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Former Arlingtonian
Joined: 23 Oct 2013 Posts: 141
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Posted: Mon Jan 23, 2017 3:58 pm GMT Post subject: House prices vs employment |
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Data doesn't lie - don't buy a home when unemployment drops to historic lows!
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Guest
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Posted: Mon Jan 23, 2017 4:57 pm GMT Post subject: |
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The reality is, when unemployment is high, most people don't feel secure enough to purchase a home.
These statistics are great for a 'theoretical person' who is emotionless and looks just at the 'value' of a house.
In reality, you have peer pressure, spouse pressure, fear, greed, kids school, visit a an open house and fall in love with it.. all these emotions which are difficult to control! |
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Former Arlingtonian
Joined: 23 Oct 2013 Posts: 141
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Posted: Mon Jan 23, 2017 5:10 pm GMT Post subject: Yes - emotions drive home purchase |
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EXACTLY! |
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Guest Guest
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Posted: Tue Jan 24, 2017 12:20 am GMT Post subject: |
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It's all very complicated then. Is there ever "long term" job security? |
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admin Site Admin
Joined: 14 Jul 2005 Posts: 1826 Location: Greater Boston
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Posted: Tue Jan 24, 2017 1:06 am GMT Post subject: |
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Guest wrote: | It's all very complicated then. Is there ever "long term" job security? |
Not really. I'd suggest factoring that into your maximum purchase price and leave some cushion for job downtime. Don't overextend - leave some margin for error.
- admin |
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Guest
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Posted: Tue Jan 24, 2017 3:15 pm GMT Post subject: |
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Anonymous wrote: | The reality is, when unemployment is high, most people don't feel secure enough to purchase a home.
These statistics are great for a 'theoretical person' who is emotionless and looks just at the 'value' of a house.
In reality, you have peer pressure, spouse pressure, fear, greed, kids school, visit a an open house and fall in love with it.. all these emotions which are difficult to control! |
You can't let your emotions cloud your judgement and make financial mistakes. Buying low and selling high almost always works out in your favor. About 10% of people lose their jobs during recessions and can't find a jobs for longer than a few months. Those unlucky ones are people who never finished college, over 50, low income minorities, have criminal records, etc. If you and your spouse finished college and are under 50, you are very likely to survive most recessions and keep your house, so people like you should take advantage of the downturns to buy. |
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Former Arlingtonian
Joined: 23 Oct 2013 Posts: 141
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Posted: Tue Jan 24, 2017 3:28 pm GMT Post subject: |
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Interestingly, there are lots of employed home owners in Massachusetts who are worried.
Contrary to popular belief we will all be over 50 eventually.
Currently I know of at least 3-5 couples who own homes and are looking for full-time work. All the couples are college educated and have done well in the past. Divorce, layoffs, recessions are predictable and yet completely unpredictable.
Using general rules of thumbs to predict the expected twists and turns of life is insane.
Bottomline - live below your means and have 1-2 years emergency fund accumulated if you are a home owner/or a future home owner. |
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Guest
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Posted: Tue Jan 24, 2017 7:22 pm GMT Post subject: |
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Former Arlingtonian wrote: |
Bottomline - live below your means and have 1-2 years emergency fund accumulated if you are a home owner/or a future home owner. |
Unfortunately, "living below you means"in the current market = buy in horrible town or buy a shack.. and it still wont be cheap |
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Guest
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Posted: Fri Jan 27, 2017 2:08 am GMT Post subject: |
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Quote: | Unfortunately, "living below you means"in the current market = buy in horrible town or buy a shack.. and it still wont be cheap |
Very true. When you are play by the book and not taking any risk, then you are punished badly by rapid inflation that caused by money printing and prolong ultra low interest rate.
If you were living below your means for the past 5 years, you actually lost part of your opportunity to enjoy your means. As whatever money you save, does not equal to whatever purchasing power you lost due to inflation. |
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Former Arlingtonian
Joined: 23 Oct 2013 Posts: 141
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Posted: Fri Jan 27, 2017 3:49 am GMT Post subject: Living below your means is the way |
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Living below your means is a good discipline.
Yes, in hindsight I should have been flipping homes of the last three years and I should have bought $10K worth of Tesla stock in 2012.
Wrong. We know the current real estate boom will turn into a bust. There hasn't been a real estate boom (this is one of the biggest) that wasn't followed by a BUST - NEVER!
I can't tell you it will happen tomorrow or in six months or twelve months. But, just as the sun rises every day - a massive real estate boom turns into a real estate bust that leaves families destroyed and people wishing they hadn't bought that condo. |
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guest Guest
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Posted: Fri Jan 27, 2017 3:17 pm GMT Post subject: Re: Living below your means is the way |
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Former Arlingtonian wrote: | Living below your means is a good discipline.
Yes, in hindsight I should have been flipping homes of the last three years and I should have bought $10K worth of Tesla stock in 2012.
Wrong. We know the current real estate boom will turn into a bust. There hasn't been a real estate boom (this is one of the biggest) that wasn't followed by a BUST - NEVER!
I can't tell you it will happen tomorrow or in six months or twelve months. But, just as the sun rises every day - a massive real estate boom turns into a real estate bust that leaves families destroyed and people wishing they hadn't bought that condo. |
The last bust was -15% from the peak. The next bust will be about the same. You will never get a cheap house or cheap rent in the Boston area. You are the opposite of the realtors who tell us anytime is a good time to buy, but you are just as wrong. Losers rent forever. The best advice is to stop making excuses and look for ways to make more money so you can afford to buy after the next bust. Buying absolutely make sense if you are upper middle class or rich. I know of no millionaires who rent. |
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Guest
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Posted: Fri Jan 27, 2017 3:22 pm GMT Post subject: Re: Living below your means is the way |
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guest wrote: | I know of no millionaires who rent. |
I am one and I do.
Undoubtedly, Robert Shiller is also a millionaire, and he has essentially stated that renting isn't a bad idea.
Mark Zuckerberg rented until recently.
I'm sure there are other counterexamples. This is just off the top of my head. |
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Guest
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Posted: Fri Jan 27, 2017 3:55 pm GMT Post subject: Re: Living below your means is the way |
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guest wrote: | I know of no millionaires who rent. |
I'm one also and rent... but I do own investment property. I look at everything from a value perspective.
Where I currently live, rent is HALF the cost of mortgage+condo Fee+taxes. Makes no financial sense to own unless I believe the bubble in my local market will run for another 5-8 years
The ones being hurt are the middle class, millionaires just make their equity in other ways (save and live in low cost areas, stocks, business, etc) |
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Former Arlingtonian
Joined: 23 Oct 2013 Posts: 141
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Posted: Fri Jan 27, 2017 4:39 pm GMT Post subject: Re: No one knows how big the next bust will be |
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guest wrote: | Former Arlingtonian wrote: | Living below your means is a good discipline.
Yes, in hindsight I should have been flipping homes of the last three years and I should have bought $10K worth of Tesla stock in 2012.
Wrong. We know the current real estate boom will turn into a bust. There hasn't been a real estate boom (this is one of the biggest) that wasn't followed by a BUST - NEVER!
I can't tell you it will happen tomorrow or in six months or twelve months. But, just as the sun rises every day - a massive real estate boom turns into a real estate bust that leaves families destroyed and people wishing they hadn't bought that condo. |
The last bust was -15% from the peak. The next bust will be about the same. You will never get a cheap house or cheap rent in the Boston area. You are the opposite of the realtors who tell us anytime is a good time to buy, but you are just as wrong. Losers rent forever. The best advice is to stop making excuses and look for ways to make more money so you can afford to buy after the next bust. Buying absolutely make sense if you are upper middle class or rich. I know of no millionaires who rent. |
No one knows how big the next bust will be!
In my area I would be paying $9500 /year in real estate taxes. In stead we rent for $2500 and we don't plan to retire in this state so owning makes no sense. Also, there are approximately 5-6 empty homes within 2 miles of my homes. empty foreclosed upon and winterized by the Banks that own them.
Never in my 50 years on the planet have I seen so many empty homes.
Why would there be so much empty homes when interest rates are at a 5000 year low??
For my family situation and area renting is best. During the real estate booms no one can believe you are renting and when the crashes happen everyone says you were so wise to rent.
Over and over again Wall Street/public reinforce to false belief to buy when prices are rising or peaks to avoid missing out. |
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Guest
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Posted: Fri Jan 27, 2017 5:45 pm GMT Post subject: Re: Living below your means is the way |
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Former Arlingtonian wrote: | Living below your means is a good discipline.
Yes, in hindsight I should have been flipping homes of the last three years and I should have bought $10K worth of Tesla stock in 2012.
Wrong. We know the current real estate boom will turn into a bust. There hasn't been a real estate boom (this is one of the biggest) that wasn't followed by a BUST - NEVER!
I can't tell you it will happen tomorrow or in six months or twelve months. But, just as the sun rises every day - a massive real estate boom turns into a real estate bust that leaves families destroyed and people wishing they hadn't bought that condo. |
Don't underestimate the "wife" factor! Every year the frustration will be greater and greater "I want our own home!".. Its not hard to understand why ppl are still buying at these prices... there are so many emotions involved.
To give you an example:
Financially, we do not need to have home to "build equity", we make good incomes and have oversized savings. I could happily rent for the next 10 years as its much much cheaper than buying... unfortunately the wife thinks differently.
She has a finance background and understands value, investments, overvaluation etc. but this all gets thrown out when looking for a "home". "what if the prices continue to appreciate like this for the next 8 years, we will only be able to afford a shack, whilst "joe the receptionist" who bought 10 years ago will have a nicer house than us... etc etc
signs of a bubble for sure, but we know bubbles can run for much longer than we expect |
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