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

NEW -> Contingent Buyer Assistance Program
[quote author="awgee" date=1231493689][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?</blockquote>


Rickhunter and Awgee,



I can totally see where both of you guys are coming from. Awgee bought his first home in 1990 and saw his entire 20% downpayment disappear and saw his home painfully decline for five years and the scar probably still remains with him until this day. Reading Awgee's posts for the past two years, he definitely understands the commodity and real estate cycles and has a keen sense to when commodities are undervalued or overvalued against the price of real estate. He understands that commodity prices peak every 30 years from 1920, 1951, and 1980 with another one coming in the near future. He sold his overvalued house in 2005 and converted that asset into undervalued precious metals with incredible timing. I applaud him for that as he is going to wait it out until real estate hits the floor and prices of precious metals hit the ceiling.



At the same time, Rickhunter is saying that buying a home is a personal decision and can bring happiness when you can easily afford the home you are buying. I do agree with him especially as we are much more closer to the bottom than to the top in you are buying in 2010. It is a good feeling when you can decorate and customize your home the way you like, becoming rooted with the community and your neighbors, and your kid not having to switch to another elementary school. I guess what Rick may be saying is waiting until 2011 - 2013 to buy at the ultimate bottom ( 5 - 10% below where prices may be between 2009 - 2010 ) may not be worth the sacrifice for him to live a happy life becoming a home owner.
 
[quote author="PANDA" date=1231499990]Rickhunter and Awgee,



I can totally see where both of you guys are coming from. Awgee bought his first home in 1990 and saw his entire 20% downpayment disappear and saw his home painfully decline for five years and the scar probably still remains with him until this day. Reading Awgee's posts for the past two years, he definitely understands the commodity and real estate cycles and has a keen sense to when commodities are undervalued or overvalued against the price of real estate. He understands that commodity prices peak every 30 years from 1920, 1951, and 1980 with another one coming in the near future. He sold his overvalued house in 2005 and converted that asset into undervalued precious metals with incredible timing. I applaud him for that as he is going to wait it out until real estate hits the floor and prices of precious metals hit the ceiling.



At the same time, Rickhunter is saying that buying a home is a personal decision and can bring happiness when you can easily afford the home you are buying. I do agree with him especially as we are much more closer to the bottom than to the top in you are buying in 2010. It is a good feeling when you can decorate and customize your home the way you like, becoming rooted with the community and your neighbors, and your kid not having to switch to another elementary school. I guess what Rick may be saying is waiting until 2011 - 2013 to buy at the ultimate bottom ( 5 - 10% below where prices may be between 2009 - 2010 ) may not be worth the sacrifice for him to live a happy life becoming a home owner.</blockquote>


Well said Panda, if you consider a second career you should be a mediator. The best mediators are from Wedding Crashers!
 
More on "renting is throwing away your money".

You have to live someplace and you have to pay for shelter one way or another.

If you rent, you obviously pay money which you will never see again.

If you buy with a mortgage, you pay interest which you will never see again, and you are paying principal which may involve depreciation, (opportunity cost), which you will never see again.

If you buy with cash, you are paying opportunity cost, which you will never see again. If you do not understand why the opportunity cost is throwing money away when paying principal or paying cash, please see BVs explanation of o.c. above.



No matter how you pay for your shelter, you are not throwing your money away. You are paying for shelter. And if you time your purchase or lease adequately, you may end up paying less than someone who thinks that predicting market values, interest rates, etc. is over thinking the process.



The idea that renting is throwing your money away is a fallacy promulgated by those who wish to separate you from your money via commissions.
 
[quote author="PANDA" date=1231499990][quote author="awgee" date=1231493689][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?</blockquote>


Rickhunter and Awgee,



I can totally see where both of you guys are coming from. Awgee bought his first home in 1990 and saw his entire 20% downpayment disappear and saw his home painfully decline for five years and the scar probably still remains with him until this day. Reading Awgee's posts for the past two years, he definitely understands the commodity and real estate cycles and has a keen sense to when commodities are undervalued or overvalued against the price of real estate. He understands that commodity prices peak every 30 years from 1920, 1951, and 1980 with another one coming in the near future. He sold his overvalued house in 2005 and converted that asset into undervalued precious metals with incredible timing. I applaud him for that as he is going to wait it out until real estate hits the floor and prices of precious metals hit the ceiling.



At the same time, Rickhunter is saying that buying a home is a personal decision and can bring happiness when you can easily afford the home you are buying. I do agree with him especially as we are much more closer to the bottom than to the top in you are buying in 2010. It is a good feeling when you can decorate and customize your home the way you like, becoming rooted with the community and your neighbors, and your kid not having to switch to another elementary school. I guess what Rick may be saying is waiting until 2011 - 2013 to buy at the ultimate bottom ( 5 - 10% below where prices may be between 2009 - 2010 ) may not be worth the sacrifice for him to live a happy life becoming a home owner.</blockquote>


Panda - If that is what he said, I would have to agree, but that is not what he said. He said that any considerations other than affordability is complicating or over thinking the issue, which is pretty much the opposite of what you just said he said. Let's not put words in people's mouth. Here is what he said:



<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>
 
[quote author="awgee" date=1231502813]The idea that renting is throwing your money away is a fallacy promulgated by those who wish to separate you from your money via commissions.</blockquote>


I dare you to say NAR puts their interest before the general public...
 
I guess the question should be more on your investment horizon. If you are planning to make a 30 year investment then buying a house now is probably not a bad idea. If you are going to track it like stocks in real time and looking to sell it, you should invest using rental parity. But rental parity math DOES NOT make sure you can time this right either. Matters of fact you can buy a house based on rental parity and be under the water in a massive way if there are simply no buyers. The benefits of rental parity is that you could at least rent it out for less of a pain but if you need liquidity you are screwed. This is similar to buying stocks. Who is to say 10 PE is correct or a certain DCF is correct,the market can fall all the way to 5 if it feels like it. And it doesn't matter if awgee's model say 10 is correct. Vice versa, stocks might never get to 10 PE and instead bottoms out at 12 and then moves up to 24 PE then who is right? Same can be said about rental parity, it might not hit parity and then zooms up to beyond parity again in the next five years.



I am personally a model freak and believe in rent parity etc but there is no right or wrong on if you should buy now or not. Each person have their own situation and rental parity can only be used as a guide. For godsakes, it might never hit rental parity for 10 years so what do you tell you 10 year old when he turns 20 and is ready to leave the house? Hey kiddo, it now makes sense to buy a place because of rental parity?



I suggest the following, if you need a place try to wait until it is more reasonable in terms of rental parity, but keep in mind that rent could fall. I just did the math for some places in Las Vegas and it looks reasonable. But if you need to buy now just do it as long as you do not need to move out of your house or need the money in the intermediate term, because when you need the liquidity that is when it hurts the most. For investment purposes, you have to go beyond rental parity, rental parity is bull crap if unemployment rate goes up to 12 percent and you can not rent your place out. Look ADP numbers and you know unemployment is rising quickly.
 
If one decides to buy, they won't easily and cheaply be able to change that decision for at least 5 years and likely ten or more years.



The decision to wait for better prices, more motivated sellers or better affordability can readily be changed tomorrow, next week, next month, in three months, or next year with little to no perceivable downside.
 
[quote author="PANDA" date=1231499990]

Rickhunter and Awgee,



I can totally see where both of you guys are coming from. Awgee bought his first home in 1990 and saw his entire 20% downpayment disappear and saw his home painfully decline for five years and the scar probably still remains with him until this day. Reading Awgee's posts for the past two years, he definitely understands the commodity and real estate cycles and has a keen sense to when commodities are undervalued or overvalued against the price of real estate. He understands that commodity prices peak every 30 years from 1920, 1951, and 1980 with another one coming in the near future. He sold his overvalued house in 2005 and converted that asset into undervalued precious metals with incredible timing. I applaud him for that as he is going to wait it out until real estate hits the floor and prices of precious metals hit the ceiling.



At the same time, Rickhunter is saying that buying a home is a personal decision and can bring happiness when you can easily afford the home you are buying. I do agree with him especially as we are much more closer to the bottom than to the top in you are buying in 2010. It is a good feeling when you can decorate and customize your home the way you like, becoming rooted with the community and your neighbors, and your kid not having to switch to another elementary school. I guess what Rick may be saying is waiting until 2011 - 2013 to buy at the ultimate bottom ( 5 - 10% below where prices may be between 2009 - 2010 ) may not be worth the sacrifice for him to live a happy life becoming a home owner.</blockquote>


Panda,



For somebody that asks so many questions, you have impressed me by reading between the lines. Thanks for clearing this up.

I didnt know I had to explain everything on a blog, nor do I care to. Other people will never determine when I buy. I check these blogs

for the price updates and will buy when I want to. Would you give up a few years of ownership for a 5-10% decrease in price,

a decline that's not even a sure thing?



I know you asks all these questions, and have been given mostly the advice of waiting, waiting, and waiting.

But if the right opportunity came along, I know you would jump in a heartbeat.



On my other point, if everybody listened and waited, yes, we would have a gigantic price decrease.

But most people dont give a shit, and home ownership is what they want. You can see it in the sales in irvine.

You have the data, dont let anybody tell you different. Whether you want to wait or not, I know it's not because of the advice you

get on this blog, it's because you havent found the deal you want.
 
[quote author="rickhunter" date=1231512234]Whether you want to wait or not, I know it's not because of the advice you

get on this blog, it's because you havent found the deal you want.</blockquote>


That's wrong.



I was on the fence and this blog guided my decision to rent based on the various comments and analysis.



I am 100% sure I am not the only one.
 
[quote author="awgee" date=1231502813]The idea that renting is throwing your money away is a fallacy promulgated by those who wish to separate you from your money via commissions.</blockquote>


You mean the guy you are paying your rent to?
 
[quote author="SoCal78" date=1231513228]Mr. Hunter, by any chance - did you just purchase a house?</blockquote>


We've been looking for 6 months now.

We made an offer a few months back but it was too low.



An offer of 40K more got it.
 
For those who need a visual representation of Awgee's (*cough* correct) argument, I suggest you spend some time plugging values into the NY Times "Is it Better to Buy or Rent" calculator:



<a href="http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#">http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html#</a>
 
[quote author="asianinvasian" date=1231517745][quote author="awgee" date=1231502813]The idea that renting is throwing your money away is a fallacy promulgated by those who wish to separate you from your money via commissions.</blockquote>


You mean the guy you are paying your rent to?</blockquote>






look, AI, why can't you understand this:



you can pay your rent to a landlord, or



you can pay your rent to a bank (for the interest).





for the first 10 years of "owning" a house, it is all the same, even if prices are not dropping, as they currently are.
 
awgee, don't bother. keep in mind you're trying to explain this to someone who asked what the r% in financial equation means despite once having the username jpmorganfunds.
 
[quote author="rickhunter" date=1231546295][quote author="SoCal78" date=1231513228]Mr. Hunter, by any chance - did you just purchase a house?</blockquote>


We've been looking for 6 months now.

We made an offer a few months back but it was too low.



An offer of 40K more got it.</blockquote>


So, why did you not offer more, or make an offer on a home you can afford? After all, isn't any other consideration other than affordability just over thinking it or just making it too complicated?
 
[quote author="awgee" date=1231558176][quote author="rickhunter" date=1231546295][quote author="SoCal78" date=1231513228]Mr. Hunter, by any chance - did you just purchase a house?</blockquote>


We've been looking for 6 months now.

We made an offer a few months back but it was too low.



An offer of 40K more got it.</blockquote>


So, why did you not offer more, or make an offer on a home you can afford? After all, isn't any other consideration other than affordability just over thinking it or just making it too complicated?</blockquote>


The only question was affordability, but it's a question that is not easily answered.

You have to understand that affordability is subjective. It's an easy question to ask,

but a hard one to answer. To tell somebody this is, to me, telling that person to go back

and look at your finances and if you're comfortable, do what you want. It is by no means

advocating purchasing a home right at this moment, nor does it mean to wait for a few years.



I feel that you can feel happy that you did not buy but you cannot tell people not to. Your

situation could be different from theirs.



My affordability scale was this for this purchase.



My point is home price - 40K = buy

Your point is home price - 40K - X = rental parity = buy



You've probably done your homework already, and we have done ours. If you know what you are willing to

purchase at, I dont see things getting more complicated than affordability (subjective DTI).
 
[quote author="rickhunter" date=1231560240][quote author="awgee" date=1231558176][quote author="rickhunter" date=1231546295][quote author="SoCal78" date=1231513228]Mr. Hunter, by any chance - did you just purchase a house?</blockquote>


We've been looking for 6 months now.

We made an offer a few months back but it was too low.



An offer of 40K more got it.</blockquote>


So, why did you not offer more, or make an offer on a home you can afford? After all, isn't any other consideration other than affordability just over thinking it or just making it too complicated?</blockquote>


The only question was affordability, but it's a question that is not easily answered.

You have to understand that affordability is subjective. It's an easy question to ask,

but a hard one to answer. To tell somebody this is, to me, telling that person to go back

and look at your finances and if you're comfortable, do what you want. It is by no means

advocating purchasing a home right at this moment, nor does it mean to wait for a few years.



I feel that you can feel happy that you did not buy but you cannot tell people not to. Your

situation could be different from theirs.



My affordability scale was this for this purchase.



My point is home price - 40K = buy

Your point is home price - 40K - X = rental parity = buy



You've probably done your homework already, and we have done ours. If you know what you are willing to

purchase at, I dont see things getting more complicated than affordability (subjective DTI).</blockquote>


No, (<em>Your point is home price - 40K - X = rental parity = buy</em>), that is not my point. Once again, you are putting words in my mouth. My point is that there are many factors which enter into the home buying decision making process. If there wasn't, you would buy the first home you can afford.

And my last point is that you are too smart to just consider interest rate trends, market trends, or other impersonal factors as being too complicated or over thinking.

I am not telling you when it is right for you to buy. If you read my posts over the years, you would see that I would never think that I would have a clue when it is right for you to buy.



But, truly, it pisses me off that you just disregard all the information that some really intelligent and knowledgeable folks like Ipop, troj, IR, IR2, bk, graph, Eva, bix, no vas, skek, equitym, zov, Panda, Sarge, bv, and so many are providing you with for free. Obviously AI will never get it. He/she doesn't have the wherewithal, but you have no excuse.



The posters in here have helped me to understand market factors which I did not know existed, and did not think I could understand when they first mentioned them. I encourage you to read their posts with an open mind. Sure, some ideas will be tossed, but saying that one can't predict the future so it is useless to analyze is beneath you.
 
With what we now know in hindsight, would anybody have been willing to buy back in '06 or '07? My guess (or should I say, hope), is that nobody would. If not, why wouldn't you? However you answer that question, what these very knowledgeable people on this blog are trying to say is that those same reasons still exist. Why wouldn't anybody want to prevent making the same mistakes of all those who did actually buy over these past couple of years?



If you actually take the time to use the tool previously suggested from the NY times, you'll realize that other moneys are "thrown away" as well from ownership such as property tax, HOAs, and maintenance as well as interest.
 
[quote author="awgee" date=1231561351]





But, truly, it pisses me off that you just disregard all the information that some really intelligent and knowledgeable folks like ...no vas...,and so many are providing you with for free. Obviously AI will never get it. He/she doesn't have the wherewithal, but you have no excuse.

</blockquote>


I thought No Vas just provided snarky comments and posted pics of bong hits? That's the jist of his posts I get, anyway.
 
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