🚀 go-pugleaf

In article <882@sfmag.UUCP> mom@sfmag.UUCP writes:
> A question.  I am a fairly young man (25).  My wife and I both work.
> We are in a fairly high tax bracket.  We are starting to save up for
> a house.  By cutting out a lot of frills (not so many nights out,
> brown bagging it, being careful on major purchases) we are trying to
> save $1000 per month towards the house. . . .
> We estimate it will take about two years or so to save up enough for 
> a good-sized downpayment. . . 
> 
> The question comes in when we consider what to do with the money
> now.  . . .

The advice I've been hearing lately is that you should try to go ahead
and buy the house as soon as you can, as real estate prices tend to
rise faster than your ability to purchase. Prices will not get lower,
and the mortgage interest rate should be at bottom in the next month
or two or three. 

I don't know what prices are like in your area, but assume a $90,000
house/condo with a 90% loan ($81K) and 10% down ($9K). Add $2,000
misc. costs, and you should be able to save this $11K in 10 or 11
months, if your estimates are correct. It's probably the best use of
the money; you get tax benefits from interest deductions sooner.
If you are looking in a higher price range than this, all the better.

You'll have higher a monthly payment because of the higher loan, as well
as having to pay PMI (private mortgage insurance). Some builders of
new projects are providing financing in the 90 to 95% range out here
in California. 

These suggestions may not be appropriate to your particular situation,
but the general advice of trying to buy as soon as feasible should be.

_____
Michael C. Berch
ARPA: mcb@lll-tis-b.ARPA
UUCP: {akgua,allegra,cbosgd,decwrl,dual,ihnp4,sun}!idi!styx!mcb

>
>The advice I've been hearing lately is that you should try to go ahead
>and buy the house as soon as you can, as real estate prices tend to
>rise faster than your ability to purchase. Prices will not get lower,
>and the mortgage interest rate should be at bottom in the next month

This is *not* generally true. In Oregon, prices have been dropping
over the last several years, and I know several people who have lost
money (in the form of equity) as a result. Also, at least recent
national figures have also shown a drop. And although mortgage rates
are at an N-year low, they are still "absolutely" high, eg. just below
levels which used (till the late 70's) to be defined legally as "usury"
in some states (eg. New York).

Pat Clancy
\0-a

In article <1893@hammer.UUCP>, patcl@hammer.UUCP (Pat Clancy) writes:
> >
> >The advice I've been hearing lately is that you should try to go ahead
> >and buy the house as soon as you can, as real estate prices tend to
> >rise faster than your ability to purchase. Prices will not get lower,
> >and the mortgage interest rate should be at bottom in the next month
> 
> This is *not* generally true. In Oregon, prices have been dropping
> over the last several years, and I know several people who have lost
> money (in the form of equity) as a result. 

Some "conventional wisdom" on this subject -- which I can't confirm
from personal experience --

Unimproved land, farmland, condominiums, rental units, commercial
property, townhouses, will all fluctuate in value and drop in
value at times.  Detached single family homes very seldom drop in
value -- there are exceptions: bad locations such as a declining 
inner city neighborhood; houses in a "company town" where the company
might go into a slump -- houses in new suburbs which are constantly
getting re-zoned for unlimited development -- and so on.

A safe claim is "well located single-family detached houses hardly
ever decline in value".  I don't know about the situation in 
Oregon though.  Prices have been firm or rising most places I'm
familiar with.

Many people predict that housing cost will continue to form a
higher and higher portion of peoples total expenditures.
If this is true housing prices can continue to rise faster than 
the overall inflation rate, and even rise during deflation.

steve

>> >The advice I've been hearing lately is that you should try to go ahead
>> >and buy the house as soon as you can, as real estate prices tend to
>> >rise faster than your ability to purchase. Prices will not get lower,
>> >and the mortgage interest rate should be at bottom in the next month
>> 
>> This is *not* generally true. In Oregon, prices have been dropping
>> over the last several years, and I know several people who have lost
>> money (in the form of equity) as a result. 
>
>Some "conventional wisdom" on this subject -- which I can't confirm
>from personal experience --
>
>A safe claim is "well located single-family detached houses hardly
>ever decline in value".  I don't know about the situation in 
>Oregon though.  Prices have been firm or rising most places I'm
>familiar with.
>
>Many people predict that housing cost will continue to form a
>higher and higher portion of peoples total expenditures.
>If this is true housing prices can continue to rise faster than 
>the overall inflation rate, and even rise during deflation.
>

This is simply not true outside of the Bay area. Nationwide, in most markets,
housing has went down the last 18-24 months. This is down in absolute terms,
even before considering inflation. This has been pretty well reported in the
national financial press.

However, you could always believe the "Milionare Maker"