Posts filed under 'Real Estate'
I read an interesting article today at efinancedirectory.com - detailing 5 “Rent vs. Buy” myths that we’ve all heard over and over in the past few years, dissecting them, and telling us why they are just that — myths. Myths that created a real estate buying frenzy that seemingly everyone got caught up in, buying houses they could barely afford because they were such a great investment. Certainly, some people were able to sell at the right time, and made a lot of money off of the housing bubble. A lot of other people, though, are currently losing their shirts. This article won’t help them now, but it does make a pretty good argument for renting.
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Yes, things have apparently gotten this bad. I read an article in the LA Times this week that profiles a couple of homeowners who are CHOOSING foreclosure after doing the numbers. Sounds shocking, but it does make some sense.
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Thus spake David Sambol, the president and chief operating officer of Countrywide, in an official statement today. But is that really fair? I mean, I’m not advocating throwing people out into the street or anything, and I don’t like to see people go into financial ruin, but when you sign up for an adjustable rate mortgage…. you’re signing up for an adjustable rate mortgage. That means that the rate ADJUSTS. You should be ready for that. It shouldn’t be a surprise.
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A few days ago I used several online calculators to get estimates of the value of my house. Most were simple online calculators, but one, from HouseValues.com, arrived in my inbox, sent by an actual human being — a realtor to be exact. He sent three comparables — recent sales in my neighborhood, all of which were priced $10,000 to $20,000 below what I paid for my house a few years ago, and an estimated range of $219,900 to $234,900.
Four years ago, I bought my house for $230,000. A year later, it was appraised for about $280,000. So this was unhappy news, even though I saw it coming.
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I’ve been using zillow.com to watch the value of my home slowly decline over the past couple of years… luckily, since I’ve been paying down the principal on my 30-year fixed mortgage as well as my home equity line of credit, I haven’t seen my “zestimate” (Zillow’s home value estimate) dip below what I owe. It’s come down by about $60,000, though, from what my appraisal was when I refinanced a few years ago. Such is the current housing market.
For comparison’s sake, lets see how my home value stacks up on a few different (free) sites
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It wasn’t long ago that it was the landlords offering incentives. With the housing market as soft as it is, renting has been looking more attractive every day. Where I am, landlords have stopped offering (as many) incentives, and rents have edged up, while vacancy rates have gone down. While a few years ago, everyone I knew was in a mad dash to become homeowners, the situation is now the reverse.
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For the fearless investor who’s on a very (very) long-term schedule, it seems that there’s a big opportunity out there just waiting to be snapped up… If you search for homes for sale in Detroit, Michigan, you’ll find that there are 22,387 homes for sale right now, and if you search for Detroit homes for sales between $0 and $20,000, you’ll find that there are 3,431 homes for sale in that price range!
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I was talking with some friends last night about how the government is bailing out people who “bought way more house than they could afford” on an adjustable rate mortgage. At first we were all united against it — after all, we were all responsible homeowners, watching our budgets, paying our bills on time. We were all on 30-year fixed mortgages in modest houses that we can afford. Why should these people get extra aid that we don’t? Where’s our reward for being responsible? If the government is handing out money, shouldn’t we get some too?
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After all of my speculative talk about buying the duplex next door, four months later, it’s still for sale. Still vacant, too. AND, when I came home from work today, its front door was adorned with a lovely blaze-orange sign notifying the would-be residents that the water will be shut off soon. No buyers in sight, AND, the owner apparently isn’t paying his bills, either. (How much could the water bill really be in a vacant house?)
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OK, so based on the title of this site, you can guess that I’m in the pro-duplex camp. I already bought one, so if anyone tells me it’s a poor investment, I’m not likely to want to hear what they have to say. I ran across an article today, however, that points out that the duplex is a unique (and relatively scarce) investment and place to live..
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On Yahoo finance today, the feature article in the real estate section is on a topic that I have always loved to hate: the McMansion. Any inner-city dweller worth his/her salt has to loathe the McMansion on principle, after all. They’re big (wait, huge) and grandiose and impressive, sure. That and they’re brand new. But they’re also soooooo close together, crammed onto lots in character-less new subdivisions, and the building materials always seem slightly cheap to me. I have a feeling that they will not age quite as well as their Victorian predecessors. They seem a bit ostentatious and over the top to me, kind of like the gold lamé of housing.
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The site, formerly a trainwreck-style source of amusement, is no longer. The real estate blog of foreclosure has been foreclosed on by its very author. There was a brief notice up on the site, which said…
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So, I read this article on yahoo news today, talking about how a house is actually (contrary to popular thinking) not so much an investment as a liability, or at best, not a very good investment.
Naysayers!
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So, I’ve been biding my time, not really thinking too seriously about buying the duplex next door (but thinking about it, nonetheless). It went up for sale a month ago, and the sign is still there. I haven’t seen a great deal of activity there (both units are currently vacant), although they do periodically mow the grass (not really as often as they should when trying to sell the place, however.). All of this cashflow 101 playing has gotten me wondering a little more seriously about it…. and doing the math over again.
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I recently got hooked (ok, not quite as hooked as the person who introduced me to it) on the computer game “Cashflow.” Designed by Robert Kiyosaki (well known author of “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and Middle Class Do Not!
“), it’s an interactive game that teaches the value of passive income. And it actually got me to sit down and work out what all of my actual costs were on my duplex, and figure out what I was paying in rent these days (I did this at the beginning, when I first bought the duplex, but taxes have since gone up, insurance has gone down, and I’ve raised the rent a bit).
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