US Housing Market Faggotry

[skyrefuge]

Where exactly are these markets that people can't "afford" the rent on a 2 bedroom apartment? The Empire State Building? The John Hancock Tower? I'm convinced more and more every day that the media simply makes shit up to fill the pages.

I don't know, it doesn't seem like they're making anything up, they laid out the figures pretty clearly. The 2-bedroom apartment line referred only to food service (think McDonald's) and retail (think Gap salesgirl) professions. And it didn't say that they couldn't afford any 2br apartment; they just couldn't afford the median. By definition, 50% of the apartments in those areas are cheaper than that, so I'm sure they can find some place they can afford.

to pay $600K in interest on a $500K property over 30 years is assinine to me.

Only if the cost of rent over the rest of your life (50 years?) is significantly cheaper than $1.1M. And generally, in this country, it hasn't been, which is one reason why people who can afford to, buy instead of rent. Things are a bit screwy at the moment, so it's probably still not the best time to buy, but things will surely change (many times!) over the next 30-50 years. (oh, and you'd have to be getting a fairly shit rate to pay $600K in interest, but yeah, certainly the interest is an enormous part of the total cost)

Neil

 

[lurch70]

oh, and you'd have to be getting a fairly shit rate to pay $600K

its at a 6% rate ... we're at about 7-8 right now in NY
love that Excel Mortgage Amortization Calc ... its a scary eye opener



Mortgage Amortization

Inputs Key Figures
Loan principal amount $500,000.00 Annual loan payments $35,973.00
Annual interest rate 6.000% Monthly payments $2,997.75
Loan period in years 30 Interest in first calendar year $29,832.99
Base year of loan 2008 Interest over term of loan $579,190.00
Base month of loan january Sum of all payments $1,079,190.00


My fave is the first year of the table ... where you make $36K in mortgage payments but only $6K is from the principal ...

 

[lurch70]

I pay 1150 (1210 actually from next month) for a 800 sq/ft apartment in a pretty good area of NY (20 minute express Subway ride to Manhattan) ... the same apartment if I was to buy it would be around 450K (as a condo) ... so if I lived here at the same rent for 30 years ... it would be 432K over the course of time... if I bought it as a condo around DOUBLE that ... and heck, lets not forget I would have to pay another 600 monthly for maintenance.

Things just don't make sense ... but I guess I could brag that I "own" property.

 

[skyrefuge]

Loan principal amount $500,000.00

Ah, yeah, if you put $0 down on the $500K property, that'll certainly jack the total interest payments up dramatically.

My fave is the first year of the table ... where you make $36K in mortgage payments but only $6K is from the principal ...

Hey, that's the biggest tax deduction you'll ever see! It just gets smaller every year after that. But yeah, that's one reason that I've always added extra principal to my mortgage payments (paying off a 30-year at a 15-year rate); it makes it principal-vs.-interest amounts early on look a lot less stupid!

I pay 1150 (1210 actually from next month) for a 800 sq/ft apartment in a pretty good area of NY (20 minute express Subway ride to Manhattan) ... the same apartment if I was to buy it would be around 450K (as a condo) ...

Yeah, those numbers are pretty crazy. New York and LA are different worlds from the rest of the country! When I bought 5 years ago, I went from a 1br 800 sq.ft apartment @ $990/mo, to a 3br 1300 sq.ft house on a 1/4 acre in the same area, for $215K, with a mortgage payment (including taxes and insurance) of $1240/mo. So not nearly as big of a differential there.

At a 30 year payoff rate (and my 20% down), that's $188K in interest, for a total payment (not including taxes and insurance) of $403K, which is equal to 34 years of rent @ $990. If I live to be 85, I can live my last 30 years rent-free. In the apartment I would need to pay another $308K before I died, and that's making the impossible assumption that rent would go up for 60 years. At the 15 year payoff rate that I'm actually paying, it's only $84K in interest, so it's even a whole lot better.

After I moved out, the rent at those apartments actually went down, reflecting the lack in demand as everyone was buying houses, because at the time it made so much more sense than renting. I just checked, and rent is now $1,130, showing that the pendulum has indeed swung back the other way a bit, and more people are renting again.

Neil

 

[dorian gray]

I don't know, it doesn't seem like they're making anything up, they laid out the figures pretty clearly.

My point being that writers can take a figure or a stat and apply it any way they want to fit into their peice - which, essentially, is a falsehood. It's obvious that minimum wage workers can't afford to buy a house in the median market; why bother writing it?

 

[dorian gray]

My fave is the first year of the table ... where you make $36K in mortgage payments but only $6K is from the principal ...

Ha yeah, amortization is hilarious. Nothing like lining the pockets of someone else.

 

[dorian gray]

Hey, that's the biggest tax deduction you'll ever see! It just gets smaller every year after that. But yeah, that's one reason that I've always added extra principal to my mortgage payments (paying off a 30-year at a 15-year rate); it makes it principal-vs.-interest amounts early on look a lot less stupid!

Well, I'm happy for you that you can afford to make essentially two mortgage payments per month. You must be making large quantities of money or you're a two income household or something or other.

 

[lurch70]

a 3br 1300 sq.ft house on a 1/4 acre in the same area, for $215K, with a mortgage payment (including taxes and insurance) of $1240/mo. So not nearly as big of a differential there.

i would do that in a heartbeat also ... heck, i pay that now in rent. but $200K would get me a 1br co-op in NY which I am not doing.

 

[dorian gray]

but $200K would get me a 1br co-op in NY

5 stars

 

[J.]

the wife and have almost decided to try to sell our place. we bought a $152000 2 story, 2000+ sq ft home in an affluent hood. the same house sells for around $180000 now.

we found a 4 bedroom, 3300+ sq ft home on 2 acres for list price $114900. NO SHIT! the catch is that it is unfinished. the kitchen would need a remodel and some sheet rock throughout the house, and some painting. it is in the middle of nowhere which i love. but the biggest catch is that it sits directly behind what looks like a fucking junkyard. it looks like the owners of the land didnt give a shit, and then someone bought it, started this beautiful home, and then left before finishing, seeing how it is a repo. if the junkyard is the 2 acres, i could just hire some mexicans to clean that shit up and voila. if not, fuck that place.

 

[skyrefuge]

It's obvious that minimum wage workers can't afford to buy a house in the median market; why bother writing it?

But they didn't write that!

Well, I'm happy for you that you can afford to make essentially two mortgage payments per month. You must be making large quantities of money or you're a two income household or something or other.

It's not really two mortgage payments. Because interest is so much of the total cost of a mortgage, it actually takes only a relatively small additional principal to cut the payoff time in half. For me, it's $455/mo in extra principal, so my total payment at the moment is $1800/mo.

But yeah, I do make pretty good money, but I'm also the only person that I have to support, and I live like a monk, and choose to live below my means (there are plenty of $600K houses that I could have bought) so that frees up a lot of money for housing payments. So I guess my point was that the rent-vs.-buy decision depends a lot on your personal situation; there are still a lot of people living in a lot of places for whom buying is an obvious choice.

Like lurch, I'm envious of you, since it sounds like you're in position to pull off the rare sell-high/buy-low maneuver (whether you decide to execute the second half or not).

i would do that in a heartbeat also ... heck, i pay that now in rent. but $200K would get me a 1br co-op in NY which I am not doing.

I guess the weird thing is that the rent-vs.-own price differential is so much greater there than it is here. I wonder why that is? It just seems like something that would stay fairly constant, regardless of the market...as property prices rise, why wouldn't the rents that the owners charge rise at similar rates?

we found a 4 bedroom, 3300+ sq ft home on 2 acres for list price $114900. NO SHIT!

lol...it's unfinished, without any sidewalks to the doors (is there even a driveway?), but they have a whole forest of satellite dishes on the roof? That's knowing your priorities! Nice looking place though, at least when you can't see the junkyard...I'd be all over that!

Neil

 

[dorian gray]

...as property prices rise, why wouldn't the rents that the owners charge rise at similar rates?

I was wondering about this also. What's the deal Lurch?

 

[dorian gray]

lol...it's unfinished, without any sidewalks to the doors (is there even a driveway?), but they have a whole forest of satellite dishes on the roof? That's knowing your priorities! Nice looking place though, at least when you can't see the junkyard...I'd be all over that!

That's the first thing I noticed too!

 

[lurch70]

i live in a pre-war rent stabilized apartment building ... there are quite of few of these around in the boroughs but super hard to come by ... fair market value on mine is around $1600 but becasue of these old city regualtions they have to rent it at a $400 less preferential rate.

but yeah otherwise most of my area is in the $1600-$2000 a month for a 1br.

 

[General Zod]

but yeah otherwise most of my area is in the $1600-$2000 a month for a 1br.

LOL @ one bedroom for $2,000. This is why I live in NJ. You have to really love the city to want to pay that much for so little.

Zod

 

[lurch70]

and these are not even nice and large 1br's ... we are talking about 650-700 sqft


oh yeah ... here are some killer deals, steps away from my office overlooking Manhattan

http://newyork.craigslist.org/que/nfb/567021804.html

 

[skyrefuge]

fair market value on mine is around $1600 but becasue of these old city regualtions they have to rent it at a $400 less preferential rate.

ha...I wasn't expecting such a neat and simple answer to this question. Excellent!

Silly me for assuming a free market.

Neil

 

[NAD]

http://money.cnn.com/2008/02/06/real_estate/walking_away/index.htm
FUCK THESE PEOPLE
FUCK CALIFORNIA
FUCK THE US GOVERNMENT AND THE DUMBASS RELIEF ACT OF 2007
FUCK FUCK FUCK FUCK FUCK YYYOOOOUUUUUUU

Dude I seriously love those people. Really. They got suckered into a loan so that some assfuck could make $$$$$$$$$$$$$$$ on Wall St. with a CDO, and now the sucker, the sap, the little guy is taking down the whole system by simply not paying a bill. Not that I would do it, but I think it's sorta rad. Although I agree about the whole Fuck California bit.

Great article on what is really happening with the "jingle mail" scenario:

http://globaleconomicanalysis.blogspot.com/2008/02/debt-trap-mass-exodus.html

 

[lurch70]

a NY story ... WTF!

Homeless? Low-Paying Job? Her Mortgage Was Approved

How did a homeless woman end up buying a house in Queens with no down payment and a mortgage bill that was multiples of what she earned each month?

That’s a question that was being asked by the New York State Commission of Investigation at its hearing on the subprime lending crisis and mortgage fraud on Wednesday, during which Suzette Francis testified.

Ms. Francis, 31, was living in a homeless shelter in Queens in 2006 after she lost her job during her pregnancy. When she got a new $10-an-hour job as a security guard, she wanted to rent an apartment and approached the principal of her child’s school, who happened to have a real estate business. Ms. Francis said the woman told her that she had no apartments available, but asked how her credit was. After a quick credit check, the woman told Ms. Francis she was available for a special Fannie Mae program for first-time buyers that did not require any down payment.

She knew a two-family house in Jamaica, owned by a relative, which would be available for sale.

In October 2007, Ms. Francis signed up for a $470,000 adjustable rate mortgage with an interest rate that began at 10.8 percent and shot up to 16.8 percent. The mortgage payment was $4,517 a month. She never made a single payment before the house went into foreclosure.

 

[NAD]

Yeah that isn't surprising. So many loans were made with zero down and a made-up income. Remember when Buck Bundy got a credit card?

Fall... FALL!!!