Sunday, September 19, 2010

Ten Reasons to Buy a Home: Houses Are Cheap

Enough with the doom and gloom about homeownership. Brett Arends in the WSJ presents  10 reasons why it's a good time to buy a home.  Reason #1 is that you can get a great deal and Reason #2 is that mortgages are cheap.  In other words, relative to income levels, housing affordability remains at historically high levels (see chart above).  In July, a potential home buyer with the median family income of $60,498 had about 161% of the qualifying income necessary ($37,392) to qualify for a 30-year fixed rate mortgage at 4.9% and purchase the median priced existing single-family home at $183,400, with a 20% down payment.  Monthly payments for that hypothetical home would be only $779 (principal and interest), see details here.    

12 Comments:

At 9/19/2010 10:21 AM, Blogger morganovich said...

just out of curiosity:

where are these mythical $183k median homes?

i grant that my real estate experience is limited to some of the very high end (san francisco, new york, connecticut) but i have not seen a price like that since i was a kid.

SF is nothing like affordable right now. there is surprising little on the market, and the decent stuff is still trading at $900-1000 a foot.

is there something that skews these numbers or am i just really underestimating how much cheap suburban and rural housing there is in the middle of the country?

 
At 9/19/2010 3:58 PM, Blogger Jason said...

Morgan, there are tons of the homes in Detroit. Stop by sometime, you can pick up a bunch of real fix-er-uppers - cheap.

 
At 9/19/2010 4:31 PM, Blogger Ron H. said...

morganovich said... (asked)

"just out of curiosity:

where are these mythical $183k median homes?
"

Here's some prices in your neighborhood - hopefully.

I think Zillow initially shows the city where your internet provider lives. Mine is Charter Cable, in Riverside, CA where the median price is that magic number you asked about, $183k.

Not too far from you, I see that Jerry Garcia's house is for sale. What a hoot. It's out of my price range, but if you or someone you know is a Deadhead, here's your chance.

 
At 9/19/2010 4:38 PM, Blogger rjs said...

19 million reasons not to buy a home

 
At 9/19/2010 9:09 PM, Blogger juandos said...

Funny how Brett Arends didn't offer one intelligent reason to own a home...

Reasons not to own a home:

1) never having to mow a lawn

2) never having to repair or replace a roof or the myriad other problems that come with being anchored to a house

3) never having to pay property taxes

4) never having to pay home owner insurance

5) never having to waste time with zoning nonsense

6) never having to slog to through Home Depot or some similer place

7) never having to worry about a mortgage...

8) never having to worry about splitting up the property with the soon to be 'ex'

9) never having to worry about what to do with a house if you job evaporates

10) never having worry that your town will pull a 'property condemnation' stunt on you so a mall or something equally silly can replace it...

 
At 9/19/2010 9:49 PM, Blogger Ron H. said...

"Reasons not to own a home:"

Hmmm...interesting list, juandos, You make some good points.

Of course even if you don't deal with those things directly, you are still paying those costs if you rent, and your place to live can be yanked out from under you even more easily.

# 8 makes good sense though.

A #11 might be the fairly instant mobility of renting. 30 day notice & adios.

 
At 9/19/2010 10:47 PM, Blogger juandos said...

Ron H. says: "you are still paying those costs if you rent, and your place to live can be yanked out from under you even more easily"...

Ahhh, I looked into that thirty years ago when I moved to Missouri and before I moved here in fact...

Regarding property taxes, the portion of my rent that goes to property tax is considerably less than it would be if I had my own domicile on a piece of property that was the same size of my apartment...

Here in Missouri its quite tough but not impossible to yank one out of a rental property without cause...

I don't think its entirely fair but the onus is on the rental property owner to make the case entirely for pulling a renter out of a multi-family dwelling...

BTW it seems here in Missouri that a village or city has a much harder time condemning a multi-family dwelling for whatever reason versus a single family dwelling....

I don't know all the whys and wherefores about that though but there it is...

 
At 9/19/2010 11:08 PM, Blogger Redbud said...

So five times annual income is how much house people should buy?

 
At 9/20/2010 12:13 AM, Blogger Michael said...

An economist shows a chart that shows housing is grossly over priced and yet says now is a great time to buy.

I wonder if Mark buys high and sells low?

 
At 9/20/2010 1:14 AM, Blogger Ron H. said...

"Here in Missouri its quite tough but not impossible to yank one out of a rental property without cause..."

Ah yes. I was thinking of renting a house vs. owning a house.

 
At 9/20/2010 6:32 AM, Blogger juandos said...

"Ah yes. I was thinking of renting a house vs. owning a house"...

You know Ron H, you bring something to mind I should look into merely to satisfy my own curiosity...

I never considered anything but an apartment (multi-family dwelling) and never considered a house for a few of the reasons I listed...

But now I wonder if there are some major differences?

 
At 9/20/2010 9:30 AM, Blogger juandos said...

Michael might just have a point if this Business Insider article is credible: The 7-Million Housing Shadow Inventory Could Trigger A Price Avalanche

 

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