MLS home price was up 15 per cent to $638,948 compared with October 2008. In the Fraser Valley, average prices are up almost eight per cent to $445,637 compared with the same month a year ago.”
“‘If you look at sales-to-active-listing ratios we see in the Fraser Valley, Greater Vancouver and Victoria, they’re all over 20 per cent,’ Muir said. That is typically ‘buyer’s-market’ territory, ‘which indicates some upward pressure on prices.’”
The Vancouver Observer. “Everyone in Vancouver is by now aware that the real estate market has bounced back. We can see it in the hard, cold numbers produced by the REBGV every month. Prices are up, sales are up and inventory is down. We can also see evidence of the rebound in the media. It’s hard to find a newspaper article that is pessimistic about the future of Vancouver real estate these days.”
“One more sign indicating that Vancouver real estate is once again hot is the return of the Vancouver condo development presale. As the real estate market spiraled downwards in early 2008, one Vancouver condo development after another was put on hold. Now that the market, and public confidence has returned these projects (Cosmo, V6A, Richards) and many new ones (The Mark, District, Social) have been coming back online.”
The Georgia Straight in Canada. “Even though he had never purchased real estate before, Alym Abdulla could sense that the market was heating up as he began looking at downtown condos last spring. The 24-year-old pharmacist started seeing suites in late March, and before long he realized that some of the units were receiving multiple offers from prospective buyers.”
“‘I must have looked at close to 50 places,’ Abdulla told the Georgia Straight in a recent interview in his living room. ‘I put in offers on two other places that didn’t go through because the market started to pick up.’”
“He said he was getting discouraged and was ready to quit when his real-estate agent, Stu Bell, recommended that he check out a home in a Bosa-developed building near the corner of Hornby and Smithe streets. When Abdulla entered the suite in the middle of May, he was immediately impressed by the layout, which featured two full bedrooms, each with an en suite bathroom, on either side of the living room. ‘The thing that really sold me on this place was the balcony,’ he said. ‘It’s quite large. It makes you feel like you’re not trapped in your little shoebox downtown.’”
“Bob Rennie’s company Rennie Marketing Systems has sold billions of dollars of real estate in Vancouver. Rennie also told the Straight by phone that he always thought the effect of the Games would be felt in future years. ‘It’s after the Olympics that we’re going to see the impact on real estate,’ he said, noting that Vancouver has a much higher profile than other recent Winter Games host cities. ‘I don’t believe that anyone ran back to Turin or Lillehammer or Salt Lake City…to buy a secondary residence or to move the family to safety or to move some money to safety. Vancouver is on the map. We’re a world city. We’re a brand.’”
“Abdulla ended up paying the $508,000 list price. He said he bought then because he wanted to take advantage of the low interest rates. With a smile, he acknowledged that some of his friends look at him differently now that he’s a homeowner: ‘One of my friends who I used to live with in university, he’s like, ‘I feel since you bought your place, you’ve matured. You’ve completely changed in the way that you are. Before, we used to live the student lifestyle. Now, you’re always cleaning your place. You have plants. You look after them. You’ve even got a cat now. It’s like you’re an adult.’”
‘It’s hard to find a newspaper article that is pessimistic about the future of Vancouver real estate these days’
Have a look at the Georgia Straights comments; it’s like a blast.
‘This guy is young and successful. Investing in the real estate market is usually a sound choice, especially at a time like now before the olympics.’
‘Jim, renting may be cheaper, but owning is always more advantageous as he has the power and freedom to rent out his place and feed that money into his mortgage. Otherwise, he has the luxury of living in a spectacular location till he decides to sell.’
Another:
‘My rent was $975 a month for a crappy, 35 year old one bedroom that didn’t have insuite laundry or anything, and where the landlord would knock twice then enter my suite without advance notice for non-emergencies, once even while I was on the toilet. Now, my mortgage is the same for a 12 year old one bedroom with laundry, fireplace, dishwasher. This includes maintenance fee. And I can have a pet. And no landlord can come in because he feels like it. Yes, the interest rates will rise, but my salary will also increase. If I’m laid off or my mortgage skyrockets, I’ll work my ass off to keep it all together.’
I liked this one:
‘One of my friends who I used to live with in university, he’s like, ‘I feel since you bought your place, you’ve matured. You’ve completely changed in the way that you are. Before, we used to live the student lifestyle. Now, you’re always cleaning your place. You have plants. You look after them. You’ve even got a cat now. It’s like you’re an adult.’”
That’s exactly the mindset the banks love, because it will make you their slave for life.
Yes who would have thunk owing your own place = adult. Wow he can do math
Ever since getting rid of our place I feel so much better. It is great. I’m never going back to servitude to a f—ing house. These people mistake drudgery for maturity.
“Now, you’re always cleaning your place. You have plants.”
I hate all those leases that don’t allow plants or cleaning.
And I noticed a long time ago , the kitchen sink on an island with no back splash….. and boy are they tiny like in a hotel room.
Just just how do you expect to ever wash a turkey platter? I guess single people go to KFC for thanksgivin.
Switched over to spaghetti dinner, antipasti and spumoni for THX giving. easier, less pans/pots, and you aren’t so full you feel sleepy or like you are going to explode for 4 hrs after.
And you are able to play a mean game of poker without nodding off.
Or when the landlord comes in and cleans your plants, or something… Yep, terrible leases they are…
I do find it amazing how many people think that they are not “complete” until they have overpaid for some crud-shack that has a list of problems longer than the Healthcare bill. They measure maturity as directly equal to the number of hours blown fixing the lack of maintenance performed by the previous owner (who no doubt walked away with a huge profit after these idiots grossly overpaid for the house.)
Whatever!
Keep turning over your paychecks for these their over priced houses. That insures their bonus etc. Got to keep the bankers jobs secure. That’s number one. Don’t want to beg for more Tarp money from the good faith taxpapers. Besides some of them[slaves] are starting to Question giving more money to the bankers?
Perhaps a few are getting “wise” and then the WHOLE SYSTEM would crash.
If you take on a $500K mortgage at 23, you better change your lifestyle. Things like forget the ski trips, vacations, decent cars, food. Yep, it will consume you.
But what would I know, the biggest mortgage I ever had was $100K and that keep me awake lots of nights.
Don’t you just love it when Turbo Tax Timmie (Geitner) tells the banks ,’You must make more (risky) loans to FBs’. Didn’t we just go through this with Barney, Maxine,Chris, and add whoever another congressional retard you want. More foreclosures in two years and more costs to the taxpayers. Do they ‘really’ care ? Don’t answer that ! We know they don’t.
“…but my salary will also increase.”
Yes, because anything else would be…well…”unfair”.
“…but my salary will also increase.”
Yeah, good thing nothing else will like utilities, insurance, cost of living. Those things always stay constant, right?
“‘I advise my sellers to take a look at the comparable sales in their neighborhood and price their home 15 percent to 20 percent below the competition and they will more than likely generate an offer sooner than if they price it with the competition,’ Hummel said.” Good advice, I guess he’s earning his 3.5%.
I agree that it’s good advice. But also telling is the recommendation to price 15 to 20 percent below comps, not 5 to 10 percent. That says something about the current rate of decline in that area.
Actually I did this just recently. I needed to sell my house quickly, job loss not real hope of new one with a few months. I listed my for 10% less than a comparable listing a few blocks away. It sold in 4 days and the other is still on the market (I think).
Anyway I’ll be moving to Dallas, the job market seems better down there.
Once the Olympics are over, Vancouver is toast. Or the residents in B.C. are smoking too much weed, and not sharing.
They are even marketing properties in Bellingham WA as being close to the Vancouver Olympics, as if a couple of weeks of rental income will justify the investment.
Wow, only three months till the Holy Train Wreck there.
that soon?
If my landlord walked in on me unannounced, I might just be tempted to buy too!
A simple chain lock takes care of that problem.
A simple chain lock takes care of that problem.
Even better.
If my landlord walked in on me unannounced, I might just be tempted to buy too!
I’d be changing the locks or looking up restraining orders.
‘It’s hard to find a newspaper article that is pessimistic about the future of Vancouver real estate these days’
It’s hard to find a newspaper article anywhere ever that’s pessimistic about the future of real estate. Using newspaper stories as a barometer on housing isn’t a very good idea.
I love the “my salary will also rise” BS.
Yeah, because EVERYONE can look forward to regular raises that more than keep up with inflation! Hahaha - good thing we don’t have a high unemployment rate with peoples’ salaries going to nearly 0 and… oh, wait - nevermind!!
Duhhh… Yet this idiocy is still very common around here in Maryland, so other lands of the Eternal Bubble will still have this idiotic optimism regarding endless wage increases just for showing up.
“With a smile, he acknowledged that some of his friends look at him differently now that he’s a homeowner”
I’d look at him differently too. I’d look at him like a fool for spending 500k at 23yrs old in a falling market. The trifecta! Wel played, sir!
That guy stands a fair chance to be broke and eating his cat’s food before he turns 30. Vancouver is a beautiful, desireable city, except for the skid row near the Chinese garden, but come on now. I suspect he paid close to ten times his income for a condo, and he will soon learn the very adult lesson of buyer beware.
What’s the going rate for a junior pharmacist in Vancouver? And I bet he still has student loans. And once again, I didn’t see any mention of what type of mortgage he has.
Actually, he may be earning 75 to 80k.
Actually, he may be earning 75 to 80k
http://www.livingin-canada.com/salaries-for-pharmacists.html
Based on income stats for B.C., I’d say that would be a tad high for a *junior* pharmacist. However, even assuming that’s true, his price:income ratio would be a “mere” ~6.5:1. Yeah, no problems here…
It is probably an ARM with the first 5 years or so fixed. I think 30 year fixed rate mortgages are rare in Canada.
What good is it to “take advantage” of low interest rates if you have a FLIPPIN’ ARM???
OK, I’m going to make some ASSUMPTIONS here:
*He makes $80K. Gross of $6666/month.
*His taxes are 33%(?), but that includes health.
*He put $40K down. I’m being generous. That’s if he somehow paid off his college loans and scrimped like crazy.
*His interest rate is 5.2%. PI of $2526/month.
*Insurance+tax is 1%, HOA $200/month. Again, that’s on the low end. Say $600/month for these extras.
His total take-home is $4444/month.
His total mortgage pay would be $3126/month.
That leaves $1318 to heat his little condo and feed his cats. Well, it’s doable, if he’s cautious. BUT, he has to live near-perfect for the next 30 years or so — with very little cushion. Not much for retirement or if his car breaks down, or if he wants to buy a necklace for a girl.
He would have been FAR better off sharing a 2-bed apartment for a few years and pack away the dough. After two years, he could probably score that same place for $300K, put $100K down, and had half the monthly payment.
” I think 30 year fixed rate mortgages are rare in Canada.”
I think 10 year fixed is extremely rare.
Not much for retirement or if his car breaks down, or if he wants to buy a necklace for a girl.
No worries there. He’s gay.
Ok, then if he wants to buy earrings for a guy.
“*He makes $80K. Gross of $6666/month.
*His taxes are 33%(?), but that includes health.
*He put $40K down. I’m being generous. That’s if he somehow paid off his college loans and scrimped like crazy.
*His interest rate is 5.2%. PI of $2526/month.
*Insurance+tax is 1%, HOA $200/month. Again, that’s on the low end. Say $600/month for these extras.
His total take-home is $4444/month.
His total mortgage pay would be $3126/month.
That leaves $1318 to heat his little condo and feed his cats. Well, it’s doable, if he’s cautious. ”
Is mortgage interest not deductible in Canada? If so, your example is inaccurate - if that situation was in the U.S., I’d day that his effective tax rate will be about 10% (he’d probably have about $30K in itemized deductions just related to the property). That would bring his take home closer to $6000/mo, not $4444. That would in turn leave him close to $3000/mo after PITI etc. I wouldn’t buy a $500K property on an $80K salary, but it’s not really as bad as you make it out.
Not only is mortgage interest not deductible in Canada, the income tax is very progressive.
An $80k single is going to be thoroughly taxed–much more than a similar US income. So-it sucks even more to be a 24 year old buyer. Less money than US buyer of similar income, and no deductible interest. Sweet!
Isn’t pharmacy a graduate level=BS + 2 year deal? The ink isn’t even dry on his diploma. He hasn’t saved much.
“the very adult lesson of buyer beware”
Some of us (me) have to learn it repeatedly. In June I stupidly went ahead with some blood work suggested by a physician, without insisting on knowing the price tag up front. $785 !!!! I’m at least going to insist on the bill (which arrived today) being itemized, and on an understandable version of all the results. (Anyone else got a suggestion for revenge?) IMO what’s wrong w/ the health-care so-called system is the collective refusal of providers to put price tags on their wares.
Yup, they kept pushing c-scopes on me, so finally I relented and it cost 1500, not covered by insurance. I’m not saying the state should have added it to our 40 other insurance mandates, but the doctor could at least have warned me. I had no symptoms or family history.
I could have gone my whole life without that.
I agree. The surprise when the bill comes is enough to make you sick.Really sick. Why can’t we see a general statement of prices?
Thomas is living with her boyfriend’s family while trying to save enough to buy a house in the next six months. Tired of renting, Thomas said buying a house with her boyfriend seems more sensible than throwing money away on rent.”
SIX MONTHS? WTF is wrong with these people? We saved for TEN YEARS! And then we paid off the house in 15.
And she’s whining about affordability?
Well, we do know the CryPod generation is not really about patiently working toward long-term goals.
“SIX MONTHS? WTF is wrong with these people? We saved for TEN YEARS! And then we paid off the house in 15.”
Exactly. I’ll have our place paid in full in just under ten years.
just under ten years.
Cool!
May I ask a personal question of you and others?
Whether you have a paid off mtg - who here has an emergency fund..not you bila!, and how much do you feel is advisable.
Do you think one should have that first before paying off a mtg, or ?
I guess you should have an emergency fund before paying off a mortgage.
In theory, I could go the rest of my life w/o working. However, if they keep raising my property taxes with these “parcel taxes” someday I may be forced to sell or abandon.
that is the major problem in America, most people don’t save a dime. i rented small apartments or shared apartments from 1994-2009. i saved and bought a house for cash. it took years to save the cash. i remember many times going to different banks over the years and the teller would be surprised i had saved so much. well, with all the credit card cutbacks and such people will be forced to save or then the FHA can just step in and issue loans to people who have not saved or did so for 6 months! but, then again our trade policies have allowed us to gut the underbelly of the american economy so is it a surprise there are no jobs and people rack it up to survive. the loss of a real economy based on manufacturing things to sell here and abroad is the real problem that must be changed. maybe when we hit 20% unemployment Americans will realize what is going on or maybe not!
“He said they will have to come up with $2,800 to qualify with the federal program kicking in about $38,000. ‘It’s a program that’s really good, but it’s not working,’ he said.”
Just another example of the gubmint getting involved and making matters worse. “They” will continue to gum up the works and cause more and more distortions in the housing market, and the economy on the whole.
Japan may have had a ‘lost’ decade, ours will be longer.
“Japan may have had a ‘lost’ decade, ours will be longer.”
Ours will be a couple of generations.
As FPSS pointed out, Japan fell into their lost decade as a nation of savers with some emergency funds cushioning them, and their government had a whole lot less debt (in aggregate).
“Tired of renting, Thomas said buying a house with her boyfriend seems more sensible than throwing money away on rent.”
Are children taught this untruth from birth? You hear it over and over again. “Throwing money away on rent.”
Throwing away money on rent is not an untruth, when houses are priced normally.
Of course it never gets mentioned that throwing away money on interest, property taxes and insurance is just as truthful.
I assume that renters also pay the property taxes and insurance of their landlords. So it’s nothing something exclusive to home buyers.
Really? I would assume no such thing.
In the places I’ve lived in the last 8 or so years, my rent has covered anywhere from 40% to 60% of the monthly mortgage payment (estimating 20% down, 30-year fixed), never mind taxes and whatever else…
VB in VB,
Theoretically it’s buried in the rent somewhere, but you still just pay whatever the rent number is. If you want to make a fair comparison of how much money you’re ‘throwing away’ it should be:
Rent + renter’s insurance
Vs
Interest + property taxes + house insurance + maintenance
This assumes no utilities are included in the rent.
Notice that you said “the last eight years.” It’s hasn’t been a normal market in the past 8 years. And if by “sf jack” you mean San Francisco — well that place hasn’t been normal since they discovered gold in the hills.
And your point is what… exactly?
One is “throwing money away on rent” only if they are living in the exact place they’d like to own, and only if they could own it for a reasonable price.
It’s pretty simple, really. And prices are on their way back to reasonable here, even if it takes longer than the rest of the country.
Yea, I pay a ton of money for a place I wouldn’t want. If I had bought pre-bubble then I’d have a way nicer place at the same payment level or less. 100% appreciation or greater in the past few years.
They paid $300,000 for the building I live in during the late 80s or early 90s, and collect perhaps $31,000 a month in rent.
I in no way figure they or most longer term landlords in my region take a loss. If they bought during the bubble sure, not if they bought before.
You are not throwing it away, you are purchasing something. You are getting a place to live in return for rent money. Just like you receive a meal at a restaurant when you give them money.
And let’s turn it around, shall we. Recall the term “homedebtors”, or “loan-owners”? “Money-renters” ring a bell?
I love how the same people who feel they are throwing away money on rent never bother to think about how they are throwing away money by renting MONEY. A mortgage is rented money.
“A mortgage is rented money.”
with a very long term lease.
And a very hard one to break at that, with a most illiquid form of collateral.
Meaning that PITI is *cheaper* than rent.
That is why people used to have a hard time saving up for a downpayment. Because renting was more expensive since the landlord had to be able to make money on the deal. In that world (and assuming that you don’t have to be mobile to find a job, keep a job or get a job that pays more money - big assumptions), it makes a lot of sense to buy if you will be there for a while so the savings over rent can pay for the transaction costs.
oxide,
Quite and rather! When the wife and I bought our first house in… 1989? we found rents quickly eclipsed our $475 PITI payment. It actually only took about 12 to 18 mos. before our having purchased made economic sense.
If only we’d have had the ’sense’ to freakin’ -stay- there! That’s ‘another’ Realtor Myth that’s going to get the stuffing kicked out of it; the Trade Up House. My guess is that young couples strapped for living wages aren’t going to have much of an appetite for dream homes. No matter -how- low int. rates might be?
Oh, I forgot about that too. I think it’s safe to say that over 30 years, rent always go up. Fixed is “fixed.” And IIRC, the PITI on a house was comparable to a smaller apartment, so you get a smaller house. And at the end of 30 years, you don’t have to pay PI at all.
So, yes, if you rent, you do get a place to stay for the month. But for the same payment on a mortgage, you’re getting a place to stay AND the probability that someday you’ll pay it off. Even if you move, those costs are usually covered by appreciation.
Again, this is in a normal market.
oxide,
While there ‘are’ days Mrs. D and I regret not having remained in our very first ’starter house’ ( 1,200 s/f 3/2 on 1/4 acre lot in Molalla, OR ) in many, many ways it simply wouldn’t have been practical. At all!
It would have been claustraphobic while the girls were growing up, we were young and aggressively advancing our careers and… our neighbors were.., mostly on the downside of life. Additionally, the street ‘used’ to be like a dead end until it was used as a detour briefly during road construction. Well! With NO stop signs it became the short cut of choice and you could forget about tranquility from that point on.
The current owners ( and I still drive by once in awhile ) have done a great job keeping up and making improvements! Sadly ( as we predicted ) they are the ‘only’ ones on the block making those sacrifices.
Another unmarried couple buying a house together….
If he won’t commit to you by marrying you, why would you trust him to commit to making the house purchase agreement work out right?
Buy the car before they graduate.
Buy the wardrobe before they get the job.
Buy the condo before they get married.
Buy the house before they have a kid.
I see a pattern here.
Buying a house with an unmarried partner is a bad gamble. A friend of mine did that, and they broke up two years later. It was an uncomfortable time because they still had to live in the house together while they tried to sell it, especially for him because she’d bring home her new boyfriend(s) for overnight stays. Oh, did I mention it was a 2-bdrm 1 bath?
After nearly six months, they finally lowered the price enough to ditch it at a very substantial loss, each of them losing roughly the equivalent of a full year of take-home pay.
In all fairness, that could happen to a married couple too.
“It was an uncomfortable time because they still had to live in the house together while they tried to sell it, especially for him because she’d bring home her new boyfriend(s) for overnight stays.”
A friend at college who was living in a duplex lost his girlfriend to the next door neighbor. He endured several months of the squeaky bed frame knocking against the wall before he moved away.
endured several months of the squeaky
Like that film with Michael J Fox, he ‘conducts’ the ‘orchestra’ of the activity behind his bedframe!
“A friend at college who was living in a duplex lost his girlfriend to the next door neighbor.”
He should have bought his next door neighbor a steak dinner as thanks for showing him just who and what his girlfriend really was.
I haven’t read the article, so I don’t know whether this applies in this case, but in some areas, certain unmarried couples can buy a house but can’t get married to each other, although they might prefer to be married.
Ben, you missed this chestnut at the end of the Spokane story.
Chesrown moved the earth, but could not move the markets.
Oregon’s unemployment rate held steady at 11.3 percent in October . . . Oregon ranked as one of the worst states in terms of food security – or, in simple terms, households that go hungry. . .
And yet, according to federal officials and the state, Oregon has one of the most-effective food stamp programs in the country. So, why does the state rank second-worst, behind only Mississippi, in terms of ‘very low food security’?
Researchers say while unemployment is a factor, the state has had high hunger rates even during boom times. Mark Edwards is a sociology professor at OSU. Edwards: ‘Even ten years ago, we found that Oregon had high hunger rates, even among people who were working – and had full-time, year-round jobs. So there’s something else going on in Oregon . . .
Living in Idaho but only 50 miles east of the OR-ID border, it’s constantly tempting to explain the differences between the states by their political pursuasions. Oregon arguably has the most socialistic politics in the western states: Idaho prides itself as being a beacon of conservative politics. Even during good times the unemployment rate has a gap at the border: ID averages around 4% whereas OR averages around 6%.
I’m often driving back and forth across the border on small country roads. They don’t even have signs at the border but you don’t really need them. Farmhouses on the OR side are in poor repair with roofs needing replacment, paint peeling, and yards trashy. Farmhouses on the ID side gleam with the pride of ownership and sport shiney new cars in the well-paved driveways.
It’s like driving back and forth between the old East Germany and West Germany, with Idaho playing the part of West Germany.
In my youth, one could see the same thing when leaving northeast US states for Quebec (and as I got older, as well, it was clear the differences between entering Montreal vs. entering Boston).
In Quebec, it always felt like:
“Shabbyness, statism, taxes - up!”
“Pride, ownership, hope - down!”
My aunt and I saw the opposite this past August. Northern Vermont looked like a tumbledown dump. OTOH, Quebec looked sharp, clean, and prosperous.
I saw the same on my river trip through Quebec and VT.
Farmhouses on the ID side gleam with the pride of ownership and sport shiney new cars in the well-paved driveways.
Keep an eye on that sitituation over the next few years. It’s quite possible that the houses in ID were purchased with ARMs and the new cars with HELOCs. All of that shiny, new stuff may disappear before you know it.
+1. Ditto, that’s what I thought too.
the most socialistic politics
That would be a Double Ditto
No, I’m talking about older houses too. The owners just seem to take the effort to keep them up. And the cars aren’t Bimmers and MB’s but rather modest Fords and Buicks. Idahoans tend towards frugality.
“Farmhouses on the OR side are in poor repair with roofs needing replacment, paint peeling, and yards trashy. Farmhouses on the ID side gleam with the pride of ownership and sport shiney new cars in the well-paved driveways.”
Good observation. While Oregon is scenic its forest hides a flock of toothless poor that resemble West Virginia’s hollers.
He said they will have to come up with $2,800 to qualify with the federal program kicking in about $38,000. ‘It’s a program that’s really good, but it’s not working,’ he said.”
F*cking INSANITY
With a smile, he acknowledged that some of his friends look at him differently now that he’s a homeowner: ‘One of my friends who I used to live with in university, he’s like, ‘I feel since you bought your place, you’ve matured. You’ve completely changed in the way that you are. Before, we used to live the student lifestyle. Now, you’re always cleaning your place. You have plants. You look after them. You’ve even got a cat now. It’s like you’re an adult.’”
And you are also a FB! Congrats!
We should mock up certificates to send these people. Frames are cheap at Office Depot.
throwing money away on rent? Do they complain about throwing money away on food from the grocery store?
Don’t be silly. They aren’t throwing away money at the grocery store. They’re throwing away money eating out.
You can’t expect most people to understand basic economics. They’ve never heard of putting the numbers down on a spreadsheet or what compound interest is.
“Chesrown envisioned a $1 billion urban version of the luxury developments he was creating in Idaho when be bought the property in 2004. A mini-core of high-end shops and residential towers would fill the space between Monroe and Maple streets. More housing – for a total 2,600 units – would extend the project west of Maple”
How do you make a small fortune? Take a large one into the real estate development business. MIllion dollar homes in felony flats? It never made sense.
Anybody that has lived in Spokane for any length of time knows that the appetite for Half Million anything, much less condominium developments is very small. Even the second phase of his Secondary Lake Coeur ‘d Alene development is floundering.
I’m pretty sure Chesrown lost Blackrock north to the tune of $14M+
Bellerive is for sale, too, along the Spokane river- nevermind the $2M home built on the wrong lot! His Liberty Lake project went POOF as well if I remember correctly. I bet he wishes he still was selling cars in Colorado!
A single parent to 6-year-old Jordyn, Thomas lived in low-income housing in 2007
There’s her first mistake right there. Jesys Krist on a crutch, why do people intentionally saddle their rug-rats with misspelled names???
Baby’s named a bad, bad thing
“Part I: Brought to you by the Letter Y”
Q. I like the name Tegwin for my third child. My two children have uncommon names that are easy to pronounce and spell. I am compelled to use something original…ideas???
A. Yes. Jump off a bridge. Your kid sounds like an elfin creature in a Tolkein book.
As parents it’s imperative that we share with our children that just by changing an “i” to a “y” ( or vice versa ) alone makes them ’special’.
It’s so… Bubble-esque don’t you think?
I don’t understand the fascination with the letter “y”.
Why Y?
If the women wanted to be trendy and current, they’d be overusing the letter “W” after the fashion rag.
That said, it’s a good thing I didn’t have children when I was young, God knows what I would have named them.
The more radical feminists want to use “womyn” or some such foolishness.
Heck, since it’s sexist to embed the term “man” in “woman”, why not go to the non-sexist spelling “woe-person”?
why not go to the non-sexist spelling “woe-person”?
I prefer “fembot”
Dennis, not woe-person but rather “womb-person” — that’s what “woman” actually means i believe.
And then, we could call guys “d*ck-persons” ?
I prefer “fembot”
d..less?
Baby’s named a bad, bad thing
Thanks for that. Hard . to . type . while . laughing . tears.
All the girls here have names like Kay-Lee or Kay-Leigh or Kay-Tee-Leigh…blechh
If a person rents, and uses the savings to invest in stocks/bonds they come out WAY ahead after 10-15 years in terms of net assets. This is just common sense. Real estate as investment is only for those with the intestinal fortitude to ride the highs/lows, not for Joe Blow SixPack.
Just hope that stocks and bonds don’t go into a 1929-54 funk. Or a 1965-82 malaise.
Just hope that stocks and bonds don’t go into a 1929-54 funk. Or a 1965-82 malaise.
When one looks at why stocks went up in the 50’s (lack of global competition) and 80’s (increasing debt) one has to wonder if the period of little or no growth in stocks this time could be far longer.
“The price you pay determines your rate of return.” - Buffett.
Buy stocks when they are out of favor. Sell them they are in favor again.
Do this enough times and over a lifetime you will grow to be rich.
In a normal market, a rent payment and mortgage payment are not that different, so there is nothing to invest. And you do have to live somewhere. Why not put that rent payment toward equity. Again, I keep stressing NORMAL MARKET. We haven’t been in a normal market since 2000.
That also assumes that you plan to stay put for several years. Being able to do that is no longer a given if it ever was.
Yes, I know. Gone are the days of my grandparents, who stayed in their home for 60 years. Or my other grandparents, who held a mortgage burning party.
*sigh* 1950-1995. Good times for the middle class. Before and after that, it’s a modified banana republic.
Throughout the 80’s and 90’s people were saying to me, “But you can’t LIVE in your bonds.” Wanna bet? I lived just fine in my bonds, and continue to do so (augmented now by my mortgage notes). Admit I briefly owned RE in 90’s and again in 00’s but never with conviction since the 70’s.
Ancient humor, reportedly true:
When asked what he invested in, Groucho Marx replied, “Municipal bonds.”
The questioner remarked, “But they don’t pay anything.”
To which Groucho responded, “They do if you have enough of them!”
Here in central Oregon, a eatery recently hired 25 employees…500 people applied. That’s a ratio of 1 job for every 25 applicants.
My town, Pismo Beach, recently advertised two (2) positions for begining grounds keepers. They got 210 applicants. Where’s that hope and change ?
Oh we’re on our way to hope and change…hope any kind of job, including those that most American’s wouldn’t do in the past and change to wage deflation.
Actually, that’s a ratio of 1 : 20, but who’s counting.
C’mon people-Ben gives you Gillette, WY and not a single “haircut” or “shave” comment? You guys are falling down on the job!! Too early for the liquor induced jokes? Where is Oly when I need her? Grrr….
I’ve been wondering the same thing.
Yeah, where is Oly these days? Did the geoducks catch up with her?
“Many of those potential buyers are now equity inmates trapped in homes they cannot sell.”
The more things change, the more they remain the same…
ROTFLMFAO!!!!
Paying 508,000 dollars for a small vancouver condo is insane. Even if interest rates are 1%, the variable rate is 2.25% right now, it’s still insane. If the rate was zero then that might be a good deal.
“And in a report released Monday by the U.S. Department of Agriculture, Oregon ranked as one of the worst states in terms of food security – or, in simple terms, households that go hungry.”
When I hear the term “food security”, shoplifting in a grocery store or cattle rustling come to mind. Is this another term that originated from the previous administration to try to keep people perpetually frightened of everything except that which they should be truly concerned?
“If the rate was zero then that might be a good deal.”
Only if the rate was destined to remain at zero forever.
…and/or if incomes are stable or rising. Wouldn’t debt on most any terms become an increasing burden if wages were falling?
“Wouldn’t debt on most any terms become an increasing burden if wages were falling?”
Bingo! If wages were falling - if deflation were at hand - then REAL interest rates would rise - even if these rates were fixed at zero.
Also, the value of cash - measured by its purchasing power - would rise.
Gee, OR has the best food stamp program AND also lots of hungry people. Sort of like how San Francisco has the best homeless shelters AND the greatest number of homeless people. I wonder whether there’s any causation going on here?
“Greenstone will move forward with a more modest project that is still expected to take a decade-plus. The vision may be less grandiose, but it may be one that better suits the adjacent West Central neighborhood and a city that has difficulty digesting $1 million homes and $500,000 condominiums. It was going to take a horde of ‘equity refugees’ from California to fill those boxes. Many of those potential buyers are now equity inmates trapped in homes they cannot sell.”
“Wheaton says there may eventually be pricey abodes at Kendall Yards. Greenstone has succeeded because its developments in Liberty Lake and Coeur d’Alene offer homes at all price points, he says. But Spokane-area residents can more easily live with, and in, the $175,000 to $250,000 townhouses that will start going up late next year.”
Heaven forbid should there be any consideration for building housing that might be affordable to people working in a given community, though I wonder if $175-250K may still be pricey for Spokane incomes.
That this is not the primary consideration for housing in many areas speaks volumes.
The “primary” (and only) consideration for homebuilders is to move product at the highest possible price. Period. They could care less whether or not the houses they are building and selling are “affordable” to the local populace or not. These guys would cheerfully sell houses to suicide bombers as long as they paid up front.
“It doesn’t stop with retail and office space. Manufacturing has fallen off as well, creating vacancies at the industrial level. ‘Without a doubt, orders aren’t what they used to be,’ said Tom Fischer, one of the owners of Coldwell Banker Commercial NW Real Estate. ‘We have an oversupply of manufacturing capacity. The only places I’ve heard where there is increasing business and more employees is in Internet sales and fulfillment offices — bicycle parts, motorcycle parts, things like that.’”
“Whether retail or industrial, Fischer said, falling consumer demand is draining cash flow and forcing business owners to make tough calls. ‘The reality is that people are not going out to lunch and dinner like they used to and not buying consumer goods — from radios to cars. Go down Riverside Avenue and you will see a half-dozen restaurants with two or three cars in the parking lot instead of a dozen at dinner time.’”
That’s quite the “recovery” that’s supposedly underway given the real economy appears to still be contracting in many areas.
“… falling consumer demand is draining cash flow and forcing business owners to make tough calls.”
I hear a lot about this “cash flow” thingy. It seems to be the root of a lot of problems.
How could this be a problem when we have trillions of dollars being dumped into the financial system?
(Caution: Sarcasm alert.)