Polls

Survey Says?¡?! Owning a house is "Dumb"

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Now's the time to buy!

I was riding high in April, shot down in May. Watching that mighty river of real estate sentiment, Zillow.com, I found recently that my accidental-landlord house in Virginia had picked up a cool 15 percent in value since January. 

Why? Sentiment, baby, sentiment. With no properties for sale in the immediate area, I was getting the benefit of the Beltway real estate recovery in all its theoretical glory. I could actually calculate that the place might get back up to my closing price sometime around the year 3000. 

Then some dirty dog a few doors down put his place on the market, priced to sell, asking way below my current zestimate. Now the whole neighborhood average is screwed. Try telling Zillow how that other person's asking price shouldn't count: Does that schmuck have a fully wired detached shed with both storage space and an office? A backyard gazebo? A quarter-acre lot? A tastefully redone basement? No way! But do they listen? I'm 18 percent off my purchase price now, all because somebody is actually trying to sell a property rather than blowing gas about the recovery. 

This is the kind of mischief that results when you put consumer sentiment to the iron test of the market. The National Association of Realtors® keeps claiming there's never been a better time to buy, but nobody believes it anymore. 

How about "Never"?

At Calculated Risk, the incomparable Bill McBride has measured housing hate for a while now, and he has some interesting new information from Trulia and RealtyTrac: A survey indicates 54 Percent of Americans believe real estate won't recover until 2014 or later. "The evidence was anecdotal, but it was not uncommon to hear people say owning a home was 'dumb'," McBride writes in reference to the real estate busts of the 1970s and 1980s. The current bust long ago exceeded both of those, and so has the anti-real estate sentiment: 

Clearly there has been a sharp shift in when people think the housing market will "recover". Expecting a recovery is somewhat different from asking when people will want to buy, but I think they are somewhat related—if non-owners think the market won't bottom for several years, they would probably also say they won't buy soon too. Just a little more evidence of a shift in sentiment…

Claiming to know the sentiment of any collective, let alone one as big and various as The American People, is way dumber than owning a house. And surveys of opinion about purchasing are superfluous at best: If you want to know how people feel about an asset, all you need to know is what they pay for it. 

Still, because buying a house requires a lot of time and preparation, buyer sentiment may in this case make some sense. The best way to bring back the house-happy America of yore would be to let prices fall to market-clearing levels, without benefit of any HAMPS or TARPs, Fannies or Freddies. Now more than ever, this is a heretical notion. As Rep. Brad Sherman (D-California) explained while supporting exorbitant FHA loan guarantees, "The economy of Los Angeles would tank if prices fell another 50 percent."

NEXT: Radley Balko Rides Again

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    1. The chart is missleading – I bet most people have some vague sense of “recover” as when home prices are back up to where near the peak – not recover as when HPA turns positive.

  1. speaking of buildings toppling, I was worried about some of you posters living in the tornado’s path but then I realized you all live in the safest place, your mother’s basement

    1. Your blog sucks.

      1. Really? I’ll quit right now.

        1. Don’t quit. You have already wasted a lot of time on it, you might as well continue. The inter tubes are vast.

          1. Besides, narcissists never quit. They can’t.

                1. yes, they see what you are

  2. Hell, I’m free and clear, mortgage-wise, but between property taxes, condo fees, maintenance costs, etc, I often wonder if it’s worth it.

    1. If you expect hyperinflation (as I do) then owning a house with a mortgage, and having other debts, is a good strategy. So *if* you expect hyperinflation then you should take out a HELOC or simply mortgage your condo, as soon as possible, and invest it in the appropriate venues. (And you should also get John T. Reed’s book on the subject — I’m just an academic, and he’s a professional!)

      1. Something I’ve thought about as well. Everything seems to be setup for hyperinflation in the US, but the one thing against it is that every other country is equally as broke, or in a bubble of their own. In economics, everything is relative, so if everyone has a ton of debt, it kind of all cancels out.

  3. The thing about the sentiment is that the sentiment is pretty consistent between the two surveys, if you view it in terms of ?t from now.

  4. Buying a house is dumb. Especially right now.

    1. Gold, however…

      1. I just SOLD a house, and BOUGHT gold.

        The closing price was the same as I’d paid for it in 2004, but with the closing costs and realtor fees, I ended up with about a 9% loss. In this market, I count that as a win.

        1. Buying a house made out of gold is never dumb, however. Just ask Richie Rich.

        2. Yeah! Fuck the housing bubble! Home investment was advertised on late-night TV, speculators drove up prices to ridiculous levels, and people were told to get into the market when it was at all-time highs– how fucking stupid can you get, right?

          Thank God that *gold* will never go through that!

          1. Gold has never been worth zero!

            1. Do you actually have the gold? As in, physically possess it? If not, why? If you’re hedging and the events you’re hedging against actually come to pass, having an IOU on gold doesn’t do shit for you.

    2. Unless, you know, want to live in one. Even if my house lost half its theoretical value, I’d still benefit from living here, though I guess I’d be considered a sucker for paying more than what someone in the future would pay. I’m not too worried though.

      1. I’ve been beating that same drum for years now, LiT. See if anyone listens.

        1. And we’ve been banging the ceiling with our broomsticks for just as long.

        2. Me too. I bought this house so I could live somewhere nice for a long fucking time, not as an investment.

          1. Exactly. My mortgage payments remain constant while the dollar loses value and I locked in a pretty good rate a few years ago. If you did not do anything stupid, it does not matter if you are upside down on your mortgage as long as you make your payments.

            The main people that care about this are ones who made foolish decisions or were “flipping” houses. They gambled and profited from a bubble, why should they not suffer when the bubble collapses?

            By the way, next time you see 5-10 shows on TV about flipping houses, you’ll know we’re in another real estate bubble. I knew there was something wrong when I saw some of those shows but I assumed it was just a CA thing. Somehow, I did not think bubble, which given my interest in economics, I should have realized immediately. Of course, most of the “experts” did not call it either.

            1. I assumed it was just a CA thing

              It was also a gay thing, but that was a marketing decision. Some of those boys get so darn frustrated!

        3. I’m listening. We refinanced a few months ago and got dinged by the assessment (down 1/3). But we’re not moving anytime soon, so who cares?

        4. LIT & capitol1, you are so very correct. I bought my first house when I was 19.. a home is an investment in one’s old age, not in next year’s status symbol. It shocks me that not a word about the genuine old-fashioned but still valid reasons to own a home are never mentioned. I blogged about it at the beginning of the crash and it’s as though those posts fell like raindrops into the sargasso sea. 🙁

      2. Yes and no. You’re still paying a type of rent in the form of property taxes; and you’re paying interest on a loan. Then you have upkeep (on your dime), insurance, landscaping, etc.

        At a certain point, you’re barely doing better than just renting, but with vastly more hassles. For me, I’d rather that the pool is maintained for me, that if my washer breaks, I call the office and they replace it, and so on.

        1. Plus there probably wouldn’t be any hot chicks at a pool owned by me.

          1. Well, so much for the surprise pool party I was planning for you, Commodore.

            1. Tell them it’s Roethlisberger’s pool.

              1. Even I wouldn’t sink that low.

              2. Chlorine is cheaper by the drum.

        2. It all guess it’s what you’re looking for.

          Me, I need a house and a yard which usually means a landlord. Presently, my landlord sends down ‘handy’ relatives to fix problems. Usually it’s better, and faster, for me to do any maintenance myself. Also, I don’t get remunerated for any improvements I make, which makes me reluctant to improve my surroundings.

        3. Yes, but in some places thanks to the lower prices, mortgage plus property tax plus expected repairs is actually less than renting.

          That of course wasn’t nearly true back in 2006– the cost to buy was zooming up while rents were flat.

  5. James Altucher made this arguement a couple of years ago.
    He has an interesting blog and he likes to write and he has some money.
    If Reason were smart, they would link to his website.

    1. I notice you didn’t link to his website either, dummy.

  6. Alt text is correct. The market will never recover to ye olde inflated prices, no matter how much propping is tried.

    1. Wanna bet?

    2. No “artificial” propping necessary, just a little more “natural” inflation is all it’s going to take.

      Last I heard it was on the way.

      1. That definitely factored in to our recent home buying decision. Got a nice fixed rate mortgage – the Fed can print all the money it wants and I should still be, relatively, OK.

      2. I would say flat GDP growth, flat CPI growth, plateau’d unemployment and dropping house prices all point to a failure of “natural inflation” to kick in. Bernanke might get more stupid dollars into cash registers by killing the interest on reserves program. But I think President Obama will be taking another handful of Stimulis and washing it down with 4LOKO, just as Reason and Paul Krugman, The Doctor, have been saying.

    3. Word’s making it around Washington that supposedly this strange mechanism called “inflation” (sp?) has the potential to raise home prices everywhere. Maybe we should pursue that!

  7. The economy of Los Angeles would tank if prices fell another 50 percent.

    Um, the economy of Los Angeles is already tanking, Brad. Its housing market is the symptom, not the cure.

  8. This tells me it’s back to being a decent time to buy. You may not time the bottom exactly, but you’ll get pretty close to it.

    “Be greedy when others are scared and be scared when others are greedy”

    1. Agree. I am interested in buying to have place to live and not an investment, however

      I wonder if rental prices have gone up nationwide inversely to home values.

      I was looking to rent a house last year and was shocked at how inflated the prices were from the last time I had looked (less than 3 years ago). I am looking to buy now because comparable properties, with a 20% down payment, would have me paying a third of rental prices (including taxes and insurance)

      1. I don’t think SW PA is a typical housing market. Which of course is one problem with the survey Tim points to — “the housing market” is not geographically homogeneous. Not that that will stop the feds from raping taxpayers in Appalachia and Upstate NY to save the economies of FL, CA, and AZ.

        1. Not that that will stop the feds from raping taxpayers in Appalachia and Upstate NY to save the economies of FL, CA, and AZ.

          Trust me, it’s not working that well for us, either.

        2. Not that that will stop the feds from raping taxpayers in Appalachia and Upstate NY to save the economies of FL, CA, and AZ. DC, MD, and Northern VA.

          FIFY.

          1. I’ve got a little tract of heaven right in Jerry Ford’s old hometown, Thack, and my zestimate is dropping like a stone.

            Speaking of which, any Realtors? in this thread? Any employees of the Appraisal Institute? Anybody using a copy of Uniform Standards of Professional Appraisal Practice as a booster seat at the public library? Now that Zillow has my place back in the toilet, I’d like to hear a good case against Zillow.

            1. Now that Obama is beyond even the remotest doubt a terrible president, I’d like to hear an apology for your “because he’s black” vote.

                1. Just saying he’s terrible does not necessarily make it so. It is, as you should know, your own unsupported opinion. If you make such assertions, and desire feedback on them that would confirm your assertions, you should actually back those assertions with reality based arguments that aren’t biased by your own race based biases.

                  After all, Obama could not possibly be any worse than his horrific predecessor.

    2. I prefer the macho-capitalist “Buy when there’s blood in the streets.”

  9. The alternative to buying is renting. How is that a winner??? When you rent you pay the owner of the property for maintenance, insurance, tax and a profit. How’s that work for ya???

    1. If you own the property, you pay for all that stuff except profit…and arguably you pay profit to the person you buy the house from. Plus you have little flexibility in moving.

    2. When you buy, you pay the real owner of the property–the government–for a bunch of shit as well in your property taxes. How’s that work for ya?

      1. You still end up paying your share of any taxes when you rent. The landlord passes it along like any other expense.

        1. What you said.

        2. They pass it along, but the total amount of the taxes that comprise your rent are almost assuredly going to be less than if you were a homeowner, as a renter is paying a distributed portion of the complex’s property tax while a homeowner is paying the full share.

          Now, if you rent a whole house, you have a point. Which is why I would never rent a house for longer than a few months.

          1. “…a renter is paying a distributed portion of the complex’s property tax…”

            And not allowed to deduct a penny of it.

          2. As usual you are full of shit!

        3. Yes, but typically landlords are required to maintain things like AC, the lawn, and appliances unless you’re a sucker who signed a contract stating otherwise.

          1. Sy|5.25.11 @ 10:12PM|#
            “Yes, but typically landlords are required to maintain things like AC, the lawn, and appliances unless you’re a sucker who signed a contract stating otherwise.”

            You think my leases with my tenants don’t include an allowance for those costs?
            You think maybe you fly on airplanes and don’t pay maintenance costs?
            Hey, sucker, I got a contract for you that includes all sorts of ‘free’ stuff!

            1. Jackass, the point is that when faced with mounting repair bills, the profit margin can wear pretty thin.

              1. Sy|5.26.11 @ 1:43AM|#
                “Jackass, the point is that when faced with mounting repair bills, the profit margin can wear pretty thin.”

                You think landlords don’t *KNOW* that and plan for it, dipshit?

          2. Are you related to that dumb fuck, Episiarch???

        4. Saying a renter pays property taxes like a homeowner is like saying the bus rider pays for gas like the guy in the limo.

          No comparison.

          Homedebtors are the most deluded humans on the planet.

      2. Technically that gets passed on to you when you rent…but you’re right, it’s probably a wash.

        1. I suppose another advantage is that, by and large (and by virtue of living in the county and not the city), I can do whatever the fuck I choose and no one can say a goddamn thing.

          Shoot guns? No problem.
          Make a 4 acre rock garden which spells fuck the government? No problem.

          Try doing that in a rental.

          1. 100-acre rental lots! Get your 100-acre rental lots!

          2. Being able to go outside in your underwear and blow up a propane tank during the rising sun of dawn is an invaluable experience that cannot be quantified with such a vulgar commodity as money.

          3. I’m wit’chu!! Tired of living in an apt. with elephant feet stomping above me. I’m a disabled Vet and can’t do the stairs, otherwise I’d be the elephant!! So, I’m looking for a house now. Don’t plan on moving again, so I wanna be happy where I’m at. And yes, rents are starting to go up.

        2. How is it a wash? You rent a lifetime, and walk away with 0. You buy, and have an asset to pay for your move to Libertobia, the lawyer for your felony drug conviction, etc.

          1. Can’t believe I agree with rather.
            For most folks, you can buy or lease an auto; who cares?
            Real estate loses value after a bubble, but like equity positions, gains in the long term.
            Just don’t buy on the bubble, and the bubble should have been obvious to most anyone.

            1. If you’re living someplace for 30 years, absolutely. That’s probably not me right now, and not a lot of people.

              1. But if they have another real estate bubble, and you sell at the right time…

              2. Tulpa|5.25.11 @ 10:50PM|#
                “If you’re living someplace for 30 years, absolutely. That’s probably not me right now, and not a lot of people.”

                Agreed, although I might choose a different time-span.
                If you’re temporarily located someplace, there’s no reason to risk even a down payment.

            2. I changed my mind since I read Being able to go outside in your underwear and blow up a propane tank during the rising sun of dawn is an invaluable experience

              I’m sticking to my boat

      3. There are circumstances when it’s better to rent. For example, if you aren’t living in any one place for a long time, then closing costs and such wipe out the advantage of buying. Also, if you’re financial future is uncertain, it’s safer to rent then buy.

        1. exactly – these days, flexibility is very important to me. I’m currently “buying”, er renting from the bank, but plan to sell so I can rent.

          Why? Mobility for job hunting.

    3. To me it’s simple. The advantage to renting is that you don’t tie up all your available credit in the house, and you can use it on other things. The disadvantage is that you have to pay the landlord’s profit.

      1. To me it’s simple.

        It sure ain’t simple in California. Here, the landlord’s overhead varies dramatically from same type rental property to same. The landlord’s tax overhead depends on when he purchased the property. I rent, and according to Zillow, it’s an $800,000 home.

        Even if I put down $400,000 to buy it, I would pay more in interest to own it than I pay in rent. That’s a prop 13 anomaly. I’m self-servingly opposed to repealing Prop 13, but I know it’s the correct thing to do.

        Zillow seems OK to me. I tracked the price of another home I sold last year with the Zillow web site. It tracked better than Realtor.com and other web sites I looked at. I’m basing that on the local PA county offices reporting of realized home sale prices.

      2. As a former landlord, I can attest that there was not much profit in renting a home. By the time I paid for taxes and insurance (I owned the home outright so no mortgage), maintenance, etc, I made $142 a month. When I realized how little I was making after renting it out for 2 years (also with the understanding that there would need to be major system repairs – roof in particular – that would come sooner than later, I put a for sale sign up. Had I a mortgage, I would have lost money on renting it out, and I was smack in the middle of the average rent cost in my area.

  10. Completely off-topic, but I just found out that Texas caved on the TSA anti-groping bill. Apparently the FEDs said that they’d ground all flights if it passed, and Texas caved.

    http://www.rawstory.com/rs/201…..comes-law/

    1. Missed the Hit&Run; thread on it?

      1. Must have. My bad. Been too busy to read everything today. Scanned and didn’t see it. I’m gonna go find it now and bitch about how my state senate is full of pussies.

    2. I was so disappointed. I’m off tomorrow so I think I’m going to spend some time contacting my Texas state rep and finding out what their stance on it was.

  11. “The economy of Los Angeles would tank if prices fell another 50 percent.”

    I’ve been hearing sentiments like this lately–I heard someone the other day say that the housing market doesn’t react to the business cycle–the housing market is the business cycle!

    I don’t buy it for a minute.

    The latest downturn wasn’t triggered by inflation–it was a financial disaster. The remedy isn’t in the housing market–it’s in the financial sector.

    We need to deregulate the financial industry and set the forces of creative destruction loose. Instead we’re regulating the financial industry more and more all the time.

    Trying to prop up the housing industry was a stupid thing to do, but propping up the financial industry was even worse.

    We need more risk taking behavior by the financial industry, and instead the government is doing almost everything it can to prevent financial institutions from taking on more risk.

    For thousandth time! The financial industry didn’t bail itself out with taxpayer money. Our politicians bailed them out. Just because our politicians did something stupid like that–and refuse to take the blame for it? That’s no reason to put the blame anywhere other than where it really belongs…

    The solution to Congress and two presidents bailing out Wall Street with taxpayer money isn’t to put handcuffs on Wall Street. We need to take the handcuffs off Wall Street–for things to really start getting better.

    The solution to two presidents and Congress using taxpayer money to bail out Wall Street is to put handcuffs on the president and Congress.

  12. Why would you want to own? Let the government seize someone else’s property.

  13. We need more risk taking behavior by the financial industry….

    A seriously calculated risk fully backed by reserves. Remember that the next time a geeky Mormon on a bicycle knocks on your front door.

    1. I don’t care what it’s backed by so long as it isn’t backed by the taxpayers.

      I want to get rid of the regulations too. Government officials forcing the merger of retail banks with investment banks? And then turning around and crying about how investment banks and retail banks should be split up because they’re too big to fail?!

      We didn’t need a Consumer Financial Protection Agency to protect us from Wall Street–we needed popular opinion to help protect Wall Street from the politicians!

      Investment banking activity is the engine that makes creative destruction go. Since we put shackles on the investment banking industry, we shouldn’t hold our breath waiting for the next round of creative destruction.

      I think it’s mostly a cognitive problem. People still blame Wall Street for the bailouts–not the politicians that bailed them out!

      Just because Barack Obama did something stupid with $350 billion from our future paychecks was no reason to kill the goose that lays the golden eggs.

      We all say we don’t believe what politicians tell us, but when they told us that it wasn’t their fault they voted to give our future paychecks away–it was all Wall Street’s fault? For some reason, we believed them!

      Talk about popular delusions and the madness of crowds.

      1. To some extent.

        The first, important point is that Wall Street liked a lot of the government policies during the crisis. They were both supporters and the ultimate beneficiaries of that theft. It’s appropriate to hold Goldman, for example, accountable for the rent-seeking bullshit it enjoyed. You’re right that we need fewer restrictions on banking and more on government, but it’s right to hold individual bankers in contempt.

        The second point is that Wall Street activity increasingly distanced itself from being the engine of creative destruction. M&A is ridiculously important (arguably less so than middle-market M&A), but trading had its golden years before the crisis. A lot of that additional liquidity was ephemeral as the algos could rapidly exit the market (? la the March Flash Crash), which means it obfuscated price discovery. It was profitable, but its benefits via lower cost of capital for companies were on the margins. I’d argue its the independent investment banks, hedge funds, VCs, etc. in our economy that are more the lifeblood of capitalism. They may go through an i-bank for some capital market activities, but the i-bank’s role is ancillary.

        What fed the trading bonanza, IMO, was the discovery by large banks that their federally subsidized deposits, role as primary dealers, and efficiency in having regulations wielded in their favor, etc. afforded them a much lower cost of capital than ordinary firms. Ordinarily, I think investors would be wary of lending money to a company like Citi that had shown no ability in the past to manage its risk. But investors — be they depositors, bondholders, stock jockeys, etc. — assumed correctly that if Citi were on the verge of going belly-up, their downside was limited.

        Now, I’m perfectly fine with these activities — high-frequency trading, gaming the S&P’s liquidity premium, legit arbitrage, etc. — occurring, but the point is that they were irrelevant to banks’ function as financial intermediaries. And as individual bankers can still be rent-seekers even if the industry itself is essential, that means there were some people doing non-useful activities. Combine the two and you have some undesirables in sectors they’d claimed via regulatory capture. I don’t like them, and I don’t like that most top bankers refused to protest the government in the hopes that they’d be next in line to get a treat from the Fed’s candy bag.

        I say this as someone in banking, who thinks no banks were responsible for fraud (i.e. not all disasters have a criminal mastermind), and was a proud part of a damned good unit called “cavalier” (or “cowboy,” I can’t remember… some sports team) by its main regulator.

        1. “The first, important point is that Wall Street liked a lot of the government policies during the crisis.”

          Even IF IF IF it were true that Wall Street wanted all that money the politicians were shoving down their throats, that’s no reason to hobble Wall Street so they can’t engage in what they do to the same extent as before…

          If we don’t want the government involved in the mortgage business, or any one of a dozen other markets, then we need a vibrant, ruthless Wall Street to pick up that slack. If you don’t want the government involved–OR Wall Street? Then who the hell else is there to take on those necessary risks?!

          Again, Wall Street is where the creative destruction comes from. We need creative destruction so freakin’ bad right now–and we’re throwing wrenches in the creative destruction machine at every opportunity!

          And it has nothing to do with reason–or, rather, the reason is because our politicians have suckered the American people into believing that what our politicians do is Wall Street’s fault.

          Not only is Wall Street not responsible for giving themselves hundreds of billion in TARP money–when Wall Street paid the money back? Our politicians turned around and squandered it again!

          The politicians didn’t retire any debt with the money that was paid back. They didn’t give us a tax cut with it. The money our politicians squandered on TARP is still coming out of the taxpayer’s paychecks–and will come out of the taxpayer’s future paychecks for at least a decade to come. How could what our politicians did with the TARP money after Wall Street paid it back possibly be Wall Street’s fault?

  14. It is obviously a good time to buy property. The best indicator is that everyone is talking about what a terrible time it is to buy property.

    1. true but property is back to a long-term investment. Not a buy, flip, and make a profit within six months deal

    2. Housing is a horrible investment, even gold would be better. Buy an actual investment that makes products or sells services instead of rotting imo.

  15. “The economy of Los Angeles would tank if prices fell another 50 percent.”

    One has to wonder how people work themselves around to positions that are this nonsensical from a common sense standpoint.

    One might as well say “The economy of the US would implode if automobile prices fell another 50 percent”.

    Since when is cheap anything bad for the economy? The market value of a house is just a fictive thing that you can borrow against. If the argument is that the economy will collapse if people can’t borrow against imaginary asset values, then there is a lot more wrong than the price of houses.

    1. “The economy of the US would implode if automobile prices fell another 50 percent”.

      I think Engine Charlie Wilson covered this one in the 1950s: “For years I thought what was good for the country was good for General Motors and vice versa.”

      Rad Brad is really just repeating a standard end-times belief that once the rubes stop coming in to get fleeced, L.A. will collapse. It continues not to happen, even over long periods when the rube supply slows to a trickle. But it’s a powerful belief, wrapped in all sorts of creation myths about the big and terrible men who built the city, inferiority complexes relative to NYC (and even San Francisco to some extent), pangs of liberal dread and entitlement, and many other bad vibrations.

      1. Actually the car analogy would kind of make sense, if the primary market was exports. You want your exports to be expensive.

        But you can’t export houses, so it makes no sense at all. More expensive houses just mean buyers have to borrow more money to buy them. Ultimately the main beneficiary of expensive housing is the lenders. Even rising home values are only good for the economy in a quasi-Keynesian sense if you expect everyone to be in debt up to their gills by taking out home equity loans on it.

        1. Consider that the people who own big, expensive houses spend very little time in them — they are too busy making the money to pay the mortgages, taxes, insurance, etc.

          A friend of mine is a live-in caregiver, responsible for a couple of nice kids every afternoon when they get home from school. Mom gets home about 6 PM, Dad an hour or two later (to be fair, they never miss important occasions with the kids, but they are routinely only there nights and weekends). Jovylyn spends more time in the house than the owners, and they pay her to be there.

          In the morning, every owner in the neighborhood leaves, and hundreds of pool cleaners, landscapers, plumbers, electricians, etc come in. All you hear all day long is lawnmowers and leaf blowers.

          Then, about the time the homes are paid for, the owners retire, sell out, and go to seniors’ communities and apartments which would fit into the living rooms of the houses they spent their lives paying for.

    2. “Since when is cheap anything bad for the economy?”
      Look around.
      It allows people to buy things they don’t need and make decisions without all of the information about the true costs of things. Cheap food doesn’t reflect the cost of health care in its price, so we have an obese nation of diabetics. Cheap gasoline doesn’t reflect the cost of wars in its price, so our country is bankrupted by military actions around the world trying to obtain “what the people want”. Cheap cars and cheap highways have covered the land with landfills and roads between the malls and the landfills (some are called “U-Store-It”s). So, the answer to your question is “right now, right here”. What makes it worse is the debt. Debt is a process of stealing from the future to satisfy a desire right now. The sad part is that we have stolen trillions of dollars from the future to buy cheap plastic crap right now and call it a “high” standard of living.

      1. shorter auntiegrav:
        EXTERNALITES!111!1!!1
        Go away.

  16. Can’t we just go back to a house being a place to live in?

  17. Hi Tim,

    You mad bro?

    1. Troooooooollololololol!!

  18. At first glance the sign on that building looked (fittingly) like a Chicago Cubs logo

  19. Wow, that really does make a lot of sense when you think about it. Wow.

    http://www.real-privacy.int.tc

  20. The short response is: It depends.

    Unless you don’t mind sleeping on a park bench or under a bridge, you have to live somewhere. Meaning, you’re going to pay somebody rent. Whether that somebody is a landlord or the bank, the distinction is irrelevant.

    If you bought your house at the (assumed) bottom of the market (like me), you didn’t overpay, you have stable employment, and you didn’t buy a house beyond your means, then there are a lot of advantages to owning a home: equity, tax break, low interest rates, quality of life, stability, etc. But it depends. You need to do a thorough Rent vs Own analysis first. There are places in this country where owning a house is simply out of the question for the average person. It’s too expensive. You might as well rent and, at least, you have the freedom to move around. If your job situation is unstable, you might have no other choice. You might also be able to take advantage of the plight of other homeowners who have to rent out their houses and downsize to stay afloat.

    Still, it depends on the location. Some areas (like Seattle) were not hit as hard by the recession as others (like Vegas or Detroit or Miami) because the employment situation hasn’t been as dire; consequently, while prices have fallen 25-30% off the peak, they are relatively stable now and unlikely to fall further unless there’s a deluge of foreclosures.

    While it’s affected by national conditions, real estate is primarily LOCAL, and always has been. Do a competitive analysis in your area before you buy. And before you sell. Consider the additional costs of owning a home: property taxes, landscaping, maintenance, homeowner’s association dues, etc. Look at the tax breaks. I’d grab a copy of Turbotax and run a projection of what your financial situation would have been like in the past tax year, if you had been paying a mortgage at the going rate.

    As for current homeowners, consider whether you can hold on for the next 3 or 4 years until conditions (presumably) improve. Don’t sell unless you absolutely have to. There’s no point in grumbling. Things are what they are. Make the best of them. And realize that nearly everyone has lost something in the past several years. You’re not alone. Smile. 🙂

  21. Renting should _always_ cost more than “buying”, since rent should include not just PITI and maintenance, but profit for the landlord. Paying more for a house than it’s worth to rent is always a stupid idea, unless you’re a flipper and you know exactly when to sell.

    Nominal prices may rise, but if those gains are eaten by devaluation, all you’ve done is f–ked oldsters over for the banksters, at the barrel of their lickspittle agent’s gun.

  22. Take heart. I remember a story back in the run up about a house in Amsterdam that had finally gone into the black… after 350 yrs. Seems the price paid during the tulip mania had finally been met and exceeded.

  23. Being involved in municipal government for years, I’m stunned and amazed at the totally negative “vibe” that is surrounding this topic (Full disclosure, the assessments on my own property have gone down the past 3 years).

    We’ve gone from “everyone should be an owner” to “You’re crazy to be an owner.” Clearly both propositions are not quite accurate and don’t fully reflect the dynamics of the world around us, but really, let’s take a bit of a chill pill and a collective breath.

    For years, up until about 2008, we operated a number of programs that helped move hundreds of moderate-income families into homeownership with very little downside risk. Heck, my mom and dad bought their first home using the old FHA program for first-time buyers…also without the world coming to a grinding halt.

    I’m convinced that it was too many people trying to “get over,” either through securitization of debt, or other causes that are the real culprit here. Sure, there were some households totally over their heads in the boom years. But I’d venture to say many more are, like many of us, suffering through a down market but religiously paying their mortgage on time.

    Let’s get back to figuring out how to help move the 2 million(!!!) foreclosed properties in the US back into the hands of people that will call them home and begin to rebuild the incredibly frayed fabric of some of our cities and neighborhoods.

  24. It is still LOCATION, Location, location.

    Where I live, prices have recovered. It is due to good school district and desirability. Take care to buy in right location.

    1. Don’t have children so don’t care about school district – that only effects those with children. Lots of us married couples don’t have children, especially those with higher educations – not a slam, just a fact from the Census.

  25. The National Association of Realtors? keeps claiming there’s never been a better time to buy, but nobody believes it anymore.

    The truth value of “there’s never been a better time to buy” has nothing to do with the truth value of “there’ll never be a better time to buy”.

  26. The value of a house is not the price, but (location, location, people to go in it) whether it ENABLES people to live where they need to be (NOT where they desire to be). In the end, we also have to evaluate whether we need the people. Unless you question what people are FOR, you don’t understand where houses need to be, and the rest is just guesswork based on a failing empire’s propaganda. If the house doesn’t put people with useful skills close to where they can apply those skills to NECESSARY work, then the value of the house can easily drop to zero or even negative numbers (cost to demolish to obtain access to the land/soil). The ‘other’ housing story is whether a municipality allows migrant structures for actual useful people to occupy temporarily as they follow useful work. But nobody wants to acknowledge that we aren’t all living the American Dream of a white picket fence of exclusion.

  27. Housing prices were so badly and artificially inflated that they have a long ways to fall yet before they’re in line with incomes. Add to that, job security is poor, and mobility is desireable when you may have to relocate to stay employed. Owning real estate in these conditions is a liability. And it was never really an investment. Almost no one stays anywhere long enough for their house to be an investment anymore, and that’s not even taking into consideration how much better that money might do in some other sort of actual investment. Yes, you do have to pay to live somewhere, but ownership is an unwise move for many, and worse when prices are still likely to fall and then stagnate before wages catch up again. Relative to the cost of living, wages have been declining for some time and will probably continue to for awhile. Until we base our economy on more solid and diversified things, we won’t see real recovery, we’ll see a series of bubbles and busts, and the citizens/taxpayers will always be the ones to pay for it, while industry perpetrators and the politicians they own, will benefit. Housing is a bad choice of an industry to base the ecnoomy on. Keeping air in this bubble is a very bad idea. Housing has had booms and busts before, (people have short memories!). And since all the housing and mortgage fraud became the M.O. of these industries, they are even more shakey and shady. It is a shame that evidence of how much fraud is going on isn’t household knowledge like ridiculous celebrity gossip is. Instead of talking about Charlie Sheen and how we need to stop the fall in house prices, the media should be talking about the FBI’s reports in the early 2000s thru the present that show that mortgage fraud is rampant and is done by the industry itself 80% of the time. Were this fact, commonly known by everyone from consumer org’s to bloggers, known, I doubt people would fall for the hype of housing, and maybe a crisis would’ve fizzled before it came to this. Americans aren’t stupid, but they are badly misinformed. I wish all the TVs would go dark, then people would have to think again.

  28. I hate having a landlord with a deep passion.

    How’s that for a reason to buy? Flippers have mercy.

    1. > I hate having a landlord with a deep passion.
      > How’s that for a reason to buy?

      Make sure you don’t buy into an HOA then. They’re even worse than landlords, because you have all the responsibilities and obligations of ownership without all the rights.

  29. Once home prices are down to 1.5-2x the gross annual income of the average US family, then and only then will I buy a house. Until then, Garden Apartments for me & the wife. No yard work, all maintenance covered, free parking, etc…

  30. I bought a tour bus which had just come out of service. Less than $10,000 later, I had a custom 40-foot RV with all household-grade fixtures and appliances (except the biggest propane fridge I could buy), Sleep Number bed, La-Z-Boy recliners and Jacuzzi tub.

    I now spend most of my time living at a small airport. There are stores full of stuff that I don’t need to buy, from lawn mowers to floor tile, and that money goes for things that I want to buy, or places that I want to go.

    I don’t pay property taxes, HOA fees, street light assessments, points, mortgage balloons or any of the other things that suck up thousands of dollars per year from most folks’ budgets.

    My coach has about two million miles on it — and was built for a FIVE million mile profitable life, so I’m never going to wear it out.

    Most people have to wait until they retire before they can have the big RV and the vacations on the road. Those are the ones who owe $500,000 on a $200,000 house.

  31. It depends on whose perspective about owning or not owning property. If you look at it from the Obama communist regime perspective then it makes perfect sense not to own property. Why? Because even prior to him coming into power policy has been shaping to abolish private property rights. Now things are in place to force people to make logical economic decisions about whether or not to buy a house or rent, which plays right into the hands of the globalist.

  32. It depends on whose perspective about owning or not owning property. If you look at it from the Obama communist regime perspective then it makes perfect sense not to own property. Why? Because even prior to him coming into power policy has been shaping to abolish private property rights. Now things are in place to force people to make logical economic decisions about whether or not to buy a house or rent, which plays right into the hands of the globalist.

  33. It should be obvious to people that Gold is going to bubble soon. For fun i bought a couple of small bars last year and i sold them last month. I saw so many posts about Gold – YIKES – reminds me of 2006 for housing.
    Also, you buy a house if you plan on staying longer than 7 years, or you rent if you are planning on staying less than 4 – other than that you have to look closer at the numbers. It’s not hard. Buying a house if you are staying over 7 years is a great investment no matter what.

  34. Looking forward to buying a house because I plan to live there for the next 30 years. I have hate apartment living. I want to paint & decorate to my taster. In the long run if you stay a long time the investment & tax write offs are worth it.

  35. I have worked abroad for 5 years, with total rental reimburstment on a nice villa as a contractor, saved roughtly $250K, plus paid off all my debt. I returned stateside this year long enough to close on a absolutely beautiful 2008 forclosed house, in a great location. LOCATION, LOCATION, LOCATION….thanks zillow. Paid cash money. I then rented the property for $1,200 per month. My taxes and insurance run me $684 per month. So, I am pocketing $500 montly, that’s $6K a year. I will continue working abroad rent free while waiting for my house to increase in value. May take 5 years, I do not care. I will then sale and put the cash, hopefully $325K in the bank. By that time I should have roughly $800k in the bank….I am done. Thailand, here I come FOREVER…I leave the NOT so good old US to you guys. Spending $3k a month doing what ever the hell I want for the next 22 years. By that time I will be if still alive I will be 3 years into already drawing SS and retirement account withdrawals. A big thanks Mike for turning me on to this 10 year plan…it is working out like a charm. Will see you in Thailand in about 4 1/2 years my friend.

  36. By the way, I am only 40 yrs old. 4 1/2 more years baby, 4 1/2 more years!!!!

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