When are we going to see mortgages rates going up to 8-10%

NEW -> Contingent Buyer Assistance Program
[quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]



Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


i agree with AI. if you had bought that home instead of renting, you wouldn't have lost any money since 2005.</blockquote>


Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.
 
[quote author="asianinvasian" date=1231482033][quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]



Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


i agree with AI. if you had bought that home instead of renting, you wouldn't have lost any money since 2005.</blockquote>


Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.</blockquote>




are you dim?



that $120k, had he bought instead, would be gone now (it went to pay interest, very little to principal in the first few years), and since the average house price is now early 2004, he would likely have lost his down payment too!
 
[quote author="asianinvasian" date=1231482033][quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]



Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


i agree with AI. if you had bought that home instead of renting, you wouldn't have lost any money since 2005.</blockquote>


Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.</blockquote>


awgee realizes everything just fine. You don't seem to understand the simplest basics of consumer finance.
 
[quote author="freedomCM" date=1231483785][quote author="asianinvasian" date=1231482033][quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]



Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


i agree with AI. if you had bought that home instead of renting, you wouldn't have lost any money since 2005.</blockquote>


Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.</blockquote>




are you dim?



that $120k, had he bought instead, would be gone now (it went to pay interest, very little to principal in the first few years), and since the average house price is now early 2004, he would likely have lost his down payment too!</blockquote>


dim sum?



No one said anything about interest. If you don't want to pay interest then pay off the mortgage, or better yet, don't get one to begin with, like us asians!
 
[quote author="asianinvasian" date=1231482033][quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]



Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


i agree with AI. if you had bought that home instead of renting, you wouldn't have lost any money since 2005.</blockquote>


Thanks acpme. What awgee doesn't realize is the 120k he spent on rent he will never get back. But if his house loses 120k in equity he will get that back unless he is a house flipper.</blockquote>


I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?

This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.

Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.



Throwing money away is a valid claim to make when rent variance is very small compared to the morgage you would be paying for the same unit. The question is what you do with the extra savings. What is your opportunity cost. Housing is an investment just like everything else, but if its giving you a negative return while you could be placing that cash in something that gives you a positive return then you're the moron for ignoring it.



I'm in a different boat all together. I would rent the rest of my life to be honest just because my cost of placing 20% down or more is astronomical compared to what others might calculate. I don't include a 5% rate of return as my loss of opportunity on 20% down. I calculate a much higher rate compounded out 30 years. So unless the home is appreciating, I have a hard time even putting 20% down on a home that has equal rent/morgage ratio. 150K x r% x 30yr = $$$,$$$,$$$
 
This board has been existent for a couple or years now with thousands of posts and it seems like some folks have learned nothing. I give up.
 
[quote author="awgee" date=1231487778]This board has been existent for a couple or years now with thousands of posts and it seems like some folks have learned nothing. I give up.</blockquote>


Look at it as entertainment. Remember it's impossible to be rich if everybody viewed things intelligently. You need idiots around to #1 make yourself feel better, and #2 to profit from.
 
[quote author="trrenter" date=1231480142]<blockquote>On the otherhand, if someobody came to me and asked me, when it?s the best time to buy in general?

I?m going to say..



WHEN YOU CAN AFFORD IT!</blockquote>


That is very short sighted almost stupid statement.



What you could buy for 700k two years ago is much less desirable then what you could buy today for that.



So you are saying don't worry about the value of what you can buy. I guess if you want less house for more money that is a great philosophy.



I bet the people that could afford to buy a home two years ago and took that advice are not to happy today!</blockquote>


You guys are missing the point. A question of buying is very personal. A question of happiness is even more so.



For Awgee or anybody here to take upon themselves to answer it by saying to wait, wait, wait, till when? is short sighted in itself.

What is the difference between this versus somebody saying buy, buy, buy?



You shouldnt take what's happen 2 years ago as an example because you would only have to go back to 7 years ago for a counter example.
 
[quote author="awgee" date=1231487778]This board has been existent for a couple or years now with thousands of posts and it seems like some folks have learned nothing. I give up.</blockquote>


I think some folks need to realize that everybody has their way of doing things.

It is neither stupid nor smart, it is their way and can have the same results even

though the philosophy is different.
 
[quote author="asianinvasian" date=1231477034][quote author="awgee" date=1231462262]

That is just plain stupid. Many of us can afford to buy now and have been able to buy since 2005 or 2006 or 2007 or 2008. And waiting to buy is working out rather well.</blockquote>


Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>
I would like to address this since it is similar to my situation.



Back in 2005, $2500 a month could rent you a 4br/2ba. That would have probably cost you about $600k in 2005. So running the numbers through the calculator using 20% down and some conservative expenses puts monthly cost at about $3300 a month.



4 years later, you've spent about $158,400 and add your DP it comes up to $278,400.



That same house is probably worth about $520k. You've probably paid the principal down about $10k. So if you sell, you'll net out close to nothing... losing almost your entire DP.



In this case, waiting to buy nets you at the very least, $38,400. And... you wouldn't be out your $120,000 that you put down.



This is the reality that I have to deal with (with higher numbers of course)... I wish I had thought about rental parity back then.
 
[quote author="blackvault_cm" date=1231487648][quote author="asianinvasian" date=1231482033][quote author="acpme" date=1231479625][quote author="asianinvasian" date=1231477034]I'm in a different boat all together. I would rent the rest of my life to be honest just because my cost of placing 20% down or more is astronomical compared to what others might calculate. I don't include a 5% rate of return as my loss of opportunity on 20% down. I calculate a much higher rate compounded out 30 years. So unless the home is appreciating, I have a hard time even putting 20% down on a home that has equal rent/morgage ratio. 150K x r% x 30yr = $$$,$$$,$$$</blockquote>


What is r in that equation?



Also, if you are such a good investor...why don't you make gazillions on Wall Street? I'm not making fun of you, but asking a serious question. You are extremely confident about your ability to beat the market and it seems like you've done it for some time now.
 
[quote author="awgee" date=1231481012][quote author="Major Schadenfreude" date=1231480557][quote author="asianinvasian" date=1231477034][quote author="awgee" date=1231462262]

That is just plain stupid. Many of us can afford to buy now and have been able to buy since 2005 or 2006 or 2007 or 2008. And waiting to buy is working out rather well.</blockquote>


Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>


Agreed. The housing bubble has made EVERYONE who was part of the first-time-buyer pool the past 8 years spend more money on keeping a roof over their head and will continue to do so for the forseable future. This is in comparison to if the lending environment had been the normal, sane 20% down, 28% DTI on a 30 year fixed. Renting really is "throwing money away". Although renters have been throwing a lot less of it away compared to the homedebtors during this bubble.



Thank your leaders for this situation. Yet, incumbants were recently voted back into office, so I guess everyone is okay with the situation.</blockquote>


You can call it whatever you want, but more than once I have calculated the difference between renting and owning and when figuring everything, including ROI, renting is throwing less money away right now. I don't get it. Haven't you read any of IRs articles on the cost of renting vs. owning? There are cross points at which one becomes more or less expensive than the other.</blockquote>


My point is that had real estate prices progressed normally; that is, proportional to inflation and incomes, then home prices would have been much closer to rental parity during this decade and all the renters who are now sitting on large down payments would have bought homes much earlier because we would have reached those cross points long ago. Today's rent money would be building up equity in the home we would have purchased. Instead, we are throwing our money away on rent because the lenders, borrows & politicians made home ownership a losing proposition for practically this wholde decade.



They retarded the normal growth process of that small percentage of responsible people who exactly or intuitively knew that the numbers for owning a home didn't pan out.



And yet John Cambell was re-elected with 30'000 votes to spare. A big "screw you" to all the responsible renters who have been waiting a long time to buy their first home in his jurisdiction.
 
[quote author="rickhunter" date=1231490311][quote author="trrenter" date=1231480142]<blockquote>On the otherhand, if someobody came to me and asked me, when it?s the best time to buy in general?

I?m going to say..



WHEN YOU CAN AFFORD IT!</blockquote>


That is very short sighted almost stupid statement.



What you could buy for 700k two years ago is much less desirable then what you could buy today for that.



So you are saying don't worry about the value of what you can buy. I guess if you want less house for more money that is a great philosophy.



I bet the people that could afford to buy a home two years ago and took that advice are not to happy today!</blockquote>


You guys are missing the point. A question of buying is very personal. A question of happiness is even more so.



For Awgee or anybody here to take upon themselves to answer it by saying to wait, wait, wait, till when? is short sighted in itself.

What is the difference between this versus somebody saying buy, buy, buy?



You shouldnt take what's happen 2 years ago as an example because you would only have to go back to 7 years ago for a counter example.</blockquote>


No, you are putting words in my mouth. I said that it is stupid to say that affordability is the only factor in response to your saying that one should buy a home when one can afford it. You are the one who did not recognize how many factors, personal and otherwise, are used to buy a home. Again, affordability is only one factor one should consider when deciding to purchase a house or anything else and to say that one should buy when one can afford it is stupid. You failed to recognize and communicate how personal a home buying decision is.

Here is your post in case you do not remember.

<em>"For the average person,



The best time to buy is when you can afford to do so!



Dont overthink or make things more complicated than that?"</em>



So considering anything other than affordability is too complicated for the average person and whatever personal reasons they may have other than affordability is overthinking? That is just plain stupid.



Who said I was taking the last two years as an example. You really need to stop making strawman arguments. I never said anything about the last two years. I base my analysis of the Southern California re market on the last seventy years. Do you have any idea how long the average So Cal re cycle lasts from one top to the next or from one bottom to the next?
 
[quote author="irvine_home_owner" date=1231491564][quote author="asianinvasian" date=1231477034][quote author="awgee" date=1231462262]

That is just plain stupid. Many of us can afford to buy now and have been able to buy since 2005 or 2006 or 2007 or 2008. And waiting to buy is working out rather well.</blockquote>


Rather well for who? If you pay $2,500/month for rent you just threw $120,000 out the door since 2005. Congratulations, you're a genius.</blockquote>
I would like to address this since it is similar to my situation.



Back in 2005, $2500 a month could rent you a 4br/2ba. That would have probably cost you about $600k in 2005. So running the numbers through the calculator using 20% down and some conservative expenses puts monthly cost at about $3300 a month.



4 years later, you've spent about $158,400 and add your DP it comes up to $278,400.



That same house is probably worth about $520k. You've probably paid the principal down about $10k. So if you sell, you'll net out close to nothing... losing almost your entire DP.



In this case, waiting to buy nets you at the very least, $38,400. And... you wouldn't be out your $120,000 that you put down.



This is the reality that I have to deal with (with higher numbers of course)... I wish I had thought about rental parity back then.</blockquote>


Don't confuse people with facts.
 
[quote author="blackvault_cm" date=1231487648]

I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?

This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.

Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.

</blockquote>


You bring up a good example. Let's say after 30 years the value goes back to 840k, so they have that much at least. Had they instead been renting at 2.5k/month during that time they'd be down 900k, permanently.



But the key is they can afford it. No one is suggesting anyone buy a house they can't afford. During the bubble most bought when they couldn't really afford it.
 
[quote author="asianinvasian" date=1231494515][quote author="blackvault_cm" date=1231487648]

I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?

This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.

Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.

</blockquote>


You bring up a good example. Let's say after 30 years the value goes back to 840k, so they have that much at least. Had they instead been renting at 2.5k/month during that time they'd be down 900k, permanently.



But the key is they can afford it. No one is suggesting anyone buy a house they can't afford. During the bubble most bought when they couldn't really afford it.</blockquote>


You are ignoring the differential between the cost of ownership and the cost to rent. Obviously this family is paying way more to own vs. rent. If they rented the same house for cheaper, the difference between cost to own and cost to rent produces a return the compounds, and compounds, and compounds over those 30 years theortically.



$500 per month savings componding at 6% over 30 years is $500K.
 
[quote author="Roo" date=1231492052]



Also, if you are such a good investor...why don't you make gazillions on Wall Street? I'm not making fun of you, but asking a serious question. You are extremely confident about your ability to beat the market and it seems like you've done it for some time now.</blockquote>


Many reasons. Wall Street doesn't make gazillions, its broke, and going to jail. Thats just the tip of it, not to mention that New York is cold and I hate the cold.

FYI, I invest because it thrills me, not because of the money. I can live the rest of my life with what I have today, don't need anymore...maybe several more kids.

If you really want to know about my life, I suggest you PM me with a place/time and a cup of coffee waiting for me, and I'll spill you my life story if it really fascinates you. Just not now, and especially not on this thread as it relates to housing and not my personal life.
 
[quote author="ipoplaya" date=1231495524][quote author="asianinvasian" date=1231494515][quote author="blackvault_cm" date=1231487648]

I know of a family that aren't house flippers. They bought a home in Riverside for 840K, currently worth 310k?!?! According to your theory a house flipper won't get his money back but this family will?

This family at the time felt it was the right time to buy and that they can afford it. They still can afford it, but they are sick about it everyday.

Regardless of a flipper or a permanent resident do you think this family will ever see their home at 840K again? As a numerical figure maybe...30 years from now. But inflation adjusted...never. Unless their home has an undiscovered oil field or several tons of limestone sitting underneath it.

</blockquote>


You bring up a good example. Let's say after 30 years the value goes back to 840k, so they have that much at least. Had they instead been renting at 2.5k/month during that time they'd be down 900k, permanently.



But the key is they can afford it. No one is suggesting anyone buy a house they can't afford. During the bubble most bought when they couldn't really afford it.</blockquote>


You are ignoring the differential between the cost of ownership and the cost to rent. Obviously this family is paying way more to own vs. rent. If they rented the same house for cheaper, the difference between cost to own and cost to rent produces a return the compounds, and compounds, and compounds over those 30 years theortically.



$500 per month savings componding at 6% over 30 years is $500K.</blockquote>


I'm not ignoring the difference because this is obviously an extreme example. What if their rent was 10k? If you buy an 840k house now do you think it will go down to 310k?
 
Let me clarify what I meant earlier when I talked about opportunity costs. When I re-read my post, I can see how it can be taken the wrong way.



Opportunity cost is an opportunity you are forgoing in order to pursue something else. In my case I have to take what my average yearly return is in the stock market, and use that as my opportunity cost. If I have 1M dollars, and my average return is 10% then I shouldn't take any other investment if it doesn't yield me at least 10%. Everybody has different opportunity costs and they are not always financial. If you are a lawyer working for a lawfirm, then perhaps you need to save that money and start your own firm. If you enjoy baking perhaps you should save and start your own pastry shop. If you are a MRI tech, perhaps you should start your own outpatient imaging clinic once you saved enough cash. I'm sure for awgee his opportunity cost is gold. He looks at 200K and decides if he should invest in gold today or invest in a home today.



Thats all I meant by my statement, I didn't meant sound like I return more than the 5%, I just meant that we shouldn't just apply a 5% Opp. Cost, and instead to be more creative, use your skills, and explore your possible opportunities. We all have our niche.
 
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