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Forums » Off-topic discussion » Home Values. 1 2 3 4

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  Feb. 7, 2012 8:32 a.m. mguar Reader

  In reply to Curmudgeon:

  Brilliantly said Curmudgeon! Hide behind enough formula and lawyers it's extremely easy to evade penalties..

  I do want to explain one thing though that everybody misunderstands..

  $0 down is not a bad thing! GI's came home from WW2 and were granted GI loans with Nothing down. Remarkably the rate of foreclosure was lower with GI's than conventional loans with 20% down..

  It's not the zero down part. It's the due diligence on the part of the bank..

  I bought my first home On the GI bill following my service in Vietnam.. $0 down and no credit.. (In fact I borrowed the earnest money from the realtor because my checkbook was empty and payday was 8 days away)

  Putting money down does not guaranty the homeowner won't get sick or a divorce.. nor does it assure anyone that He won't lose his job or the economy turn bad..

  The rate fo foreclosure on GI bills was less than the rate of foreclosures on conventional loans..

  Why? back then banks were required to do due diligence.. (Post Banking Fraud of the 1930's) It seems like Bankers are always calling for deregulation. they did in the 1920-30's they did with the savings and loan and they did staring in the late 1990's

  When will we learn?

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  Feb. 7, 2012 9:05 a.m. Datsun1500 SuperDork

  mguar wrote:

  Datsun1500 wrote:

  mguar wrote:

  If the expert who appraised the property told you it was a good deal. The bank who lent you the money to buy confirmed it was a good deal. Clearly fraud was involved..

  If your own research and budget tells you it's not a good deal and you can't afford it but you do it anyway, it's on you.

  The best expert on what is a good deal for me, is me. The fact that any "expert" says it is a good deal is not relevant and does not get me off the hook.

  You are correct, shelter is not really optional. Buying a house for said shelter, is optional.

  OK let's look at the research most people had access to in determining if the house they buy is fairly priced and if they should buy it.
  

  Most people could do comparable assessments and did..

  Most people looked at income and asked what guidelines were available to determine the correct amount to dedicate towards housing and stayed within those guidelines

  So they got as good a home as they can afford and stayed within budget..

  You forgot the first part, the most important part. Look at your income and see how much of it you can afford to spend on the house. No one else can do that except you and your spouse. No bank, no realtor, no loan officer. If you are counting on them telling you what you can afford, no wonder you are in a mess. You say above "people asked what guidelines were available to determine the correct amount to dedicate towards housing" The only "guidelines" necessary are how much YOU can afford to spend and not get over your head.

  You say they got as good as a home as they can afford and stayed within budget, that is not correct. They decided they wanted a bigger/more expensive house than they could afford and now it's coming back to haunt them. The issue is not the house was overpriced, the issue is buying a house you can afford.

• 

  Feb. 8, 2012 12:41 a.m. mguar Reader

  In reply to Datsun1500:

  I'm sorry. That is absolute non-sense..It makes as valid of an argument as blaming the pretty girl for getting raped.
  

  The real truth is most bankruptcies/foreclosures are caused by unavoidable events.. #1 is getting sick, divorce, loss of job, reduction in income, etc..

  overspending is #7

  I will admit that a small number of buyers were greedy folks who overbought.. But no-where near the majority. In fact a very distinct small minority who were among the first homes foreclosed on..

  The numbers of foreclosures is at an all time high. AND INCREASING!
  

  I will use myself as a prime example.. for decades I sold telehandlers to the new housing industry. That industry doesn't exist today.. (telehandler industry) Less than 50% of all licensed architects in Minnesota have done any work as an architect in the last year.. I used to have a core of 1400+ customers I sold equipment to. Last Time I called those customers only 4 were still working in construction and all 4 of them had gone from management or supervisor category to wearing a tool-belt and driving a hammer..

  Look at what happened. 10% of the working population were laid off and another 7% had their income reduced by 40% or more.. (I'm lumping underemployed into this group as well.)

  That was caused by the bankers who killed the construction industry. Not by a tiny percentage of greedy buyers who knowingly got in over their heads..

  With a record number of foreclosures ever since 2008 (and increasing) Any home owner able to hang on to their home for 4 years in this down economy only to lose it now or soon that person did not overbuy..
  

  Oh and a side note, 2011 is the first year in American history more women were working for wages then men.. Engineers, architect, Contractors construction workers etc. all took employment hit's.. Stayed home and the wife's income paid the bills..

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  Feb. 8, 2012 6:33 a.m. SVreX SuperDork

  mguar wrote:

  I wonder if you aren't comparing Park Avenue New York with the cost of upstate New York ? One is cultured refined and uber expensive while the other is far more basic.

  No, I'm telling you that the prices you see on television and on the internet are not representative of a real cross section of other local communities, that they represent a very elite slice.

  I am also telling you that a 1/4 acre yard in one place has great value and in another is a negative. Culture determines value, not type of construction material or size.

  If I choose to live in another location, I will want to maintain a similar lifestyle to what I have, meaning I will want to live where similar people of a similar socio-economic class live. Those places do not look the same in the US as they do in other places. Middle class in the US means 3/4 acre in suburbia with 2.2 kids and a dog. It is very different in other places. That is wealthy in some places, and impoverished in others.

  But I see you are not open to other perspectives. Carry on.

• 

  Feb. 8, 2012 7:39 a.m. Curmudgeon SuperDork

  mguar wrote:

  Why? back then banks were required to do due diligence.. (Post Banking Fraud of the 1930's) It seems like Bankers are always calling for deregulation. they did in the 1920-30's they did with the savings and loan and they did staring in the late 1990's

  When will we learn?

  Never. In the 1920's, the housing market was not much different from the 1990's. Lending standards were relaxed, people bought houses like crazy, the bubble expanded until it popped. That bubble popping was one of the root causes of the Great Depression. The gubmint stepped in, slapped a few hands (AFAIK no one in banking did time then either) and the country struggled along until WW II gave us a convenient rathole to throw huge amounts of money into. (BTW, that is the secret to a booming economy: sell stuff that constantly has to be replaced. )

  SVreX is right about houses in different parts of the world not being, for lack of a better word, 'value comparable' based on their construction. You can't give away a timber framed house in Yucatan in Mexico for instance. Why?

  The termites down there are freakin' AMAZING. Everything is made of concrete or stone (or at least some sort of masonry) because that's the only thing they won't eat. Picture of a tree nest:

  The Mayan ruins have no surviving wood for that exact reason. But up here where the termites are reasonably easy to control timber framing is pretty common and accepted. Solid concrete or masonry, not so much.

• 

  Feb. 8, 2012 7:45 a.m. fasted58 SuperDork

  when I read values I thought it meant this...

  

  ... nevermind

• 

  Feb. 8, 2012 8:33 a.m. mguar Reader

  SVreX wrote:

  mguar wrote:

  I wonder if you aren't comparing Park Avenue New York with the cost of upstate New York ? One is cultured refined and uber expensive while the other is far more basic.

  No, I'm telling you that the prices you see on television and on the internet are not representative of a real cross section of other local communities, that they represent a very elite slice.

  I am also telling you that a 1/4 acre yard in one place has great value and in another is a negative. Culture determines value, not type of construction material or size.

  If I choose to live in another location, I will want to maintain a similar lifestyle to what I have, meaning I will want to live where similar people of a similar socio-economic class live. Those places do not look the same in the US as they do in other places. Middle class in the US means 3/4 acre in suburbia with 2.2 kids and a dog. It is very different in other places. That is wealthy in some places, and impoverished in others.

  But I see you are not open to other perspectives. Carry on.

  I completely understand your perspective.. I am not saying 2.2 kids in a suburban setting.. As much as possible I'm doing apples to apples.. While you're talking about adapting and accepting*..

  *There is nothing wrong with adapting and accepting.. in fact it's very..wise and smart. However that does not provide us with a perspective of what housing costs are like elsewhere.

  In the last 2 years the program I spoke about has had a even more global perspective.. Someone from England purchased a home in Italy or France.. Someone from Germany bought in Africa or Asia. Someone from south Africa moved to Australia. Etc.

  I will grant that the homes presented to select from are only a brief snap shot of what homes are in any given market.. However there is now over 4 years of programs where 3 different homes in a given area and price range are presented.. The one consistent has been a higher cost..

  Fixer-upper Apartments in rural small town Italy were massively more expensive than similar places here in America.. Remote Back woods homes in central America were more expensive than Similar homes here in America. Beach front homes were more expensive than similar beach front homes in America..

• 

  Feb. 8, 2012 8:46 a.m. mguar HalfDork

  In reply to Curmudgeon: Yes I would build with ICF's in much of America.. Termites exist pretty well everyplace here in America except the most Northern states.. The higher material costs are offset by the potentially faster construction..

  ICF construction with proper hold downs on roof rafters would easily survive most natural disasters..An F5 tornado or severe hurricane is survivable with ICF's and proper hold downs..

  I digress. At least in the 1929 crash a few bankers jumped out of windows or hung themselves..
  

  With regard to the method of construction.. Who cares?!?! If you look at $30,000 fixer uppers or 3 million dollar beach front pads Apples to apples American homes are cheaper (sell for less)..

• 

  Feb. 8, 2012 9:05 a.m. z31maniac SuperDork

  mguar wrote:

  In reply to Datsun1500:

  I'm sorry. That is absolute non-sense..It makes as valid of an argument as blaming the pretty girl for getting raped.
  

  The real truth is most bankruptcies/foreclosures are caused by unavoidable events.. #1 is getting sick, divorce, loss of job, reduction in income, etc..

  overspending is #7

  That's why the wife and I bought a house we could afford, pay utilities on, etc with ONE income. IN CASE one of us lost our job, got sick (she left me, house is in my name only), etc etc.

  It's called planning.

• 

  Feb. 8, 2012 9:44 a.m. Datsun1500 SuperDork

  z31maniac wrote:

  That's why the wife and I bought a house we could afford, pay utilities on, etc with ONE income. IN CASE one of us lost our job, got sick (she left me, house is in my name only), etc etc.

  It's called planning.

  This is an internet argument, please do not bring logic into it. Why can't you see it is anyone's fault except the guy that got himself into the mess? Why do you not understand it is the loan officers fault, or the bankers, or the realtors, or the.....?

• 

  Feb. 8, 2012 10:19 a.m. z31maniac SuperDork

  SHould have said IF she left me.

• 

  Feb. 9, 2012 4:08 a.m. mguar HalfDork

  z31maniac wrote:

  mguar wrote:

  In reply to Datsun1500:

  I'm sorry. That is absolute non-sense..It makes as valid of an argument as blaming the pretty girl for getting raped.
  

  The real truth is most bankruptcies/foreclosures are caused by unavoidable events.. #1 is getting sick, divorce, loss of job, reduction in income, etc..

  overspending is #7

  That's why the wife and I bought a house we could afford, pay utilities on, etc with ONE income. IN CASE one of us lost our job, got sick (she left me, house is in my name only), etc etc.

  It's called planning.

  You make an excellent point. However like everything your planning has a cost. You traded off potential gains for security.. Plus you paid higher income taxes because of that security.

  That is the resulting home you bought may have had to be located in a less desirable location, Perhaps further away from the center or town or in a higher crime neighborhood, worse school district,.. less accessible to public transportation, or civil/recreational amenities. It was lower priced for a reason.

  Realtors tell you the three most important things to look for in a home are.... Location, Location, and Location..

  When I bought my first home I traded everything for those. Crappy little old house, tiny yard etc.. But because it was located on a really high demand lake near a major metropolitan city I usually earned more per year in appreciation than I earned working..

  I went from a $27,800. home to a 2.3 million dollar home simply because I choose the right location (2X). My income never justified the home I was in..

  You know what else? The cost of owning this house is cheaper than a similar house in a less desirable neighborhood.. Crime rate is virtually non-existent. Safety is in the highest order. Our schools are among the best in the state.. Yet property taxes are remarkably low compared to similar homes elsewhere..

  That's because everything has been in and paid for for decades.. plus the cost of services is divided among properties sitting side by side worth millions or tens of millions..

  Oh and if she leaves you? it doesn't matter if the house is only in your name. She get's half of it.. So if your house is paid for and worth oh say $200,000 her lawyer will get $100,000 from you upon divorce.. (Plus 1/2 of whatever else and depending on who earns the most spousal support.. (Shoulda demanded a pre-nupt)

• 

  Feb. 9, 2012 7:19 a.m. z31maniac SuperDork

  I love the income tax analogy..............spend $10k to save $3k!

  Brevity. Look it up.

  But, our plan is to pay the house off early, turn it in to a rent house, and then buy the house we want. Seems as though you knew that though......

• 

  Feb. 9, 2012 8:08 a.m. mguar HalfDork

  z31maniac wrote:

  I love the income tax analogy..............spend $10k to save $3k!

  Brevity. Look it up.

  But, our plan is to pay the house off early, turn it in to a rent house, and then buy the house we want. Seems as though you knew that though......

  What your brevity fails to explain is that you're going to pay taxes and your going to have a home someplace.. Why not use one to minimize the other?

• 

  Feb. 9, 2012 8:36 a.m. z31maniac SuperDork

  I'm doing that, since I bought a home. You're suggesting that we should have spent much more on a house, using the interest write-off to lower our tax burden.

  My point is that it would have been irresponsible to spend more on a house than we can support on one budget. And that the mortgage interest deduction, doesn't really make that big a deal.

  I paid $6k in mortgage interest last year. It got me $750 back on my taxes.

• 

  Feb. 9, 2012 9:27 a.m. Datsun1500 SuperDork

  z31maniac wrote:

  I'm doing that, since I bought a home. You're suggesting that we should have spent much more on a house, using the interest write-off to lower our tax burden.

  What he is saying is you did it the wrong way. Instead of planning you should have knowingly gotten in over your head and blamed it on everyone else when it came crashing down.

  He is in foreclosure and thinks if everyone else is then it's easier to say "not my fault"

• 

  Feb. 9, 2012 5:52 p.m. mguar HalfDork

  In reply to z31maniac:

  You have middle class values.. Work hard, save towards retirement, be loyal, honest, and good things will happen..

  I grew up with those same values.. It's what most Americans do.. that's why we're so productive as a nation..

  On one budget? That assumes that there is one budget doesn't it?
  What if your wife gets sick and you need to spend your time nursing her and can't work like my buddy? Or you get a divorce and her lawyers demand sale of the house to settle things as has happened to other friends?

  In my case I had 20 years in a career destroyed by the banking industry. At the time I was less than 7 years from payoff. had more than 1/4 million saved towards retirement. At that my payments were within normal guidelines and only took a portion of my income leaving the wifes income for her to spend as she saw fit (she saved hers too)
  

  However unlike most of the rest of the world Americans have not had a middle class pay raise since the 1970's (adjusted for inflation)

  A small group of Bankers found there was a lot of money to be made if they could be deregulated.. Don't you like that word? Deregulated?
  

  Let's deregulate stop signs and speed limits in school zones? Or do you think there is a valid reason for those rules? Just like the rules applied to banks. Hard learned rules caused by the great depression, savings and loan scandal and most recently the housing crisis.

  Anyway how does that apply to you?

  There are roughly 77,000 pages in the IRS tax code plus tens of thousands of legal precedents giving all kinds of tax breaks to the uber wealthy..

  How many pages do you get? 40 or so?
  

  There are more deductions available if you have the resources to find them.. If all you saved was $750 you need some help doing your taxes..

• 

  Feb. 9, 2012 6:00 p.m. mguar HalfDork

  Datsun1500 wrote:

  z31maniac wrote:

  I'm doing that, since I bought a home. You're suggesting that we should have spent much more on a house, using the interest write-off to lower our tax burden.

  What he is saying is you did it the wrong way. Instead of planning you should have knowingly gotten in over your head and blamed it on everyone else when it came crashing down.

  He is in foreclosure and thinks if everyone else is then it's easier to say "not my fault"

  I never suggested your foolish course of action.. I know I never followed that..

  My house payments were well within guidelines and I did not need my wife's income to pay.. At one point I had close to 2 million dollars in equity in this house.. Yes, some of that was driven by reckless bankers. However it also reflects 30,000 hours of my work (nights and weekends after my regular job). Wise purchasing both in initial purchase and material purchase. Further while the financial tried desperately to foreclose they never were able to.. (if they had been able to foreclose any equity in the property would have gone to them, hence their motivation) I'm slowly working my way out of the hole I was put in..

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