U.S. Unemployment Rate Drops to Lowest Since December 2008

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Originally Posted by oyarde

I honestly doubt the avg American even has a clue what they end up paying on a 100,000 dollar home on a 30 yr fixed rate loan , of any rate by thetime it is done...

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I think the average American is much better informed today about personal finance than they were in 2006. Not hard to see that P&I on a 30 year fixed loan is $449 a month, which is much less than one would pay in rent on a similar home of similar value. Except, in this case, they will actually own their home when it is paid off.

I have the utmost confidence in the average American to think that simple test above through. Naturally, they're choosing to buy homes and take the debt at rates that may not exist for very long. It's the best move one can make, and it's helping to bring the American economy back to life, a win-win.

There has to be jobs to support it and that is never coming back in current climate, best case , stagnation , where almost enough jobs to accomadate those ready to enter.

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Originally Posted by Jordan

If someone offered to lend you $100,000 at a post-tax rate of 2.8% for the next 30 years would you turn that down?

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depends a lot on
1) how much I make now
2) how much I make in the next 10 years
3) what happens if I don't pay back
4) how much other expenses I have

Pre- or post- tax rate doesn't really matter, either I have money to pay back or I don't. I don't make borrowing decisions on the interest rate between 1% and 10%.

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Originally Posted by Jordan

I think the average American is much better informed today about personal finance than they were in 2006.

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That's only because of prophets and geniuses like Ron Paul, Peter Schiff, Alex Jones, Gerald Celente, Webster Tarpley.

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Originally Posted by oyarde

I honestly doubt the avg American even has a clue what they end up paying on a 100,000 dollar home on a 30 yr fixed rate loan , of any rate by thetime it is done...

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What is the cost of not buying? The opportunity cost- what else would have been given up instead. What would you spend every month to rent instead and still have nothing at the end of 30 years vs buying and having a re-sellable asset? Say you could rent a comparable place for $1000 a month. In 30 years you would have given away $360,000.

My own case is special but I purchased a condo for $108,000 less than fourteen years ago and just finished paying it off early. In that time, if I paid the going rental rate of $1,200 a month I would have spent $200,000 and had nothing for it. I can still sell it for over $150,000. (if I took 30 years to pay it off the rental cost would have come to $432,000!)

Zippy, you've got to consider property tax, maintenance costs, mortgage insurance if necessary, home insurance, financing costs, and everything else.

In a lot of cases, renting is still a great financial decision.

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Originally Posted by KingNothing

Zippy, you've got to consider property tax, maintenance costs, mortgage insurance if necessary, home insurance, financing costs, and everything else.

In a lot of cases, renting is still a great financial decision.

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As I have said many times, that gets added to what they charge you in rent too. You don't escape any of it. And you get nothing in return.

If a person does't plan on staying in one place more than a couple years renting would probably be wiser.

Zipp is also in California , real estate is different there than normal places.

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Originally Posted by Jordan

Yeah I've heard this since 2007. At what point will you be wrong?

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You have never heard me predict anything before, because I haven't. I expect the crisis around December of 2014 with a series of increasing pain before then starting halfway into 2013.

Just like anyone who predicts things I may be wrong, but I doubt it. We will see.

The primary factor that gave me a rough idea at a timeframe was QE3, which if it continues at the rate pof $40-$90 Billion per month, lagging monetary pressures would begin to really push at consumer price inflation by mid-2013, and with pressure still coming in prices have nowhere to go but up.

A lot depends on what the Fed does then. If they continue or increase the QE3 deluge unabated at that point, the wider crisis I expect around December 2014 becomes inevitable.

When I was 17 yrs old, I grossed $286.65 per week, good money @ the time, probably around three times "minimum wage"( long time ago ) , I could pay my rent in what I made in a week.Fast forward five yrs , bought my first house , three bedroom , one bath, basement, detached garage on a prestigious street ,nice lot ,38K . I was grossing $364 a week , again , make the house payment with one paycheck.It is , a different world . Kids today @18 or 22 are not going to have the job security I had , are not going to pay the house payment or rent with a weeks pay, are not going to own2 or 3 vehicles that run well that are pd for . Today's prices are for the high earners , not the median income type ,much less the young who wish they were median.

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Originally Posted by oyarde

Zipp is also in California , real estate is different there than normal places.

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Curious- what is the difference between the cost of real estate and rental prices in you areas (anybody?)

Here is a comparison for many places: http://money.cnn.com/2012/08/02/real...omes/index.htm

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NEW YORK (CNNMoney) -- For people who are willing to stay put for a few years, buying a home has become a much better deal than renting in almost every major housing market in the nation.

In more than 75% of the 200 metro areas analyzed by real estate listing web site Zillow, homeowners would reach a "breakeven point" -- where owning the home makes better financial sense than renting it -- in three years or less.

"Historic levels of affordability make buying a home a better decision than ever, especially considering rents have risen more than 5% over the past year," said Stan Humphries, chief economist for Zillow.

The survey was Zillow's first buy-versus-rent analysis, incorporating all homeownership costs, including down payments, closing costs, mortgage payments, property taxes, utilities and maintenance costs, and compared them to rental costs. It also took into account projected home price appreciation and rent increases, as well as tax deductions and inflation.

Zillow's findings support other reports that show that rising rents, record-low mortgage rates and falling home prices have made homeownership a more attractive option.


In some of the metro areas Zillow looked at, home buyers would break even in less than two years.

In Miami, for example, a homebuyer would only have to stay in their home for about 1.6 years for the purchase to pay off, Zillow said.

Homes in the metro area are selling for about 45% less than they were five years ago. Meanwhile, over the past three years, rents have climbed 20%, according to RentJungle.

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Buy vs. rent in 30 major cities



City

State

Breakeven time in years




New York

N.Y.

5.1



Los Angeles

Calif.

4.3



Chicago

Ill.

2.8



Dallas

Texas

2.1



Philadelphia

Pa.

3



Washington

D.C.

3.5



Miami

Fla.

1.6



Atlanta

Ga.

2.5



Boston

Mass.

4.3



San Francisco

Calif.

5.9



Detroit

Mich.

1.7



Riverside

Calif.

2



Phoenix

Ariz

1.7



Seattle

Wash.

4



Minneapolis

Minn.

2.7



San Diego

Calif.

3.6



Tampa

Fla.

1.6



St. Louis

Mo.

2.5



Baltimore

Md.

2.8



Denver

Colo.

2.5



Pittsburgh

Pa.

2.1



Portland

Ore.

3.5



Sacramento

Calif.

3.1



Orlando

Fla.

1.7



Cincinnati

Ohio

2.1



Cleveland

Ohio

2.4



Las Vegas

Nev.

1.7



San Jose

Calif.

8.3



Columbus

Ohio

2.4



Charlotte

N.C.

2.7

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Originally Posted by Zippyjuan

As I have said many times, that gets added to what they charge you in rent too. You don't escape any of it. And you get nothing in return.

If a person does't plan on staying in one place more than a couple years renting would probably be wiser.

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it doesn't matter if it gets wrapped into the cost of renting - you need to consider it to accurately price the cost of home ownership versus renting, and you also must consider closing costs and other fees during the procurement process.

I've done a pretty thorough analysis and found that for my location renting makes more sense now, though I constantly troll housing websites looking for a good deal.