Basically, people are buying property not to live in, but in the hopes they'll be able to sell it off at a profit. That may not sound like much, but to economists that's a big, flashing sign that there's a bubble that could be popping at any moment. That doesn't mean that it's a bad idea for a certain individual to buy a house-a lot depends on your particular situation and area of the country... but it's something one ought to think about before doing so.
I believe I read another article by the Economist a few months ago that pointed out that it's now cheaper to rent than buy in the larger cities around the world.
P.S. I'm not sure if those articles are free or subscription-based, but if they want a log-in, feel free to use mine (or bugmenot). log-in: jharr@depauw.edu password: 12345 As you can guess from the password, I give this out to a LOT of people-mostly classmates. Just don't mess with the email subscriptions, please.
Posts: 2409 | Registered: Sep 2003
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rivka, that TND loan looks exactly like the Good Neighbor loan I've heard of. It's probably exactly the same. I wonder what they mean exactly by 'revitalization' area...and I wonder where those would be in Sherwood? I'll have to check it out.
quote:The selected bidder may purchase the property at a 50 percent discount from the list price. For example, if a HUD home is listed for $100,000, a teacher can buy it for $50,000. To make a HUD home even more affordable, you can apply for an FHA-insured mortgage with a downpayment of only $100 and you may finance all closing costs.
So what do they mean when they say that I would finance all the closing costs? Does it just become part of what I owe on the mortgage, or would I be paying some weird percentage rate? Hmm... Thanks for the link, I'll have to look into this.
As for the rest of this thread, I know 100% MORE than I did when I started it thanks to you guys and it's really helped me put some things in perspective. Right now I'm leaning toward the "rent for a year and figure out your surroundings" vote simply because I only have 2 months before I move. But, because of my poking around on the internet, I've already got lenders and realtors calling. I'll be able to ask lots of questions and maybe see if there's something I should jump on.
From what you guys have told me, it seems like a much better idea to wait and have the down payment before I buy. That could take a while, but it makes sense to me.
Posts: 6415 | Registered: Jul 2000
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Yeah, if you're moving into a new area, renting isn't a bad idea until you know where you want to buy. And having a good down payment is very nice.
We rented for the first 2 1/2 years of our marriage and decided we didn't want to pay rent anymore. It was money that wasn't doing anything for us. So we took a big breath and started home shopping.
We got a 5K first time homeowner grant toward our down payment and put down another 5K ourselves. The stipulation in the grant was that we had to own the home for at least 5 years. But it was free money, nothing to sneeze at. Our loan officer at the bank gave us information on several such grants and was very good at explaining the differences between loan types.
We did the "real estate investment" thing and bought a duplex. At the time, my income wasn't quite enough to comfortably cover the entire mortgage payment, but with rent income we were able to handle the mortgage and build up a few month's worth of mortgage payments in case we couldn't rent it for a while. Came in handy a year later when our first tenants moved out and we had to figure out how to effectively advertise for the place.
Since then, my income has risen to the point where we can handle the mortgage by ourselves. We use the rent income to make extra payments on the principal each month. Our goal is to pay off our 30-year mortgage in 15 years.
We haven't decided yet whether we're going to stay in our duplex or buy another place and rent both units. We're not avid landlords and we're aware of the crap we might have to go through with tenants. So far we've been pretty lucky, but we've also been fairly generous with rent prices. Still, we're building up equity, we've got our own place with a big backyard, and we're pretty happy.
Things do change from the time you buy your home, sometimes for the better, sometimes for the worse. Your income will hopefully rise, the value of your house will hopefully rise, you get better at managing your finances around your mortgage payment. Nothing's guaranteed, but personally, I like the feeling of home ownership, and I'd be loathe to go back to renting.
Posts: 5957 | Registered: Oct 2001
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*sigh* I should probably buy something. Dallas was going to be temporary, but it turns out I like my job and just started a Master's program, so I'll probably be here for a while. That is, I do not currently have plans to move. Still, I like being fairly mobile within the metroplex, and buying a house just seems like such a huge committment. It also sounds like it would take all my fun money, and I use my fun money to keep me happy. Still, Dallas's prices are not overheated. It would be good time to buy something.
I don't want a house, though. It would be a one-bedroom condo. I use my apartment as a studio, library, and relaxation place, but I don't take up much room and I don't have very much stuff. Renting is fine; my rent is still under $500 a month. I think if I bought anything near where I'd want to, it would be at least half again as much, and maybe more.
Posts: 26077 | Registered: Mar 2000
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Katie, prices are going up fast. Now would be a good time to buy.
And your rent is under $500 a month because you live in a one-bedroom, second story apartment with scary stairwells. It's a nice place, but obviously not intended to be permanent.
If you're willing to live closer to school and a little farther from work, there are some great condos available out that way, and not needing more than "small" makes it much more affordable to find one that will suit. (We did extensive research at one point.)
Rivka, I'm with you on hoping that the housing bubble in SoCal pops; it would be so wonderful to be able to buy a house in a few years.
Posts: 21182 | Registered: Sep 2004
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I definitely fall on the side of rent for a year, or at least 6 months to get to know the area. And your job. If you absolutely hate it you may be looking to move sooner than you think.
That being said, definitely keep an eye to buying. We bought after renting for exactly a year. There were very specific location requirements (particularly about dogs) that I had to research to figure out where we were living.
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Yeah, they are going up. Several people have told me I need to buy something. I just love being mobile.
I really don't want to go North of work - traffic sucks going up 35. I do it a couple of times a week for school, but I don't want to drive an hour both ways every day. If I bought something, it'd be in Las Colinas or maybe Irving. Maybe I'll look around.
Third-story apartment with scary stairwells. Posts: 26077 | Registered: Mar 2000
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Something to consider: You buy a condo with a fixed-rate mortgage, your mortgage payment won’t go up as the years pass. But rent prices will. Eventually, you can rent out your condo for more than your mortgage payment. It’s one good reason to own a condo. Might be a bit simplistic, but there you go. :)
Posts: 5957 | Registered: Oct 2001
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quote:Renting is fine; my rent is still under $500 a month.
Wow! I would never have guessed that your rent is so low, even if it does have scary stairwells and isn't in the best part of town.
I totally understand about not wanting to buy a house though. Even though I'm not currently in a situation where home-owning is an option, there have been times I've considered it in the past. But all my moves have been made knowing they were temporary. Besides, buying a home seems like such a big commitment and I don't know that I've found anyplace I'd like to live for more than a couple years.
*dreams of a nice apartment for less than $500*
Posts: 959 | Registered: Jan 2002
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Hmm...maybe I will, if I can find something that makes my payment the same as my rent now. Considering I just started a three-year program, that does sort of make sense.
Ris: I know - I love my little apartment. Makes the scary stairwells worth it. Besides, the crack apartments up the street and around the corner got torn down recently. They are building a new high school on the land, so I think the area is gentrifying a little bit.
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My husband and I bought a starter type home thinking it was better than renting, and I wish we had rented during the years before we built this house.
We bought an inexpensive home in a lower middle class neighborhood because we wanted to live cheaply while we saved money to build our home.
Everything went great until we got ready to move to our nice, new home that like all homes went way over budget and we wound up borrowing more than we planned, so our mortgage payment was higher than anticipated.
We couldn't sell the other house. It was in such a bad neighborhood, no one was buying in the area. Oh, we had offers - but they were for less than we paid for it and since we only lived there for a few years we didn't have much equity so we couldn't afford to take a loss.
We paid two mortgages for a year, and it was one of the toughest things I've ever done, and when I quit working to stay home with the kids, we were still paying two mortgages.
Now we still are carrying the note, but have a lease-to-own agreement and are hoping that soon the tenant will be able to get financing to buy it outright. For now, we still own it and it is a thorn in our side.
The amount we've been able to deduct on mortgage interest is nowhere near compensating us for the headaches we've had and the money we've spent on keeping up the note on a house we didn't live in.
If you buy, think everything through - especially resale value.
Posts: 14428 | Registered: Aug 2001
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That's a great point Belle. I have friends that have bought (at my age and situation) with grand thoughts of selling at a huge gain and buying cars etc. Unfortunately, it's hard to predict what the market value on your home will be down the road.
Posts: 6415 | Registered: Jul 2000
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I wonder what they mean exactly by 'revitalization' area...and I wonder where those would be in Sherwood? I'll have to check it out.![[Wink]](wink.gif)
It's a nice place, but obviously not intended to be permanent.![[Razz]](tongue.gif)
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Wow! I would never have guessed that your rent is so low, even if it does have scary stairwells and isn't in the best part of town. 
