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Old 01-24-2011, 04:58 PM   #21
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Originally Posted by donheff View Post
Sounds like a lot of us FIRE'd folks
Heck yeah -- the FIREd are the ideal group that fits that category. But it doesn't fit the bill for most Young Dreamers.

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Old 01-25-2011, 02:55 PM   #22
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Housing prices are still falling in many areas, even with interest rates so low and banks not releasing numerous empty homes onto the market(at least here in SoCal). Historically bubbles have not been reinflated.

U.S. Home Prices Slump Again, Hitting New Lows - Yahoo! Finance

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Old 01-25-2011, 03:07 PM   #23
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Slight topic derail (and mods, feel free to split this into a new thread if appropriate):
With rates so low, it may be a great time to get a mortgage/refi. But if paying cash
for a house, does that mean it's one of the worst times to buy?

As rates go up, the same loan amount will result in higher monthly payments,
and it seems like many (most?) buyers look at monthly payments to gauge
what they can afford. Seems like that will put downward pressure on prices.
If you were considering paying cash for a property, would this influence
your timing?
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Old 01-25-2011, 05:26 PM   #24
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Originally Posted by Pete View Post
Historically bubbles have not been reinflated.
If it's housing bubbles you are talking about, there really isn't any history. And stock market bubbles-aren't we right now seeing a pretty good re-inflation?

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Old 01-25-2011, 10:27 PM   #25
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Originally Posted by figner View Post
As rates go up, the same loan amount will result in higher monthly payments, and it seems like many (most?) buyers look at monthly payments to gauge what they can afford. Seems like that will put downward pressure on prices. If you were considering paying cash for a property, would this influence your timing?
That's one effect, but perhaps it's minor in comparison to the effect of (unemployed) potential homeowners being unable to obtain a mortgage at just about any interest rate. Other potential upgrading homeowners might still be underwater in their home mortgages and unable to sell at a price that would let them go shopping for a "better" home.

I think you base a real estate decision on a couple other factors:
1. Would I want to live here for a long time without worrying about landlords and rent increases?
2. Can I rent this property out at an attractive cash-on-cash return?

I wouldn't be counting on the real estate market making the home's value appreciate much faster than inflation. Even if that happened, if you were in either of the above situations then you'd still be reluctant to sell.

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Old 02-12-2011, 02:44 AM   #26
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Just a comment, since original poster seems very comfortable with the "immediate" equity of a short sale.

As other people posted, this may or may not be the case. I think realtors and people in the industry try to suggest that shorts are priced below market (I've heard 15%, I've heard 10%). On any case by case basis though, you really don't know for sure.

Don't forget the closing costs to buy.

And don't forget the costs to sell (realtor fees amongst other things that will pop up).

Equity isn't a number that you can easily calculate. If you get into a house and decide its not for you, or your employment picture changes (Referring to Nords words of caution), you are probably going to come out a loser in the short term.

Keep playing with numbers, you sound like you are approaching this very sensibly. Just try not to have too optimistic of an outlook, it could bite you.
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Old 02-12-2011, 06:13 PM   #27
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Get a roommate. That'll split the utilities and give you a little extra cash each month for the inevitable repair.
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Old 02-21-2011, 07:44 AM   #28
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Location, Location, Location. Some places are very depressed and purchasing a home may be a bargin compared to renting. Others not such a good deal. If you are married and starting a family you will quickly find that you will be considering things like schools, nieghborhoods etc over a tax deduction. Those things may be mutully exclusive as a depressed area has lower tax revenue and are cutting services like school programs. For us it is was hard to find a 3 bedroom rental that was less then a morgage, espeically when you want to stay put for 20 yrs.

We found it hard to retire early with a morgage and the many unforseen expences that home ownership can bring. Are kids are almost all in college and we will be renting a 2 bedroom that includes heat and hot water in an area with a low population. That way we can utilize the equity in our house and have the flexibilty that retiring early can bring.

I also like the idea of having a consistent expence that is all inclusive to control your budget.

Just Trekking thru!
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