Quote:
Originally Posted by mhays
The portion of a home payment that's principal is another form of savings. Very leveraged savings....you can lose it if you sell in a down market, but it's also common to earn more equity in a year than your combined home-related costs.
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Wait... unless you're doing a 15 year amortization... I assume you're familiar with the amortization schedule for a 30 year loan.
Quote:
Originally Posted by corey
When I hear that people are thinking of moving to less expensive cities like Kansas City to be able to buy a house and that people are buying multiple investment properties in such cities I really think that a housing downturn is just around the corner. This is exactly what happened in the early 2000's, especially in Arizona, Nevada, Sacramento, etc. Also, if you are thinking of moving to Kansas City or Chicago you should get a load of the pathetically low salaries they pay in those cities. I could be wrong, but I don't think prices in Denver are going to go up any more and they are likely to drop by as much as 20% by say 2019. I don't think I would be buying a house now since we are at the top of the market. I did that in 2006 and was underwater for years. But, if you can comfortably afford it and plan on staying in that house for ever it will work out in the long run. You need a place to live right? I definitely wouldn't be buying that "starter home" right now. Also, the strong economy we have right now wont last forever. They never do. It will loose steam sooner or later. Everyone but the realtors (and apparently the Federal Reserve) believe that the slowdown, or even a recession, will start at the end of this year.
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Interesting thoughts. For now it would take at least a gray swan to cause much damage. Fair to say though that they don't ring a bell when that's about to happen.
The RE in AZ, NV and FL were yugely overbuilt including large tracts of starter homes. Nothing even close to that today.
Don't care for Chicago. The state is one downgrade away from junk bond status. Chicago doubled their property taxes which solved a part of their financial problems. Cranes aplenty with nice tall boys being built downtown so Rahm has done a nice job of securing the status of the core city.
I could like the risk in K.C. though. The upside isn't as assured but that's why it may be a good buy. Buy low and sell high is never a bad strategy.
It will take a fairly nasty recession to drop prices in Denver by 20% I'd think; 10% sounds more realistic. Ofc if you're looking at the tippy top of the market 15% may not be all that much so who knows?
It's a lead pipe cinch that some day the worm will turn. The question is how much further up will it go before that happens?