House buying, jesus christ.

[unchainedghost]

Daly and abrown are some smart motherfuckers up in here.

Totally agree with the mortgage should equal or les than your current rent. And counting on deductions to justify spending a little more is a bad decision.

Im grateful to them both, they have laid down some highly educational science.

Im curious why you think counting on deductions is a bad decision btw. Assuming they exist, that is. Obviously if a CPA says "yeah youre not saving shit on deductions" then the math changes on the spot.

Just for the reason daly said in one of his posts. Political/city/property taxes change. It's safe to assume they will gradually go up/people in office change/ shit always gets more expensive. They could greatly reduce one or more of the angles you are counting on to pay for the mortgage.

[sonatine]

Right, duh, sorry.

Im still digesting a lot of whats been said so far.

[Pooh]

Mortgage deductions are not going away anytime soon and you will most likely be grandfathered if they do imo. There are posters with more knowledge than me but look at the clusterfuck going on in the government now...getting rid of the mortgage deduction would be major political.

[sonatine]

Mortgage deductions are not going away anytime soon and you will most likely be grandfathered if they do imo. There are posters with more knowledge than me but look at the clusterfuck going on in the government now...getting rid of the mortgage deduction would be major political.

Yeah its not a binary equation.

One year its 15%, the next its 35%, you just never know. But you're right, its not going away. I really want a conservative estimate of worst case scenarios as well as some figures on deductions vs offset, and although thats clearly a convo for me and my CPA, its an area that a lot of people here have experience with tuning clearly.

[sonatine]

Ryback_feed_me_more: You could always move to Florida dude. No State Income tax just sales tax, But Id be wary they fucking shoot people randomly down there.

Whats funny is I love Florida, my girl and I half-joke about retiring there constantly.

But no steelhead, no salmon drops it down the list quite a few slots.

[abrown83]

The government shut down, especially if we were to default, will not help anyone.

Prices may drop or flatten but only because rates will go through the roof...and rather quickly.

I don't think that is actually going to happen.

I would say we are in one of the best buyer markets and if you don't buy sooner you could be looking back and smashing your head realizing what you missed out on.

I locked in last year at 3.25% on a 30 year fixed.....LULZ! I will never pay my house off early.

I can get a better return on 30 year Treasury Bond, let alone Stocks.

Please dont take this as me being argumentative because clearly youre light years ahead of me on this, but one thing I hear repeated is the concept of micro-markets. Example; right now, in Vancouver Washington, there are very few units on the market relatively speaking and the ones that are have been overpriced up to 20% because its such a competitive market. This is not the case across the board, its just that in this particular part of the country the market is really competitive with a lot of people buying (a great many of them flipping as well), so housing prices are stupid crazy inflated for homes matching certain environmental profiles.

So in terms of interest rates, yeah Im sure its a good time to get locked in, but the sum commitment at the end of 30 years between a 225k mortgage on a 275k home at 5% and a 250k mortgage on a 300k home at 4% is something like 540k vs 530k. If I was going to live there the full 30 years, thats kind of a coin flip ultimately, its a difference of less than $30 a month. But if Im looking to sell the property after 5 years, that 25k potential profit from buying when the price is low can be the difference between walking away with a down payment on a new home or breaking even (or possibly losing money).

Again Im just riffing here, not saying youre wrong or that I understand _anything_ better than you, just comparing notes.

You are introducing a third unknown variable into the equation with your micro markets that can have a lot of effect on numbers. I think it would always be better to move ahead of where everyone else is going to want to be in 10 years but that may be harder to figure out than you think (especially when you are new to a market as there may be something that you didn't account for).

I am going to give you some more information in aiding your decision making:

Historical Interest Rates we have artificially propped up home prices by keeping interest rates low.

Long-term home values can't out pace the growth of the economy. Now growth of the economy isn't just economic growth it factors in a few things, in our case the long term devaluation of the dollar, but I think with a little critical thought you can quickly come to realize why home values can't outpace economic growth. Now that being said inside of that long term trend will always exist these micro markets you speak of and there may be some potential.

If you are already going to spend money on fixing it up, why not buy a foreclosure or short sale in need of fixing up? In some places there are even government grants and 0% interest loans you can get to fix up a place. You might be able to get a great deal on a property and pay to fix up the kitchen that you were already going to change.

For every 200,000 in mortgage, every 1% interest rates goes up costs you $50,000 on a 30 year loan. I hate interest and you should too. It is what I like to call the "Poor Tax".

Lastly and most importantly, what is the fundamental reason of home ownership? (Most people are going to answer this incorrectly)

 

It is an asset that can be mostly shielded from rapid inflation. If we were to experience a late 70's, earlier 80's inflation rate, rent could double with in five years and your pay very well may not. Having a fixed mortgage payment provides you quite a bit of coverage in case of rapid inflation. Everyone should have some form of inflation protection in their asset allocation. Owning a house is one of the best forms of inflation protection out there.

[sonatine]

That post.. is a master class. Thank you.

Honestly every single one of your posts, Daly's too, have forced me to re-examine my position and expectations. And thats frankly amazing, thank you both.

Regarding the forclosed/fixerupper, nothing is off the table. One problem we have in north Oregon and only slightly less so in south Washington, is there are literal packs of developers who snatch up every undervalued house on the market, renovate, flip. Im seeing less of that in the more rural areas but rural areas in the above neighborhoods are simply too isolated for me.

But I love the idea of rebuilding/remodeling/renovating, I just didnt see many viable options in the (extremely small) sample size I checked out, but clearly I need to really investigate that avenue, it smacks of success.

[tony bagadonuts]

Sonatine...Sonatine...what I have I ever done to make you treat me so disrespectfully?

If you'd come to me in friendship, then the scum giving you these mixed messages would be suffering this very day. And if by chance an honest man like yourself would make enemies then they would become my enemies. And then they would fear you.

[Daly]

Mortgage deductions are not going away anytime soon and you will most likely be grandfathered if they do imo. There are posters with more knowledge than me but look at the clusterfuck going on in the government now...getting rid of the mortgage deduction would be major political.

Yeah its not a binary equation.

One year its 15%, the next its 35%, you just never know. But you're right, its not going away. I really want a conservative estimate of worst case scenarios as well as some figures on deductions vs offset, and although thats clearly a convo for me and my CPA, its an area that a lot of people here have experience with tuning clearly.

Step one - go to any online mortgage calculator and enter in all the information you know about the terms of buying your potential home. When you run the calculator have it show you the full amortization and zero in on all the 2014 months. Your payment will be the same every month but it get broken down by interest and principal. Add up all the interest paid in 2014.

Step two - go to last years tax return and find out what your total deductions were. Its probable that you had a standard deduction of ~$6,100.

Step three - take the total interest paid and subtract 6,100. that's your increase in deduction (although you could add donations and a bunch of other deductions that would be worth claiming, but lets keep it simple). Now go back to your tax rate you paid to Uncle Sam last year. Tax rate X increase to deduction = a rough estimate of total tax savings in a year due to a mortgage deduction.

[Daly]

Mortgage deductions are not going away anytime soon and you will most likely be grandfathered if they do imo. There are posters with more knowledge than me but look at the clusterfuck going on in the government now...getting rid of the mortgage deduction would be major political.

This is worthy of a thread of it's own. While I do think you are right about there being no changes in the immediate future I suspect we will see some very material changes to the tax code in this country in the next 3-10 years. All you have to do is look at the current govt shutdown/debt ceiling situation for more then 15 seconds and have a hard look at the "income" statement and balance sheet of the country and it becomes an undeniable fact that spending will go down, taxes will go up or money printing/inflation will take hold (or a combination of the three).

All the BS above aside - if you need to count on a tax rebate equivalent of "X" to make a mortgage doable and said deduction could go away in the next handful of years.... that's something you should consider.

[sonatine]

.... that's something you should consider.

Duly noted, absolutely.

Im going to have to be patient, put together a bigger down payment, find a more attractive loan program than FHA, and probably make a serious effort at finding a home I can sink an improvement loan into later on.

Ill check the Fannie Mae foreclosures as well. I looked at the available units online around Vancouver and thought they were fucking hideous to the last. Maybe the ones further north are more attractive..

[sonatine]

Lastly and most importantly, what is the fundamental reason of home ownership? (Most people are going to answer this incorrectly)

 

It is an asset that can be mostly shielded from rapid inflation. If we were to experience a late 70's, earlier 80's inflation rate, rent could double with in five years and your pay very well may not. Having a fixed mortgage payment provides you quite a bit of coverage in case of rapid inflation. Everyone should have some form of inflation protection in their asset allocation. Owning a house is one of the best forms of inflation protection out there.

the 'a' in 'abrown83' stands for absolute fucking legend.

[Sanlmar]

Imagine someone from the future telling you about 2019/20 monetary expansion in 2013. Just try.

That was a hell of a post in retrospect

[simpdog]

throwback to the days when PFA had some useful posts and it wasn't quit the dumpster fire.

abrown where you at these days?

[garrett]

throwback to the days when PFA had some useful posts and it wasn't quit the dumpster fire.

abrown where you at these days?

didn't you get the memo, everyone's a dupe

abrown probably still here posting, just unbeknownst to you lol, I wouldn't know that about him or if hes even RIP so excuse me if so but over time ive realize. You cant take too much too seriously online right.

[Forum Wars]

Very valid bump today; I was considering creating a housing thread, but this one is good for showing how different 2013 is from 2022.

One thing to consider: real estate and stocks should be your two pronged strategy to build wealth. Real estate and stock. Notice no NFTs in there.

EDIT: Oh, since I have the time, I plan on playing around with some crypto and NFT shit (Airdrop mining, anyone?), but any profit churned from these intangible bad boys will go back into R.E. and stocks long term.

[NaturalBornHustler]

I've got a property that I've had since 2016 and I'm HODL'ing it for dear life as it is going to put 250k in my pocket whenever I so choose. Spring is going to be nuts. Prices on SFH are FLAT in my area which is unheard of (except for last winter lol) this time of year. Usually huge drop off in prices with January being bottom. Not this winter, which means when the weather breaks it is going to be bonkers. Going to take years for all the building to catch up and supply chain/labor issues are just going to complicate it even more. Housing starts were cut in half from 2010-2020. If you have a house and need cash I would refi but do not sell. Things will be in sellers favor for years to come.

[Ryback_feed_me_more]

Ryback_feed_me_more: You could always move to Florida dude. No State Income tax just sales tax, But Id be wary they fucking shoot people randomly down there.

Whats funny is I love Florida, my girl and I half-joke about retiring there constantly.

But no steelhead, no salmon drops it down the list quite a few slots.

Dude Florida Deep Sea Fishing cant be beat though.. Trolling off shore in the Gulf about 20 miles out and get hit by a Marlin on your line. Nothing like battling a several hundred pound fish for an hour+ some times.. Also depending on the current limits set for size and such even Red Grouper can be fun just drop lining.

[Pooh]

I've got a property that I've had since 2016 and I'm HODL'ing it for dear life as it is going to put 250k in my pocket whenever I so choose. Spring is going to be nuts. Prices on SFH are FLAT in my area which is unheard of (except for last winter lol) this time of year. Usually huge drop off in prices with January being bottom. Not this winter, which means when the weather breaks it is going to be bonkers. Going to take years for all the building to catch up and supply chain/labor issues are just going to complicate it even more. Housing starts were cut in half from 2010-2020. If you have a house and need cash I would refi but do not sell. Things will be in sellers favor for years to come.

We bought another house in June 2020 just pulled out $200k cash out 2.25% interest only. Pooh likes free money. I disagree we will be in a sellers markets for years to come though. 100% disagree actually. Once the Fed starts raising rates and if the 30 yr mortgage gets to 4.5% it's look out below time. This time won't be different.

[Pooh]

Did Sonatine ever pull the trigger and buy that house 8 years ago? If so, how did it work out?