[Repsol]

It fits me perfectly............

[jmar0351]

Originally Posted by iflyjetzzz

I rent. I've been renting since 2003 when I started to notice exotic mortgages coming into vogue. I will continue to rent until ~2017; housing prices will likely be declining until around then. The homeowner is losing my monthly rent payment just in the property devaluation (1-2%/mo is brutal when you're levered 20+:1); that doesn't even take into account property taxes, maintenance, etc. I've already moved out of one house due to the landlord being foreclosed on - worked out well for me, as I gamed the system but she lost all of her assets trying to be a land baron.

When the time comes for me to buy, I'll be paying cash - we have more than enough saved up to pay cash for a house. My wife and I have a conservative philosophy toward money (similar to Dave Ramsey's view of finances) - I tell friends relatives to also be conservative; take it for what it's worth: If you're over 40 and have a car loan, you screwed up. If you're over 55 and have a mortgage, you screwed up. You have set yourself up to work until the day you die.
The necessity to accumulate a large nest egg is amplified in our current low interest rate environment. Personally, I expect rates to stay this low for the next couple of decades; they are much closer to long term historical norms. The last 50 years is an aberration.



The only investments that I have at the moment are CDs and short term Ts. If you're in the stock markets, you're risking losing that cash; the market's extremely frothy right now and trade volume - sans HFTs - is anemic. That's a recipe for an express elevator to the subbasement. You sound like someone who is very much 'risk on.' Eventually, the 'risk on' philosophy catches up with you.

Well, I have to admit it, I tried to call your bullshit, but you appear to be pretty informed. However, since there are so many forclosures out there, and you do have some money, don't you think now (or at least sooner than 2017) would be the time to strike? Mortgage rates are super low, and I don't think home devaluation will continue much past 2012... ?

[iflyjetzzz]

Originally Posted by jmar0351

Well, I have to admit it, I tried to call your bullshit, but you appear to be pretty informed. However, since there are so many forclosures out there, and you do have some money, don't you think now (or at least sooner than 2017) would be the time to strike? Mortgage rates are super low, and I don't think home devaluation will continue much past 2012... ?

No worries on the BS thing.

There are several factors as to why I wouldn't touch a home right now; take them for what they're worth.
1) Net emigration. We are currently seeing more foreign nationals leaving the US than there are coming into the US. That decreases housing demand. Between declining H1Bs and illegal immgrants returning home, the US is experiencing net emigration.
2) Negative household formation. With job losses and belt tightening, more children are moving back home to live with parents and parents are moving in with children.
3) New home construction. Construction is finally starting to slow down enough that new home construction is approximately equal to housing units that are being destroyed - somewhere around 300K units/yr. However, there is such a large glut of excess housing that prices will continue to fall due to the supply/demand imbalance.
4) Option ARM recasts. There are a significant number of option ARMs that will recast through 2012. This will mostly impact former bubble markets - LA, San Diego, San Fran, Miami, DC, NYC. The mortgagors will be looking at doubling or even tripling of their monthly mortgage payments. Most of those will end up being foreclosed on.
5) Aging baby boomers will be getting rid of second homes as they retire and reduce expenses.
6) The excess number of housing units (based on vacancies) built between 2Q2000 and 2Q2010 are ~5.2 million. Even if there is a net positive household formation of 700K/yr, it will take until late 2017 to burn off the built up excess.

Housing is an extremely leveraged asset, where a small decline in value puts the homeowner underwater very quickly. What most people have seen is the other edge of the leverage sword, where rapidly rising home prices have made many very wealthy. But leverage is a two edged sword, and we are now experiencing the downside of leverage.
The problem with being levered is that eventually the odds catch up with you and wipe you out financially.

As far as interest rates being extremely low, that is the WORST time to buy a home, as home affordability and prices move inversely with interest rates. The very best time to buy a home is when interest rates are high, as you can always refi for a lower interest rate when rates drop.

[iflyjetzzz]

Originally Posted by J02 335i

Sooooooo........ you think renting for that long is a good investment? I think you have read the wrong get rich quick books.

A home is NOT an investment. Shelter is a basic need; it is not an investment. You have had the privilege to watch a secular rise in home values over the last two decades. You are currently witnessing a secular decline in home values as they revert to the mean.
What you have witnessed is the same human behavior of hoarding homes as you recently witnessed for baseball cards and beanie babies. It's just that home hoarding lasted longer. Familiarize yourself with Tulip Mania; the human behavior of hoarding has occurred throughout human history.

Look beyond the past 50 years of financial history (heavily influenced by baby boomers moving through stages of life), the next 20 years will be nothing like the past 50.

[BTM]

OT but Iflyjettzz...asking because I got my bachelors in econ from UofA, and you are touching on some very relevant economic topics (housing surplus, population/demographic trends, etc) - any chance you have a similar background?

[Noc57]

This guy's an idiot.

[bavarianboar]

This is probably written by someone who knows nothing about cars and takes the commuter bus to work or works from home. Insane.

So with similar analogy and bizzare implications, all the corollas, sentras, and civics are driven only by 6 figure income people.

It is like saying, this guys wears Armani, Gucci and Hugo Boss, not the fake ones, but the real ones, but all of those type of guys cannot afford to rent a decent apartment.

[Sara]

Black: Aggressive personality, rebel.... Yup thats me.

[galahad05]

My color says I'm a serial killer. Huh.

[IN54NITY]

So pay rent for 14 years? That's 168 months x rent, say $1000 = $168,000 you p!ssed away. You have no equity, nothing, zip, nada to show. Your land lord is fat and happy, ~if~ she didn't overpay for property and didn't get one of those sucker ARMs. Now property tax is a b!tch, but at least that's a deduction on my IRS 1040. But my house isn't depreciating at even close to that. In fact, since I "refied" last year @ 4.75% ~fixed~ for 30, the bank appraised my house higher, yes, higher, than when I bought it in 2006. Do I think it will appreciate forever? No, but it may. I do consider a house in my ~total~ diversified investment strategy. So good luck with all that cash and fighting the Fed. Do you know exactly what date deflation stops, and inflation begins? I would like to put that down on my calendar.

Sorry for being OT, but I hope none of you take investment advice from a BMW forum.

[J02 335i]

Originally Posted by iflyjetzzz

A home is NOT an investment. Shelter is a basic need; it is not an investment. You have had the privilege to watch a secular rise in home values over the last two decades. You are currently witnessing a secular decline in home values as they revert to the mean.
What you have witnessed is the same human behavior of hoarding homes as you recently witnessed for baseball cards and beanie babies. It's just that home hoarding lasted longer. Familiarize yourself with Tulip Mania; the human behavior of hoarding has occurred throughout human history.

Look beyond the past 50 years of financial history (heavily influenced by baby boomers moving through stages of life), the next 20 years will be nothing like the past 50.

You make me laugh, I have bought a house every three years for the last eleven years, and I will tell you first hand that it IS an investment. Maybe house appreciation is different here in Canada, but I have never in my life made as much money (tax free) in a short period of time from anything other then real estate.

You can't argue this point anymore, as you have no experience in real estate, obviously, coming from someone who is going to be paying rent for next fourteen years. Do you have any idea what kind of money you are making your land lord? You are paying his/her mortage, building his equity, which leaves you with well......nothing my friend. I know people loses thier homes and can't make payments but, this all comes down to being good with your money, and purchasing property you can afford. This isn't financial expertise, this is common sense.

[lastMleft]

Originally Posted by BTM

Check the byline, it was written by a couple of women

I wonder if the women are pretty

[iflyjetzzz]

Originally Posted by BTM

OT but Iflyjettzz...asking because I got my bachelors in econ from UofA, and you are touching on some very relevant economic topics (housing surplus, population/demographic trends, etc) - any chance you have a similar background?

Bachelors in Economics, US Air Force Academy.

[StatenEye]

You are giving this writer a ton of hits. Please delete the link and copy and paste the story to the forum!!

[iflyjetzzz]

Originally Posted by aleckzandr

So pay rent for 14 years? That's 168 months x rent, say $1000 = $168,000 you p!ssed away. You have no equity, nothing, zip, nada to show. Your land lord is fat and happy, ~if~ she didn't overpay for property and didn't get one of those sucker ARMs. Now property tax is a b!tch, but at least that's a deduction on my IRS 1040. But my house isn't depreciating at even close to that. In fact, since I "refied" last year @ 4.75% ~fixed~ for 30, the bank appraised my house higher, yes, higher, than when I bought it in 2006. Do I think it will appreciate forever? No, but it may. I do consider a house in my ~total~ diversified investment strategy. So good luck with all that cash and fighting the Fed. Do you know exactly what date deflation stops, and inflation begins? I would like to put that down on my calendar.

Sorry for being OT, but I hope none of you take investment advice from a BMW forum.

I've moved every few years due to the military. We are in the process of moving from San Antonio to Tucson. I've done an indepth study of Tucson's housing market and home prices have steadily declined by 1-2% there for the last 3+ years.
If you bought a $500K house in 2007, you would have lost $5-10K/mo on its value to the point where it's worth half of what it was when you bought it. It's now valued at $250K and still losing $2500-5K/mo. I can rent that same house for less than $1500/mo.
I was stationed in DC 2006-2008 and I can say without a doubt that had I bought there, the capital losses that I would currently have would be more than paying 14 years of rent. San Antonio's losses 2008-2010 have been less severe, but home values have steadily declined there.

What you're missing in your calculation is that there is always a cost to living somewhere, whether you rent or own. There are a ton of hidden costs to ownership that most don't acknowledge or even think of computing in their housing costs. As a renter, my costs are defined.

[wuchao1]

Originally Posted by Delta0311

I drive a BMW because I have low-self esteem and no one loves me. Yeah ok, seems like the writer on has a thing against BMW drivers. And if I was financially unstable I sure as fuck couldn't afford a BMW.

Maybe a BMW driver fucked this dudes girlfriend.

+1 on that lol

[iflyjetzzz]

Originally Posted by J02 335i

You make me laugh, I have bought a house every three years for the last eleven years, and I will tell you first hand that it IS an investment. Maybe house appreciation is different here in Canada, but I have never in my life made as much money (tax free) in a short period of time from anything other then real estate.

You can't argue this point anymore, as you have no experience in real estate, obviously, coming from someone who is going to be paying rent for next fourteen years. Do you have any idea what kind of money you are making your land lord? You are paying his/her mortage, building his equity, which leaves you with well......nothing my friend. I know people loses thier homes and can't make payments but, this all comes down to being good with your money, and purchasing property you can afford. This isn't financial expertise, this is common sense.

OK, sure, it's different in Canada. If you say so. My Canuck friends are telling me that the real estate market there's extremely overheated and they're expecting it to roll over anytime now.
In fact, this article sounds like Canada's housing market is starting to roll over right now: http://www.theglobeandmail.com/repor...rticle1700962/
The Canadian housing market has been increasing rapidly for more than a decade; your market is only five years behind the US market.

Real estate is an EXTREMELY leveraged asset; you have seen one edge of the double edge sword of leverage. I hope that you recognize the other edge and sell quickly as the real estate market corrects in Canada. Most people that play with leverage get wiped out financially.
When the Canadian real estate bubble pops (and it will), it can do so very radically.

[mike-y]

Originally Posted by aleckzandr

So pay rent for 14 years? That's 168 months x rent, say $1000 = $168,000 you p!ssed away. You have no equity, nothing, zip, nada to show.

That's not entirely true. He could have saved over a $1000 a month by renting over a mortgage for a comparable dwelling. In that case, he'd have $168k in the bank. People who recently bought around here have mortgages that are 2-3 times what a comparable rental rate would be. Plus, they are out the 20% or whatever cash their down payment was. Not to mention the median home prices here have dropped $200,000+ since '06-'07. so if you bought back then, you've lost a lot more than a renter.

[zaheer]

No but I went from two smart brabus's b4 i jumped to BMW and thinking getting another one as a second car

Originally Posted by db2112

New thread: "Has Anyone gone from a BMW to a SmartCar?"

[IN54NITY]

Originally Posted by iflyjetzzz

What you're missing in your calculation is that there is always a cost to living somewhere, whether you rent or own. There are a ton of hidden costs to ownership that most don't acknowledge or even think of computing in their housing costs. As a renter, my costs are defined.

Sorry, your agument is invalid. First, why do I need to discuss the cost of living, "whether you rent or own", in a rent vs. ownership discussion? I believe the "hidden" cost of ownership to which you refer, is maintenance. (Which, BTW, any half brained landlord considers in the rent.) This is also hardly "hidden" in any budget of a homeowner with an IQ over 100. Whether the house appreciates (in inflationary times) or depreciates (in deflationary times) is something else entirely. Being a fool and buying a house in a hyper bubble market in FL, AZ, CA, or NV, or ~anywhere~ (Canada too) hoping another greater fool will come along is also something else entirely. Property tax is hardly "hidden", it comes in a white envelope every January. Insurance is manageable, and guess what, landlords consider that in rent too. I know what my montly house dues are for the next 30 years. You probably don't know what "costs are defined" after your lease is up, in what, 12 months. You easily forget the only constant in the US economy since Woodrow Wilson signed the Fed into law, is inflation. If you want to argue that the sky is green, go ahead it's CAVU to the moon for you.

Back on topic, the article is frivolous.

[garage queen 335is]

Originally Posted by db2112

New thread: "Has Anyone gone from a BMW to a SmartCar?"

I went from M6 to 335Is he he

[IN54NITY]

Originally Posted by mike-y

That's not entirely true. He could have saved over a $1000 a month by renting over a mortgage for a comparable dwelling. In that case, he'd have $168k in the bank. People who recently bought around here have mortgages that are 2-3 times what a comparable rental rate would be. Plus, they are out the 20% or whatever cash their down payment was. Not to mention the median home prices here have dropped $200,000+ since '06-'07. so if you bought back then, you've lost a lot more than a renter.

True. I saved billions of dollars by not going upside down on buying 100s of overpriced McMansions.