Horray!
Of course, the economy sucks, we are in two wars in a very unstable part of the world, the previous administrations torture of detainees could result in the freeing of more terrorists than any pinko-hugging, liberal hippie ever would, and energy is no where near being solved.
On a different note: Barak Obama does not really want to hear from you, or me, or any of the majority of Americans. There are just too damn many of us, and plenty of us are out of our friggin minds, so really, he doesn't. He wants ideas, and good ones too, though any of those will die in Congress because that's what DC does to good ideas. He will end up dismissing many good ideas as untenable or impractical, and some mediocre to bad ideas will get through for some b.s. reason or other (like "spirit of compromise").
I hope that his presidency will be a dramatic turn around from the past 8 years. I hope that good things come. It will have to be better, but in the end, I anticipate that things won't change as much as I want. But, hey, I'm just one person. Maybe my ideas and notions would not be better for this country. Doesn't change that I have them.
Wednesday, January 21, 2009
Saturday, January 17, 2009
Open letter to sellers and (their) realtors,
I can no more predict the market and its fluctuations over the next few years than anyone else. That said there are things I know:
- The economy is not good now, and no one knows how long recovery will take.
- Home prices will not recover until after the economy does
- Low interest rates now depress future home values by making higher priced homes seem more affordable than they will be if/when interest rates rise.
- Prices now are still high when compared with historical price:rent and price:income ratios.
- Comparables that were sold between ~2006 and summer 2008 are invalid as those sales were in an overinflated/overleveraged market, they can be used only if the seller can acknowledge at least a 10% depreciation from that value and likely 20%+.
- No matter closing price, I cannot expect any house I purchase now to recover value beyond breaking even within 5 years, longer if the economy does not recover.
- I cannot expect any changes/improvements I make to the house to increase its value enough to cover the cost of said changes/improvements.
I want to no longer rent. I want a portion of my monthly payments to be “saved” in equity. I want to have a place where I can work on projects, renovate, garden. I want to be able to work on my car at my residence. I want a place to come home to that is mine. These are the reasons I am buying.
I could be very wrong…I hope I am, but I will not forfeit my future for a house that I expect to drop in value, and I will not increase what I will pay based on artificially low rates, further depressing the future value of the house. I cannot expect to live off my home if trouble strikes so I must have a greater cushion in my budget to weather whatever may come.
Jacob Ketter
Tuesday, January 13, 2009
House Hunting
It's always funny to hear people ask "Is now a good time to buy?" because the answer always seems to be "Yes!" To a certain extent, provided that two specific conditions are met, it really is always a good time to buy. Those two conditions are important, however. The first is that you are going to live in/own the property for an extended period of time. Normally this is at least 5 years, right now it could well be longer.
The second condition is that the buyer must be able to afford the payments. Since this option pretty much eliminates ballooning rate type mortgages, it would have applied even during 2006-7...it's just that many of the people that bought then would have been precluded from buying because the exotic loans were necessary to produce an initially affordable rate.
I'm looking for a house. I've always wanted one, and now that I have a job that pays enough in a market that is getting back to sensible prices, I can afford one. I have known better than to get some bizarre financing option (and now, apparently, banks do too) but I am in a minority of Americans who are good at and enjoy mathematics. I also expected and am glad to have been correct, that prices were inflated beyond what real incomes could support.
At a median home income of $50k/yr (a bit high) after taxes is ~$36k/yr or around $3000/mo. Good banking practices use gross income to figure max payments and for the imaginary middle person here it would lead to <$2000/mo in total debt payment. That would include mortgage, car loan(s), student loan(s), credit card debt, and anything else. A minimum down (3.5%) FHA loan at a very good 5% interest, for a $300k house is $1550/mo without taxes and insurance, which could add between $100 and $700 /mo depending on location/risk/whatever. People were getting loans for more expensive houses on less income that were greater risks.
I like the idea of banks restricting the mortgaged amount to 3x annual income or less. If they were to impose that restriction, no matter what, then housing prices would be forced into a much better place. People would have to save (possibly by building equity in their current home) to front a larger down payment to buy a home that cost over that.
Of course banks aren't restricting like that, and between location and other factors I may have to go over. I'm still going to do my best to stay under 3x, but I've put a limit of 4x. In practice, the real limit comes in monthly payment amounts, which are tax and insurance dependent as well, and I've set a hard limit of 33% with a desire to have total payments be at or under 25% of gross.
We'll see.
The second condition is that the buyer must be able to afford the payments. Since this option pretty much eliminates ballooning rate type mortgages, it would have applied even during 2006-7...it's just that many of the people that bought then would have been precluded from buying because the exotic loans were necessary to produce an initially affordable rate.
I'm looking for a house. I've always wanted one, and now that I have a job that pays enough in a market that is getting back to sensible prices, I can afford one. I have known better than to get some bizarre financing option (and now, apparently, banks do too) but I am in a minority of Americans who are good at and enjoy mathematics. I also expected and am glad to have been correct, that prices were inflated beyond what real incomes could support.
At a median home income of $50k/yr (a bit high) after taxes is ~$36k/yr or around $3000/mo. Good banking practices use gross income to figure max payments and for the imaginary middle person here it would lead to <$2000/mo in total debt payment. That would include mortgage, car loan(s), student loan(s), credit card debt, and anything else. A minimum down (3.5%) FHA loan at a very good 5% interest, for a $300k house is $1550/mo without taxes and insurance, which could add between $100 and $700 /mo depending on location/risk/whatever. People were getting loans for more expensive houses on less income that were greater risks.
I like the idea of banks restricting the mortgaged amount to 3x annual income or less. If they were to impose that restriction, no matter what, then housing prices would be forced into a much better place. People would have to save (possibly by building equity in their current home) to front a larger down payment to buy a home that cost over that.
Of course banks aren't restricting like that, and between location and other factors I may have to go over. I'm still going to do my best to stay under 3x, but I've put a limit of 4x. In practice, the real limit comes in monthly payment amounts, which are tax and insurance dependent as well, and I've set a hard limit of 33% with a desire to have total payments be at or under 25% of gross.
We'll see.
Thursday, January 08, 2009
Ode on the POTUS Departing
would that i could
forgive the conceit
that favors action with inadequate knowledge
but i can't
so i won't
i'll just lambaste the dope
who should have learned some while he was in college
forgive the conceit
that favors action with inadequate knowledge
but i can't
so i won't
i'll just lambaste the dope
who should have learned some while he was in college
Tuesday, January 06, 2009
Happy New Year
I am one of the ~60% of adult Americans who did not make a New Year's resolution. It isn't because I count on failing (as most do) or because I think they are wrong headed, but because I don't feel as though I need the motivation of a resolution to try and improve myself.
Like everyone else on the planet, I am a flawed human being. There are faults I know of and those I don't, those I want to improve and those I really don't see as worth fretting over. The category of faults that I know of and that I want to improve upon is the one that typical resolutions fall under. But resolutions are a temporary thing, and life is daily, weekly, yearly. Nothing that I would resolve to do for a new year is anything that I wouldn't (and don't) resolve to do every day: treat others with courtesy and respect, broaden my knowledge and understanding of the world and the people in it, be healthy with respect to what I eat and activities, and keep a positive outlook and have fun.
Those are things I try and do every year, every month, every week, every day. I don't always succeed. Sometimes I am exhausted physically and mentally and end up eating a bag of chips and half a pizza for dinner rather than cook. Sometimes I get angrily frustrated with our representative government and expend energy labeling the majority of the populous idiots. Sometimes I get despondent about relationships (or lack thereof) and question my choices in life.
Mostly, though, I do fine. I do what I should, and I have far less to complain about than a large number of people in this country and in the world at large.
Like everyone else on the planet, I am a flawed human being. There are faults I know of and those I don't, those I want to improve and those I really don't see as worth fretting over. The category of faults that I know of and that I want to improve upon is the one that typical resolutions fall under. But resolutions are a temporary thing, and life is daily, weekly, yearly. Nothing that I would resolve to do for a new year is anything that I wouldn't (and don't) resolve to do every day: treat others with courtesy and respect, broaden my knowledge and understanding of the world and the people in it, be healthy with respect to what I eat and activities, and keep a positive outlook and have fun.
Those are things I try and do every year, every month, every week, every day. I don't always succeed. Sometimes I am exhausted physically and mentally and end up eating a bag of chips and half a pizza for dinner rather than cook. Sometimes I get angrily frustrated with our representative government and expend energy labeling the majority of the populous idiots. Sometimes I get despondent about relationships (or lack thereof) and question my choices in life.
Mostly, though, I do fine. I do what I should, and I have far less to complain about than a large number of people in this country and in the world at large.
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