Re: Crushed by debt
PAW
4/30/2011 4:01:49 PM
I agree. The effect of a recent lay-off and related debt I accumulated will be with me for years. I was out of debt, except for my mortgage and then 9 months ago, was laid-off. Much to my disappointment, the credit cards began to see the light of day again. Even if I got a new job today paying me what I had before the lay-off, the only thing I am confident about is that I will be digging out of this debt-hole for years to come.
Recovery Path?
Bullseye
4/30/2011 2:39:48 PM
Are we on a recovery path or just stuck in hole hoping time will change things for the better. It took about 7 years for the real estate bubble to burst and it will probably take even longer to see any recovery. I live in Ca. and the homes here have lost about half there value from 2007. There just isn't enough high paying jobs to cover the large mortgage payments. There never was. The prices of homes must come down to prices where they are affordable and the banks are willing to lend again.
Re: Crushed by debt
PAW
4/29/2011 4:43:07 PM
Jobs. Jobs. Jobs. Until the unemployment rate gets in check and consumers start making money to spend, the housing market will continue to be weak. I am one of the many unemployed and, unlike some folks; I am not in jeopardy of losing my home. However, it is going to take years to dig out of the financial mess my extended unemployment has brought.
Re: How the Home Equity Has Fallen
Tenacious
4/28/2011 10:52:05 PM
There's no other way to say it. That sucks. It's a lost decade of equity.
Here's a rather dramatic visualization of the loss in home equity we've experienced in the past few years.
Crushed by debt
AskAsa
4/28/2011 7:15:11 AM
So many consumers tell me they're crushed with debt they incurred when they were/are unemployed. They can't afford to spend, so of course they lack confidence. It's a vicious cycle.
Housing Market
impactnow
4/28/2011 12:19:24 AM
It is very sad to see that with all the spending we have had on stimulus nothing has truly been done to address the housing crisis. Record low interest rates and rock bottom prices are not moving the needle at all. I don’t believe the housing market will get any legs until the job market improves the jobs being created today are generally low paying and aren’t replacing the high paying jobs lost in the recession.
I love the vacancy rates (apartments) in Denver right now. I just got under contract to buy a C-Class multi-family property with 100% occupancy (of course, I didn't buy it based on that number, but I'll take it!)
Re: Renting vs buying
Value Hiker
4/27/2011 12:13:49 AM
A rough estimate of investing a real estate property in SF bayarea.
Medium house price = 500K, Down $100K, Mortgage: 400K Property tax = 6K, Mortgage (Assume 5% rate) = 20K, Maintenance = 2K, Total Cost =28K
Rental Income = 2K per month, Assume 10% ~ 20% vacancy, tax back from property tax & mortgage interest (assume 28% tax rate) = (6K+14K)*28% =5.6K, Total income = 20K+5.6K = 25.6K
You still have 2.4K loss.
If you are high income, you will lose the property tax deduction due to AMT. If the house is not primary residence, you will lose mortgage interest deduction too.
Combined together: you lose 8k if you are high income person investing in a second house.
Consider the 100K downpayment, you cash flow may be even worse. Your only hope is rapid capital gain, which is quite uncertain, even in long run.
AskAsa,
Very good point on property taxes. FYI, I lived in NY/NJ for 10 years. Bought my first place in Brooklyn. Eventually we left, partly because NJ property taxes were becoming obscene.
I don't know that you can find an equation that works when property taxes are 30% of your mortgage, which was the deal when I lived there.
-Scott
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