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Re: US real estate

Postby Mr-914 » December 20th, 2011, 1:46 pm

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My brother left Florida two years ago, but I still have friends there. My parents live in Phoenix. So, I know a thing or two about two of the places with the biggest drop in value.

In both places, good deals are hard to find because people are just staying in their houses. One of my college buddies is actually redoing his whole house. "it's not like I can move", he said. Many of the places for sale have been on the market since the recession hit, people just refuse to lower the price, so they sit.

Phoenix is horrible. Some of the developers are uber-rich. One guy hasn't stopped building new suburbs. "When the economy picks up, they'll need somewhere to live." Big problem with squatters and construction material theft in the ghost town subdivisions.

Two years ago, Florida was pretty amazing. I drove through a very quiet Daytona Beach in summer. It seemed like every home was for sale. No one buying though. Pretty similar in Orlando.

If you want to know about renting v. owning from an economist view point check this out:

http://baselinescenario.com/2011/05/13/renting-and-buying-compared/

You can’t tell now what is going to happen to house prices over the next ten years. But there is one thing you can sort of estimate: the current ratio of house prices to annual renting costs. David Leonhardt‘s rule of thumb is that if the ratio is below fifteen, owning will probably work out better than renting, and if the ratio is above twenty, renting will probably work out better than owning.
Ray Jepson

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Re: US real estate

Postby mo-i » December 20th, 2011, 2:05 pm

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Thanks for the swift reply. Could you educate me about the "adjustable rate loans"?
If the interest is 3,9% the monthly rate surely must be something like 1/12 of 3,9%
plus amount X of payment.

Over here at the moment it is possible to get the low interest booked in for up
to 15 years (half of the running time of the wole financing.)

So in my eyes it would be advisable to pay 30% down and pay back within 2o years
in order not to get bent over during the last 10 years (when approaching retirement).

mo-i
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Re: US real estate

Postby iab » December 20th, 2011, 2:23 pm


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Adjustable rate mortgages are for 1, 3 or 5 years. After the term is complete, the interest rates adjusts to something based on the prime rate. That adjustment is largely determined by your credit score. It gives you a lower rate than fixed and should be used if you are planning to move near within the timespan of the mortgage.

The 20% down NURB wrote is more of a rule of thumb. Prior to the bust, people even with poor credit could borrow up to 110% of a home's value. Now, with stellar credit, I could get a 100% loan if I chose.

There are 20 and 15 year fixed mortgages here in the US. Using them is a choice. You can shorten the time to pay the 4%, but you need to have a higher monthly payment. That "extra" money for the 15 year could be used to invest in another place if you go with a 30 year. If your investment is paying more than 4%, it would be better than doing the 15 year loan.

Re: US real estate

Postby simon_four_fingers » December 20th, 2011, 4:33 pm


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I don't know if you can still do this, but when you see a 27 year old buying a $750,000 house, I'd guess they are sticking 5-15% and going 45-60 years on the mortgage with the idea of refinancing when they have more money.
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Re: US real estate

Postby NURB » December 20th, 2011, 5:27 pm

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The way it was explained to me by my mortgage broker was; if you're not planning on staying in the same place for 30 years, don't worry about it. You'll make a bit on each sale, and eventually catch up.

Of course, now that is becoming quite difficult.
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Re: US real estate

Postby Lmo » December 20th, 2011, 9:38 pm

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I don't see how people can live in such squalor...

On Yahoo this afternoon. 22 year old student buys 6,744 Sq. Ft. flat in NYC Central Park West, $88 million USD.

http://finance.yahoo.com/news/billionai ... c-pad.html
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Re: US real estate

Postby rkuchinsky » December 20th, 2011, 11:00 pm

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I will have my loft for sale in the new year....... less than $1000/sf for sure.

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Re: US real estate

Postby Mr-914 » December 21st, 2011, 8:19 am

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LMO brings up an interesting point. Very expensive property is still being sold. You would almost think the recession hasn't really touched like...1% of the population. Hmmm.
Ray Jepson

"The key to success in this business is to find a boss who doesn't care." - Mike Rowe

Re: US real estate

Postby simon_four_fingers » December 21st, 2011, 10:14 am


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FYI, the recession is over.... Didn't you get the memo? Now we are all just poor.
summerdan wrote:At the famous designer's design, and see more of open the book thinking, read some books are always didn't harm
Come on I believe that you can

Re: US real estate

Postby rkuchinsky » December 21st, 2011, 10:24 am

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Mr-914 wrote:LMO brings up an interesting point. Very expensive property is still being sold. You would almost think the recession hasn't really touched like...1% of the population. Hmmm.


Is Canada the 1%?

We had hippies camping out in parks too...

R
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Re: US real estate

Postby Mr-914 » December 21st, 2011, 12:56 pm

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The 1% has no nationality.
Ray Jepson

"The key to success in this business is to find a boss who doesn't care." - Mike Rowe

Re: US real estate

Postby joyride » December 21st, 2011, 3:30 pm


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To add to Nurb, if you dont have the 20% you will have to pay for mortgage insurance (PMI). This covers the lenders if you default (having less than 20% tells them you are more 'at risk'). It stays on until you reach the 20% in equity, which can be a long time taking in consideration the amortization table. Also, many mortgage companies will not approve you if you have less than 10% down, and at that much you probably will not get the lowest rate possible. At least some of these companies have learned that they need to be a little more strict on their lending habits.

Re: US real estate

Postby Stuffed Vulture » December 21st, 2011, 11:35 pm


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Re: US real estate

Postby simon_four_fingers » December 22nd, 2011, 1:22 pm


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Stuffed Vulture wrote:
rkuchinsky wrote:I will have my loft for sale in the new year....... less than $1000/sf for sure.

R


I'll probably soon be selling an 18 month old 1000 sq ft apartment in a hip part of Portland OR, and I don't expect more than $300 USD per sq ft.



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Re: US real estate

Postby rkuchinsky » December 22nd, 2011, 2:10 pm

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So, in short, it's really as bad as I thought? All US real estate is super low? Somehow I find that crazy that while salaries are pretty much comp to north of the border, housing is so much lower. I'm not sure if it's good (so much extra money to spend on non-housing), or bad (equity is low and a loss of value compared to purchase).

R
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