It's A Terrible Time To Buy An Expensive House • Hacker News Board

Re: It's A Terrible Time To Buy An Expensive House

#31

Post by huherto » Tue, Sep 17, 2013, 2:05 PM UTC

debacle wrote: post #23

I hadn't considered the impact of #3, even though I knew it was a reality. Being in a position to buy a new house but not take advantage of low interest rates (because I don't want a long amortization on the mortgage), it actually makes little sense to buy right now except maybe if I planned to leverage a diminished equity in a different market. #6 seems somewhat tinfoil-hatty. Does anyone have some data to back up #…

#9 They will probably try to downsize. Or they can do a reverse mortgage, but I don't know how that would affect the market.

Re: It's A Terrible Time To Buy An Expensive House

#32

Post by eloisant » Tue, Sep 17, 2013, 2:05 PM UTC

jpmattia wrote: post #7

It's worth noting that patrick was among the few active bloggers that noticed the housing bubble early. Ben at the thehousingbubbleblog, calculatedrisk were two others. Folks that were paying attention and shorted the banks made some money. But of course: this time is different, broken clock, and , etc etc.

Also you can find people saying everything and its contrary.

Retrospectively you'll always find people who "predicted" any up or down in the market. That doesn't mean they will get it right the next time. Or it would be too easy, just find the guy who got it right once and you can predict the future!

Re: It's A Terrible Time To Buy An Expensive House

#33

Post by this_user » Tue, Sep 17, 2013, 2:07 PM UTC

envex wrote: post #9

amanfredi wrote: post #8

In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.

Plus renting is basically flushing your money away each money opposed to building equity in something over time.

Except you are not necessarily "building equity". House prices can decline and at the same time you do have to put money into the building in the form of renovations to maintain its current substance. What is even worse is that buying a house on a mortage with say a 10 or 20% down payment means three things:

1) The majority of your net worth is probably in that building so you're badly diversified across asset classes, 3) You are massively leveraged on that one position. 2) You are holding an extremely illiquid investment that could take months or even years to sell. This will probably be worst when when you want to sell the most.

All three of those are marks of a questionable investment.

Re: It's A Terrible Time To Buy An Expensive House

#34

Post by DamnYuppie » Tue, Sep 17, 2013, 2:09 PM UTC

untilHellbanned wrote: post #20

Think this is all true, but when will any of these points be recognized by the masses? Never? 5 years?

Hopefully not until after my house sells ;)

Re: It's A Terrible Time To Buy An Expensive House

#35

Post by eloisant » Tue, Sep 17, 2013, 2:09 PM UTC

ambiate wrote: post #29

It is important to weigh in many factors. The easiest to grasp is debt to income ratio. (Debt/Income) 100. Student loans, phone bills, internet, netflix, insurance, etc. Tally it all in. Divide it by your monthly income. For example: $650 student loans,$100 cellphones,$90 car insurance,$300 food,$250 gas,$150 electric (average over 12 months),$80 water/sewage/trash ---- $1620 ($1620/$4000) 100 = 40.5% recurring debt…

I don't know, if shit hits the fan you can change your utilities budget. Change your cellphone plan to a prepaid, take the bus instead of your car, eat ramen everyday instead of going to the restaurant...

But when you have debt, you can't just decide not to pay this month or you really get in trouble.

Re: It's A Terrible Time To Buy An Expensive House

#36

Post by marksands07 » Tue, Sep 17, 2013, 2:10 PM UTC

envex wrote: post #9

amanfredi wrote: post #8

In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.

Plus renting is basically flushing your money away each money opposed to building equity in something over time.

+1. I live in an extremely rural community where you can afford to buy a 3 bedroom home for under $100k. If you can put 20% down on a 15 year loan and pay it off in 12 years, then yes, buying is much better than renting. If you're 25 years old, from the age of 37 to retirement you've just earned almost 30 years of free living (with the exception of taxes, utilities, etc.).

Re: It's A Terrible Time To Buy An Expensive House

#37

Post by kevjiang » Tue, Sep 17, 2013, 2:12 PM UTC

tootie wrote: post #4

He kinda ignored supply and demand.

Rental prices are based on supply and demand, except for in a few cases (for example, rent control). That's why he suggests using rental prices as a way to check how reasonable a house price is.

Re: It's A Terrible Time To Buy An Expensive House

#38

Post by mkr-hn » Tue, Sep 17, 2013, 2:15 PM UTC

jonnathanson wrote: post #10

Some very solid points about the market in general, but I wonder how several of these points (particularly the points about oversupply, baby boomers, etc.) apply to places like SF or Manhattan. SF, in particular, seems to be extremely young (though that could be observational bias on my part), well-monied, in sharp undersupply of housing, with rent matching or in some cases exceeding the cost of a mortgage. Historica…

A tepid Twitter IPO right on the back of Facebook's might convince people to start looking to places with higher growth potential. Anywhere Google takes its Fiber is a good bet.

I don't know about a bust, but things can only go so high before people with money and ambition start looking elsewhere.

Re: It's A Terrible Time To Buy An Expensive House

#39

Post by jameshart » Tue, Sep 17, 2013, 2:18 PM UTC

amanfredi wrote: post #8

In many places, homes available to rent are not and will never be comparable in quality to homes available to purchase.

Nor can you customize rented property to suit your needs more precisely. Want to run ethernet to every room? convert one room into a gym, or a recording studio? Add more space? Not your property, so not your call. Nor can you guarantee that a rental property will continue to be available at a cost you can afford for a long time. Your landlord may elect not to offer a lease renewal. And if you have kids in school, or just strong local connections, or a sweet commute you want to preserve, that's not a disruption you want someone else to be able to impose on you.

Re: It's A Terrible Time To Buy An Expensive House

#40

Post by vermontdevil » Tue, Sep 17, 2013, 2:19 PM UTC

I now do not consider buying a house a good investment due to property taxes.

The bill is coming soon for a lot of school districts (especially those with strong unions) with the rapid costs of health care for retirees.

This is going to be our next crisis as we can see it playing out in Detroit.