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necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

I'm the usual HOA bitcher in these threads and didn't get much from my own "let's bitch about our HOAs" thread, so I'm going to rant about HOAs here hopefully not into the cold darkness of the forums.

Not everyone wants to own a house with a yard, white picket fence, and all that nonsense or you live in an area so expensive to purchase a single family home (SFH) and so a condominium starts looking attractive. Unfortunately, buying a condominium means that you will be subject to a private, almost completely unregulated semi-socialist organization known as a Homeowner's Association (HOA). But wait, if you do want that house with yard and fence, you may have an HOA as well! There are HOAs for certain SFH communities, but they are all but guaranteed to exist in any place where there are continuous, shared costs among homeowners. In some parts of the country, it is becoming impossible to find a home anywhere near a major city without an HOA.

Here's what to look for in an HOA:

1. Budget. An HOA without a solid bankroll will be unable to basically do anything and the value of your property will be affected. If an HOA goes bankrupt, it can't exactly file chapter 7 and reform or something - the HOA represents a community's interests and collective economic means. Would you marry someone with a repetitive history of bankruptcy / financial mismanagement?

2. Litigation history. About 85% of all HOAs in the country are going through litigations whether they be against homeowners, the city, the builders, or some random unlucky person. Lawsuits are obviously very costly and usually wind up raising the HOA dues considerably.

3. Annual / monthly due history. My HOA fee used to be about $70 / month about three years ago according to records. They have since raised the dues to now $309 / month over time due to various factors completely out of my control. Refusing to pay these dues will get a lien placed upon my property and make it impossible to sell until I have paid them as well as fines & interest. Most HOAs in the country for SFH communities do not have such high rates unless they're very exclusive or costs of everything are expectedly high (gated, private security, masseuses, community 2-screen theaters, etc.). If you're interested in such a place, the rest still applies to you anyway, so keep reading.

4. Percentage of owner occupied units. If there is a high percentage of renters in a community, you will probably want to avoid buying there. There are also restrictions on the types of loans available to you (for example, FHA loans) if your property is in a community of significant percentage of investment properties. Warning: some HOAs will lie to you and some HOAs are so inept at communicating with homeowners that they will not know which units are rented and which not. My HOA grossly underestimates the number of units that are rented because of extremely poor communication with a large number of poor English-speaking (but wealthy!) homeowners.

5. Good paperwork / bookkeeping by the HOA. An HOA that is organized and knows what it's doing is an HOA that is informed and more likely to be stable, keep your costs low, and provide you with a lot of things that most people living in SFHs will be jealous of as a result of their competence. Emergencies will happen, but an HOA that's well organized will handle it faster and help keep you as an owner informed.

6. Well-written, well-defined bylaws. The covenant / bylaws should be available for any potential homeowner upon demand and should be updated regularly. Poor HOAs will go overboard on the legalese or be so loose in wording that legal professionals just may call the bylaws null and void. This does depend upon your state.

7. Fines / penalties. These are the speeding tickets of an HOA. Many HOAs exact fees upon residents and their guests to keep their budgets in good check. A healthy HOA should be fining individuals that really do cause problems rather than those who have never caused problems. A poor HOA will be too lax and wind up costing residents big time because there are always stupid people that do dumb things to their property in an HOA - no exception.


I thought I had done the homework on my HOA before I bought my condo, but as a result of some really shoddy investigation by certain professionals during my process, I'm now stuck with a once pretty good property that's completely unattractive to buyers. Other people have wound up with HOAs that constantly fine them to the point where they can barely make it month to month. A quick Google search will show that HOAs can make day to day living a nightmare.

The good news about HOAs is that some states are starting to regulate HOAs and beginning to enact laws that require HOAs to have a certain amount of reserve funds, for starters. Unfortunately for those of us with HOAs, this is a double whammy - you will probably have to pay up more money to raise these funds or have to pay even more money if these funds aren't raised.

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necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Todd Flanders posted:

Is there any easy way to research this information?
Supposedly all I've written is in the Home Buying For Dummies book according to some family members (who have significantly more real estate experience than me), but I remember glancing at the section in a book I was reading and thought "well, that was useless."

Todd Flanders posted:

I'm considering a condo since it is more appealing than a house for various reasons. Or is that rookie mistake #1?
There's a lot of factors involved, but it is quite possible for condos to be better than houses depending upon what you want out of your living space. I don't consider a condo appropriate for me anymore but it was appropriate for me at the time I bought due to life events I didn't expect at the time of purchase (I'd argue it should be covered under tax law, but I know it's not).

Personally, I would advise against anyone buying a condo unless they already have a SFH or townhome. Even a 2000+ sq ft condo can be restrictive if you want things like a workshop garage, atrium, sun room, and other stuff requiring lots of actual land. However, one roof covers a lot of units, so if you plan to stick around a long time, it's a big relief to share costs of new roofing with others. A condo in a great location is fantastic to rent out over a couple decades due to the improvement to land value ratio and due to rental market demographics favoring occupancy rates of rental condos over rental SFHs.


The bottom line is that things you care about in a place to live are unique to you, and your HOA and your community's residents should align with you and your requirements just as much as your property itself. It makes buying real estate doubly hard, and because of that, I would discourage first time buyers from buying a condo unless they're in one of those places where you just aren't going to get a house anywhere near your job in the next 20+ years.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Don't you get some housing expenses paid for in the army? That's how it was for my dad in the US Army. Or is that some sort of enlisted v. officer compensation difference?

There are currently plenty of houses for rent in many areas since so many homeowners are unable to sell their properties to move. You should be able to get a decent deal on a house rental almost anywhere now.

Buying a place and expecting the area to do well is speculation - it may be educated, but it's speculation. A lot of areas looked like they were booming just fine during the boom years, but they were basically fueled by loose lending practices. I expected my area to get a good round of improvements with a new luxury mall and light rail, but due to the recession, all this has been delayed another 2-3 years.

But anyway, I would not recommend anyone that's not a real estate guru to strap themselves into a house and not expect to live there for very long. I've done a lot of homework and despite all my efforts I've honestly been pretty burned (although I took a risk or two I underestimated). If you don't want to deal with the hassles of being a landlord (property managers take a cut, and that still doesn't mean you don't need to pay for repairs), I would recommend you stay out of the real estate market if you intend on renting the place out whatsoever. If you do it right and get lucky, it's basically a steady revenue stream where you have to spend a bunch of cash for repairs every several years.

FidgetyRat posted:

You'll have to keep the place in working order, repair anything that is wrong with it, deal with tenants trashing the place, and all of that is very difficult to do if you live far away from the rental unit.
The risk of all this varies from property to property. I'm about 2500 miles from my property and have a property manager, but the tenants had better records than me and the area is pretty affluent, so the risk of such renters is very low. I plan on spending a good amount of time there anyway, and trips to the property are tax deductible business expenses - this is less relevant at lower tax brackets but get better the higher you get until you're at about $120k / yr AGI.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Different agents have different philosophies. The long-term career agents for the most part run on reputation and whether their past customers are actually happy with their home purchases. You can't deny they'll try to maximize commissions, but at the same time bad word of mouth is extremely detrimental to them and will cut into their future earnings for sure. So, I'd prefer to go with someone that's starting out and is tripping over themselves trying to find you anything in your budget range or someone that's so experienced and busy (even in this horribly low volume market) it's in their interest to get you a house that fits your needs.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

FidgetyRat posted:

Also, don't forget wedding gifts.. That could help if you close after november, otherwise it could certainly come in handy for boosting savings or buying new utilities.
Wedding gifts may only cover so much of the cost of the wedding, especially given that so many people are tightening their budgets now. The cost of my upcoming wedding (footed by her parents and mine) will be approximately $200 / guest (50 guests, aggregated), and given a lot of the guests are going to be young, not very affluent people, we're expecting maybe $20-$40 gifts from most of our guests with the big ticket stuff being footed by our parents (again).

glompix posted:

My agent is telling me I'm making a huge mistake by not buy a house right now.
Your agent is working in his interest unless he's a good friend of sorts. There are very, very, very few people in this world that will give you genuinely good, educated advice whatsoever, and even smart, educated people can be grossly wrong. Don't trust anyone whatsoever when they stand to make money off of you in any way or there's enough legal tape that doing anything remotely nasty to you would result in a lot of pain on the other party's part.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Rick Rickshaw posted:

I'm only 20, but I have a great job and very little expenses (I still live at home), so obviously I'm in a pretty good position at the moment, but I work for a small company, and while I feel my job is pretty secure, it's still a little scary to get wrapped into a mortage at this stage of my life. However, I've got money in the bank right now, and I'd love to do something with it.
I was 23 when I bought my place, and given that was 2 years ago, I think I could have made better investments in hindsight, but my road started with something similar to your situation (the start-up I was working for got bought, I made a good bit of money). I would make a big note that when you lose equity in a home, you can lose all your collateral / equity and then some. When your stocks drop maybe 70% like they have for a lot of people, at least you still have something.

If you want to get into trying to actually make money via real estate, you should look at buying REOs, foreclosures, etc. for the best deals (and be wary of the property's condition). In some states, it can be extremely difficult to do this (some states force buyers to put up 100% of the purchase price) while it's much easier in others. If you want to take a bit more backseat approach, you should be buying shares of REITs (Real Estate Investment Trusts) that are usually associated with residential and commercial properties. However, these trusts have basically tanked because basically anything touching real estate has dive-bombed in the past 2 years. If you want to buy a house and rent it out, you'll have to do some hard math.

My only advice I can give if you want to buy some real estate to make money on is to never, ever sway from the hard-fast rules (eg. min 10% cap rate) and to avoid mixing the business aspect of the home with your personal reasons for buying a property. If you can't easily make the mortgage payment with the expected rental income, I wouldn't buy it if you plan on renting it. This is why I recommend only buying foreclosures and bargain-bin priced homes - homes are priced way too high for you to rent them out and merely break even in almost every coastal city in the US.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

FidgetyRat posted:

I'm genuinely curious as to why people even go for townhomes/condos when SFH's are available. At least in my area, a Condo/Townhome can sell for just as much as a full 2-story home on a decent lot where neighbors aren't sharing walls.
Pricing varies from market to market, and in some very crowded markets, the cost of land is the breaking point. I'm considering a townhouse for my next purchase because:

1. I don't want more than a small yard, ever. I hate yardwork after doing it for 10 years as a kid for my parents. I don't want to pay for a gardener / landscaper either because I'm a cheapskate.
2. I like the style of a lot of townhouses in the target area (DC / VA)
3. Significantly cheaper than a SFH because the cost of land is huge. A SFH in my estimated budget was practically a ghetto. It was ludicrous even before the housing boom.
4. I expect to rent it out later and I expect townhouses to be far easier to rent than condos in my target market. There's an overabundance of condos I've seen and the area will be attractive enough to my target demographic that it'd be quite desirable.
5. There's almost no SFHs under $1 million that aren't crappy to me in the areas I want to live, and the thought of shelling that out for a house makes me cringe.
6. I won't have children, so it'll just be me, the woman, and the cats to take care of, and you don't need a big house for that whatsoever. Smaller families are going to be more common in the markets I'm looking at, making the selection and variety of townhouses greater than SFHs, too.

If I have an extra $200k or something by the time I'm ready again, then maybe I'd be in the market for a SFH where I'm looking, but I would rather put $200k toward buying land in the country and building a vacation home / ranch / farm for retirement instead of a smidgen more of house I don't want or need. Diminishing returns is a bitch when buying real estate.

Realjones posted:

#1 may be true, but does it take the HOA fee into account, which will likely be significantly higher with the condo?
HOA fees are affected a lot more by general property prices than density. Consider HOA fees for a community of 200 units w/ a pool v. a community of 100 w/ a pool - the cost of the pool / person is actually similar due to increased cost of maintenance per sq ft of the pool. Also, a high end community will have better amenities, raising costs quite a bit v. a community lacking much besides parking.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Doodarazumas posted:

I learned that the amount your house was purchased for is not what you can get away with on insurance coverage. Seems like drat near half the roofs in houston were replaced this winter, so it comes as no surprise.
There's three values you need to be concerned with when buying a house: purchase value, appraised value, and insured value. These values are all very different from each other in practice but should be all considered carefully before buying a place. I wouldn't buy a $20k house appraised at $1.9 million because the property taxes would ruin me. I wouldn't buy a house for $400k that is stated for insurance purposes as $200k replacement value according to insurers. And I would never buy a house for $200k that is appraised for only $100k in a declining market (county appraisals lag behind market values by about 2 years in most regions).

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Cmdr. Shepard posted:

gently caress investors. Nothing would make me happier than to put in a lowball offer on an investor-owned home and having them sell it to me because they have no other option. That would be a great "gently caress you" in my opinion.
I concur. Any "investor" buying now is pretty stupid unless the market in the area has basically tanked while unemployment is below national average. It varies from market to market, but most metro areas are not going to have recovered for a while, and that means the best deals you can get are not now and certainly not only in the past several months. Bank-owned inventory is still sky-high, and once they realize the sheer amount of inventory they have and the limited market that's available (overbuilding alone would cause steep price declines and we've got several factors working against home prices) they'll drop prices even more just to get out from them.

Leperflesh posted:

But for my wife and I, this is more about "renting sucks rear end, I want to be my 'own boss' of my own property" than "rent is a waste of money".
If the cost premium of ownership and the additional potential liabilities of home ownership are fine with you, that's great. But you have to realize that this is one of the most turbulent times of the US in the better half of a century and that ownership can now actually become a financial liability during this period rather than an asset or source of comfort. And given what I know about the SF Bay market, I'd prefer to move nearly every year instead of pay ridiculous rent increases, especially at your sort of price range (what you going to get for $250k, a 1 bedroom condo? A house far away from the city where you'd have to commute for an hour?).

As much as your employer can support you, those are things that are comforting when things are generally stable, and I've seen my own benefits (what smidgin I have) disappear in a flash due to deteriorating conditions. Employers have the right to remove these benefits you are expecting just as much as you have the right to choose to rent or own.

I've gotta say as someone trying desperately to get rid of a home (that's apparently still wanted!) it's ridiculously crazy how little you'd walk away with if you had to sell even within 7 years (regardless of mortgage). Perhaps ownership is worth all that to some people, but I don't really think so anymore unless I had a lot of money to blow and a lot of time to sink into my home.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Leperflesh posted:

Single family houses in Oakland, Hayward, San Leandro, San Jose, East Palo Alto, and a scattering more. At this moment, for under $250k I get 81 listings for Hayward, 289 listings for Oakland, 10 in San Leandro, 161 in San Jose, 34 in East Palo Alto, and so on. This is realtor.com, single family houses only (no condos, no townhouses).
I've been in all of these areas and would never buy a house there unless it's purely for investment purposes. However, I have an anti-CA economic bias (I don't think its future in 30 years is very bright whatsoever compared to the national averages I'd wager)


Leperflesh posted:

Could you elaborate? This thread seems to be full of some pretty good advice. I realize it's not the "house selling megathread" but everyone who buys a house should know what will go into selling it, since the possibility of needing to at some point is probably there for most people.
I believe now that anyone that buys a house should understand at least as much about what it will take to sell the house because it's actually pretty scandalous IMO. When you buy a house, you typically don't pay much besides in earnest money, inspection, and so forth. When you sell a house, here's what you need to consider:
- realtor costs (used to be 6%, which is split among both the selling and buying agent)
- excise tax (paid to govt)
- any improvements that a potential seller will ask of you as a contingency (could be something small or something radically huge like a new roof or something)
- potential lowering of value due to your negligence as a homeowner in maintenance issues (intentional or not, it's still negligence)
- lowered property values due to macroeconomic or local market conditions (see: everyone that bought in Michigan in the 80s that didn't sell in the mid-90s thinking it'd recover now struggling to get what they paid for in the 70s)

This comes all right out of that "equity" that real estate agents loved to espouse during the past boom (which was actually not as huge of a topic until the relaxation of loan requirements in the early 2000s - typically real estate agents only talked about cutesy crap rather than the business end with potential clients). If you buy a house on a 30-year fixed rate, you get jack poo poo for equity over the first 5 years - almost all of it is interest. For example, I had a $285k loan in 2007 that I have now gotten down to $5k. In the meantime, I've paid about... $75k in interest, taxes, and HOA fees. I have gotten tax deductions for a lot of it, but (depending upon your tax bracket) that's probably only about a 25% "discount" with the "discount" at maybe 35% if you're one of the top 1% richest in the country.

If you're cool with possibly moving and losing potentially half or more of your 20% down in 8 or so years, that's the price of ownership you have accepted. I accepted that risk myself and have been burned because I have to move for completely unexpected circumstances that I'm trying to fight with the IRS about.

Personally, I now think that mortgages are loving terrible and it's probably in one's best (purely financial) interest regardless of the kind of economy to just buy a home with cash or at least 40% or more down (if you're not that sure about a home, you shouldn't buy it). I feel that the kind of security that comes with actually owning your home is worth the wait for my family versus the basic, minimal security of pseudo-ownership that comes with a mortgage. In a lot of metropolitan areas, I think finding a drat good place to rent is better off than paying exorbitant prices merely to say "I own this place." The American Dream (tm) is not a home mortgage, it's owning your home, and I think it's a pipe-dream that's been marketed by bankers, politicians, media, and real estate agents blindly for decades without really being critical about what it means.

With that said, there are risks of renting, too! If the place you're living has a big boom of some sort and it's sustainable, you're going to have rent increases everywhere - permanently. Also, in some areas it is really hard to find anything but disgusting old houses with terrible maintenance available for rent (Seattle area) due to sheer lack of supply, so the incentive to buy becomes partially about health and safety, but it still means increased cost over renting.

Above all, remember that a house is like a car that you live in - it deteriorates, it requires maintenance, and resale value is important. A lot of people have this entitlement complex where they think they should be living in a house they own just because they make decent money and aren't "poor" or something, but that's not really a good reason to just buy a house to me, that's just being a selfish, self-important bitch.

Leperflesh posted:

I don't understand how a short sale is possible if the couple is selling the house for more than they owe on it. Hopefully someone will explain.
In essence, that's really it - the bank realizes the balance won't be paid off and has to do a write-down on the difference. There's things like private mortgage insurance that affect whether it's a good idea or not for the bank to proceed with foreclosure, but the prevalence of 80/20 loans over PMI exposed lenders to really risky loans. Not paying back a loan in full is similar to asking a hospital to just reduce some of your bills or defaulting on your credit cards.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Yeah, what the money goes toward is more important than what the cost is. My $309 / month goes toward lawyer fees for our lovely lawsuit, a likely broken (and leaking pipe) water bill used by a bunch of renters (free water, omg!), various maintenance that's underfunded by around 70%, garbage / waste disposal, a tiny pool, a horribly maintained hot tub, and legally required insurance. Two years ago, it was $226 / month - the fees increased because of lawyer fees and water, that's it. If I got cable included, I wouldn't bitch as much, but the rather ho-hum clubhouse gets cable while residents have to pay for it on their own.

It's up to you whether it's worth the fee, and it can go up or down, but I've rarely heard of condo association fees going down.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Sophia posted:

Thanks Leperflesh, you gave me some good ideas about building some adverse scenarios / increases into my projections to see what I could handle if something unexpected happens. And sorry to anyone who thinks I may have been snippy or stubborn at them in the thread, but I feel like some people think I'm fiscally irresponsible or something for considering my options / recognizing the realities of my housing market when they don't even know me or my history - it made me a bit defensive. I do know how to manage my spending, I swear, and I'm just exploring.
Well, if there's anything I can say for the ultra-conservative housebuyers is that I was in your situation at 23 and felt quite confident and everything. Bought a condo with the guidance of family members that supposedly knew real estate way better than me and had been successful over a few decades, and I'm still completely hosed over at this point for the simple reason that I bought at the wrong time. I write out what's happened in the past 8 years for me and it looks like an adult version of Lemony Snicket's A Series of Unfortuante Events. Sure, for every other story like mine, you may get a pretty happy story, but we're all currently living in some of the most turbulent times in the history of the US and it kind of makes me scratch my head that people that aren't investors would be thinking of buying a house.

Affordability is a floating standard. People would pay 90% of their income toward a mortgage if the mortgage included almost all their living expenses anyway.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

If house prices overcorrected to below historic levels without the stimulus, I'm almost certain we'd have a foreclosure rate never before seen in the history of the US and combined with other factors including unemployment, we're probably looking at a sequence of events probably leading to something worse than the Great Depression (likely a revolution or something as catastrophic). Look at what's happening in Detroit, for example. At that point I won't give a poo poo about my money but my life. I'd love for houses to correct to historical levels of a sound economy because I like stability and all. But I'm deathly scared the consequences would make the scenario of $10 / gallon gas look pretty peachy.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Chajara posted:

Speaking of PMI, I have a coworker who's in the process of buying a house and she told me we didn't necessarily need a 20% down payment. I asked "What about PMI? Don't you end up paying like an extra hundred bucks or more a month due to that if you don't have the down payment?" and she said that since the place she's trying to get is out in the country outside city lines that there was no PMI. She's knowledgeable and has a pretty good head on her shoulders so I'm inclined to believe that this is the case rather than somebody just fed her some bullshit and she bought it, but I thought I'd ask here anyway.
I was offered by the lender to pay my PMI during the local Seattle boom from 2005-2007, so I didn't put down 20% because I was a little concerned at the time that the market could implode and I could always put it into other funds for the sake of security. There's no way I would have gotten the loan if I had to pay for PMI though. Now, if I had put down 20%, I would now have lost another $32k more on top of the $32k down payment (I'm in the middle of a short sale) so you can consider PMI in some respect to protect you.

dwoloz posted:

3) Is projected income something they consider? ie is the income from renting out two bedrooms of the house considered? My research tells me I'd be looking at $600-$800 per month
Lender doesn't care about rental income - it's too complicated to add into the already complex process (well, it used to be complex and strict as hell). I went with this and I figured I could afford not having a roommate if it came down to it and would just have a roommate for gravy money. Remember that if you rent out any part of your property (to non-family) that you claim depreciation for the portion of the property they are renting. The math isn't that hard but can be confusing. The truth is, there's so many tax exclusions on real estate that let you earn up to hundreds of thousands / year (in effect) that the IRS wouldn't bat an eye if you depreciated the whole drat thing while living in it and you rented a room to someone else.

Now, if you make over $125k (even as a married couple - same amount) and start deducting real estate losses, you're not allowed to! So basically, if you make good money and are young and single, I advise against buying real estate that could ever lose money (meaning, almost everything). I don't like the idea of making GBS threads where you eat, and looking back I think you should only buy homes with a single purpose - you rent the whole thing out and it's pure business or you buy it to live in it. Any blend of the two results in compromises that work against each other to your disadvantage no matter what.

moana posted:

You don't want your mortgage payment to depend on someone else's income.
As much as this is sound and all, it's exactly how commercial real estate and managed residential real estate works. But these are businesses that have neato insurance policies and professionals and enough room to work with that they can do this. Almost nobody in this thread is capable of running an operation like that and such discussion belongs in a separate thread. There's plenty of ways to make great money on renting out real estate, and even now there's people flipping houses and doing fine (a guy I know is good enough that he's still doing it after quitting a good job years ago - he's also far more real estate savvy than anyone in this thread, period).

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Happydayz posted:

Basically single men account for 10% of all home buyers, yet for whatever reason single women account for 21%

Why such a huge disparity?
I don't mean to be sexist or something, but there's research that women go through "nesting" and this factor will probably cause them to buy property out of wedlock more likely than men despite great income disparities in the same age group.

Also, I've talked to a lot of real estate agents over the past few years and it seems that ground floor 2BR/2BA condos are extremely popular with single female first-time buyers. I mean, they pulled out their stats graphs to show me the demographics of those that might be interested in my place.

I was a single male, 23 when I bought my condo and of the women I know, none were even close to being able to afford even a condo. Three years later, I still don't know anyone except relatively affluent males or couples that are buying. Where's all the single ladies?

Leperflesh posted:

Ugh. HOAs were a great idea at some point, pooling resources for community projects, so you can have a pool or a common building or shared laundry facilities, but they've become a blight on the country and I wish the powers and restrictions HOAs were allowed to enforce were severely limited by law.
Too bad they're a necessity by all means when you're living in a condo. At this point, I can't really recommend a condo for anyone unless they already have a house unless they have good money and are willing to splurge for something better than they can rent. In a number of markets, it's basically impossible to find a nicer, newer place to rent, so buying quickly becomes the only option for those that have some money but desire a nicer home. HOAs are about equally important as the property itself to me though when you have few choices.

The HOA I have has had only a couple of the usual problems with HOAs - nobody powertrips over anything and people are genuinely nice and try not to step on each other's toes. My issues are mostly financially based, which can affect any HOA though regardless of whether they're totalitarian or hippie commune in operational style. I'm pretty sure if the HOA had a bit more money and more than half the owners lived in their units it'd actually be quite pleasant.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

It's possible for short sales to close within 4 weeks of an offer if the agent knows what he's doing and has a good relationship with the lender. The problem is that most agents don't have that kind of relationship nor know what they're doing to be honest. So a lot of short sales will fall through when they could have happened in a timely manner with the right agent, and many others will drag on for 3-4 months. The banks have gotten a lot faster at handling short sales, so things should move along faster than they did, say, 2 years ago.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Moving sucks regardless of how much money you have or how many people you have helping, so try to land a place you can actually stay in for a few years. I'm on track to have moved 1.2 times a year for the past 10 years, 8 of them clear across the country and I'm in the middle of moving right now. If it wasn't for these moves, I'd have somewhere around another $15k in my bank account I could blow on hookers and blow, so moving can get expensive in a hurry. While most people won't move into a house across the country every time they move, it should be noted that it must be factored into a home purchase, especially if you're "upgrading" houses and you've got a lot of crap. The only good thing about moving is that if you're moving more than 40 miles for a new job, it's tax deductible..... unless you've got over a $160k AGI, which means you need to consider moving for a new job far away as a capital outlay on top of the other issues with relocation. I wouldn't turn down a $200k offer due to my pitiful $10k moving costs or something, but I would also hope that at that sort of level of employment that your employer would pay for your relocation costs rather than yourself.

-S- posted:

I've probably moved more times than any man under 30 should, and after the last time I swore off ever doing myself again. I don't care if it costs me $5k, I'm paying someone.
If you move as often as myself (more than once a year for 10 years), you should budget moves into your lifestyle basically. I'm a cheapass and didn't hire anyone to move anything until now, but given the wife's health and the fact that I've still got a weak-ish back that could go (at 26, ugh) I decided to pony up the extra $750 to have a moving company carry our furniture in and out of our place and load and unload. When you're making good money and all, it makes little sense to deal with the risks of moving your heavy stuff, not to mention the insurance benefits of having others pack your expensive furniture (none of the stuff I packed is insurable). But remember that even doctors and lawyers making big bucks have stuff break and get lost during moves - even big items, so paying a lot more doesn't necessarily mean you'll guarantee a better move either.

BTW, hiring others barely makes things better. Packing up stuff is the awful part along with transportation of vehicles and dealing with loss of car. I'm not sure if I can factor in loss of use for my moving expense deductions, but the fact I'll have to pay $200+ for a rental car until my car gets there is kind of lame.

Next time I move long distance, I'm going to drive my rear end over there with the wife and cats in tow and make it a vacation just for the stress reduction. Paying $800 to transport the car and the cost of a rental car plus cost of a flight is costlier than spending 3-4 days on the road staying at hotels and paying for gas and the wear & tear on your vehicle. In most situations, it's better to cut down on up-front costs, but in mine it was best to start the new job ASAP, so I decided to pay the extra to fly my family out with our stuff lagging behind by over a week.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

I know this is the buying thread and all, but I just wanted to chime in with an update on my current (short) sale because it's something I feel buyers should know since it affects them as well.

After less than three years of ownership and a year of nearly a $1000 / mo shortfall, I got an offer w/ the earnest money in last night - $175k. I paid $320k in mid-2007 (the height of the Seattle area housing boom). The lender pays my PMI (very unusual loan - that should have been a warning sign alone) and they'll be paying for another 10 years at this rate, so they want out on the loan just as much as me. Even though I now make 50% more than when I bought the place, I can't afford a $110k promissory note, so this shouldn't be too hard to justify to the bank.

Why the sudden price drop (the property rents for $1300 / mo)? Seems that everyone else in the complex had the same idea as me to get rid of their condos once the HOA's lawsuit was over and prices have collapsed in the condo market with our complex leading the charge. The Seattle area market was thought to have been bottoming out in the past year. Just last week some people bought equivalent units for $192k, so we're seeing price drops at a pace faster than what happened in Vegas and Arizona in 2006. My brother in law's place just outside Phoenix didn't even drop this much. Imagine being one of the people that bought last week - you've just lost $20k in a week! Good deals became retarded deals over the course of a week. There goes the "Seattle wasn't as affected by the bubble as other places" idea popular among even the bubble cynics...

Moral of the story: like all "investments," houses can drop in value whether it be due to macroeconomic conditions, buyers' perceptions, and how desperate (and able) others are to sell their properties. The original owners of these properties paid $220k in 2004 and put in about $12k in upgrades, so they're willing to pay $32k+ to get rid of it. Because a lot of these owners are well off, they can afford to say "screw it, sunk cost" to their properties and aggressively price downward. But people like me that put in a good chunk of net worth don't have that kind of leverage. On the other hand, even rich folks would hate to lose $150k on a place like me unless they had to.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

BeastOfExmoor posted:

Out of curiosity, what neighborhood was this in?

I was pretty astounded until I saw this was apparently for a Condo. Having closed on a home on Friday, I now have a vested interest in the Seattle housing market not collapse, but I honestly wouldn't be surprised if it does, especially in the hotter areas and especially with condos
(since people who were scrambling to afford condos 4 years ago can now spend the same amount and get a decent house).
Sterling Heights condos in the Factoria neighborhood of Bellevue - get them while the owners are hot and desperate to unload! But I don't think the price drops here are representative of anything widespread unless you're talking about apartment conversions.

Frankly, if I was still in the area I wouldn't be buying anything. Seattle's unemployment kinda sucks still and prices have only corrected so far for the credit boom, not the recession.

We're starting to head into the housing market boom for the year, but I wouldn't be surprised if prices barely move up as a bunch of owners in shadow inventory (like mine was) try to unload at the same time and drive prices down. My parents are probably going to get screwed here because they bought a $450k McMansion near Kent way out from everything in 2004 and about 15% of the houses in the subdivision are on sale or for rent with a couple foreclosures. You betcha there's a lot of people wanting out of those properties.

Read http://seattlebubble.com for about the most cynical view of the Seattle housing market out there.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Read the OP with my warnings about HOAs a few times over. It's part of the reason why I'm having to shortsale my place for $175k rather than $220k. The HOA fees alone for a condo in a remotely financially responsible HOA should put severe severe price pressure on condos. But in reality, what happens is that most condo owners live in it for about two years then rent out their condo and deduct the HOA fees on their taxes while claiming depreciation, then before 5 years are up, they sell it and get to keep all the appreciation.

HOAs are precisely what makes condos a real headache to buy to actually live in - there is no such thing as a condo without an HOA (well, unless you're doing a housing co-op or some other oddball way of pooling community resources). You might like a condo a lot, but the HOA might be run by idiots. The board members being nice is not a good metric (my real mistake - assuming that nice people run an HOA good enough). Most HOAs in the US are basically financially insolvent and we may start seeing most go bankrupt within another 8 years as the roofs and various structures in many condos built during the boom need to be replaced.

It's partly why I'm completely dumbfounded by so many babyboomer-generation folks buying condos on HGTV as vacation homes - how often will you be there that a nice hotel would be more expensive or not meet your needs, and the HOA fees on these places are loving murder ($500 / mo in Bolivia? wtf?).

With all that said, it's very well possible that you'll be forced to buy into an HOA or rent for basically forever in many markets. In such a situation, I would weigh the HOA as an equal factor to the financials and your living needs. Note that just because you buy into an association with lots of rich people doesn't mean it'll be any better - look at the stupid poo poo on the Real Housewives shows for an idea of what my HOA meetings could have turned into if everyone had actually shown up.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

greasyhands posted:

I don't disagree with you and I'd never move to Manhattan unless I became very wealthy.. I'm just saying Manhattan's real estate pricing has proven time and time again to not really be a bubble- yes it has swings, but it's nothing like the Bay area, or Phoenix, or Las Vegasm or.... Vancouver.
The Bay Area has been expensive (exceeding affordability criteria based upon median income) for about 40+ years now, it's not about to go down to any real level of affordability unless you live out in East Bay, which results in a horrible commute if you work in Silicon Valley. I'm perfectly happy renting a great 2BR townhouse smack in the middle of the valley for $1900 / mo. It's easily affordable on just my base salary, and once the wife has a job we could probably put 100% down on a place even here in maybe 5 years. A modest lifestyle goes a long way when you make good money.

If I had the money to buy a place in Manhattan, I would just buy cheaper and commute. Daily limo service per month would be cheaper than the mortgage difference, poo poo. Even at a wage of $200 / hr it'd be much more worth it to live further out and to live closer to hipsters than to buy a stupid 1 bedroom in Manhattan. If I happened to get some $350k+ / yr job in Manhattan, I'd probably reject it anyway because both the wife and I hate the area. I'm hoping to buy a place in rural wherever really cheap that happens to have FIOS / U-Verse and fly out to clients once a month or so while making what I do. Easy retirement within 15 years, and I'll probably be healthier to boot.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Nurbs posted:

Can HOAs go after new buyers for back dues if it's not written into the sales contract that the buyer will pay them?
There is a distinct possibility this will happen. At best, if nobody pays the backdated fees, the HOA fees will go up next year probably to make up for that loss. You should clarify this with the HOA before proceeding to closing day and clarify now. I'd rather lose my earnest money than get stuck with an HOA that is run by assholes. Shopping for a condo means you should probably pay more attention to the HOA than the condo itself unfortunately.

When you purchase a foreclosure that's part of an HOA, the bank may or may not be paying for the HOA dues while it's on the market. The HOA may or may not pursue the bank for the backdated dues and associated fines (unlikely - their lawyers are bigger than theirs, impossible to win) and because HOAs need that money to survive probably, they'll probably come after the new owner for what they had lost while the place was on the market. Some banks are nice enough to pay the HOA fees while it's on the market, but the reason they pay is probably because the HOA can put a lien upon the condo and keep the property from transferring over by law, killing a sale with basically a legal nuke.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

WTF, and I thought the Bay Area was bad for houses. Minus the plot of land they're on, those houses could probably only pull about $800k USD here.

Looks like a bubble to me

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

So an update for those of you concerned about short sales from the seller's end...

After about 3 months of brutal negotiations by all parties, a rejection, and about $1200 in HOA fees I'm throwing at the bank to make them more likely to help me, my short sale has finally pulled through. Closing is now in three weeks, which means I have to pay the lovely HOA fee again

The bank asked me to bring $5k to the table, $3k more from the sellers on top of them paying closing costs, and for the agent to take half commission. My agent negotiated me out of paying the $5k. My brother in law in the Phoenix area, on the other hand, had his close within 2 weeks despite him making a lot of money and having a sizeable bank account compared to me - my financial documents have me with about $2k in the bank (granted, like $60k in stock). The primary difference was that he didn't have PMI and we had similar loan-to-value ratio and similar income (the lender paid my PMI and I expected to keep the condo for 15+ years at least until I realized the HOA completely sucks and destroyed our property values more than the bust did).

I still remember my closing day because it was the day everything started to gently caress up for me when almost everything has gone pretty swell.

And now I can give a big, fat middle finger to Bank of America for making this so drat hard as I ride off a whole $90k lighter in the pocket for my troubles (my calculated cost of owning this abortion of a property). Beware anyone buying a shortsale property with BoA as the lender - your results will vary greatly.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

They're getting paid $65k by the PMI company, which makes up all but about $30k from the price, which has been made up for by the interest payments I've made to them in these past few years. They've made money off me, period, and I've come out -$90k and they're maybe up about $5k. PMI protects the bank, not the consumer. I got it because the lender agreed to pay it, my family advisors said I should take the offer by the lender, and I had planned to keep the place a long time, so I preferred to keep as much liquid as possible for emergencies.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Part of the reason why you won't get financing for most of those sorts of places with low owner occupancy is because you're basically now expected to be getting a loan as an investment property. Investment properties carry a lot different terms than your typical home loan partly because there's a lot higher risk of price instability because most of the homes exist to make the owner money and so you get a higher interest rate and so forth (in theory). I experienced this firsthand as an owner of a condo in a low owner occupied community - 50% of owners weren't just not in their condos, they weren't even in the country (another 20% still lived in the US). What happened is that renters took over, trashed the place, vandalized the amenities (or their unaccounted for guests), and property values mentally dropped. Once the investors saw what was going on in their absence, they all started selling it off, dropping values (on top of the terrible housing market in Seattle) about 25%, which erased the equities of those that even put in 20% before the boom (boom didn't hit Seattle until about late 2004). Sucks to have bought any of them, period - everyone lost except for those that sold at the height of the boom (a lucky 7 or so - 2 of them by the HOA president, sounds suspicious already, huh?).

alreadybeen posted:

This doesn't account for all of the transaction costs, overhead, and most important opportunity cost since they loaned those dollars years ago and ended up getting the same amount back...
And even if I had sold the property as a regular sale, they'd have been "hosed over" in some respects because I'd be cutting short the terms of the mortgage. Also, let's not forget that the new owners are getting a new mortgage, so somebody else comes along to take my spot in some respects. In fact, it is in the bank's best interest for me to keep paying interest as long as possible instead of paying down my principal, and I could have hosed them over just by paying off my mortgage so early.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

pimpslap posted:

Yep, with foreclosures you really need to remain detached and have reduced expectations. The trouble is the bank has a loss figure on a foreclosed property that they are willing to accept, but you don't know what that is.
You can estimate it if you look through county property records and it'll record the price the house was bought for. You can oftentimes find out the loan amount and percent down I believe, and from there you can estimate how underwater the person is and if they had PMI.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

On $60k income, you could afford somewhere around a $200k house if you were stretching it. Once the HOA fee kicks in (holy poo poo, and I thought my $320 / mo was bad) you're going to be house-poor for sure. Then there's your credit cards and student loan debt (I had zero debt when I bought and $75k to throw around).

Also, a condo can be far worse than living in an apartment. Apartments can evict people, with condos, you can't kick someone out of a place they own for being a shithead. My condo association couldn't do poo poo about the guy that lived above me that kept his trash outside (attracting ants) and screaming at 2 am for god knows what reasons. And the structure of the place made it such that his portly frame would make the ceiling creak. Also, it turns out I could hear the people above and below me - that's the sort of thing I looked for but couldn't hear because they were never home when I was around.

Seriously, gently caress condos, but I can understand why people would feel obligated to buy them. If your area has condos going for $270k for a 2BR/2BA and it's possibly a "good deal" then your median income is likely around $90k / yr. I would recommend not buying anything until your household median income hits that or you can find a place to live in that takes about 35% of your gross income MAX, all fees included.

senor punk posted:

I had to have Dad cosign the loan due to my base salary only being 50k, and the fact that you can't factor in potential renter $ (I have a roommate who pays me).
Yeah, I bought a 2BR/2BA in 2007 for $320k and was going to have a number of folks pay me rent for the other BR. On about a $85k income, it wasn't so bad (and no state income tax helped), but it wasn't ideal for sure on top of the HOA dues that started at $200 / mo. I just (short) sold it the other week for $186k, but the HOA dues are expected to hit $350 / mo now with no end in sight, so property values are still dropping.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

senor punk posted:

CoOp fees are not the same as HOA fees.

My Co-Op fee of $610/mo is considered pretty reasonable by NYC standards (far as I know?). It goes towards the property taxes on the complex, the cost of water/sewage, heat, trash collection, upkeep of the complex and I'm sure some of it goes to the management company that manages the place.
That's more or less exactly what's in HOA fees for condos (not the taxes though). For a lot of HOAs that involve SFHs (what you're thinking of), it's just the upkeep of the grounds and some community amenities. Same fees, different names IMO. The differences seem to be purely legal nitpicking.

The point is that HOA / Co-op fees should be every bit as important of a cost as the mortgage itself when buying anything involving shared buildings. HOA and co-op fees are not tax deductible either, so it winds up that you're paying property tax and dues after you own the place no matter what. The worst part of the dues was that my property was empty for 5 months and I still got charged a lot of utilities. If I had an empty house, I'd have just taken it off utilities, period. Can't do that in most apartment buildings it turns out.

When a co-op or HOA raises the dues, it negatively impacts the property values in a way because now it costs more to live there per month. So as property values get pushed up by inflation, the HOA has to raise its dues a bit, and so condos should appreciate in value at a far lower pace than SFHs while being subject to even more risks in property value destruction than SFHs. Therefore, I don't think condos should be considered an appreciating "investment" for anyone other than the real estate developers.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

FISHMANPET posted:

Urbanists like myself believe (and this is in some way backed up by trends in housing price decline) that in the long term denser, more walkable properties are going to become more valuable. A SFH in 30 minutes away from the central city surrounded by acres of parking lots is going to have a hard time rebounding. Some of these far flung places can survive if the increase transit to the central city, and emphasize a community design that, if not encouraging walking, at least stops discouraging it.
There will always be value to owning land that one can use as they please, and as population density increases and the ownership of 4 walls and some appliances becomes the new middle class, the value of land becomes even greater when most of the middle class enjoyed it in the past.

I'm not saying it's impossible, but the amount of effort to make housing development up and down the stack truly sustainable is probably easier done in less developed areas. Greater population density means each and every change to the landscape has a greater and greater impact. Experiments for housing changes are more economically done outside cities while experiments for social change are likely better done in cities.

FISHMANPET posted:

I'm not sure if there's a good, sustainable solution to the traffic problem that doesn't involve more intense concentration of employment in the core.
Telecommuting works for almost every information-oriented profession and will be more and more viable as better software and infrastructure rolls out. The fact I was able to make a good living working from home for a year is proof it's viable now. I can get a better Internet connection for cheaper in a stupid suburb outside of a metropolitan area because major cities are clusterfucks for telecomms and politics and take years for anything to happen. That's the opposite of progress to me.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

When the owner occupancy rate is that low, I would recommend staying the gently caress away because of risk in general for owners to flee or to invite renters (aka: people who don't give a poo poo) in. It's part of what drove my place's value down into the dirt. My place had (in reality) about a 60% owner occupancy rate and because there weren't enough owners present to veto the board's decisions to raise the rates 20%+ annually to keep the budget (which included paying some random lady $10k for "bookkeeping" and giving her raises each year apparently) somewhat near solvent, the dues have gone higher and higher, contributing to a downward spiral of owners trying to ditch their properties somehow, someway. We had about a 20% owner voter turnout each meeting by the end according to meeting notes - about 30% lived overseas, the rest who the hell knows.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

gvibes posted:

How much are real estate taxes?

According to Case Shiller, looks like DC home prices are still above where they should be historically.
http://blog.redfin.com/washingtondc...ets_2010-02.png
DC itself is not necessarily indicative of the surrounding suburbs though. I used to live in Howard County actually and part of why the prices there have never been so high relative to income is the sheer number of people with security clearances (much of the process is financial history and risk-taking behaviors) that make it far less likely they'll make poor financial decisions compared to the average person.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Just wanted to add an anecdotal story about banks like BoA investigating mortgage fraud. BoA hired a private investigator to ask me a few questions about my broker, whom actually did nothing wrong and steered me away from ARMs and the like when they were very popular. Hilariously, the investigator is doing an absolutely terrible job because he can't find my current address, which BoA actually has since I had checking and mortgage accounts with them. Not sure if my recent short sale had any connection with it, but I was curious if anyone else has heard of this happening recently.

BTW, with HOA dues that low for condos, I suspect the place is being run horribly with nowhere near enough reserves to cover emergency repairs or even periodic ones. My HOA dues at the place I had started in 2004 around $40 including water and garbage / sewer and is now at $330 / mo for various reasons that weren't foreseen. I don't know about you, but I'd rather not get an extra $300 / mo bill tacked on to my expenses only a few years down the road.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

gvibes posted:

Did you buy new construction? Seems like they typically set fees too low to start to get suckers in.
It was 3 years old by the time I got the place. I figured it wasn't a bad sign that 80%+ of the original owners were still owners at the time given circumstances. The thing is that the HOA dues were set by the residents basically and over time due to lack of involvement, the board kept increasing dues unopposed by the residents because fewer than 30% were even residents of the country it turns out and never voted on budget matters.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

zantar posted:

Also, it worries me to think about the possibility of not being able to negotiate a deal with the current owner/landlord since they bought it high (270k) in 2007 and now zillow values it at 190k
You won't be negotiating with the owner / landlord, you'll be negotiating with their lender. The good news is that in some areas, lenders know that the market is basically trashed and they're lucky to get almost any offer on a place and will let it go for some ridiculously low price.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

There is an exclusion on the amount that you can gain that's very, very generous. The 1031 exchange is what lets you roll in profits on your house into another house without getting hit with it. The exclusion is $250k if you're single or $500k if not, so only basically rich people or those who got quite freakin' lucky (and/or have been very disciplined) will be affected by it these days. This is probably one of those areas of tax code that encouraged people to speculate upon real estate far more than should be considered sane - you can basically make $500k tax-free if you buy the right place and hold it for a while or flip it.

gvibes posted:

Why won't he be negotiating with the owner? Did he say it was a short sale?
The immense property value loss would probably indicate a short sale. If not... well drat, guess they tried to buy the place during the middle of a bubble with more than 50% down.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

I should mention that even if you're rich as hell and your location more or less cemented renting is almost certainly the correct answer as someone unmarried. Mark Zuckerberg rents his place in Palo Alto even though he could afford to buy a house nearly every day (even at incredibly expensive Palo Alto prices) for a few years straight. There should be no shame in renting IMO. There are a great deal of headaches associated with houses and marriage. I made the mistake of thinking I'd be forever single (although everyone I knew thought it was completely reasonable given who I am and all) and that bit me pretty hard on top of the housing crash.

If you're such a boring person as to be setting your sights on a house as a 20-something, I'd suggest focusing more upon your career and general investing (the principles matter in the long run), not jumping into real estate like it's some foolproof "investment." What worked for our parents' generation is almost guaranteed to not work for us.

Chainclaw posted:

If the market were static and not as crazy as it is, my plan was to wait about 4 years until I pay off my student loan and get some cash saved for the 10-20% down payment, and my girlfriend graduates and gets a job.
All figures show that even if the market were to become steady and start to go up in the Seattle area, the rate at which you can save up would exceed the projected increases in value. This is moreso true when you're younger and you're more likely to get promotions and so forth versus someone that's been at a job for 12 years and has hit a stride in their career.

Houses are a time and money sink for a trade-off of freedoms.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

Dbhjed posted:

I plan on being here until I die. I don't want to move again. I would like to be in the house I buy until I die as well. and Yes apartments up here do cost 1000 because of the property tax, it is the highest in the USA. Again isn't property tax covered in your mortgage until it is paid off?
Not to get in on the DO NEVER BUY train but you can't plan life. The reality is that almost every one of us will have to move sometime. Even most of our parents have had to move from the homes they grew up and raised their kids in for various reasons. You can plan and whatever all you want, but you can't control the rest of your area. Maybe you are the type to be 60+ living in some shithole area with no jobs and a Walmart but this is hardly what describes what most young people could expect to be like in their retirement years.

necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

I'd make a strong wager that a great deal of these people that have gotten rich bought at least 15 years ago when spreads were a lot better than they are now. Everyone in my family that's gotten rich(er) through real estate bought their properties 20+ years ago at least and paid them off quickly, oftentimes as inflation grew in the early 90s. All of us that bought in the mid-90s up til now haven't gotten remotely close to the performance they had in, say, the mid-90s. Trying to get in on that is basically chasing the market though, so I've eliminated real estate as a major holding in my investments.

I'd like to point out Elizabeth Warren's excellent paper on what's been bleeding the middle class dry and the top three things that have changed to be much higher than 30 years ago are: 1. mortgage 2. health insurance / healthcare in general 3. taxes

http://www.yale.edu/law/leo/052005/papers/Warren.pdf

When the middle class is completely overleveraged, what can you expect but for them to cut back on their biggest items?

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necrobobsledder
Mar 21, 2005
Lay down your soul to the gods rock 'n roll

shrike82 posted:

You're either misinterpreting or mis-characterizing Warren if you lump in taxes with the other 2 categories. If anything, she's probably for higher progressive taxes considering that they're at historic lows.
I lumped it in not to make a comment about taxes but as a point of reference on the relative costs facing a household now (the paper shows these used to not be the top 3 I believe). Also, three's a nice, round top X number psychologically.

shrike82 posted:

I agree with you about the middle-class bleeding dry but I'm curious whether high (relative to household income) housing prices are sustainable in the long-term. By definition, shouldn't we see prices gradually fall to what people can afford?
So long as people are willing to blow through half or more of their take-home pay in expensive coastal metropolises or commit to 40-year mortgages it seems somewhat sustainable if the sacrifices people make for it have few long-term drawbacks (I believe there are though while some say it's fine). What's odd is America with all its inhabitable land is still (both through policy and market forces) encouraging people to flock to already crowded and expensive cities through lack of worthwhile careers outside of them aside from subsistence farming or something. The recession did encourage people to move to various places in the Southeast though it seems, so maybe people are coming to their senses.

I don't know how much people can take and I haven't heard any expert even try to guess, but the baby boomers (and even some generation Xers) desperately clinging to their home values is not helping all of us in this thread looking to buy our first or even second homes. Every person that overpays for a house contributes to the problem as well.

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