[Ali Shiralian]

Originally Posted by fazman

no worries, read this: https://en.m.wikipedia.org/wiki/Tulip_mania

you will learn about popular known market cycles and how they evolve and crash

Interesting...

[fazman]

Originally Posted by zx10guy

The situation I recounted happened in 2001. So things could be very well different now. I do know when I bought my vacation property from my builder on the Eastern Shore in 2012 they wanted $10k down to initiate the contract. And if memory serves me correctly, I had to cut another $10k check when they broke ground. This was way more than what the same builder wanted when I bought my primary residence back in 2001 when I think I only had to put $5k down until I went to closing. So your $15k down payment isn't the big deal you make it out to be.

Back to the story I mentioned in my post above. It wouldn't have mattered if the person changed their mind. I actually liked my furniture and most of it wasn't cheap stuff. The finances didn't depend on me having to sell my furniture to make things work. Also, I would have to buy all new furniture anyways, if I sold it.

I think you missed the point, it's not about showing off down payment amounts... (if that was the point then all my friends who just make all cash offers above asking price win that claim), the point was in reference to your comment that in your region the norm was $500/$1000 with offer letter and a $5000 with offer letter was "LIKE WOW" in your story. My point is, every region is unique and different... what is "LIkE WOW" in your region is not even going to get your offer letter presented to anyone to look at in other regions. That's all, like i said... all cash offers with no contingencies trumps all but a higher priced offer.

[David70]

Originally Posted by fazman

However, in the long run, stocks are a much more profitable investment since I don't have to pay for insurance/property taxes/etc on them. If you look at 50 years of any index and 50 years of home gains... you will see that stocks make more money.

Agree. Buy as much house as you need and put the rest in stocks and you are virtually guaranteed over time to come out ahead compared to buying much more house than you need and nothing into stocks. Reality is you need a place to live but where you live generally isn't a great investment (general terms, not true of every house in the U.S.).

Paying high taxes (regardless of the asset appreciating or not), insurance, maintenance, and then high costs to buy and sell the investment all cut into the return.

To the original question, maybe there will be a crash in certain markets, and in the near future but I don't see it happening on a national level or where I live anytime soon.

[JasonCSU]

Originally Posted by BMW F22

What about PMI? Can I take out another mortgage for the difference in order to pay no PMI?

I did this on a place I bought 10 years ago to avoid PMI; 80% on one mortgage and 20% on the other. I believe this is one of the lending practices that has since been eliminated.

[zx10guy]

Originally Posted by JasonCSU

I did this on a place I bought 10 years ago to avoid PMI; 80% on one mortgage and 20% on the other. I believe this is one of the lending practices that has since been eliminated.

The more common scenario is the 80/15/5 or 80/10/10. 80% would be the primary mortgage on the house. The 15 or 10% would be a second mortgage on the house. And the 5 or 10% would be the cash down payment you would have to come up with. I did the 80/15/5 when I bought the house I'm in now back in 2001. Be aware because the second mortgage carries a higher risk over the first mortgage, your interest rate will be higher on this one. Unless things have changed, you're able to claim PMI on your taxes subject to certain qualifying factors. I don't know exactly what the terms are as when I did have to pay PMI, the Feds didn't allow me to claim it on my taxes. And when the Feds made the change, I wasn't dealing with PMI any more.

You have to do an analysis to see if doing a first and second mortgage to avoid PMI is worth it taking into account the ability to claim PMI on your taxes. Plus there are other ways to lessen the sting of PMI such as prepaying PMI and rolling it into your primary mortgage if the lender allows this.

[-BEASTMW-]

With my wife and I now in the market for a first-time home in the Bay ****, this is definitely top of mind. I know it's far from a buyer's market, which sucks - we should have bought a year or two ago but weren't really ready. However, with our family expanding soon, we need to move out of our 1-bd apartment, and even a renting a 2-bd is crazy expensive - about the same as a new 3-bd townhouse we are looking at buying, after tax deductions.

I think a downturn in the next 3-4 years is likely, however A) it won't be as severe as the massive downturn we experienced a few years ago, and B) at least in this ****, with tons of growing tech companies (I'm talking the giant ones, not the overvalued startups) and little available land left that's a decent commute to these jobs, the downturn will be short-lived.

It wouldn't surprise me if there is a 15% downturn in the next year or two. However, in this **** the growth has been 10%+ (in the case of our very local ****, sometimes 20%+). Even if there is a 15% downturn in 2017, if it's surrounded by even 5% growth this year and a couple more years of 3-5% growth either in front of or behind the drop, by Year 5-6 you're still okay.

[BMW F22]

****

[-BEASTMW-]

Originally Posted by BMW F22

****

Yeah, why is "a r e a" censored?!

[BMW F22]

Originally Posted by -BEASTMW-

Yeah, why is "a r e a" censored?!

I don't know. The whole time while reading your post I thought you mean to say shit. Lol

[DrFerry]

Something to do with A_R_E_A_51

[ASAP]

area

[fravel]

Originally Posted by okusa

College students? They are irrelevant to this discussion as they are not homebuyers. The debt does not have an impact until interest rates and inflation increase.

I'll agree to disagree - and I'm a perfect example why; I'm a 28 year old college grad with a solid job, but I'm not even considering buying a home in the next 5-10 years (if ever) because my student loan burden is such that I can't risk having a variable cost tied to my living expenses. I'd rather rent and know exactly what my costs are going to be month-in-and-month-out and not have to worry about maintenance over spending all my free time and money maintaining a house.

My plan had always been to graduate, settle down/buy a home and live the dream - and I'm sure I wasn't alone in that thought; but that goal isn't a feasible reality for me (and many of my peers) anytime soon.

[rcracin]

Originally Posted by fravel

I'll agree to disagree - and I'm a perfect example why; I'm a 28 year old college grad with a solid job, but I'm not even considering buying a home in the next 5-10 years (if ever) because my student loan burden is such that I can't risk having a variable cost tied to my living expenses. I'd rather rent and know exactly what my costs are going to be month-in-and-month-out and not have to worry about maintenance over spending all my free time and money maintaining a house.

My plan had always been to graduate, settle down/buy a home and live the dream - and I'm sure I wasn't alone in that thought; but that goal isn't a feasible reality for me (and many of my peers) anytime soon.

This is exactly the point that people older than you and I are missing. All their fucking wisdom has left us with complete shit.

[Kidscollege$]

Originally Posted by fravel

I'll agree to disagree - and I'm a perfect example why; I'm a 28 year old college grad with a solid job, but I'm not even considering buying a home in the next 5-10 years (if ever) because my student loan burden is such that I can't risk having a variable cost tied to my living expenses. I'd rather rent and know exactly what my costs are going to be month-in-and-month-out and not have to worry about maintenance over spending all my free time and money maintaining a house.

My plan had always been to graduate, settle down/buy a home and live the dream - and I'm sure I wasn't alone in that thought; but that goal isn't a feasible reality for me (and many of my peers) anytime soon.

^THIS^ is why I am hearing of another housing crash. College students not being able to afford a house due to student loan payments are too high. In our area there are HUGE apartment complexes going up all over the place. It is easy to get approved for a $1200 apartment rental, but not for a house payment of the same amount.

EDIT: When I say College Students...I meant COLLEGE GRADUATES

[Kidscollege$]

Originally Posted by -BEASTMW-

Yeah, why is "a r e a" censored?!

Originally Posted by BMW F22

I don't know. The whole time while reading your post I thought you mean to say shit. Lol

Originally Posted by DrFerry

Something to do with A_R_E_A_51

Originally Posted by ASAP

area

Areola?

[David70]

For there to be a rise in prices, then a bubble that bursts and a resulting crash something has to change drastically enough to cause this "burst". Subprime loans, the economy, other outside factors, can cause rises in values and then a sudden drop. Has there been a drastic change in college loans that has allowed the market to improve recently (people buying houses the last couple of years) that will soon come to an end and cause housing values to plummet?

I don't see people that aren't home owners not being able to afford houses causing a crash, maybe long term values won't go up like they used to or maybe they will drop slowly but not a crash.

[okusa]

Originally Posted by fravel

I'll agree to disagree - and I'm a perfect example why; I'm a 28 year old college grad with a solid job, but I'm not even considering buying a home in the next 5-10 years (if ever) because my student loan burden is such that I can't risk having a variable cost tied to my living expenses. I'd rather rent and know exactly what my costs are going to be month-in-and-month-out and not have to worry about maintenance over spending all my free time and money maintaining a house.

My plan had always been to graduate, settle down/buy a home and live the dream - and I'm sure I wasn't alone in that thought; but that goal isn't a feasible reality for me (and many of my peers) anytime soon.

A home is a fixed, not variable, cost. Yes, there are maintenance items to be considered by that's no different than another other use asset, e.g., M3.

Which brings me to my next point, which is not necessarily directed at you. It seems to me that recent college grads often have their priorities out of order. I see a lot of 20 somethings driving around in M3s and similar vehicles but then complaining about their lack of income. So many attitudes of entitlements and backwards priorities.

Recent college grads are supposed to struggle. They are supposed to rent crappy apartments (with roommates if needed), drive crappy cars and scrape to save every penny they can in the hopes of bettering their financial situation OVER TIME. If they were really diligent they would have started this process in high school by studying more, partying less, getting into a better college and ultimately improving their changes of entering into a higher paying career (assuming their goals are largely financially driven).

Anyone who even suggests, at 28, that they may never achieve their dreams, has already taken themselves out of the game.

[fravel]

Originally Posted by David70

For there to be a rise in prices, then a bubble that bursts and a resulting crash something has to change drastically enough to cause this "burst". Subprime loans, the economy, other outside factors, can cause rises in values and then a sudden drop. Has there been a drastic change in college loans that has allowed the market to improve recently (people buying houses the last couple of years) that will soon come to an end and cause housing values to plummet?

I don't see people that aren't home owners not being able to afford houses causing a crash, maybe long term values won't go up like they used to or maybe they will drop slowly but not a crash.

The market can't be sustained just by people who already own homes. At some point you're going to need new buyers, but the large majority of my generation isn't and won't be in a position to be able to buy a home anytime soon.

Originally Posted by okusa

A home is a fixed, not variable, cost. Yes, there are maintenance items to be considered by that's no different than another other use asset, e.g., M3.

Maybe the monthly payment is fixed, but property taxes aren't, the cost of a new roof or water heater or other expensive appliances isn't. Ohh, the basement flooded? There's $5k in cleanup expenses. These are "when" not "if" scenarios - I don't have the flexibility in my budget to allow for that kind of stuff. Short of completely blowing an engine dealing with maintenance on a used car vs. a house isn't even in the same ballpark from a financial perspective.

Originally Posted by okusa

Recent college grads are supposed to struggle. They are supposed to rent crappy apartments (with roommates if needed), drive crappy cars and scrape to save every penny they can in the hopes of bettering their financial situation OVER TIME. If they were really diligent they would have started this process in high school by studying more, partying less, getting into a better college and ultimately improving their changes of entering into a higher paying career (assuming their goals are largely financially driven).

Bolded - yeah, that's an idea that has really only taken hold since the job market took a nose dive. When I was in high school the narrative was "College graduates live the high life, everyone else flips burgers." The only reason I did my time schlepping through college because I believed it would have been a worthwhile endeavor - so far I have been proven wrong, and I know I'm not the only person in this boat. If anyone had suggested that even with a degree I was going to have to scrape by for 15-20 years after then I wouldn't have gone. I would have much rather dealt with shit pay at shit jobs with zero debt than the situation I'm in now.

Originally Posted by okusa

Anyone who even suggests, at 28, that they may never achieve their dreams, has already taken themselves out of the game.

Some goals are tied to time just as much as they are to finances. I'm not interested in starting a family at 40 - but realistically I won't be in position to support one until then. I'm also an adrenaline junkie, and bodies don't last forever - most of the stuff I want to do and experience is financially out of reach, and by the time they are in reach my body won't be able to do it... it's less stressful to just accept it.

[David70]

Originally Posted by fravel

The market can't be sustained just by people who already own homes. At some point you're going to need new buyers, but the large majority of my generation isn't and won't be in a position to be able to buy a home anytime soon.

The original question was about a crash. Young college graduates not being able to buy now doesn't lead to prices suddenly taking a dump.

Originally Posted by fravel

Maybe the monthly payment is fixed, but property taxes aren't, the cost of a new roof or water heater or other expensive appliances isn't. Ohh, the basement flooded? There's $5k in cleanup expenses. These are "when" not "if" scenarios - I don't have the flexibility in my budget to allow for that kind of stuff. Short of completely blowing an engine dealing with maintenance on a used car vs. a house isn't even in the same ballpark from a financial perspective.

My house payment won't ever change (principle/interest cost), property taxes have gone up a few hundred dollars per year in the 10 years I have been in my house. Yes there are maintenance/repair costs that you also need to be prepared for. You will also find that rent in the next 10 years is also likely to go up, to cover the property taxes, maintenance and repair, and overall costs for where you live.

Originally Posted by fravel

Bolded - yeah, that's an idea that has really only taken hold since the job market took a nose dive. When I was in high school the narrative was "College graduates live the high life, everyone else flips burgers." The only reason I did my time schlepping through college because I believed it would have been a worthwhile endeavor - so far I have been proven wrong, and I know I'm not the only person in this boat. If anyone had suggested that even with a degree I was going to have to scrape by for 15-20 years after then I wouldn't have gone. I would have much rather dealt with shit pay at shit jobs with zero debt than the situation I'm in now.

Some goals are tied to time just as much as they are to finances. I'm not interested in starting a family at 40 - but realistically I won't be in position to support one until then. I'm also an adrenaline junkie, and bodies don't last forever - most of the stuff I want to do and experience is financially out of reach, and by the time they are in reach my body won't be able to do it... it's less stressful to just accept it.

I am not sure where the idea that "college graduates live the high life" came from. It has always been true that a college degree is a good investment over your lifetime (on average - still depends on the person, the degree, and what they do with it). I graduated with an engineering degree in 1993, had pretty high student loans and it took a lot of time to get them paid off and to buy my 1st house.

At age 30, in TN (cheap housing market) I bought a 3 apartment old house and lived in one of them and drove a Civic (high life?). Slowly worked on the house, got paid more and eventually started to get ahead. I don't know at what point in time people graduated from college and suddenly could buy and do what they wanted. Definitively wasn't true of my parents either.

I really don't see that things were that much different than they are now and in the end, even if they are there is no point complaining about it.

[PoorLurker]

Originally Posted by okusa

Which brings me to my next point, which is not necessarily directed at you. It seems to me that recent college grads often have their priorities out of order. I see a lot of 20 somethings driving around in M3s and similar vehicles but then complaining about their lack of income. So many attitudes of entitlements and backwards priorities.

Always interesting to see people's reasoning for selling their F8x in the for sale threads here often times taking a pretty significant loss.

Often times, I wish I was making their decisions and driving a nice car because for those few miles, it's probably pretty freaking enjoyable...but I am just sitting here with my bicycle.


edit: What degrees are people getting? That often makes a huge difference too. Get $100k in debt for a degree that gives you a $35k job, you're setting yourself up for some hardships.

Get a degree in a STEM field, work hard, save money, and then you can enjoy the fruit of your labor. The longer you wait, the sweeter the fruit.

[ASAP]

Originally Posted by PoorLurker

Always interesting to see people's reasoning for selling their F8x in the for sale threads here often times taking a pretty significant loss.

Often times, I wish I was making their decisions and driving a nice car because for those few miles, it's probably pretty freaking enjoyable...but I am just sitting here with my bicycle.


edit: What degrees are people getting? That often makes a huge difference too. Get $100k in debt for a degree that gives you a $35k job, you're setting yourself up for some hardships.

Get a degree in a STEM field, work hard, save money, and then you can enjoy the fruit of your labor. The longer you wait, the sweeter the fruit.

I think what a lot of people in modern society (USA particularly) fail to understand is that we live in a capitalist economy. A capitalist economy only works based on "hard work" only at the absolute most basic level. In fact, I would argue that is simply a fallacy that the media wants you to think, to make things easier on the "owners" to keep you out of market control. That is, a stem field may get you a decent living, you may advance a certain bit but ultimately you are completely limited in the end until you become an "owner" of some sort. You have to figure out a way to conquer a market by either selling a product that people want or providing a service that people want at the "owner" level. At that point, waiting and hard work have ultimately 0 meaning... you will be a millionaire based on the fact that you control a market. If more people understood this, they wouldn't be as caught up as they are today working for corporations and so forth.

[PoorLurker]

Originally Posted by ASAP

I think what a lot of people in modern society (USA particularly) fail to understand is that we live in a capitalist economy. A capitalist economy only works based on "hard work" only at the absolute most basic level. In fact, I would argue that is simply a fallacy that the media wants you to think, to make things easier on the "owners" to keep you out of market control. That is, a stem field may get you a decent living, you may advance a certain bit but ultimately you are completely limited in the end until you become an "owner" of some sort. You have to figure out a way to conquer a market by either selling a product that people want or providing a service that people want at the "owner" level. At that point, waiting and hard work have ultimately 0 meaning... you will be a millionaire based on the fact that you control a market. If more people understood this, they wouldn't be as caught up as they are today working for corporations and so forth.

Do you feel a bird in the hand is worth two in the bush?

Being an owner takes risk. Many people don't want that type of risk. Hence, my comment about getting into a STEM field. Getting a solid job, working hard, move up, and accomplish tasks that separates themselves from others. Will they be a millionaire? Not in the better sense of the word. Will they be able to buy a house even in a HCOL area? Yes. Can they provide for a family? Yes.

Want to make a lot of money? Like you said... sell stuff. At the end of the day, a person who is really good at selling poop in a box will make more money than the engineer who designed the box.

Look at the salaries of Pharm reps/sales.

Look at how much real estate agents make.

However, commission based jobs are unstable. Make $500k/yr during a boom cycle and make nothing during a bust. Get caught up living like you make $500k, then that bust cycle is going to hurt like no other.

Business owners? Get one business... successful? Use it to leverage another one. Two successes? That's great, leverage to get another one. However, many people don't have that drive or may not care to worry about issues that accompany business ownership.

Some people have different goals and expectations of "enough". Some people don't have "enough" in their vocabulary when it comes to work.

$100k per year working 9-5 with benefits and no weekend work does appeal to people over making $200k trying to wheel and deal.

In closing - people need to figure out what they want in life and then try to build a path it.

I could do X, Y, and Z, however, I don't care enough about the things that "extra money" could provide me with.

Mastering contentment is quite the progression killer