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billryan
billryan
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March 11th, 2023 at 7:07:15 AM permalink
NY has one of the lowest rates of home ownerships.
West Virginia, Alabama, Louisiana, and South Carolina are among the highest.
What might one infer from that?

Sounds like you plan on taking out another loan, based on your house going up in value, so you can "invest" in a bigger, more expensive house.
Sounds like a plan.
The difference between fiction and reality is that fiction is supposed to make sense.
mcallister3200
mcallister3200
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March 11th, 2023 at 7:07:40 AM permalink
One might infer NY real estate is unaffordable or unavailable to a larger percentage of the population or they have a larger percentage of residents that donít want to be there long term. Both true in this case.

This is a silly circular debate where anyone can cherry pick real life anecdotal scenarios to make sense and you guys know it.

For people who WANT to be tied to a specific area for long period of time itís tough to justify the math of not owning if they can afford it. Some others canít imagine WANTING to be tied to a small area for a long period of time if they donít have children. Taking on EXCESSIVE debt because itís theoretically ďgood debtĒ is the trap.
billryan
billryan
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March 11th, 2023 at 7:21:19 AM permalink
Quote: AxelWolf

I thought I read somewhere where that homeowners had a net worth of 30-40 times that of renters. I don't know how that breaks down.
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Don't confuse homeowners with mortgage holders. Until it is paid in full, the bank owns the house.
The difference between fiction and reality is that fiction is supposed to make sense.
gamerfreak
gamerfreak
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March 11th, 2023 at 7:26:21 AM permalink
Quote: billryan

NY has one of the lowest rates of home ownerships.
West Virginia, Alabama, Louisiana, and South Carolina are among the highest.
What might one infer from that?

Sounds like you plan on taking out another loan, based on your house going up in value, so you can "invest" in a bigger, more expensive house.
Sounds like a plan.
link to original post


I would infer that a higher percentage of folks in those states live in rural areas rather than cities.

What exactly is the problem with wanting to move up in housing? Of course the calculation is different if you live alone, but with 2 adults working from home full time and potentially starting a family, a 1200sqft townhouse gets cramped very quickly.
billryan
billryan
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March 11th, 2023 at 8:10:08 AM permalink
I bought my first house in the late 1970s. Interest rates were high, but I forget what rate I was paying. Around seven or eight if I recall correctly. I was the first of my single friends to buy a house and I was quite pleased with myself.
The house was $39,000, worth 42,000 and I put $6,000 down, so I had a twenty-year $33,000 mortgage which with closing costs and points came out to just over $35,000. I paid a few hundred at closing to bring it down to exactly $35,000. The market got hot and I told a real estate agent I'd sell for $50,000. I'd made 14 monthly payments of a few hundred dollars each and was thinking my mortgage must be closer to $30,000 by now so I'd walk away with 20K. That was more than I was making in a year so I was very happy. Only twelve of those payments had gone only to interest so after 14 monthly payments on a $35,000 loan, I still owned almost that same amount. My anticipated profit dropped, especially when you factored in moving twice,taxes, and the realtor's commission.
Home loans are frontloaded so for the first few years you pay for the interest.
I started to do my own research. Buying a $50,000 house with a 5% loan for twenty years ends up costing you double that, plus all the benefits one gets with ownership- taxes, maintenance, landscaping, and the like.
Twenty-year loans used to be the standard, but the banks have very generously raised it to thirty years and offer wonderful instruments like no money down, interest-only loans or interest only, five-year loans because houses always go up in value and you can refinance later.
The difference between fiction and reality is that fiction is supposed to make sense.
Dieter
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Dieter
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March 11th, 2023 at 8:26:08 AM permalink
Quote: billryan

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.
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That sounds like paying around $420 a month for housing rent, which is a number I haven't seen since the early 1990's.
May the cards fall in your favor.
FatGeezus
FatGeezus
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gamerfreakAxelWolf
March 11th, 2023 at 8:49:39 AM permalink
Quote: billryan

The sooner people get over the myth of home ownership, the better. Nothing stifles one's economic potential more than committing to a thirty-year loan on the house at a young age. It's always amazed me that people buy a home for $200,000, spend $350,000 on interest for the loan, sell the house for $400,000 and think they did well.
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They are selling their house and walking away with $400,000.

How much money do you think a renter could get if they sold their box of rent receipts?
gamerfreak
gamerfreak
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March 11th, 2023 at 8:59:28 AM permalink
Quote: billryan

Home loans are frontloaded so for the first few years you pay for the interest.
I started to do my own research. Buying a $50,000 house with a 5% loan for twenty years ends up costing you double that,


How is this a revelation? Borrowing money isnít free, and mortgages are amortized. It sounds like you should have done that research before buying.

I would agree that buying typically doesnít make sense if you are planning on moving in less than 5 years.

Quote: billryan

plus all the benefits one gets with ownership- taxes, maintenance, landscaping, and the like.


And you donít think these costs are built into rent?

When property taxes go up, rent goes up. When interest rates go up, rent goes up. When maintenance costs go up, rent goes up.

Renting does not shield you from these costs, you are just paying them by proxy. And at a premium, since the landlord still needs their cut.
billryan
billryan
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March 11th, 2023 at 10:02:28 AM permalink
Run some numbers.

You bought your townhouse for 150K and its gone up $130K. If you sold it, lets say you walk away with $200K.
That's a nice down payment on your next place but suppose you decide to rent for a while. You said you want more space for a future family so you don't need it now. Your mortgage was 900, plus homeowners insurance, maintenance, snow removal, PMI, etc, etc so your monthly nut is much bigger. Lets call it $1400 but plug in your own numbers. Now think forward ten years. Your kitchen appliances will have some breakdowns, your HVAC will need servicing, your sidewalk may need replacing. All expenses a homeowner has but a renter doesn't. Once you've made these list a few times, you'll get a better understanding of what you are paying to own your house.
If right now, you are paying $1500 a month but are on the hook for any costly repairs, is paying a bit more from a rental really a bad deal when you have your 200K working for you, and enjoying compound interest instead of laying dormant in your equity? If and when you need more space, you move.

In Vegas, it was a no-brainer as my apartment came with a clubhouse, two pools, and two gyms. My cable/internet package was $75 a month, a higher tier than my friend who paid $160 at his house a few blocks away. That had real value to me.
The difference between fiction and reality is that fiction is supposed to make sense.
rxwine
rxwine
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March 11th, 2023 at 10:06:32 AM permalink
Renting doesn't force people to invest any of the extra money they may gain. They can just spend willy nilly if they want. If it did, I'd be interested in the comparison between home owning and renting.
Fair is fair, if unprovable claims are insisted to be true, one should be able to use unprovable methods of debunking.

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