From loan owners caught up in the frenzy to renters being forced to wait for lower prices, the housing bubble and crash has caused everyone psychological harm in one form or another.
Irvine Home Address … 3131 MICHELSON Dr #304 Irvine, CA 92612
Resale Home Price …… $380,000
There's no way we can sell our house now
so we'll just have to stay.
Suppose we found a buyer
so we could go our separate ways.
Loudon Wainwright III – House
When house prices were going up, real estate was very liquid, and everyone who played the game was making lots of money. realtors, mortgage brokers, homebuilders and ordinary homeowners all enjoyed the false prosperity of a debt-driven boom. Even those who did not sell their properties for a profit were given the ability to extract their equity and spend as they pleased. It was the best of all possible worlds.
Then the crash came.
Everyone who prospered as prices went up began to suffer as prices went down. Transaction volumes were the first to plummet, so everyone who made a living off real estate transactions began to suffer. They are still struggling today. As loan owners saw the housing ATM shut off, their entitled lives began to fall apart, and the crushing weight of their bubble debts started to take a toll.
There were a few responsible renters who foresaw the crash, and many more who decided to wait for prices to bottom once the downtrend became apparent. These wouldbe homeowners were forced to wait, and when the government and lenders conspired to keep prices artificially high, these people were forced to wait even longer. And in areas like ours, we are still waiting.
IrvineRenter says renting sucks
I have enjoyed the financial freedom and lower cost of housing renting has afforded me over the last decade, but I used to be a home owner, and I would like to own again someday. Renting lacks an emotional quality of belonging that is difficult to replicate. Intellectually, I tell myself it shouldn't be that way, but emotionally, I know it to be true.
Back when I owned my own house, I maintained many house plants, and I always enjoyed keeping up with the landscaping. Having grown up in a rural area surrounded by nature, I liked the spiritual connection to the earth and life that maintaining plants can bring. For the first four or five years of renting, I killed a dozen or more plants. It didn't dawn on me why this kept happening. I thought it was because my transitory living kept me too busy. The reality was, I didn't feel connected. My spirit was withering, and my house plants were the outward sign of my distress.
I gave up on growing house plants, but my longing for connection remains. I find other outlets, and my connection to Irvine comes through this daily writing, but on a deeper emotional level, I am still a detached observer who's just passing through. It's difficult to feel rooted when you know you aren't. There is an emotional quality of ownership you just can't replicate in a rental.
Ownership in a declining market sucks too
Perhaps it goes without saying, but owning property that is declining in value sucks too. Overpaying for property so the cost of ownership exceeds a rental can only be compensated for by increasing values. When the cost of ownership is too high and the value of the house is declining, it is the worst of both worlds.
Few who strategically default make that decision lightly, and few who go through short sale or foreclosure want that outcome. Leaving a family home and losing money is a double whammy. For as much as I find renting emotionally unsatisfying, owning an overpriced and declining asset is far more emotionally damaging. I don't regret my decision to rent, and I suspect many who are facing the perils of ownership in today's declining market wish they could trade their problems for mine.
Denial is dead
The double dip in home prices has forced loan owners to give up their denial and accept their fate. Every foolish belief that prompted buying during the bubble has been thoroughly discredited. Real estate does not always go up. Financing will not always be made available. Everyone does not want to live here. We are not running out of land. Home equity is not free money. Appreciation is not income. Credit is not savings. And debt is not wealth.
With the death of denial comes a new era. Market participants are fearful, and many have capitulated and either sold or walked away. Over the next couple of years, the pain of the market declines will lead to widespread despair. When kool aid is really dead, the market will bottom, and the cycle will start all over again.
Does gathering gloom raise risk of double dip?
With recovery limping along, pessimism could begin weighing on growth
John W. Schoen Senior producer
msnbc.com
updated 6/17/2011
This month marks the second anniversary of an economic expansion that began at the end of what is now being called the Great Recession. But for millions of small businesses and households, the economic recovery has yet to arrive.
Frank Goodnight, owner of Diversified Graphics, a Salisbury, N.C., printing company with 12 employees, is among them. In 37 years, he has survived some tough economic times. But never like this.
“This recession is equal to the other four doubled,” he said. “Business has just been so bad for so long that right now we’re just hunkered down trying to survive.”
Everyone I know in the homebuilding industry — what's left of it — is hunkered down trying to survive. Over half the industry is unemployed, and many with jobs are underemployed making a fraction of what they were five years ago.
Consumer sentiment worsened more than expected in June on renewed concerns about the outlook for the economy, a survey released Friday showed . It was just the latest in a series of surveys that have pointed to a marked downward shift in the outlook for jobs, housing and the stock market. …
“If you think things are going to get bad and you stop buying, things will get bad,” said Goodnight, the printing company owner. “And that’s where we are right now. Everyone is afraid of the deficits. They’re afraid of the new regulations that are coming down fairly soon. They’re afraid about health care. And no one’s going to make a major investment when there’s this much uncertainty in the air.”
You don’t have to look far to find the source of all this gloom. A solid economic expansion slowed to a sluggish 1.8 percent annual growth rate in the first quarter. After posting healthy gains for most of this year, the job market stalled badly in May. The rising cost of gasoline has taken a big bite out of household budgets, though pump prices have recently begun to back down from a peak of nearly $4 a gallon. After stabilizing last year, home prices have begun falling again.
Since the housing bubble burst in 2006, about $10 trillion in household wealth has been wiped out. Some 12 million homeowners with mortgages — roughly one in four — owe more than their home is worth. That means they’ll be cutting into future savings to pay off a debt that will leave them with little to show for it once they’re done. …
The pain is very real. Unfortunately for the herd, the more people who need a market to move in a certain direction, the less likely the market is to comply. If everyone is bullish, they have likely already purchased. With no buyers, prices are certain to go down. We see that in the housing market right now as the tax credit pulled forward what little demand their was, and the buyer pool is seriously depleted. Everyone is on the wrong side of the trade, so prices are likely to fall further.
“We are forecasting that real household net worth should take a major hit in the second quarter of this year because the stock market is not doing well and there’s going to be no relief from housing,” said Chris Christopher, an economist at IHS Global Insight. “When people take a loss on their financial assets they’re going to step back on their spending.“
The recovery has also been weakened by sluggish wage gains and fears that future paychecks aren’t going to grow.
“There’s not really much impetus for spending other than wages,” said Franco. “And what we’re seeing is that a lot of the profits that companies have made over the last several quarters have not filtered down to the consumer’s bottom line.”
In a healthy economy, there shouldn't be much impetus for spending other than wages. Money isn't free. As the debt addicted abandon their entitlements and adjust to living within their means, the economy will slowly improve and be put back on stable footing.
U.S. Housing Crisis Taking Strong Psychological Toll on Many Families
Alex Finkelstein — 06/06/11
The value of single-family homes in the U.S. has been dropping like a stone in the last four years of the Great Recession. And it hasn't hit bottom yet.
The continuing decline in housing values is changing the lives of numerous Americans for ever, The Wall Street Journal finds in a recent informal survey with various sources.
The most frightening aspect of the falling-prices phenomenon the WSJ finds is that prices now stand at 2002 levels. That means, the WSJ reports, “Nearly a decade's worth of appreciation has been wiped out.
“If you bought anytime in the last 10 years, chances are your house is worth less than you paid. You're trapped in a loss.“
That has to be disheartening. It's worse in Las Vegas. If you bought any time in the last 16 years, your house is worth less than you paid. There is little joy in that reality.
The WSJ states “the housing funk is even seeping into popular culture. In his new album, called “10 Songs For the New Depression,” Loudon Wainwright sings to a wife seeking divorce in the tune “House:” “There's no way we can sell our house now so we'll just have to stay.”
He also ponders: “Suppose we found a buyer so we could go our separate ways.”
How would you like to be in that situation? Trapped in a marriage you can't escape because you can't sell your house. Yikes!
The WSJ states Wainwright has captured the moment. The economy has wreaked havoc on personal lives, transforming decision-making in the household.”
Psychologists say the phenomenon is more than just a musical expression of home-sweet-home.
“More and more divorced couples are forced to remain in their homes while their houses are for sale, which creates extreme stress on the couple and their children,” Margo Meeker, a clinical psychologist, tells the WSJ.
“Having to live under one roof post-divorce and then having to stage and show the house while the family is going through such a major transition and loss creates even more anguish in an already stressful situation.”
People get divorced because they often can't stand one another. Imagine being forced to live with someone you may have grown to hate. The distress of losing large amounts money is bad enough without adding more anguish to the situation.
The WSJ reports a recent survey by the National Foundation for Credit Counseling concluded that “financial distress was having an impact on our marriages, our roles as parents, our jobs, health and even sleeping patterns.”
Just 6% of respondents said financial distress wasn't a factor in their daily lives.
Contrast that with the carefree feelings people had in 2006 when house prices were going up, everyone had nearly unlimited spending money, and projections were for them to be able to live that lifestyle forever.
The ripple effect has become larger partly because so many Americans have tied up their wealth in housing, the WSJ reports. In 1985, 12% of personal disposable income came from savings, while just 1% came from home-equity lines, according to the Federal Reserve and Congressional Budget Office.
“By 2007, 10% of personal disposable income came from housing credit: second mortgages, home-equity lines and so on,” notes the WSJ. Less than 1% came from savings.
Wow! I find that statistic truly remarkable. People really did believe credit was savings and home equity was a personal piggy bank.
“Today, Americans are saving more and spending less”, the WSJ states. “Their homes are no longer piggybanks or sources of free money. That's a good thing, but we spend less when we're saving. Falling home prices have failed to translate into demand. People who want to buy homes still can't afford them.”
In another National Foundation for Credit Counseling survey, the WSJ found nearly half of respondents said they could never come up with a down payment for a new home. Another 17% said they would have to borrow from family or friends. And 21% said they would need to get a low down payment if they used their own funds.
“The confluence of sellers unable to sell and buyers unable to buy has created what Meeker calls a “housing trap.”
If sellers can't sell and buyers can't buy, it isn't a housing trap; it's a recipe for continued low sales volumes and a major decline in prices.
“People who anticipated home prices rising-or at least staying level-can't afford the economic hit even if they choose to move to a place that is less expensive.”
People anticipating higher home prices was the root cause of the foolish buyer behavior that inflated the bubble. Lenders provided the air in the form of stupid loans, but buyers had to borrow that money, buy houses and drive up prices. Many knew they couldn't afford the house without mortgage equity withdrawal, yet they went through with the purchase anyway. Those foolish buyers are suffering right now. The sad truth is, they deserve it.
How to lose $75,000+ per year for 5 consecutive years.
Some people who bought at the peak are suffering worse than others. The owner of today's featured property bought in the North Korea towers (Marquee at Park Place) in 2006. The description claims the property is not a short sale, so the buyer is losing well over $400,000 of their own money (purchase price plus upgrades).
This one has to hurt.
Irvine House Address … 3131 MICHELSON Dr #304 Irvine, CA 92612 
Resale House Price …… $380,000
House Purchase Price … $778,000
House Purchase Date …. 3/31/2006
Net Gain (Loss) ………. ($420,800)
Percent Change ………. -54.1%
Annual Appreciation … -13.4%
Cost of House Ownership
————————————————-
$380,000 ………. Asking Price
$13,300 ………. 3.5% Down FHA Financing
4.49% …………… Mortgage Interest Rate
$366,700 ………. 30-Year Mortgage
$79,536 ………. Income Requirement
$1,856 ………. Monthly Mortgage Payment
$329 ………. Property Tax (@1.04%)
$0 ………. Special Taxes and Levies (Mello Roos)
$79 ………. Homeowners Insurance (@ 0.25%)
$422 ………. Private Mortgage Insurance
$840 ………. Homeowners Association Fees
============================================ 
$3,526 ………. Monthly Cash Outlays
-$298 ………. Tax Savings (% of Interest and Property Tax)
-$484 ………. Equity Hidden in Payment (Amortization)
$22 ………. Lost Income to Down Payment (net of taxes)
$68 ………. Maintenance and Replacement Reserves
============================================
$2,834 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$3,800 ………. Furnishing and Move In @1%
$3,800 ………. Closing Costs @1%
$3,667 ………… Interest Points @1% of Loan
$13,300 ………. Down Payment
============================================
$24,567 ………. Total Cash Costs
$43,400 ………… Emergency Cash Reserves
============================================
$67,967 ………. Total Savings Needed
Property Details for 3131 MICHELSON Dr #304 Irvine, CA 92612
——————————————————————————
Beds: 2
Baths: 2
Sq. Ft.: 1369
$278/SF
Property Type: Residential, Condominium
Style: One Level, Contemporary
View: Park/Green Belt
Year Built: 2006
Community: Airport Area
County: Orange
MLS#: S653854
Source: SoCalMLS
Status: Active
——————————————————————————
This is NOT a short sale! Beautiful condo in Irvine's finest highrise at the Marquee in Park Place. Resort style living! Located on the 1st residential level in the West tower, with garden view, facing away from the freeway. Original owner with totally custom re-modeling with Black granites thru-out, black carpet, black sink, Jacuzzi tub, custom black drapery. .. etc. If you love black, you will fall in love with this place! Enjoy the amenities: pool, spa, fitness center, BBQ area, billard room, and conference rooms. State-of-the-art security including 24/7 concierge service, guard-gated access, keyed elevator access, and security cameras. Conveniently located, close to John Wayne Airport, renowned restaurants, beaches, shopping and tollroad/freeways. Unbelievably priced for quick escrow! A must see!
totally custom re-modeling
This interior might appeal to someone, but I suspect it is a turn off to most.
Do you think this owner cooks much with those paintings on the stove?
Is that a statue of the Borg? Is that fine art included in the purchase price?
“As the debt addicted abandon their entitlements and adjust to living within their means, the economy will slowly improve and be put back on stable footing.”
Actually, it won’t. Wall Street has no interest in pulling the economy out of a recession, and low wages are just what they are hoping for. And why should they care? They can hide money overseas in tax shelters; they’ve outsourced most of the industry and continue to do so; and if the U.S. economy goes south, they’ll relocate in what’s left of Europe and Asia. Either that, or retire. Their sole interest is in short-term fixes, and turning the country into yet another banana republic.
Our government is owned by banksters, and I don’t see any improvement heading our way. Say hello to multiple decades of even lower wages and utter stagnation.
G.13,
Exactly. Banksters can keep or decrease wages, penison, benefits with the recession and get the govt to bail the banksters out. Of course the banksters are so necessary that retention bonus were given to keep them at the begining of the recession and are doing such a wonderful job that they deserve performance bonus for getting the bailout.
Wow, that’s some scary decor…add another $50K+ for remodeling (or a big prescription of Prozac)….
Years ago, before the insane housing bubble drove me out of California, I looked at a cute little 3-bedroom in Pasadena. The owner wanted to sell after his last tenants had destroyed the kitchen tile and painted the hardwood floors in Day-Glo colors. I never knew purple could glow in the dark before . . .
Suffice to say, I did the math and realized I couldn’t afford the place, so I moved on. Still, whenever I see a badly-decorated house or condo, I think of that little bungalow. And right now, I’m thinking, if that owner believed his place had been trashed, he should see THIS place.
Wow, a 400K plus loss. I thought prices never go down in Irvine. Even at this price, buying in the NKT doesn’t make any sense whatsoever. That big HOA monthly nut makes this place worth maybe 250K at the most.
Tip to homedebtor trying to sell. Put funky art in closet and pick up some guys from Home Depot to paint walls and ceilings a nice, neutral color.
At least this wasn’t advertised as “light and bright.”
Yes, it will be a tough sell with this bizarre decor.
This person has awful taste in decor.
Thanks for the update on North Korea. It’s always interesting to see what is happening here. That HOA dues figure is outrageous! For that price they’d better bring me coffee in bed every morning!
That, and make me breakfast.
There’s plenty of very affordable housing out there. Six years of waiting for Irvine is about entitlement and simple greed.
What do you care? If there is so much affordable housing, why don’t you go buy some?
This is about market value converging to, and then potentially crossing under, intrinsic value.
Personally, I prefer to buy as low a possible, and employ as much patience as I can sustain while waiting for opportunities.
Tomato, Tomahto. Just saying how lame it is to bitch and moan about the man holding you down.
Oh, is that what you were saying!? I can’t see how your opening salvo could possibly be construed as such.
That said, I think it is even more lame to bitch and moan about people trying to make informed decisions about the biggest financial decisions they are likely to make in their lifetimes.
Bill, are you another identity for Planet Reality? You sound an awful lot like him.
You mistake canny financial decisions for “greed.” Indeed, putting off purchasing something that you really want now when you can get it for less later…is that greed? Or disciplined frugality?
I may or may not feel (absurdly) “entitled” to live in Irvine, but I do think it an advantage to me (commute-wise in particular), and if I can do it, I will. And if I can do it more cheaply I certainly will. Even if that means less commissions for realtors. Even if they started feeling “entitled” to the high volume of their commissions and to everyone believing their BS.
It is “greedy” in the sense that renters don’t want to lose money by purchasing an over-priced Irvine house.
I’m being greedy every time I see a new BMW 5 Series I’d love to own, yet I choose to drive my old Accord and earn (currently minimal) interest on the $45k+.
Youo are greedy if you behave in any way that means less commissions for Bill.
So people who waited out the crash and didn’t give into your realtor stupidity “buy now, prices always go up, it’s different this time, Suzanne researched it” are greedy and feel entitled.
Go fly a kite in a lightning storm!!!!!!!!!!!!!!!
Spoken from under your bridge, oh troll.
OK “Bil” … I’ll take the bait …
“Very affordable housing out there” you say. Hmm…
According to the US Census Bureau, the median household income for Orange County CA is $71,735. (2009 data available)
We can make some reasonable assumptions that figure hasn’t changed much, up or down, in the two years hence, certainly not appreciably.
Using this property as an example, a sell price of $380K is still WELL above the generally accepted parameter of 4x income, $287K (@ even 5x income, it’s still overpriced by about $30K) This property is not alone in that it is STILL chasing the market down. Using rental parity as a guide … from my own personal experience … I rent a very comparable townhouse, 1305 sq/ft, 2 bed, 2 1/2 bath “luxury” townhouse with attached 2 car garage, pool, clubhouse with workout facility and security gate. I pay a little over $2100/mo.
I can’t see how buying this place would be a wise or even fiscally responsible act given it’s nearly $1000 more per month to “own” it. So I ask … how is that affordable?
My God. The interior looks smoke damaged.
$3,526 ………. Monthly Cash Outlays
$42k/year to live in that dump? lol
That man’s brain is a fully-controlled subsidiary of Fox News.
At least deficits recently became a concern of the political and media classes, on January 20, 2009, at precisely 11:00 a.m. Before, they were just huge war deficits, which are inherently efficient and job-creating government spending. Deficits spent on public works projects at home just kill kittens and create uncertainty.
All this concerns me, except I’m actually more concerned that there won’t be more regulations coming down on places like the financial sector.
A whole lot of people sure care about deficits all of a sudden. Where were they when it was their party creating them?
Public works projects? You must be referring to the shovel ready projects that Obama said weren’t quite shovel ready.
For the larger project, CA has enviromental impact study, community impact studies, …. Some how some polical hack’s relative gets the contract for these multi-million dollar studies. I would be satified if the money is used to hire large number of people to fix the roads, clean the street, clean the brush, instead of just going to a few individuals for their studies (and they are not even Ph.D.’s or staticians).
WAR IS PEACE
FREEDOM IS SLAVERY
IGNORANCE IS STRENGTH
funny how much the first half of the California Kool-Aid sounds just like the preamble Obama’s agenda.
I think any time deficits are accelerating to the point that our national debt is growing exponentially, that’s probably a reason to raise an eyebrow. or does the left wing establishment not think rate of change matters? ah yes, there it is, the all-important “change” we were promised…
something in a basic black ?
darth vader’s OC crash pad or what
Yeah, straight from Pottery Barn’s Dark Master Collection
I find his lack of contrasts . . . disturbing.
Some thing is wrong when you “purchase” a new luxury condo and then must do upgrades.
Any pending HOA re-assessments for the non-paying units may be a factor for the price reduction. Anybody know the finance to the NKT?
What ever party is in full control, it’s party time and drunken sailors on shore leave for restraint.
If I were parodying a 1986 bachelor pad, I would model it on this place.
Who on earth would live here? A goth who can’t leave high school behind? A bachelor determined to remain a bachelor? President of the Morticia Adams fan club?
Weren’t these towers built for people who worked very near at New Century and earned $200,000? Now, these people can only find jobs in retail.
The housing bubble and banks sucked in money that would’ve been better invested in manufacturing. Though, manufacturing is considered non grata in OC because it creates pollution, smog, noise, etc, but it also creates jobs (Boeing go away!).
vincenzo… Hats off to you, the best post I’ve read in ages.
Nah. Actually making something for a living is so last century!
Why work for a living when you can defraud people and shuffle paper around for a fee? DUH! We just have to wait it out a little bit longer … the gravy train will soon be roaring down the tracks again and we can all resume living the lives we were MEANT to lead … Masters of the Universe unite! (extreme snarkiness intended)
The US can’t even become a third-world country because we don’t have enough disenfranchised working poor to exploit or extort. Though Wall Street is doing it’s level best to ensure we will get there soon … then they’ll just be vultures picking at the carcass.
Well, should want to leave one failed state for another here is what $380K will buy 35 miles from downtown Chicago:
http://www.realtor.com/realestateandhomes-detail/18679-West-Maple-Avenue_Grayslake_IL_60030_M77979-12901
http://www.housingwire.com/2011/06/23/pending-conforming-loan-limit-decrease-puts-california-on-edge?utm_source=feedburner&utm_medium=twitter&utm_campaign=Feed:+housingwire/uOVI+(HousingWire)
“By reducing the conforming loan limit, thousands of California homebuyers will be shut out of homeownership,” CAR President Beth Peerce said.
Oh My God! some people will be shut out from homeownership, that sounds really alarming…wait…if you have a brain and can think (something realtors usually pray you don’t have), you can see your are not being shut out of anything. You just may not afford a much more expensive home. So if you are tight on money and extending yourself, you might only be able to buy a 650k home instead of a 750k home. I’m shedding a tear for these guys, that is so sad, the government must do something!! Can you imagine how sad the kids would be if the family has to settle for an inferior $650k home? sheezz
Over the last year, the ‘shadow inventory’ (# of properties that are not currently listed on multiple listing services and are delinquent by 90 days or more, in foreclosure and owned by lenders) declined by 200,000 properties. This is comparing the ‘shadow inventory’ of 1.7 million in Feb-Apr 2011 to the 1.9 million properties in Feb-Apr 2010. If this level continues to decrease by only 200,000 each year going forward, it would take 8.5 YEARS to clear ‘shadow inventory’ out of our residential RE market! Unfortunately, this could even be considered a slowdown from 2009-2010, when the ‘shadow inventory’ decreased by 100,000 from Q4-2009 to Q1-2010.
Home “shadow inventory” dips on year: CoreLogic
(Reuters) – The number of U.S. homes likely to hit the market soon fell compared to last year due to fewer new delinquencies and a high level of distressed sales, a real estate research firm said on Wednesday.
CoreLogic reported that the so-called shadow inventory of homes in the three months to the end of April declined to 1.7 million homes. That’s equivalent to a five months’ supply and is down from 1.9 million in the same time frame the year before.
It is also down from the peak level of 2 million homes seen in the three months up to January 2010, CoreLogic said.
…
CoreLogic estimates the supply of homes yet to come up for sale by calculating the number of properties that are not currently listed on multiple listing services and are delinquent by 90 days or more, in foreclosure and owned by lenders.
http://www.reuters.com/article/2011/06/22/us-usa-housing-corelogic-idUSTRE75L35C20110622
NAr: “It’s a great time to buy!!!”
http://www.realtor.org/home_buyers_and_sellers/buy_now_ad
Hey, don’t worry, Suzanne researched this!
https://www.youtube.com/watch?v=Ubsd-tWYmZw
-Darth
Thanks for the reference for “Suzanne researched this!”
Watched it 4x already, and I’m still shaking with laughter and rage.
I know it’s not a parody, but it’s still tough to accept.
Yep, anytime I feel my anger over the housing bubble ebbing, I just watch that video and then go to an open house. After a few minutes of hearing some slime-sucking [r]ealtor spout the same old its-a-great-time-to-buy nonsense and try to pass themselves off as highly-trained experts, I know that nothing has changed and there are hundreds of thousands of Suzanne’s out there bullying people into becoming foolish loanowners.
Wanna get really mad? Fast-forward 2-5 years on that family in the video. They’re a few hundred thousand dollars underwater, their payment is spiking, and they’re losing their home. They’re getting a divorce and declaring bankruptcy along with the foreclosure. The kids are living with Grandma while all this gets worked out. The dad’s well on his way to becoming an alcoholic, and the mom’s sleeping with the doctor down the street, because she thinks he’ll be able to give her the home her husband failed to deliver. (After all, it’s HIS FAULT it didn’t work out! It was a great buying choice, because Suzanne researched this!) Meanwhile, where’s Suzanne? She took her 6% and today she’s hunting for some more suckers, so that she can tell them to buy-now-or-be-priced-out-forever!!! All as she cruises around in her leased Lexus SUV. Now multiply that scenario by several million, and I give you America.
-Darth
…furious
Too funny!!!!
The only thing Suzanne researched was to multiply the selling price by 3 or 6% and then figuring out what to spend the loot on!
I know there have been many stories of renters getting the shaft when the house they’re renting is foreclosed on, but for the first time this is happening to people I know. Their landlord hasn’t been paying the mortgage for years, and has been pocketing the rent. My friends found out the house they’re renting is up for a short sale two weeks after it went on the market. They now have to show the home to prospective buyers, even though it’s unlikely a short sale will happen. The house is scheduled to be taken by the bank in a couple weeks. Looking at other rental homes in their area, accidental landlords are asking for ridiculous rents to cover their insane mortgages – $5,500/month for a basic house. This is an awful situation and just another example of how renters are getting screwed by this whole debacle.
So if you find out your landlord is pocketing the rent and not paying the mortgage … what happens if you stop paying him the rent?
Most likely you will get evicted.
It used to be that “tough financial times” brought families tighter together.
I purchased a home where the selling couple was going through a divorce with kids in the mix. It’s horrible.
The statistical lie is that “67% of marriages end in divorce.” Actually the likelihood of divorce greatly depends whether you’re a man or woman and how old you are, plus your education and financial status.
Whether male or female, if you’re now married and 20-29 years old, you’re definitely in a high-risk age group for divorce.
But if you’re both well educated (college degree +) and affluent, then your risk of divorce amazingly declines.
The housing crash has a funny way of destroying the affluence bit, placing what would otherwise probably be “safe” marriages into a higher risk for divorce.
No romance without finance?
http://www.divorcerate.org/
http://www.washingtonpost.com/local/number-of-long-lasting-marriages-in-us-has-risen-census-bureau-reports/2011/05/18/AFO8dW6G_story.html?hpid=z3
Remember the serial divorcee(r). They raise the rates.
Unwed parenting and divorce are two large factors that dramatically increases the change of proverty. Great for housing, cause two house/apt are needed instead of one. Great for the RE agents and lawyers.
It may be time to rewrite the aphorism “Buy when everyone says it’s better to rent.”
I think we’re at least 20% above the eventual floor, but a status-seeking follower friend of ours, who is normally the last person to think for herself, told us that it’s a bad idea to buy a house, because real estate will be stuck in neutral for many years.
This is definitely causing some dissonance – I don’t know what to think here. Maybe the bottom is in after all?
I’ll pass this on to Suzanne, and have her research it.
Yes, if you can see the potential benefits of anticyclical investing it is time to buy now or in the near future (2011-2012), just as it was time to sell when everyone was buying
All this hate on housing was part of my reasoning to buy.
^ that’s a dumb reason to buy
It was a small part of the decision. Main reason is I found a place I like, at a significant discount to the market (short sale), and I am sick of renting. The payment is less then I could rent for. The hate for housing was a small influence to pull the trigger rather then wait.
I am planning on buying more properties over the next couple years, so I see this as the start of my dollar cost averaging into the market.
Well put!
There’s an aphorism in investing that recalls the same sentiment … something like “It’s time to sell when the shoeshine boy is giving stock tips”.
I’ve decided to become a “financial contrarian” … my own description. Whatever the mainstream is doing, i’ll direct my efforts in the opposite direction. Additionally, if Wall St. thinks it’s a good idea … it’s a fair bet its not in your best interests and it’s only a good idea for them while you’ll get stuck holding the bag … again.
Beware this phrase dear friends: “Financial Innovation” !!!
(Orwellian for sophisticated ponzi scheme)
So let me get this straight:
1) You think that the commenters on this board are “the mainstream”.
2) You plan to buy now, because we, “the mainstream”, are uniformly agreed that it’s a bad time to buy.
Good luck with that!
-Darth
You misunderstand.
I’ve been visiting this blog for a few years now so, no … I do not view the bulk of the commenters here as “mainstream”. By using that term I mean, the average joe, the person who’s easily fooled by sound bites and talking heads. Put bluntly, the lemming mentality.
Perhaps it might make more sense if I paraphrased the infamous aphorism about investing … “I know it’s time to sell when the shoe shine boy is giving out stock tips”. If the herd is running in one direction, I’m considering the other direction. It’s not a perfect idea but it helps to serve as a counterweight to prevailing public opinion.
people! people!
haven’t you all learned by now!? Stop……feeding the trolls!!
I completely relate to this post.
I would love to own a place (within my means) so I can install the floors that I like, paint the rooms the way I want to, remodel it to my taste, etc. However, I don’t want to own a home that continues to decline in value so I’m stuck renting.
Honestly if I was convinced that home prices would even remain flat for the foreseeable future I would still buy, but not if they continue to decline.
Totally sucks.
Wow, darth vador is selling his quarters in the death star.
Hey, it’s OK, he will sell, and loss will be erased, because the Force is with him.
$840/month HOA fee, really? Call me provincial, but that strikes me as absurd. Thats P&I on a fairly nice place out here in the hinterland.
Call me provincial, but that strikes me as absurd.
You get all these goodies for your HOA dollars:
Enjoy the amenities: pool, spa, fitness center, BBQ area, billard room, and conference rooms. State-of-the-art security including 24/7 concierge service, guard-gated access, keyed elevator access, and security cameras.
The HOA used to be around 1,100, so it went down a bit, and these are suppose to be luxury living, the kind of place Bruce Wayne would live in because it was too late to drive home to stately Wayne Manor.
“Renting lacks an emotional quality of belonging that is difficult to replicate”
You never own your home. Property taxes make you a permanent serf.
You’re living a life of illusion.
That, and the never-ending repairs, replacements, and maintenance, not to mention the possibility of needing to sell when the market’s down.
Why all the agonizing about houses going down in price? Every other thing I’ve bought and used has gone down in price!
Seriously, that’s why the government let me depreciate the house I’m renting out. I’ll hopefully be out of the landlord business soon when my inherited property sells.
Ha, very true Joe R, everything goes down in value after its “old”.
The income breakdown bar chart is a good one, especially for anyone thinking about buying a home going forward. the interesting part is notice that none of the scenarios include a category for savings, so really this is ex-savings (though let’s face it, most people in the last 5 years really didn’t have any so it’s nearly a moot point).
That interior. Jeeze.
Liberace ain’t dead. He moved to North Korea Towers and started collecting zombie art.