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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 01:17 PM   #41
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by brewer12345
I never really understood that.* Yeah, its nice to be in a place with good schools, but there are also excellent private and parochial schools in many places.* We consciously made a decision to skip the hugely inflated prices that went with the nearby towns with famed school systems because the trade off between higher housing prices (and taxes) versus parochial school tuition was a no-brainer.
in the northeast the high property taxes are really subsidized child care. the schools have buses and plenty of activities to baby sit your kids while you are still at work. and the property taxes to pay for this are deductible from federal taxes so you get a discount. plus your home is worth more. My opinion is that unless you are putting your kid in some elite private academy like Andover, the best deal is a good school district.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 01:20 PM   #42
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by dex
A couple of thoughts:
First the cost of houses will come down but not as significatly as they went up.* If a house went up 100% over a period of time I doubt it will fall by 50% or back to the original purchase price.* So what size adjustment is price are we talking about here?* The major change is or will be in seller's expectations - from one of making a large amount of money to breaking even (taking into account sales commission and other costs).* Expectations will be taking a large hit.

As a buyer* - apx 6 months or more away - and RE this is all great news.
homes will drop to the point where sellers will take the cash and run. remember that even if we are in a bubble and we won't know for sure until next may the big builders will continue building and selling new homes even if they have to drop prices to where they break even on every home. if you live in an area where they can still build a lot, you have to compete against the new homes to sell.

i'm very conservative when it comes to buying a home since it's a long term investment and won't buy anything outside my price range. better to wait or buy something smaller than risk foreclosure in the future.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 01:24 PM   #43
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by al_bundy
in the northeast the high property taxes are really subsidized child care. the schools have buses and plenty of activities to baby sit your kids while you are still at work. and the property taxes to pay for this are deductible from federal taxes so you get a discount. plus your home is worth more. My opinion is that unless you are putting your kid in some elite private academy like Andover, the best deal is a good school district.
Hmmm, well, even assuming I agree about the childcare thing (which I don't), living in the better school district would have cost me a minimum of an extra 200k in house cost up front. That's without getting into the extra 2 to 5k a year in in extra RE taxes. Doesn't sound like a great deal to me.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 01:27 PM   #44
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by Jay_Gatsby
DF and I are looking to buy sometime during the Fall of 2007
Heh.* *I like the sound of that -- "The Fall of 2007."*

It has a nicer ring than the Great Recession of 2007 used by this economist:

"The Biggest Slump in US Housing in the Last 40 Years"…or 53 Years?
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 02:03 PM   #45
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by brewer12345
living in the better school district would have cost me a minimum of an extra 200k in house cost up front.*
Wow!!* ** That is very, very different than here in northern Illinois.* Assuming your house is valued at say, $500k, that would be a 40% premium for better schools, all other things being the same.* Wow!!

I won't try to estimate what the premium would be here since I haven't been house shopping since I assisted my son and DIL several years ago. But it was no where near that kind of premium then. BTW, we were paying special attention to the school system because number one grandchild has special needs, usually unaccomodated by private schools.

I had no idea, again with all other things being the same, highly rated schools deliver that much premium to house prices in some parts of the country.* I agree with your decision to go with the private schools and save $200k on the house.* Wow!* That just seems totally out of line!* There must really be some serious educational issues in the neighborhoods with subpar schools for the neighborhoods with the best schools to get such a premium.*
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 02:13 PM   #46
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by wab
Heh. I like the sound of that -- "The Fall of 2007."

It has a nicer ring than the Great Recession of 2007 used by this economist:

"The Biggest Slump in US Housing in the Last 40 Years"…or 53 Years?
Interesting play on words I guess. Then again, I was always taught to capitalize the names of the seasons.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 02:24 PM   #47
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by al_bundy
in the northeast the high property taxes are really subsidized child care. the schools have buses and plenty of activities to baby sit your kids while you are still at work. and the property taxes to pay for this are deductible from federal taxes so you get a discount. plus your home is worth more. My opinion is that unless you are putting your kid in some elite private academy like Andover, the best deal is a good school district.
There is a great movie off of this starring one of my favorite actors, and as luck would have it, one of my favorite actresses. Alan Arkin and Marisa Tomei in "Slums of Beverly Hills." It's about a family that wanders from eviction to eviction, always trying to stay within the Beverly Hills School district.

In fact, I believe that if you have at least a couple kids, and you and more importantly your kids are not sensitive to your neighbors living more lavishly than you live there are many school districts where the quality and amenities are so good that renting an apartment within their boundaries you are getting a good deal on tuition and childcare of very high quality and a free side benefit of living space.

No fights over who cuts the grass either. You just have to keep an eye out for who your daughter is hanging out with after school. But with everything you are saving, your wife can probably afford to take a minimum stress job working for the school, and watch the kids 24x7. All this, and she saves on gas, earns a pension and healthcare, and is home to fix your Martini when you the proud road warrior come in the door and call out, “Honey, I’m home!”

Oh the pain of regret. I wish I had my life to live over!

Ha

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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 02:27 PM   #48
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by youbet

I had no idea, again with all other things being the same, highly rated schools deliver that much premium to house prices in some parts of the country.* I agree with your decision to go with the private schools and save $200k on the house.* Wow!* That just seems totally out of line!* There must really be some serious educational issues in the neighborhoods with subpar schools for the neighborhoods with the best schools to get such a premium.*
There is also a substantial prestige premium attached to the community with the higher prices and better schools, so not everything is equal. *My neighbors are construction workers, shift foremen, self-employed people, contractors, the occasional actuary and guy like me, and school district employees. *The hoity-toity place has lots of PhDs, high toned white collar jobs, financial industry stuff etc. *But I am a lot more comfortable with my Chevy driving blue collar neighbors than I would be in the more expensive area.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 03:15 PM   #49
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

Another approach to where to live vis a vie school district quality.

I think it is fairly common to allow students to go to school in the district that their parents work. This worked out for us as we live in a nice town with subpar schools but I work in an area with one of the better school districts in the state. From preschool onsite child care now to his entering senior year this has been the community for my younger son.

There ae a couple downsides, although no student has been cut once admited the new admissions definitely depends on available space and this ties me to the job more than most arrangements. Fortunately I like my job so that has not been much of an issue. I can actually look out from my office and see my son's school. I drive this way every day so it has not been an issue about school related transportation. I know folks who have moved into this school district because private school tutiton was $5-10K per kid, with 2 or more kids that adds up to the house not being so expensive. At the end you have 1) a nice area to live in2) good schools and 3) house equity. The downside can be a materialistic culture ( hint, the student parking lot has cars multiple times the value of the teacher lot) and keep your eyes out for drug issues.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 04:52 PM   #50
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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We bought our first Oahu home in 1989 for $277K.

In 1990 it appraised at $425K.* Part of that was due to $30K of landscaping & home improvements, including at least the equivalent in sweat equity.

By 1996 it appraised for $243K and stayed there for 3-4 years.

Today it'd sell for ~$600K but the tenants would not be happy.
So, Nords, you kept the house, rented it at some point, and it came back over time.* Are you satisfied with that result?*

I ask because I am in the process of getting this northern california rental home ready to sell.* (yes, it's taking a while -- reasons include my deadbeat sister tenant -- but that's another story.)

As prices go south I'm wondering whether I should keep it and get new tenants (who are not related to me!), which was my original plan all along until the bubble started inflating.

Do you, Nords, or any other buy-and-hold folks out there, have any wisdom on this score?*

(I should mention that I bought 9 years ago for $129 or so -- current evaluation is somewhere around $400.* The prospect of sinking back to the $100s is sobering to say the least, but if I felt the regular cycle would hold I could probably live with tenants covering my PITI payment twice over.)
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 06:02 PM   #51
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by HaHa
T
In fact, I believe that if you have at least a couple kids, and you and more importantly your kids are not sensitive to your neighbors living more lavishly than you live there are many school districts where the quality and amenities are so good that renting an apartment within their boundaries you are getting a good deal on tuition and childcare of very high quality and a free side benefit of living space.
Children, especially teens, can be very rigid regarding status. Poorest kids in school will almost inevitably be low status.



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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 06:07 PM   #52
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by brewer12345
If you can find a 'hood with reasonable amenities, taxes, and nice neighbors that isn't next to the smelter or something, might be wotrth investigating that private school trade-off.
If there is such a trade-off to be had. A lot of places don't have any private schools at all, let alone good ones. We bought in a good school district because the private alternatives in town are pathetically amateurish, bad, and not even certified.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 06:24 PM   #53
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by Caroline
(I should mention that I bought 9 years ago for $129 or so -- current evaluation is somewhere around $400. The prospect of sinking back to the $100s is sobering to say the least, but if I felt the regular cycle would hold I could probably live with tenants covering my PITI payment twice over.)
Numbers, Caroline...show me the numbers!

What is your PITI payment? What is comparable rent going for? What is the condition of the house? What is your current mortgage balance?
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 07:56 PM   #54
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by Martha
Children, especially teens, can be very rigid regarding status.* Poorest kids in school will almost inevitably be low status.*
I understand your point. But what is the early retiree in an expensive area to do? Condemn his kids to being the outcasts, or condemn them to a crappy education?

Possibly the real answers to this would not be welcome on an ER forum

Ha
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-24-2006, 09:14 PM   #55
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

From Peter76
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Numbers, Caroline...show me the numbers!

What is your PITI payment? What is comparable rent going for? What is the condition of the house? What is your current mortgage balance?
Thanks for asking, Peter:*

PITI is $836
Rent is 1400-1600 mo., per mgt. company.
Condition of House (since I've been sprucing it up to sell -- VERY GOOD!
Current mortgage balance $45K

I'd thought it was a no-brainer to sell this thing at $450 or so, which was what surrounding houses were going for as late as March (and what it was appraised at).*

If it's down around $400 now, and dropping, I'm wondering if I should just hold it for 5-7 years till the prices go up.* The mortgage would be that much smaller, etc. etc.* Area demographics look good -- no lack of upper working / lower white collar folks moving into California (some pundits out here are suggesting that people will start to buy again as early as the spring.)

But then there's the aggro. of keeping it...

You know, maybe I'm just considering this to keep myself from worrying too much while I wait for someone to want to buy it.*

Not like I lose either way...* it's just that wrangling the emotions is the hardest part.* I'm VERY happy to have discovered YMOL, LBYM, FIRE, etc. etc. but there IS a small downside.* It's that I look at everything through the prism of retirement.* *Every extra dollar made on this house is a dollar closer to retirement from my sucky job.* That's bound to raise the anxiety level...

Excuse me, please, for obsessing over a problem a lot of people would love to have.*
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-25-2006, 03:17 AM   #56
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by brewer12345
Heh, one of the towns nearby is famed for its school system. It is a well-off area, but I think the real reason for the high test scores is that its the town where a major Bell Labs facility is situated. You don't think the kids of all those science and math PhDs tilt the scores a tad, do you?
I grew up in one of those NJ towns in the 60's with a geeky (wonderful) PhD Dad toiling away at Bell Labs. Family of 6 in our 1500 sq ft split level and a neighborhood that was like an extended family. -----I miss the simplicity of "home" from those days.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-25-2006, 06:33 AM   #57
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

Caroline,
Have you lived in the house two of the last five years? If so I would seriously take the profits (tax free). The rents aren't that high in the area so no need to stick around for that. Just set the minimum amount that you want to profit and put it up for sale. If the "tenant" is still their get her out and start showing it. Homes show much better when tenants aren't living in a home (unless they took care of it like their own) or in the when realtors come to show it.

BTW- Very nice problem to have.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-25-2006, 06:39 AM   #58
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

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Originally Posted by HaHa
I understand your point. But what is the early retiree in an expensive area to do? Condemn his kids to being the outcasts, or condemn them to a crappy education?

Possibly the real answers to this would not be welcome on an ER forum

Ha
Eh, you are thinking too rigid. Remmber taht our hypothetical Er is capable of being a lot more flexible than the working stiff and he also probably has a big wad of capital at his disposal.
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-25-2006, 06:46 AM   #59
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

Caroline,

The only reason to keep the house is if you can not find a better investment... since you are not living in the house... think of it as stock... would you sell stock if it was going down and transfer the funds to another stock?? Or would you just continue to collect the dividends (rent) and wait for the value of the stock to possibly go back up...

Also, the taxes are a big thing on the home... like someone said, if you can have it as a homestead then your gain is not taxable... if you continue to rent then it will be taxable.... (of course, you could move back in for a few years and make it a homestead again...)..

Just my thoughts...
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years
Old 08-25-2006, 07:56 AM   #60
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Re: U.S. Economy: Home Sales Drop to Lowest in More Than Two Years

Update:* My ex just got a contract on the family home for $280K, after spending 40K in improvements and upgrades in the past 2 years.* We bought it for $245K in 1995.* Glad I didn't keep the house!
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