I’ve said the same exact thing, but they are not and that surprises me. They are building a new neighborhood next door to ours and these houses are going to me mini mansions. I don’t understand who the hell can afford these houses. They are to be in the upper 500K range on up.vraiblonde said:
Drop in Home Prices Forecast....
- Thread starter Pandora
- Start date
Obviously someone can, but I'm curious how house-poor they are. (Isn't that what you call it when you buy an expensive house and the mortgage takes up most of your monthly income?)Pandora said:
Anyway, the rule of thumb as to how much house you can afford is to take your household income x 3 (roughly). So if you figure the average household income, then look at the average home price, those should equal out. If they don't, then it means there's a tidy sum to be made by building smaller homes.
Nickel
curiouser and curiouser
That's what's happening here right now, although the houses aren't as cheap as $120k (average is $150k). A lot of the new homebuyers in my area are young military (with Norfolk being so close). Developers are building neighborhoods like mine, with 1500 (plus or minus) sq foot homes, and a few neighborhoods with larger homes. Even those are going for less than half the prices in MD for comparable homes.vraiblonde said:
Here is a thought.
You buy a house for $330K today and mortgage it for 30 years at 6.25%, your monthly P&I payment is $2,031.87. After 10 years, the balance owed is $277,400.42.
Now you wait, and this house drops 10% in price to $297K and mortgage it for 30 years at the now 8.5% interest rate, your monthly P&I payment is $2,283.67. After 10 years, the balance owed is $262,729.87.
The 8.5% guy owes $14,671 less than the 6.25% guy, but the 6.25% guy paid $30,216.00 less over a 10-year period in payments.
Like itsbob said, if you cannot afford a house now, you cannot afford a house later.
You buy a house for $330K today and mortgage it for 30 years at 6.25%, your monthly P&I payment is $2,031.87. After 10 years, the balance owed is $277,400.42.
Now you wait, and this house drops 10% in price to $297K and mortgage it for 30 years at the now 8.5% interest rate, your monthly P&I payment is $2,283.67. After 10 years, the balance owed is $262,729.87.
The 8.5% guy owes $14,671 less than the 6.25% guy, but the 6.25% guy paid $30,216.00 less over a 10-year period in payments.
Like itsbob said, if you cannot afford a house now, you cannot afford a house later.
ylexot
Super Genius
My feeling is buy when the price is low and the rate is high. Then when it goes the other direction, you refinance. I was lucky and bought when the prices were low and the rates were reasonable (~6.5%). Since then, my house has gone up in market value, I refinanced to 4%, and went from a 30yr to a 15yr at the same time (which I can do now because I make more now). 
somdrenter
Sorry, I'm not Patch...
That’s half the answer. Now, compare the number of units sold with active listings.ylexot said:Exactly which reports are you looking at?
St Mary's County Year End Real Estate Trend Indicator - <$30K to >$500K Format (from the link you provided):
2005
Total Units Sold: 1,731
Average Days on Market: 41
2004
Total Units Sold: 1,446
Average Days on Market: 51
2003
Total Units Sold: 1,450
Average Days on Market: 42
2002
Total Units Sold: 1,358
Average Days on Market: 74
Yeah, that looks oh-so-stagnant
Active Listings-Homes Sold
May ‘03 280-117
June 273-133
July 238-125
Aug 244-164
Sept 232-143
Oct 244-126
Nov 235-124
Dec 206-159
Jan ‘04 192-86
Feb 186-97
March 222-103
Apr 231-110
May 235-121
June 248-164
July 342-329
Aug 281-149
Sept 270-147
Oct 273-122
Nov 209-131
Dec 277-143
Jan ‘05 219-122
Feb 299-122
March 293-151
Apr 281-137
May 280-117
June 310-166
July 337-166
Aug 359-153
Sept 374-153
Oct 380-147
Nov 447-115
Dec 439-125
Jan ‘06 449-90
Feb 488-81
March 557-108
Apr 610-126
May 611*-110*
*May 06 numbers are estimated. MRIS numbers come out on the 10th.
What those numbers tell me is that a bunch of people missed the boat on the housing bubble. They saw the outrageous prices people were getting for their homes, and decided to sell - too late.
C
czygvtwkr
Guest
Geeze I got red karma for my postings on here.
The fact is I just bought a house that I could not have gotten 2 years ago. Because 1 it would not have been on the market 2 years ago, I would not have gotten the seller to pay all closing, and I would not have gotten it for below listing price. Many people I work with were upgrading 2 years ago and getting above their listing price then.
The fact is I just bought a house that I could not have gotten 2 years ago. Because 1 it would not have been on the market 2 years ago, I would not have gotten the seller to pay all closing, and I would not have gotten it for below listing price. Many people I work with were upgrading 2 years ago and getting above their listing price then.
somdrenter
Sorry, I'm not Patch...
Some folks can easily afford it. Others:vraiblonde said:
http://abcnews.go.com/Video/playerIndex?id=1752600
http://realestate.msn.com/buying/Articlenewhome.aspx?cp-documentid=338165
A couple of things I'd like to complain about:somdrenter said:
First, housing prices - okay. But what about lenders who make these loans knowing full well that the borrower can't afford it? When my ex and I bought our first house, the mortgage company TOLD us what we could spend and we didn't qualify for anything above that because they didn't want to deal with the risk of foreclosure. Is it different now?
And property taxes - what's up with that? Land should be something you buy and pay taxes on one time, not get taxed on it every single year based on some arbitrary number that the (whoever sets these rates) decides it should be.
How does THAT work? Who decides what your property taxes should be and what do they base it on?
Pete
Repete
See this ABC news video is YET AGAIN another swan dive into the pity pool of sympathy for stupid people.somdrenter said:
Poor woman, she is losing her house {cue tape of her walking through packing boxes} "We used to sit here with our dogs and watch TV" "We loved our little house" Did you look at that house? THAT was NOT a "little house" and she is NO VICTIM. She is guilty of pizz poor planning but NOT a victim like ABC news painted her. She wanted a effing mansion, she searched out a bank that would loan her the money on an adjustable rate mortgage so she could. Now she is losing it because she was an IDIOT, not a victim.
I have a couple questions.
1. When interest rates are the LOWEST IN 30 YEARS what the eff do people think the rates are going to do in the coming years?
2. If the ONLY way you can buy a particular house is to use 99.99% of your disposable income for mortgage payments, does that seem right to you?
3. WTF does the word "adjustable" mean in the phrase "adjustable rate mortgage"?
Nickel
curiouser and curiouser
We just bought our house in December. Our mortgage company approved us for "x" dollars, because that is what they determined we could afford. Realistically, "x" was extremely high, but we had an understanding of our finances and knew, for ourselves, what we could afford. We ended up getting a good deal for considerably less than our ideal price, so we made out pretty well. I think that if someone doesn't go into it knowing what they can or cannot afford, and just buy a house at the high end of their approval spectrum, they might be in trouble.vraiblonde said:
vraiblonde said:
Yes, that is called house poor as I know it.
I’ve always thought that was the rule of thumb too, but my mortgage broker was telling me they do this monthly debt to income ratio thing and this allows more people to qualify. Maybe somebody who knows more about it can give more details of how that works.
Many people buy expensive houses on interest only loans and ARM loans. Say somebody looks at that $600K house and the realtor says, the payment will be $3,220.93 on an ARM loan. They jump up and down and think
: We can afford that, but then after the term is up, say 36 months, the payment jumps to whatever the market rate is or more depending on the terms. I seem to think we will se 8.5% interest rates in the not so distance future again, but say, if that was the case, the monthly payment jumps to $4613.48. Hopefully he got a 17K raise to cover the difference.
When I say 8.5%, THAT is a mortgage under $359K, anything over that is considered a jumbo mortgage and the rate is 1/2 to 3/4 higher I've noticed.
MANY of my tax clients are in these types of loans so I see the rates, see the payments, see that they may not be house poor now, but they will be, or if they are house poor now, I wonder what is going to happen down the road.
I couldn't handle that worry. Worrying if I could pay my mortgage down the road, depending on a raise of some sort.
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I also don't understand people who get "interest only" mortgages... 
I repeated points others already mentioned. I started typing up a response, got busy 
By the time I posted, there was 30-minutes of post in the thread already. I hate when that happens.
ylexot,
I will say no on that. I think some banks will allow you to use up to 60% of your montly income toward a house payment.
By the time I posted, there was 30-minutes of post in the thread already. I hate when that happens. ylexot,
I will say no on that. I think some banks will allow you to use up to 60% of your montly income toward a house payment.
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kom526
They call me ... Sarcasmo
My FIL calls it house rich, mortgage poor. When my wife and I were looking to buy our 1st place (1995) we were approved for a $252,000 mortgage. Well she was a 2nd year teacher and I was still a couple of years from journeyman. There was no way in two hells we could have afforded that and do things like have electricity and eat. These folks who believe everything that mortgage companies tell them about what they qualify for really need a dose of reality.