Villages of Columbus - Columbus Square - Camden Place

NEW -> Contingent Buyer Assistance Program
<p>IR,</p>

<p>I remember someone on here saying I was a bear.</p>
 
<p><em>Blue Fire, I never said anything about mortgage.</em></p>

<p>Ahhhh, there's the rub. But why be so cryptic? Obviously one is going to assume a mortgage when arguing any rent vs. buy situation, and instead you make vague comments like "I am not comparing apples and oranges. You might be, but I am not." Naturally, if you are going to pay 100% cash for a home that you are going to be living in, then in that context clearly renting would "lost money." </p>
 
If you pay 100% cash, you have "lost money" in the form of interest you no longer receive on that money.





Any cash outlay is lost money unless you are acquiring something appreciating in value or providing cashflow. Neither of those circumstances are true with residential housing right now.
 
So... help me understand this time value of money. At the peak in 2005, I could probably sell my place for $1mil. There are two comps on my street that prove this, one for $1.2mil for a gaudy remodel, and $1.3mil for a dump (I have a bad feeling about this one. It has had a for sale sign for months, but not on the MLS, and it is just now being gutted for a remodel). My neighbor across the way, rents for $3k, and since my place is larger it could rent for $3500. They moved in at around the peak in 2005 too.





Fast forward to today... If I wanted to <em>sell </em>my place, and not just <em>list </em>my place, I would have to price it at $699k. I really do not think by having someone sitting around playing solitaire on the weekend will sell the place, if I priced it <em>below</em> the other listings at $799k. That is the cold hard reality of the market today. If they have cookies, then at least awgee might stop by to check it out. I want a buyer, not the cookie monster.





Now, if someone were to rent it at $3500, and home prices followed inflation, then the rent inflation and price inflation increase would be a wash. And, like I have said before, private landlords are less likely to raise rents for good tenants, and would make my rent inflation overstated. But, that isn't the point. The point is, you would have to rent for 85 months before you <em>threw away</em> the $301k in lost equity by paying rent.





Of course, rents could go higher than inflation, and so could the prices of homes. The reality of either happening is laughable.





If you want, I can factor in a mortgage and the tax breaks, but that can get <em>really</em> ugly.
 
<p><em>The point is, you would have to rent for 85 months before you threw away the $301k in lost equity by paying rent.</em></p>

<p>You only lose that equity if you sell. And only if you are worst case scenario as you listed out, bought at the peak and trying to sell at the bottom. But none of that is relevant, if you bought a place to live in, why would you sell, and why would you sell now, in the worst possible market conditions?</p>
 
BF, because I don't think mortgage has any relevance, it depends more on personal circumstance. You can see interest as paying extra money which is going down the drain. Or you can see interest as saving money which can be spent elsewhere, and is also tax deductible. In the first case you are still throwing less down the drain than paying rent. In the second case you are making money.
 
<em>"You only lose that equity if you sell."</em>





This is the illusion that causes people to hang on to assets declining in price when they should dump them. Got any Pets.com stock? You only <em>realize </em>the loss when you sell, but the loss is just as real if you hold it and pray for the market to come back.





<em>"But none of that is relevant, if you bought a place to live in"</em>





This is a true statement. But if you look at the dynamics of buying at the peak and you see you are throwing away money on extra interest you would not be paying if you had bought at a lower price. If you wait and pay 30% less, your payment will be 30% lower for as long as you make that payment. This payment difference represents "wasted money" because you obtaining nothing additional for the additional payment.





<em>"Or you can see interest as saving money which can be spent elsewhere, and is also tax deductible. In the first case you are still throwing less down the drain than paying rent. In the second case you are making money."</em>





Please help me understand what you are saying here.





Interest is only a savings over renting if your interest payment is less than your rent. This is not possible at today's prices. If prices were lower, then I would agree that paying interest is preferable than paying rent because it represents a savings. That savings does not exist in today's market absent toxic financing.





A tax deduction does not make money. You are still spending a dollar to save a quarter. Now if you are spending a dollar in rent or spending a dollar in interest, then the interest would be preferable because of the tax savings, but in today's market, you can spend a dollar in rent or <em>two </em>dollars in interest. Even after the tax deduction, you are still way behind.
 
<p><em>If prices were lower, then I would agree that paying interest is preferable than paying rent because it represents a savings.</em> </p>

<p>That's the only point I'm trying to make. Glad we agree.</p>

<p>To be honest I don't think Irvine is really affordable for most people, even in good market conditions. That's why there's housing in places like Corona, and why the 91 is always jam packed with commuters.</p>
 
<p> </p>

<p><em>"If they have cookies, then at least awgee might stop by to check it out. I want a buyer, not the cookie monster."</em> </p>

<p>LOL, graph


</p>

<p> </p>

<p><img alt="" src="http://thelongestlistofthelongeststuffatthelongestdomainnameatlonglast.com/images5/cookie.JPG" /></p>
 
quote:"hey shooby- do you know if you will own the land beneath your condo? i found out that it is own by the association. no biggie."





you are wrong. you own let's say in a 5 unit condo 1/5th of the land, or in a 10 unit condo 1/10th of the land. and that is a biggie.the land you own is the most expensive part of your condo...
 
Well, at least it is owned by the homeowners. In Palm Springs many of the condo complexes, and some houses, are actually on "leased" land...so you only own the structure. One of the complexes I know of is in a heated battle with the local Indian tribe that owns the land. Their 50 year lease just came due and the Indians want more "rent" and the condo owners are balking at the huge "rent" increase. I would never buy on leased land.
 
Yeah, can you imagine this conversation ? "Hi, I'm the rep for the Indians. They want to build a casino here now. Kindly remove your house from the premises".
 
Anyone that bought in Camden place, do you have a copy of the list of utilities we're supposed to call to switch the name over?



I've been trying to contact Lennar but seemingly no one is working there this week. Thanks.
 
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