Inspired to go into debt?

[JoCa]

3 hours ago, anatess2 said:

The housing market crashed a few months after we closed on the deal which swallowed the equity we had with our downpayment. 

Anyone who is thinking of buying a house or expanding, etc.  I'm telling you be very, very cautious right now.  This sucker is gonna pop . . . soon.

You can trace the housing market back over time and generally speaking every 7-10 years it drops.  2008, 2001 (very minor), 1990, 1984, etc.  Most of the time it coincidence very nicely with the economic and economic recessions.  I'm telling ya, all the signs are there for an economic recession to happen real soon. Fed will raise rates in Dec. they will probably get in 1 or two more rate hikes before June.  My guess is that sometime around then the yield curve will invert and within 6 months we will be in a recession.  This time next year is gonna look a lot different.

So if you are buying you need to be darn sure you are good for the recession.  I would also be very cautious about timing.  I actually have to buy/sell soon and I am getting everything ready for Spring, I believe it will be the last hurrah-I'm getting out now and taking my winnings to play ball somewhere else.

The last thing you want to do is build a house (get the loan, etc.), wait 6-12 months to move and then you find you can't sell your current house. 

I have no clue how bad the recession will get . . .but interesting story that most people don't know about the housing crash.  There were real estate deals that happened, i.e. people came to closing signed the documents, lawyers signed off on it, etc. that the banks failed before the lawyers collected the cash to pay for the loan; i.e. the closing proceeds came from the lawyer's pocket rather than the bank. If we get into a credit crunch, it could be real bad.  I have no idea if it will be a credit crunch recession or just a "normal" business recession.

The other thing you could do is find out exactly how much of the house has to be finished to get a CO.  You might be able to build a 2-story shell with basement, only finish the first level get a CO and then overtime finish the rest of the house. I plan to go down this route (build as big as I want but only finish off what I need immediately).

So if you are going to build, I would sell ASAP!!!! And if you are going with a cookie cutter builder, be cautious it will probably be a lot cheaper in a year or two . .. as in the immortal words of G.W.Bush "this sucker's going down!".

My targets are Dow takes a 50% haircut down to ~12000, it might briefly hit 10k (I don't expect it to go under). Nas >50% haircut, housing probably at least a 20% drop.  I'm getting ready to deploy some capital to buy up some cheap stuff in a year or two.

 

Edited November 14, 2017 by JoCa

[person0]

5 minutes ago, JoCa said:

So if you are going to build, I would sell ASAP!!!!

We will be putting on market in January, then moving in with family temporarily until the house is built.  We anticipate a sale price that will technically give us a 35K 'profit' compared to the original purchase price of our current home.  Even if there is a crash and we lose 10% value on our new house, that would negate the 35K 'profit' and put us at break even.  The KY market only dropped about 5 or 6 % during the last recession, even at it's worst.  I think we are in a good position to come out okay on those fronts as well, even if we don't 'win'.  We also plan to live in this new home for 10+ years, which theoretically would be enough to bring us out of another housing bust and back into the green.

[zil]

7 minutes ago, person0 said:

The KY market...

Must resist urge to make snarky comment....

[person0]

1 minute ago, zil said:

Must resist urge to make snarky comment....

Now I'm curious.  Did I never mention that I live in KY?

[JoCa]

4 minutes ago, person0 said:

We will be putting on market in January, then moving in with family temporarily until the house is built.  We anticipate a sale price that will technically give us a 35K 'profit' compared to the original purchase price of our current home.  Even if there is a crash and we lose 10% value on our new house, that would negate the 35K 'profit' and put us at break even.  The KY market only dropped about 5 or 6 % during the last recession, even at it's worst.  I think we are in a good position to come out okay on those fronts as well, even if we don't 'win'.  We also plan to live in this new home for 10+ years, which theoretically would be enough to bring us out of another housing bust and back into the green.

Sounds like you've got it figured out.  Awesome!  

I would caution against thinking the market could only crash 5-6%

https://www.trulia.com/real_estate/Louisville-Kentucky/market-trends/

What is interesting is that if you look at the long term trends KY never crashed b/c it never participated in the housing bubble. From 01-06 prices increased 30% not the 80-100%+ that most of the country experienced.  And thus it never really crashed (prob. b/c they never really overbuilt) it just stagnated for a long, long time.  Prices have increased maybe 30% so you are right, it may never crash, just stagnate for a long time.  I will say as a slight antitode that in some areas the charts really didn't do justice to what was happening on the ground in some areas.

Sounds like you've done very well financially and have a lot of similar habits to me.  I would also recommend getting out of debt soonest . . .a 30 year mortgage is just dumb. Over a lifespan it is highly unlikely that one will go 30 years without a job loss (lose you home), job change (move homes-new mortgage), or major medical (lose home).  Get it and pay it off ASAP.

[mirkwood]

1 hour ago, person0 said:

Even when you pay a 30 yr early, you still end up paying more in interest.

 

That depends on the amount of extra principal you pay each month/year.  We turned our 30 into about 14.5 years.

[anatess2]

1 hour ago, person0 said:

We will be putting on market in January, then moving in with family temporarily until the house is built.  We anticipate a sale price that will technically give us a 35K 'profit' compared to the original purchase price of our current home.  Even if there is a crash and we lose 10% value on our new house, that would negate the 35K 'profit' and put us at break even.  The KY market only dropped about 5 or 6 % during the last recession, even at it's worst.  I think we are in a good position to come out okay on those fronts as well, even if we don't 'win'.  We also plan to live in this new home for 10+ years, which theoretically would be enough to bring us out of another housing bust and back into the green.

So, you won't be able to rent the house because you need the money for the sale for downpayment?

Because... renting the house could pay your mortgage.

[zil]

1 hour ago, person0 said:

Now I'm curious.  Did I never mention that I live in KY?

Yes, you have mentioned it.

(Must resist urge to be amused by @person0's pure thoughts.)

Edited November 14, 2017 by zil

[Guest]

1 hour ago, person0 said:

I am so frugal that if I don't bring lunch to the office I just skip lunch and eat extra dinner rather than going out to buy lunch (not even off the dollar menu from the McDonalds across the street)!  While I would not consider myself to be an 'extreme cheapskate', compared to my friends and colleagues, I almost am.  Our combined cell phone bill is $34/month.  We leave our house at 80+ in the summer and 68- in the winter and have low power bills.  We use low flow shower heads.  We have 0 other debt.  We have internet but no cable.  We only eat out about once a month.  The most recent purchase I made for myself was an Item that I have wanted to buy for 3 years and finally did it, paying for 25% of it with gift cards to reduce my personal out of pocket cost.  The fact that spending money is a burden, means that we are constantly adding to our savings.

Oh! I've just got to tell the following story to see if I can one-up you on the cheapskate scale.

Back in the days when the Whopper was only 99cents, I looked at the menu and found that the Whopper meal was $2.99 which included large fries and a med drink.  I also noticed that the Whopper jr. meal was $1.99 which included a small fry and a small drink which came with free refills.  Well, just some quick math tells me I can get:

1 Whopper
1 Whopper Jr.
1 Bottomless glass of soda
1 Fry (which is virtually the same in either size)

for one cent less than if I got the Whopper combo.

Yup.  I'm pretty cheap.  Oh, yes, I really am.

[anatess2]

1 hour ago, JoCa said:

Anyone who is thinking of buying a house or expanding, etc.  I'm telling you be very, very cautious right now.  This sucker is gonna pop . . . soon.

You can trace the housing market back over time and generally speaking every 7-10 years it drops.  2008, 2001 (very minor), 1990, 1984, etc.  Most of the time it coincidence very nicely with the economic and economic recessions.  I'm telling ya, all the signs are there for an economic recession to happen real soon. Fed will raise rates in Dec. they will probably get in 1 or two more rate hikes before June.  My guess is that sometime around then the yield curve will invert and within 6 months we will be in a recession.  This time next year is gonna look a lot different.

So if you are buying you need to be darn sure you are good for the recession.  I would also be very cautious about timing.  I actually have to buy/sell soon and I am getting everything ready for Spring, I believe it will be the last hurrah-I'm getting out now and taking my winnings to play ball somewhere else.

The last thing you want to do is build a house (get the loan, etc.), wait 6-12 months to move and then you find you can't sell your current house. 

I have no clue how bad the recession will get . . .but interesting story that most people don't know about the housing crash.  There were real estate deals that happened, i.e. people came to closing signed the documents, lawyers signed off on it, etc. that the banks failed before the lawyers collected the cash to pay for the loan; i.e. the closing proceeds came from the lawyer's pocket rather than the bank. If we get into a credit crunch, it could be real bad.  I have no idea if it will be a credit crunch recession or just a "normal" business recession.

The other thing you could do is find out exactly how much of the house has to be finished to get a CO.  You might be able to build a 2-story shell with basement, only finish the first level get a CO and then overtime finish the rest of the house. I plan to go down this route (build as big as I want but only finish off what I need immediately).

So if you are going to build, I would sell ASAP!!!! And if you are going with a cookie cutter builder, be cautious it will probably be a lot cheaper in a year or two . .. as in the immortal words of G.W.Bush "this sucker's going down!".

My targets are Dow takes a 50% haircut down to ~12000, it might briefly hit 10k (I don't expect it to go under). Nas >50% haircut, housing probably at least a 20% drop.  I'm getting ready to deploy some capital to buy up some cheap stuff in a year or two.

 

Okay okay... TMI for the regular guy just wanting to buy a house.

Simplification:

Recessions only matter if you plan to sell a house (especially for investors).  You don't have to sell the house.  You can rent the house until you can sell it for a better price.   Or don't sell until you can get the money you want.  Easy peasy.

Houses are long-term investments and therefore, are not as sensitive to the up and down economic cycles.  And you can't just say... oh, I'm not gonna buy a house because in a couple years it's gonna be a recession.  You can't tell your wife to stop expanding your family until recession hits and you can buy a house for cheap.  These things become simple.  If you buy a house at the high end of the cycle, then you sell the house at the high end of the cycle.  But since this is your family home, you won't be thinking much about that until decades later.  By then, your house is paid off and you can wait out the cycle for a good sell.

Now, there was a time when people were buying houses on ARMs.  That's when you are very vulnerable to cycles.  But since we're talking about a regular mortgage here, this is not as much an issue.

 

[person0]

7 minutes ago, Carborendum said:

Oh! I've just got to tell the following story to see if I can one-up you on the cheapskate scale.

Back in the days when the Whopper was only 99cents, I looked at the menu and found that the Whopper meal was $2.99 which included large fries and a med drink.  I also noticed that the Whopper jr. meal was $1.99 which included a small fry and a small drink which came with free refills.  Well, just some quick math tells me I can get:

1 Whopper
1 Whopper Jr.
1 Bottomless glass of soda
1 Fry (which is virtually the same in either size)

for one cent less than if I got the Whopper combo.

Yup.  I'm pretty cheap.  Oh, yes, I really am.

[JoCa]

1 hour ago, anatess2 said:

Okay okay... TMI for the regular guy just wanting to buy a house.

Simplification:

Recessions only matter if you plan to sell a house (especially for investors).  You don't have to sell the house.  You can rent the house until you can sell it for a better price.   Or don't sell until you can get the money you want.  Easy peasy.

Houses are long-term investments and therefore, are not as sensitive to the up and down economic cycles.  And you can't just say... oh, I'm not gonna buy a house because in a couple years it's gonna be a recession.  You can't tell your wife to stop expanding your family until recession hits and you can buy a house for cheap.  These things become simple.  If you buy a house at the high end of the cycle, then you sell the house at the high end of the cycle.  But since this is your family home, you won't be thinking much about that until decades later.  By then, your house is paid off and you can wait out the cycle for a good sell.

Now, there was a time when people were buying houses on ARMs.  That's when you are very vulnerable to cycles.  But since we're talking about a regular mortgage here, this is not as much an issue.

 

Not so.  Great to the above . . .until you lose your job! 

Recessions do matter for housing.  No job, no income, no mortgage payment, no house.  All of the above is just more reason why we are getting close to a bust. . . .people aren't thinking about it or if they do, it's not that big of a deal.

And actually, yes you can say "I'm not going to buy a house"; I did it and it worked out very well for me.  Things change a little bit once your already own a house free and clear. If you own free and clear say you bought for 300k, housing drops 50% and you need to move. Not a real big deal.  If you have a mortgage housing drops 50% and you need to move then it is a big deal.

Again, no one is thinking about the downside risks to housing right now . . .it can "only go up" or it "will recover" or "people aren't using ARMs so it won't be bad".  

Just b/c a recession is coming doesn't mean the world stops . . . it can't and it shouldn't. But if you aren't at least aware of it and protecting your downside risk you will be in for a lot of pain.  Some of the wisest financial advice I've ever heard. Except for the career you choose, when you buy a house will have greater impact on the wealth you have in life.  

KY might be fine, there are plenty of places that are fine . . .but the warning signs are flashing, if you live in a hot market be very, very careful.  I'm seeing plenty of signs.  low downpayment or 0% down loans are back.  ARMs are back (not as bad as they were, but they are there).  Look at the people putting in offers on places.  Had a recent offer on a relative's home.  0% down loan, they offered 2% above list b/c they couldn't come up with the money for closing costs!  Place I'm looking at buying wouldn't budge b/c they bought 0% down are selling <9 months after they bought and want to get back what they put into it (i.e. price + realtor fees  .. . good luck charlie!). And those are 2 different states too.

http://www.latimes.com/business/la-fi-mortgage-down-payment-20170629-htmlstory.html

The typical down payment for 60% of first-time home buyers is 6% or less, according to NAR’s latest data. But the association’s research finds few adults ages 34 and younger (just 13%) realize they can buy a house with a down payment of 5% or less.

http://www.calculatedriskblog.com/search?updated-max=2017-11-01T07:00:00-04:00&max-results=10&start=40&by-date=false

Now are we 2007 bubblish crazy-town.  No absolutely not.  But 2007 was an exceptional housing bubble-never before seen in the modern history of the US. Are we currently extremely elevated by historical standards.  Oh heck yeah. Housing prices are about (inflation adjusted) about where they were in '05.  I think we can all agree that while '05 wasn't '08, '05 prices were out of wack.  So yeah, housing prices nationally are currently out of wack.  Oddly enough it was '05 the last time when I personally started saying housing prices were a bubble.  And '05 the fed was in a rate-hiking mode. I don't think it will take 2 years to get to a recession but it could.

But I feel pretty confident in saying, baring a massive spike of income inflation, we will be revisiting the current housing price level on the way back down.

If you are buying and don't have 6+months of savings to make it through a job lose . . .you shouldn't be buying.  Plenty of 2017 quotes and data out there.  Housing has increased way faster than incomes.

Edited November 14, 2017 by JoCa

[JoCa]

More data for you:

https://www.themaven.net/mishtalk/economics/debt-deflation-setup-credit-card-defaults-and-subprime-auto-delinquencies-rise-iA4oa13Oh06vhe6aFIzb0Q

The first thing that happens is people stop paying credit cards . . . why b/c it's the easiest one to stop paying with minimal consequences.  

We are obviously not in a recession, however there are a plenty of serious warning signs and my guess is over the next 6 months they will get more pronounced.  Recessions don't just "happen", they are a process and if one knows what to look for and how the business cycle works one can know what signs to look for.  The data is slowly but surely degrading.  

[Still_Small_Voice]

I wish I would have said no to getting solar panels on my house.  We have about $33,000 of debt now.  What were we thinking?  Payments on them will likely be over $270 per month.  My electric bill was not even near this per month.  Too expensive and not worth it

[anatess2]

@JoCa, I understand this is your hobby horse.  Whether you have a job or not is irrelevant to the recession.  It doesn't matter if there's a recession or not, if you have no job, you have no money.

And no, recessions don't happen because people are ignorant.  Recessions happen because... Capitalism.  It's a natural correction.  You don't have to have a degree in finance and economy and statistics to know how to live smart.

Anyway.  Carry on.  But don't expect the regular Joe to follow what you're saying.

[JoCa]

27 minutes ago, anatess2 said:

@JoCa, I understand this is your hobby horse.  Whether you have a job or not is irrelevant to the recession.  It doesn't matter if there's a recession or not, if you have no job, you have no money.

And no, recessions don't happen because people are ignorant.  Recessions happen because... Capitalism.  It's a natural correction.  You don't have to have a degree in finance and economy and statistics to know how to live smart.

Anyway.  Carry on.  But don't expect the regular Joe to follow what you're saying.

?? I never said the bolded; I'm not sure what you are referring to.  

No recessions do not happen b/c of Capitalism, they happen b/c of the Fed and fractional reserve banking; that's it, no more no less.  It used to be that recessions happened due to unforeseen circumstances like a hurricane, drought, etc.  But that is not the case today.  No a recession is a correction due to an unnatural process of excess credit that is unleashed, i.e. we have an entirely fictional monetary system that is backed up by nothing. Just b/c it is fictional doesn't mean you don't need it or can't get real stuff with it.

All you need to know is how money is created, how it is destroyed.  Currently all money is created by debt, full stop.  Everything runs on credit and consequently when the credit well slows down or stops, recessions happen.  If the Fed allows the creation of credit to go on too long without stopping it you end up with bubbles or massive inflation.  While banks and the fed can control to a large extent the flow of credit, they can't control where it goes. 

And if you want to get wealthy in this life, the best thing you can figure out is where the money will go before it gets there and to get out before the tide goes out.  All I'm saying is that now is not the time to be jumping into massive debt; now is the time to be paying it off.  When the recession hits, that is the time (if you have a job), to go on a spending spree.

To the 2nd bold, no you don't need those things, but if you aren't aware of how the monetary system works nor what is going on right now and what will come in the future shortly it's going to be real hard to ever become financially independent . . .which is exactly what the whole system is set up to do-extract wealth from the little peons all the while the fat cats get more and more.  It is no coincidence that the rich get richer and the poor get poorer (baring technological increases); the system is set-up to do that.

I have sympathy for Occupy WallStreet, wrong tactics and wrong people to blame-but they were on the right track as far as the symptoms go.  There is a reason why the 1% are the 1% and outside of a few outliers it has very little to do with how hard they worked.

[anatess2]

14 hours ago, JoCa said:

?? I never said the bolded; I'm not sure what you are referring to.  

No recessions do not happen b/c of Capitalism, they happen b/c of the Fed and fractional reserve banking; that's it, no more no less.  It used to be that recessions happened due to unforeseen circumstances like a hurricane, drought, etc.  But that is not the case today.  No a recession is a correction due to an unnatural process of excess credit that is unleashed, i.e. we have an entirely fictional monetary system that is backed up by nothing. Just b/c it is fictional doesn't mean you don't need it or can't get real stuff with it.

All you need to know is how money is created, how it is destroyed.  Currently all money is created by debt, full stop.  Everything runs on credit and consequently when the credit well slows down or stops, recessions happen.  If the Fed allows the creation of credit to go on too long without stopping it you end up with bubbles or massive inflation.  While banks and the fed can control to a large extent the flow of credit, they can't control where it goes. 

And if you want to get wealthy in this life, the best thing you can figure out is where the money will go before it gets there and to get out before the tide goes out.  All I'm saying is that now is not the time to be jumping into massive debt; now is the time to be paying it off.  When the recession hits, that is the time (if you have a job), to go on a spending spree.

To the 2nd bold, no you don't need those things, but if you aren't aware of how the monetary system works nor what is going on right now and what will come in the future shortly it's going to be real hard to ever become financially independent . . .which is exactly what the whole system is set up to do-extract wealth from the little peons all the while the fat cats get more and more.  It is no coincidence that the rich get richer and the poor get poorer (baring technological increases); the system is set-up to do that.

I have sympathy for Occupy WallStreet, wrong tactics and wrong people to blame-but they were on the right track as far as the symptoms go.  There is a reason why the 1% are the 1% and outside of a few outliers it has very little to do with how hard they worked.

Sigh.

Like I said... all this becomes noise when you're buying a HOUSE.  You don't just buy a house because, Oh, what a nice thing to have a house.  At least not in the OP's case.  You buy a house because YOU NEED ONE.  And that's just fine.  Because it doesn't matter the market when you're buying a collateral for the long haul.

For example.  I bought a house at the high end of the cycle.  I have X mortgage which is fine because I planned for X mortgage.  It is only not fine if I can't sell the house for how much I bought the house for because then I'll have lost money.  But since I am raising a family in this house so I'm not planning on selling this house ever - it's probably gonna get handed down all the way to grandkids and such - It doesn't matter much that I bought the house at the height of the cycle.

Now, when is this a problem.  This is a problem if I bought the house for more dollars than is wise.  The cycle affects income.  So, if one loses their job and they have to find a lower paying job because of the recession, then they're gonna be upside down on the budget.  These contingencies are part of home ownership.  You don't buy a house for more than you can comfortably pay with the risk of job loss, etc. regardless of the economy.

Edited November 15, 2017 by anatess2

[mdfxdb]

This is the weirdest thread ever.....

OP manages to pay off a 6 figure home in a few years.  Good for him (passive brag?)

OP prays and gets confirmation that it is ok to go into debt.  God / spirit confirmed this is ok.  (passive brag?)

OP justifies the expenditure because he makes so much money and is so frugal. (passive brag?)  I find this interesting because a $200K mortgage for 15 yrs at 3.25% is about $1,400/mo at 26.4% of OP net income means OP is taking home $64,000 per year more or less.....Which means OP is living off of less than half of his take home if he is paying off his house in 5-7 years.   wow........what's for dinner top ramen? Spagetti o's?

OP then takes all of this info to an anonymous web- site asking if we think it is ok, even though he prayed about it and knows it's ok?

Weird.......

Edited November 15, 2017 by mdfxdb

[anatess2]

15 minutes ago, mdfxdb said:

This is the weirdest thread ever.....

OP manages to pay off a 6 figure home in a few years.  Good for him (passive brag?)

OP prays and gets confirmation that it is ok to go into debt.  God / spirit confirmed this is ok.  (passive brag?)

OP justifies the expenditure because he makes so much money and is so frugal. (passive brag?)  I find this interesting because a $200K mortgage for 15 yrs at 3.25% is about $1,400/mo at 26.4% of OP net income means OP is taking home $64,000 per year more or less.....Which means OP is living off of less than half of his take home if he is paying off his house in 5-7 years.   wow........what's for dinner top ramen? Spagetti o's?

OP then takes all of this info to an anonymous web- site asking if we think it is ok, even though he prayed about it and knows it's ok?

Weird.......

Hey!  If you've managed to pay off a mortgage and own a house free and clear.  You have license to brag.  Passive or otherwise.  Stop projecting your deficiencies onto this thread.

Whew.  I've been playing mother all day today.  Why not here too, eh?  Behave children!  <where's that dancing man emoticon TFP used...>

[mdfxdb]

I guess I am deficient.  I'm only a 9, and your husband is a 12.....

which by the way is a lie because there is no such thing as a 12.....

[zil]

23 minutes ago, mdfxdb said:

here is no such thing as a 12

They had to add to the scale when he became a model.

I don't think @person0 was bragging.  I don't think he was asking if we think it's OK (despite the number of people telling him what he already knew about not needing more).  I think he was asking if anyone else had ever experienced revelation telling them to do something which the Church recommends we avoid.  He was looking for a pattern (which he later realized could be found in scripture) that would give him a little more assurance.

[anatess2]

23 minutes ago, mdfxdb said:

I guess I am deficient.  I'm only a 9, and your husband is a 12.....

which by the way is a lie because there is no such thing as a 12.....

You  haven't met my husband. 

 

[JoCa]

4 hours ago, anatess2 said:

Sigh.

Like I said... all this becomes noise when you're buying a HOUSE.  You don't just buy a house because, Oh, what a nice thing to have a house.  At least not in the OP's case.  You buy a house because YOU NEED ONE.  And that's just fine.  Because it doesn't matter the market when you're buying a collateral for the long haul.

For example.  I bought a house at the high end of the cycle.  I have X mortgage which is fine because I planned for X mortgage.  It is only not fine if I can't sell the house for how much I bought the house for because then I'll have lost money.  But since I am raising a family in this house so I'm not planning on selling this house ever - it's probably gonna get handed down all the way to grandkids and such - It doesn't matter much that I bought the house at the height of the cycle.

Look, no one needs to buy a house.  You need a place to live; but that is drastically different than the need to buy a house. And yes, yes it does matter.  The idea that you will live in 1 house for 20-30 years while you raise a family is just not feasible. For some people it is, but for the vast majority of people it is not.  On average people buy a house every 7 years. 

Yes you bought a house at the high end of the cycle and that will impact your eventual overall financial standing.  Yes if you plan and budget for the price, then it is like buying a computer, it shouldn't matter than you bought a computer 5 years ago for 2k when you can buy the same one today for 1k . . .however there is one big difference debt!!!  And your attitude above is why the system is so jacked up, b/c people don't care about debt. 

All they care about is if they can make the monthly payment and that is a recipe for financial ruin.

That's why if you buy a house for cash or have it paid off, where you are in the real estate cycle doesn't matter quite so much.  I agree with you on that point.  But if you have debt, then when you buy matters very much in the real estate cycle.  There are plenty of people who think the same thing (I don't plan on ever selling) then they have a job loss, a medical problem etc. and then they lose the place.

Your reasoning is exactly why the housing bubble was so bad and destroyed so many lives.  People speculated and the people who didn't speculate just "needed a house" and bought anyways instead of assessing if it was financially a good decision.  A lot of people who needed to buy a house in '08 didn't need to buy a house in '11 even though they needed a place to live. 

Edited November 15, 2017 by JoCa

[anatess2]

Just now, JoCa said:

Look, no one needs to buy a house.  You need a place to live; but that is drastically different than the need to buy a house. And yes, yes it does matter.  The idea that you will live in 1 house for 20-30 years while you raise a family is just not feasible. For some people it is, but for the vast majority of people it is not.  On average people buy a house every 7 years. 

Yes you bought a house at the high end of the cycle and that will impact your eventual overall financial standing.  Yes if you plan and budget for the price, then it is like buying a computer, it shouldn't matter than you bought a computer 5 years ago for 2k when you can buy the same one today for 1k . . .however there is one big difference debt!!!  And your attitude above is why the system is so jacked up, b/c people don't care about debt. 

All they care about is if they can make the monthly payment and that is a recipe for financial ruin.

That's why if you buy a house for cash or have it paid off, where you are in the real estate cycle doesn't matter quite so much.  I agree with you on that point.  But if you have debt, then when you buy matters very much in the real estate cycle.  There are plenty of people who think the same thing (I don't plan on ever selling) then they have a job loss, a medical problem etc. and then they lose the place.

Well then that's where we differ.

I guess that's American thinking.

Families live in homes where tradition is established.  Raising a family when you have to uproot them every 7 years is not ideal for family stability.  That's why people have a hard time in the military.  Filipino families live in generational houses.

 

[JoCa]

Just now, anatess2 said:

Well then that's where we differ.

I guess that's American thinking.

Families live in homes where tradition is established.  Raising a family when you have to uproot them every 7 years is not ideal for family stability.  That's why people have a hard time in the military.  Filipino families live in generational houses.

 

I tend to agree, you should have the ideal of staying in a place for a long period of time.  But more than that you need to have the flexibility to go where the jobs are! 

And given a recession, the best thing one can do is pick up and move (even if it is from the north end of town to the south end of town) to where the jobs are.  The people who are smart figure out real quick, "if I lose my job, I'm going to find a job and I'm going to go where that job is located!"  That's the part people don't think about.

And you can't have that flexibility with a mortgage hanging around your neck.