Re: Meg Munn chunters on...


>"Mark Sobolewski" <mark_sobolewski@xxxxxxxxx> wrote in message
>news:mark_sobolewski-74F89F.14100824092005@xxxxxxxxxxxxxxxxxxxxxxx
(snip)

>>Heidi wrote:
>> I said earlier that much depends on the area in which you
>> buy....location,
>> location. If you buy into a growing area, you'll find property values
>> increase. Information about neighbourhood historial trends and future
>> development plans can be found at city hall. This is public information
>> that should be readily available to you.

>Mark wrote:
> Indeed! And home _building_ is growing as well. So even though
> there are many new homes being built in record number in my area,
> why are the prices still skyrocketing?

Because there are city *limits*...boundaries. There is only so much *land*
available for development within each city, town, district, etc. The more
people move in, the more land is needed. The scarcer land becomes, the more
valuable it becomes. Real estate prices rise as the demand grows.

Or let's take the number of high-rise condos. Only so many buildings exist.
As more and more people demand condos, being available only in limited
amounts, those condo prices rise. Sometimes the rate of building new condos
is slower than can meet the demand of an influx of people. Sometimes
availability is calculated specisely in such a way that the prices remain
high on purpose, especially where demand is steady, ongoing and regular.

> A few things: Many home investors are buying interest only
> loans in the hopes of turning around the property later
> at a profit. This has given Greenspan some concern because
> all of those are coming due, SOON and they'll have to dump
> those homes ASAP or take a hit.

And you're counting on massive numbers dumping their homes, rather than take
that hit and carry on? What if that doesn't happen? Or, what if the
dumping happens, but the prices remain high anyways because enough other
people are still buying that will allow those prices to remain high? Even
if bankruptsies occur and the banks repossess the houses, the bank will
still want to see a return on *their* investments. If the bank handed out
interest only mortgages then they're *not* going sell those homes for 30%
less! They'll hang onto the real estate until they get back what they
invested.

(snip)

>> >Mark wrote:
>> > If you're wrong, however, you give me whatever the difference in
>> > price is between when I bought the property and when I call you
>> > on your claim taking into account costs/losses from
>> > property taxes, interest rate changes, and that super
>> > tax break.

>> Heidi wrote:
>> ...as opposed to what? Paying down your landlord's mortgage? Why
>> increase
>> his equity, when you can be building your own? Nothing irked me more
>> than
>> to be paying rent! I begrudged my landlord every penny! ;-)

> Mark wrote:
> Actually, I'm not paying her mortgage.

That doesn't matter. Any money you pay a landlord is *not* money you're
using to building something of value for yourself.

> Do you know what "interest only" means? A significant fraction
> of people have them today and don't increase their equity whatsoever
> except in terms of hoping that the market continues to rise
> (along with their property taxes.) Even if they do
> earn a "profit", they only earn money in paper equity
> and theoretically have to make the same payments forever except
> when the balloon payment comes due.
>
> No thanks. I would rather be at the beginning of a trend
> than the end.

Mark...just because "interest only" loans are available doesn't mean *you*
have to get into such a scheme. You can still buy something with a
down-payment and make large enough monthly payments to gradually reduce the
mortgage. You can still build up equity.

(snip)

>Mark wrote:
> If I stand pat, I pay LESS today than I would to buy
> my unit (even with an interest only mortgage) AND
> I put $300 bucks in the bank _EVERY MONTH_ to save
> for a down payment when I do decide to hop in.

Let's take an example of a current popular trend in my area. New houses are
popping up like crazy ...huge subdivisions consisting of hundreds of new
houses. They are being filled up with families just as soon as another
house is finished. Going rate: $325,000 to $350,000. Minimum downpayment
required anywhere from 5% to 10%....either $16,000 to $35,000. If you save
up $300 per month you'd be able to buy one of these houses in about 4 to 10
or so years. Real estate values have been creeping up steadily. They are
predicted to continue to rise. So, let's assume 10% increase annually...a
conservative estimate: That would be $32,000 to $35,000 per year. You're
only saving $3,600 anually for that downpayment. In 4 years that house
would be worth at minimum $453,000. You'd need minimum downpayment 5% =
$22,650. But, you've only saved $14,400 pluse 4 years interest on those
savings.

You're currently paying $1,000 per month rent. You say you can save $300.00
per month for a downpayment. You've got $1,300 per month to spend. Go to
the bank and find out how much money they will loan you for $1,300 per
month. Buy that tiny old little bungalow *now*....that's something you can
afford to buy *now.* Move in and start paying yourself! ;-)

Heidi



.

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