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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: XoFruitCake who wrote (67432)	11/28/2006 6:00:59 PM
From: Tradelite	Respond to of 306849

My short answer to your first two questions....YES. Convince me I'm wrong. (That will be hard--I've been thru severe housing downturns, which are now mere memories.)

To: XoFruitCake who wrote (67432)	11/28/2006 6:04:49 PM
From: Think4Yourself	Read Replies (3) \| Respond to of 306849

Owning a home isn't even usually a great investment long term. It most certainly isn't the investment most Realtors claim it is. After you factor in the interest paid on the mortgage, the insurance, the taxes, the utilities, the maintenance, the risk that the area could go downhill, your closing costs, and the commission to the realtor on the sale, you are lucky to keep up with inflation. The only way you can win is if you are living in the house or if prices skyrocket the way they did the past few years (those days are long gone). If it is an investment home you are probably going to lose if you honestly figure in all of the costs. Almost no one is willing to consider all of the costs because it means admitting they aren't as financially clever as they think they are. Investors/flippers are going to lose, and that's before you even factor in that the price of the asset is itself declining. They are paying to hold an asset whose value is declining.

To: XoFruitCake who wrote (67432)	11/29/2006 1:02:00 AM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 306849

while I agree with your point I want to point out the fallacy in this- The index assumes that a household that can afford to buy a home is spending 28 percent of its monthly income on a 30-year-fixed-rate mortgage with a 6.77 percent interest rate, along with property taxes and insurance. Based on this index, only 8.8 percent of homes sold in the East Bay in the third quarter were affordable to households earning the median income of $83,800. A year ago, the affordability index in Alameda and Contra Costa counties was 9.8 percent. 28% ratios are obsolete imho, a victim of the law of large numbers. No double earning couple with 160K income ($13,300/mo) needs 72% of their income for non-housing related "essentials"- thats $9576/mo!!!! (say half of this if they are in a high tax bracket). Thats where these ratios break down and some new analysis needs to be done as to affordability of homes. I remember when I bought my first house a few years ago before I was married, back then they really enforced that 28% rule and it was a JOKE, single people basically had to buy a dinky house and save the rest to "upscale" later. There was no other way. Even if you made 100K, a HUGE amt of money in the early 90s, you could only pay $2.3K mortgage per month, thats all you could qualify for! Those ratios don't really work anymore.