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Interest rates skyrocketed along with inflation and home values

Interest rates skyrocketed along with inflation and home values

Geno Bronzi
February 26, 201 Increasing landlord expenses are never automatic passthrough costs to the end user.


Vincent Wolf
February 22, 201 In the 1950`s homeowner ship was a foregone conclusion. That continued to about 1974 when the Arab oil embargo through a wrench into everything and interest rates skyrocketed along with inflation and home values. But today`s the situation is much muddier and everyone needs to be smart about it and weigh your chances of keeping a job for 20-30 years and being able to get another one quickly in the SAME area. That`s the biggest gamble of them all with so many companies shipping jobs overseas who can count on having a job for 45+ years with the same company like one of my parents did? Technology changes and you just never know in this new world where were headed all the time and how stable your job will be. In some fields like nursing, doctors, lawyers and the like you pretty much know your skills will always be in demand but in many others things can go obsolete or be bought out and bye goes your job in an instant. So home ownership makes sense if your career warrants staying in one place for decades or more. If not, then buyer beware in this new world. Then too the costs of home ownership are greatly UNDERSTATED. That new roof you need probably won`t be covered 100% by insurance--most insurance policies depreciate them and they can cost $7000 to $15,000 depending on roof top and square footage. That heating/AC system can be $15,000 to replace. These and more homeowner costs of ownership is partially why the government needs to continue the mortgage interest deduction to partially offset the huge costs of home ownership and `prop up demand` to make home ownership desirable in order to facilitate community well being (owners usually care more about their communities). Without that `subsidy` the market would crash as so many would recalculate their situation and sell and thereby send the market into a tail-spin similar to 2006 with far less chances of it recovering.


John Nystrom
February 22, 201 It all depends on your means and dreams! I would never buy another house in a typical suburban setting where houses all look alike, nor thinking I could make money off of appreciation, I would be extremely wary of areas prone to frequent natural disasters, and I would never buy a house at anywhere close to mid-2000 prices or at anything over 4% rates! I would buy a house if it had the location, location, location, where I knew I wanted to live, the price was relatively fair for the amenities, the interest rates were low, and I had worked every number over, added a cushion on top of that so I knew I could afford it comfortably! I simply won`t dwell on whether I could have rented cheaper, or when the water heater will go out ... I will be content looking out over the mountains, a lake, or both!


Geno Bronzi
February 22, 201 @John Nystrom "It all depends on your means and dreams!" No "John". It only depends on whether renting or buying is least costly. And right now, rental rates are a fraction of the cost of buying.


Lee Berle
February 22, 201 The right thing to do is live as cheaply as you can no matter what your wages may be. Save and invest then laugh at everyone when you retire at 40. Think about it.


Geno Bronzi
February 22, 201 @Lee Berle The right thing to do is to become an astronaut at 5 years old. Think about it!

1Harry Bush
Harry Bush
February 25, 201 @Lee Berle Sounds like Steve Martin`s "Become a Millionaire" seminar: "First, get a million dollars..."

1Bob Frank
Christy Tragenn
February 22, 201 I`ll never buy again in my lifetime. No, thank you...not after watching losers walk away and destroy my home`s value. We did everything right and watched people who never should have been given mortgages stop paying, squat, and even get gov`t "help". Nothing for those of us who do things right except being stuck with a worthless house. I`m never putting myself in that position again.

1Harry Bush
Lee Berle
February 22, 201 Two sides to renting. If you have to move about to follow jobs or a career you might best rent. The problem with renting is no matter where you go the rent will be adjusted to the normal cost of living in those areas so much of your wages might go to pay rent. In Florida a few years ago rent on average was taking over 60% of the average wage, which is outragious. Are going back to Tennesse Earnie Fords 16 Tons, what do ya get, another day older and deeper in debt. You end up owing your sole to the company store.


Geno Bronzi
February 22, 201 @Lee Berle Considering rental rates are HALF the cost of owning at current inflated asking prices of resale housing, why buy/?

2Lee BerleHarry Bush
Joe Ciletti
February 25, 201 I`ve seen people who were renting have to pay the remaining 7 months of rent on their lease after being transferred. Renting gives you mobility after the lease period expires and you go month-to-month, but some firms now force you to sign up for another full year if you want to keep your place in high-demand units. In those cases, renters mobility is limited.


Geno Bronzi
February 26, 201 @Joe Ciletti More nonsense from a used house salesman. Besides, I`d rather pay an extra few months rent than incur the massive losses from paying current grossly inflated asking prices of resale housing from which you`ll never recover.


Bill H Illify
February 25, 201 Understandable ...


Richard Di
February 22, 201 California homes near major cities, LA, SF, San Jose, etc are averaging over 350,000 and closer to 400,000. Rents for such homes is closer to 2,000 a month and do not include utilities. I am willing to bet that homeownership in such cities far outweighs renting at this time. Homes bought in the last year or two are up about 10 -12% and still rising as there are very few homes for sale. Investors picked up foreclosures for a song and now rent them providing an income today plus the appreciation of the year!


Lee Berle
February 22, 201 Which answers the question. Do you want to be the one paying for someone elses investment while they reap the rewards?Da?


Geno Bronzi
February 22, 201 @Lee Berle Considering houses are depreciating assets and never an "investment", why buy one when you can rent it for half the monthly cost?

2Lee BerleHarry Bush
Steve Carapiet
February 22, 201 Privacy is huge for many of us. If you are weak in `math` (hint: budget), then buying a home might not be a good idea. If you are not very `handy`, then rent. Some people want to buy a home but balk when the wall color is not right. You are not ready to be a homeowner. Unless of course your name is Gates then you do what you want. With today`s tools and systems, it`s so much easier to do your own house projects. Huge dollar savings. So if you want to be a `successful` homeowner, you should learn to do the work yourself. You can learn any of these skills. I`m amazed when I google or youtube a construction question. Then ask the pros at hardware stores. It`s all there. Some points to consider.


Harry Bush
February 25, 201 @Steve Carapiet "If you are weak in `math` (hint: budget), then buying a home might not be a good idea" Actually, if you can`t budget AND you have zero financial discipline, then buying a home probably IS a good idea. The equity that you build up (after decades of giving away your money to the banks in interest payments, of course) is like a forced savings plan... which is exactly what people without financial discipline need. Otherwise, rent and save/invest the difference -- while enjoying the benefits of "upgrading" to a new residence every few years while also remaining mobile in the modern work-world.


Steve Carapiet
February 25, 201 @Harry Bush Tell that to how many million dufusses and `smart` investors that lost their homes? Some of the old fashioned ways dont work anymore. The game changer....Gangstah Bankstahs! The cards are rigged, refuse to play their game.

2Geno BronziBaylor Parry
Baylor Parry March 1, 2013 @Steve Carapiet Well said


George Dobb
February 22, 201 a House? for $185,000?? In So. California? Like West LA?? HAHAHAHAHAHAHAHAHAHAHAHA


r ferguson
February 22, 201 Until Obama, in his quest to take all the money from the working, and give it to the lazy, creates his Brave New World, I like to own my beloved home. We have spent thousands of dollars improving it, from foundation to roof, and it is Nirvana.


Harry Bush
February 25, 201 @r ferguson On the other hand, Obama (and his kindred Marxist spirits at the state, county, city, and municipal levels) will enjoy raising property taxes on you, each and every year. And as a home owner, you`re stuck in place and will have to just live with it.


Carleneeyr2fevv @Carleneeyr2fevvfrom Twitter 22 Feb @MakiHuaman t.co/YAIrOTSU05


Joe Gerhardt
February 22, 201 It might be cheaper to rent, when you figure the cost of property taxes and house insurance and school levies, etc. It depends on the size of your house and utilities, mowing, snow removal, city water of well pumps, septic, etc. If you buy a house on the outskirts of a suburban area where taxes aren`t high and water and sewer are cheaper, then you might be Ok. As you get older and your area becomes less desirable to live in, you house values plummet like now and you can`t sell and move. Rent offers mobility if you work. I laugh at people that say, " But I own my house and property and it gives me security." You don`t pay your property taxes and it can be taken away from you in a year. Youn don`t own your land, the government does. LOL!

2Geno BronziHarry Bush
Geno Bronzi
February 22, 201 At current inflated asking prices of resale housing, rental rates are half the monthly cost of buying.

1Joe Gerhardt
John Jenson
February 22, 201 Better to rent for a few years and save your money in gold & silver and wait for the interest rates to rise; at which point the RE market will crash and instead of buying that starter house for $200k, you can buy a real house for that same amount.

4Geno BronziEmma SaiedJoe GerhardtChristy Tragenn
Steve Rim
February 22, 201 @John Jenson You plan to be a permanent renter I take it since little of what you describe is likely to ever happen.


Geno Bronzi
February 22, 201 @Steve Rim Steve, You plan to be a permanent debtor since housing prices are still wildly inflated and rental rates are half the monthly cost of buying.

1Stephen Clark
Lee Berle
February 22, 201 Let us see. A fella on this site said he was making 100K on each 300K home built. Rents going up because htere are so many people who can`t afford a house, or there credit rating is so low they can`t rent, or the banks want so much down anymore people can`t buy. We can go on and on here about this. What you are talking about is capitalism at it best. Capitalism is the art of charging as much as you can for whatever you are selling. Maybe we have been lied to all these years and capitalism is as evil as Kruschev and the USSR claimed it was? Capitalism doesn`t seem to be working right now for the working class folks. It might just be there are too amny chiefs and we are running out of indians??

1Poland Spring
Jean Miasegretto
February 22, 201 Lee, An aspect of free market capitalism is charging what the market will bear. One lives and dies, figurtaively speaking, by the principle. When the central government starts inserting intself ino the mix by throiwng in biases, it is no longer the same envirnment, yes? Jean

1Lee Berle
Joe Ciletti
February 25, 201 @Lee- It`s gotten to the point now where I`m just tired of hearing about "the working class". As if successful professionals don`t "work hard". Most of the union guys I know from high school don`t work nearly as hard as many professionals. Not even close. A President is supposed to represent all Americans instead of constantly pitting people against each other. I`ve never seen a President throw this much mud in my lifetime. Sadly, Class Warfare wins big in the election booth.

1Harry Bush
Lee Berle
February 25, 201 I assume you don`t consider yoursdelf working class. I consider anyone who actually works for a living is worling class. If you don`t work you aren`t working class. If you think people shouldn`t retire untill they are in their 79`s you aren`t working class. If you spent your lifetime sitting at a desk and think others shouldn`t retire untill they are in their 70`s you definitely aren`t working class. If you spent you entire life getting wealthy on wall st you have no business telling those who work anything.


Joe Ciletti
February 25, 201 @Lee Berle- huh? what? You realy veered off track there. Clearly, you must have heard the President refer to "the working class" and "working families" about a thousand times during the last 5 years. You are probably well aware that he is not including successful professionals in his concept of "working families". Your definition of "working class" includes uber-executives making Millions per year, but Obama`s Class Warfare is not about "what YOU or I consider working class", it`s about what the President thinks it is. His entire campaign was rooted in Class Warfare, so I doubt that anybody missed his main theme. The strange part is that the election is over and he is still banging away at the same drum. Four more years of the same drum beat. That`s why people are so tired of hearing about it.


Lee Berle
February 25, 201 I actually don`t think Obama has done anything at all for me in the last 4 years, and it sounds as if he intends on doing even less because I have a carry permit and like guns. I don`t think the dems have though about anyone white male. He/they have spent all there time, and started this new term, thinking only about gays, illegals, and wanting to take away guns. They should have, in my opinion, attacked communist loving businesses and wall st from the get go, and decided all Americans needed jobs to get this economy going, but, who am? Just a white mail American on SS an Medicare running for my life.


Paul Anders
February 22, 201 I`ts not always about money...There`s no trashy, noisy, inconsiderate night owls bothering me in my own home...


Geno Bronzi
February 22, 201 @Paul Anders So you can`t opt to rent that house to someone?


Paul Anders
February 22, 201 @Geno Bronzi-I rest my case, your exactly the type of neighbor I don`t want to have to deal with...a damn know it all. How much would moving cost everytime I ran into people like you...

1Joe Ciletti
Joe Ciletti
February 25, 201 @Paul Anders @Geno- Paul, just ignore Geno. He is certainly NOT a know-it-all but loves to pretend. 99% of his rantings are silly. With all the statistics and reports showing that many areas of the country have seen a housing recovery, I figured that maybe Geno would finally lay down his sword. But alas, he is still shouting his whacky chant, "Real Estate Prices are Crashing ... Sell NOW while you still can!!" I agree with you ... Geno would be that bitter neighbor from Hell.


Geno Bronzi
February 26, 201 @Joe Ciletti I hate to tell you my friend but a "housing recovery" is a dramatically lower prices by definition so you`re right.... housing is recovering but has much more room to go.


Geno Bronzi 1 hour ago So you can`t opt to rent that house to someone? Answer it.... What`s the problem?


Jim Miklos
February 22, 201 WOW...totally surprised mw concludes that everyone should buy a house. Guess I`m the loser since I sold my 5th and last house last year. I`ll never buy another. I also emptied both of my 401K`s and cancelled all my life insurance and took all my money out of the bank. Obviously, I believe the fine ethical and honest folks at mw and the rest of their MSM pundits singing all is well in the good old USA. NOT FOR A SECOND.

4Baylor ParryPoland SpringChristy TragennStephen Clark
Alan Will
February 22, 201 4 million foreclosures during the economic collapse of 2009, but about 8 million more are circling the drain as we speak.

8Wally SJim MiklosPaul AndersLee Berle
Marilyn Ketteman
February 22, 201 Stay away from land / home packages. Look at Hud report-manufacture vs. stick built. Court cases brought by Hud. The Ripoff report,etc. These homes deteriorate,cost more then actual value paid . Then are repoed,leaving buyers homeless,and the company a nice capital gain. Same banks own these high priced finance products and credit cards. Foreign telemarketers and SEC violations. We started getting ripped in the 80`s. None should pay more then 5% and leave new homes for the wealthy! Bring our neighborhoods back.

3Lee BerlePoland SpringStephen Clark
Donov Mann
February 22, 201 How can people buy a home when they are unemployed or minimum wage and or cannot get a home loan? Not everyone can afford to buy a home. Some people have to get roommates just to pay the rent let along afford a mortgage.

1Poland Spring
Lee Berle
February 22, 201 1st of all the tax code should be changed so no one can deduct more than a 50K mortgage from their taxes. No one should be aBLE to deduct more than $1000 in property taxes. No one should be able to deduct more than 2 kids. If the governemnt weren`t subsidizing over priced housing, overpriced taxing, maybe prices would be as rediculous as they are in some areas. Ya??

1Poland Spring
Steven Peterson
February 22, 201 Well, I`m renting after losing a home to a short sale. Along the way, we learned that equity has become an illusion for anyone other than the bank. We`ve posted a lessons learned document for the kids: desolationpress/finmeth/finmeth.html It also inspired another essay for the adults: desolationpress/essays/allthemarbles.html Think long and hard before signing anything, folks.


cprosario97 @cprosario97from Twitter 22 Feb @dat_santana good article!


RICHARD BADER
February 22, 201 So: You think you own your home? It`s a myth. You are renting the land from the government. It`s called property taxes. In England the land was owned by the king and so you rented it from him. He could take it back if he wanted to. In the U.S. you rent from the state. They can take it back if they want through eminent domain or if you don`t pay the government their rent (property tax) Now about property taxes. The rule of thumb for those of us that own houses that we rent is: with 20% down the rent covers mortgage payments and other fees that normally the renter doesn`t pay but not the property taxes. Renter pays water, gas and light. Renting a home is all about appreciation and paying down the principal using the rent income. Appreciation hasn`t worked real well over the time Obama has been in office. Oh if you rent a house you are in the Passive Income Category and have limited ability to write off those losses. So my conclusion. Renting is a real good deal. Negotiate a five year lease with small increases so that market conditions don`t drive up the cost of rent. You can simulate the appreciation and mortgage principal buildup by putting the money you save into some kind of financial instrument and when something breaks ask the landlord to fix it.

2Poland SpringGeno Bronzi
nonya now
February 22, 201 @RICHARD BADER nah, your angle is fool fodder. The object is to own your own home and then own 1-2 rental properties, the money from the rental properties cover the cost of your house and of the 1-2 rentals. Plus, you get to write off everything under the sun on the taxes for them. Who cares about appreciation, you get get the renter to pay off your property. Come time to sell you stick it to the govt. again, you `move` into that property for two years the sell it and don`t pay a dime in capital gains taxes.

1J.B. Robert
Baylor Parry
February 22, 201 @RICHARD BADER That does not work well in US. In Asia, yes. But not in US - unless of course, the Fed keeps blowing bubble after bubble. You are better of using your dollar else where.

1Geno Bronzi
Richard Bader
February 25, 201 Wish that you were right, but unfortunately you`re not. I am an owner of a large number of rental homes. As I said above Passive Income tax rules limits the amount you can write off so if you don`t have passive income to offset passive losses you eat the losses without any tax break. You probably already know that Passive Losses cannot offset ordinary income. So the government doesn`t eat anything. Sorry! wish it were something different Oh you`re right about the rent paying off the mortgage but you have to hold the property for abut 12 years before the principal starts decreasing substantially. The property taxes and the parcel taxes get you if you own rental property.


The Gray Adder
February 22, 201 That`s 1% not counting school tax. In New York State, that`ll run you another couple of points.


dhtherex @dhtherexfrom Twitter 22 Feb @MarketWatchPF my opinion says that renting on a temporary basis is really the best for right now...owning is dang expensive.

3Poland SpringGeno BronziChristy Tragenn
Joseph Langley
February 22, 201 Probably the biggest reason to buy a home for the average person is retirement. Most people don`t save very much, so even if there was a financial benefit to renting over buying, the average family would probably spend it. People are generally glad to have built up 200k in home equity and/or are happy to only be paying half the amount of renting in insurance/maintenance/property taxes when they are in their 60s and looking to retire. Even if they don`t want to own the home anymore in retirement, having that extra cash to retire on is very handy.

1zindel bauchi
nonya now
February 22, 201 @Joseph Langley other problem most over look when comes to renting vs. owning your own home you leave nothing to heirs when you rent vs. if you own your house. Generally speaking this means your family ends up poorer and poorer generation after generation, but I guess so many come from dysfunctional broken families these days(which you can thank govt. policies in part for) that it doesn`t matter to them.


John Nystrom
February 22, 201 @Joseph Langley Actually a very good point! Am dealing with an elderly parent who is still able to live at home because they paid off their home .. once that income is relatively fixed in retirement, there is a chunk of change that can be used for food, medicine, and health care needs, rather than paying an ever increasing rent payment!


Geno Bronzi
February 22, 201 @John Nystrom Don`t be silly. Rental rates are falling and rental rates are are half the ongoing inflated costs of owning a depreciating hosue.


Steve Carapiet
February 22, 201 @Joseph Langley forced savings.


Lou Baron
February 22, 201 Wow the "journalist" includes the cost of utilities for owners and excludes them for renters.

1Paul Anders
Larry Reznik
February 22, 201 @Lou Baron I can`t speak for all renters, but my landlord pays the utilities. I just pay the rent.

1Geno Bronzi
Lou Baron
February 22, 201 @Larry Reznik @Lou Baron Larry, it sounds like you have a good value that you are happy with. I currently have 27 single family rental homes in the Orlando Fl area that I rent out. My tenants pay all utilities as well as lawn maintenance. After paying insurance, property taxes and maintenance I make a 16% profit. I love all the articles guiding folks to rent, they`re helping me build my business. I`m aggressively purchasing 27 more homes to satisfy the demand. Have a great weekend.


Baylor Parry
February 22, 201 @Lou Baron Boolsheet

1Geno Bronzi
KENT MACFARLAND
February 22, 201 @Lou Baron I noticed that to.


guyshares @guysharesfrom Twitter 22 Feb @MarketWatchPF Buy when you are ready, not when the market tells you to.

1Paul Anders
Rusty Slade
February 22, 201 This person forgot about PMI. . . . .10% down means you pay PMI. But hey whatever. . . It`s about quality of life and what you can afford to get it.. . . . Personally, if your monthly mortgage after the interest deduction is equal to rent in the same area, then you buy.. . . . .






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most newly originated Agency mortgages are underwritten - scottm1207 | Dec 26, 2012 10:14 AM ET And the Gubmint keeps trying to interfere with perfectly good markets to make the unreal, real. Keep blasting money out there on borrowed time and false promi... - by Acc455

the real estate increases is investor based - countdown_to_facebook_ipo | Feb 27, 2013 10:39 AM ET The Chinese are buying up all the distressed real estate. zerohedge/news/2013-01-22/chinese-politicians-are-buying-billions-us-real-estate Diana, ... - by 52BIC

Banks Told To Review Their Own Foreclosures - countdown_to_facebook_ipo | Feb 13, 2013 08:30 AM ET Sharks being asked to report on other sharks. Priceless.

PINKFLOYD1 | Feb 13, 2013 08:34 AM ET The banks will get out of all this ... - by Fish24

New Foreclosures Near Six-Year Low in December: RealtyTrac - Mr.Clumpus | Jan 17, 2013 06:01 AM ET Diana Olick is not going to like this bit of news one bit.

thereugoagain | Jan 18, 2013 10:29 AM ET The Obama administration has turned this coun... - by Cage277

Lenders will have LOTS of cash to lend - TEA_BAGGIN_IDIOT | Feb 27, 2013 08:10 AM ET no....I look forward to the collapse of this country......at that time the revolution will begin

NewDay12 | Feb 27, 2013 10:01 AM ET No one... - by GPX458



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