Answer to Brad's Housing Question

[Aaron]

[rant]

You asked for the rant so here goes....

Housing prices are still climbing because interest rates are low.

Most people, when buying a house, look only at the monthly payment.  With
Interest rates low they can afford a more expensive house so people with
crappy houses want to sell for more.

The average age of the house buyer keeps dropping as well.  These people
tend to have less financial experience and don't research housing trends
like older buyers do. (I just bought a house and I fall into the "younger"
category although I researched for three years beforehand.)  They see the
"no money down" loans and jump into a house no matter what the price is.

The third problem is that we're led to believe from the time we're kids that
our lives aren't complete unless we own a house.  "You're throwing away
money." they say.  Well, my rent was $625 a month, my house payment is $759.
So it's costing me more...  "But you're building equity!"

"Huh?  All I see if $45 in equity a month for the first five years."

"But it's tax deductable."

"But it's still out of pocket and It's only $900 more than the standard
deduction I have now.  And what about the $300,000 the house will actually
cost me over the next 30 years?"

"But the house will appreciate over 30 years."

"So you're telling me that in 30 years... IF by some mirriclemy house value
has TRIPPLED...  I MIGHT break even on this whole deal?"

It's at this point the mortgage broker starts looking like a rat trapped in
a cage...  So why did I buy a house?  One reason:  A woman.

In my opinion the housing market is out of hand.  A friend of mine just
bought a 3 bedroom, 1 bath home in Johnson county for $125,000.  That
doesn't seem too bad untill you see that the house is 50 years old and only
950 sq ft.  It's because of this that I moved to Missouri.  I just got a
nice house, in a nice area, totally remolded, 1700 sq ft, 22 years old on
the forclosure block for under $100K.

My advise?  Only buy a house that you can afford to make twice the monthly
payment or more on
.  It's the only way I see I'll come out ahead.

AND....  HEH, you thought I was done....  To move this back to being Linux
related... Anyone want to come over and help me run CAT 5 through my money
pit?  I have 13 machines that need to be reconfigured and set up as well. :)

[/end rant]

Aaron

> --- Bradley Miller <bradmiller at dslonramp.com> wrote:
> > At 07:02 PM 8/1/02 -0500, Marvin [GodfatherofSoul] Bellamy wrote:
> > > BTW, to you
> > >home owners out there with some business knowledge.  Why is the
> > housing
> > >market still climbing?  You'd think that the value of housing would
> > drop
> > >now that fewer people can afford them.
> >
> > That's the wildcard in this weird economy -- a lot of people are
> > asking
> > those same questions.  I *thought* I read that existing home sales is
> > down,
> > while new home sales is still up?  Perhaps I'm wrong . . .
> >
> > My theory?  (And it can only be called that at best . . . )  I think
> > that
> > some people are still trading up/out/etc... while the interest rates
> > are
> > lower.  Why buy someone's used home for $100,000 when you can get a
> > brand
> > new home for $140,000 and about the same payment that someone 4-5
> > years ago
> > had?  That being said, I haven't seen too many new homes that I would
> > want
> > to pay even $100,000 for.  They are sloppily put together, cheap
> > looking
> > interior wise, and about as useful as  . . . well you get picture.
> > I'm
> > quite happy with my 20 year old house (1982 - hard to fathom . . . )
> > that
> > has a nice large driveway and real wood everywhere.  Our home was
> > model
> > home for this subdivision when it opened up so it has a lot of little
> > neato
> > (for the time) things to spruce it up
> >
> > -- Bradley Miller