Posted on 08/24/2005 6:58:33 AM PDT by austinite
"montly" = "monthly"
That's not exactly diversification since storage is connected to RE and is based on RE. But for now storage should do pretty well as people sell, store their furniture and rent. You can probably get them for a few years while they wait for the RE market to shake out. But after that, lots of luck.
Short term rates (which ARMs are based on) will be held as low as possible while maintaining the "strong dollar" rhetoric. But long term rates could shoot up if the Asians decide to stop the gravy train. Ironically they could do that if they see such low short term rates that they lose long term confidence in the dollar.
We tried to buy a house in Austin and were basically priced out. We found a great deal in a neighboring county that was well within our budget. If our house was in Austin city limits it would be worth 3 to 4 times as much. I think I'd rather just have a home I can afford NOW and not woory about trying to make it our nest-egg.
Here's a question: Could higher fuel costs this winter push a lot of folks over the financial edge?
People around here (northern VA) with modest homes and heat pumps should do ok since our electricity comes mostly from coal, nuclear and hydro. But speculators who bought tract mansions in Loudoun county hoping to flip them might be surprised at their natural gas bills. I don't see any signs of panic yet, but the inventory is very high for this time of year (about 500 new or pretty new tract mansions for sale).
I've looked at blue prints and design drawings for those types of houses (haven't been in one, yet)and they seem horribly inefficient. For instance, all of them have a fetish for large entranceways/foyers leading to the second floor. Also, gigantic master suites etc. If you look at the drawings long enough, you're reminded of the old Caddies with tailfins.
And yet home ownership goes up every year.
Only one lesson here, don't be the last guy in.
"The US homeownership rate reached a record 69.2 percent in the second quarter of 2004. The number of homeowners in the United States reached 73.4 million, the most ever. And for the first time, the majority of minority Americans own their own homes."
What's your point?
I was responding to austinite's comments, particularly "Who cares if the average income family can no longer afford the average home." The facts don't seem to support that contention. Homeownership is at an all-time high and for the first time, the majority of minorities own their homes. There are federal programs to make home ownership more accessible to the average family (see the link).
That's true and in many cases it's a good thing.
However, being of gloomy disposition, I see the dark side. A lot of people have taken out screwy mortgages and a lot of people for reasons of ego or temporary insanity, have bought more home than they can reasonably expect to maintain.
Facts are stubborn things, anecdotal information or emotions (gloomy disposition) aside. An uninformed opinion is just that.
Record levels of home ownership and a bubble are not mutually exclusive. There was, if I recall correctly, record numbers of people buying stocks in the run up to the dot com debacle.
I have read reports indicating that a record number of people are buying homes using interest only loans. Wages haven't increased appreciably to keep up with the rise in cost of the homes. And many of the homes themselves being built are just plain nuts.
See my tagline. I call them homeholders because they don't own anything. The government issues them a "title" that enables the government to collect rent on the property. Many of the newer homeholders that the WH brags about are bagholders in the recent property price runup ponzi scheme. Even inner city prices here (Washington DC) are unbelievable.
I blame television.
Who said they were? Market forces will prevail in the long run.
I have read reports indicating that a record number of people are buying homes using interest only loans. Wages haven't increased appreciably to keep up with the rise in cost of the homes. And many of the homes themselves being built are just plain nuts.
There are various kinds of interest only loans. You can get an interest only conventional fixed rate loan, which has the first ten years interest only and the next 20 principle/interest. If home costs exceed the ability of people to afford them, the prices will go down. That's the way the market works.
And many of the homes themselves being built are just plain nuts.
You are entitled to your opinion. You are not required to buy them.
Government, banks, etc. provide the mortgage loans and guarantees with the houses being used as collateral. It is a business decision. What's wrong with that? Most people move several times during their lives so who cares whether you pay off the house or not?
Many of the newer homeholders that the WH brags about are bagholders in the recent property price runup ponzi scheme.
The government and the banks are the ultimate "bagholders" if the buyers walk away. Frankly, I don't understand what the fuss is all about. People buy stocks, bonds, jewelry, antiques, etc. as investments. There is a risk involved. I bought my house in 1979 and it has increased in value almost six times. Another investment property in a different market has only increased three times its value since 1984. If I had it to do over again, I would have bought in a different market.
Even inner city prices here (Washington DC) are unbelievable.
Not really. They will continue to go up with the gentrification of the city and the increased commuting times involved in living in the suburbs. Housing values in DC will continue to rise along with those inside the Beltway. The further out you go, the cheaper the prices. Montgomery (Maryland) and Fairfax (Virginia)counties are among the top ten in the country in terms of household income. Unemployment is very low and the USG makes the area almost recession proof.
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