Agreed. But what downside would there to be to taking what they're willing to offer you?

well thats kind of why we are at, were we are at....

Well, it sounds like Florida is just a shitty housing market in general. The way I see it, your choice is this:

Do you sacrifice equity and flexibility to overpay to buy a house you and your wife may quite like, or do you retain capital and flexibility and overpay to rent a house you and your wife may quite like? Either way, it looks to me like your alternatives will require you some degree of overpayment. If that's the case - and assuming the overpayment is comparable in both scenarios - then the decision should come down to non-financial concerns.


That's the right way to look at it.


Yes, well, you live in a recourse state. So, yes, you are exposing much less of your capital to risk, but you're also introducing all your other assets to risk where before you weren't. I'm pretty sure that recourse laws still apply even if you use one of those federal home ownership programs, but I'm not for sure on that. Look into it, and if it turns out that federal programs shield borrowers from recourse laws, it could make some sense.

See how terrible the incentives are here?

Basically for me, my thought is that home ownership is not an investment at this point. Its like buying a car right now.

Unless you are buying a home you see yourself in for 20 years to raise a family....

Good stuff as always, guys.

FWIW, I'm renting a house for less than $1,000 which only happened because A) it isn't the greatest neighborhood ever, not ghetto, but not exactly where I want to be for the next ten years, B) it's small and C) we're renting from old people who have owned the house for like 50 years. We looked at (rental) houses for like a year w/o finding anything halfway acceptable within $500 of that. The problem comes when we want to move on and up to a better house/neighborhood. But we're both very content right now so I'm not stressing it. Now I have intelligent answers though for when people try to pressure us to buy a house. Why do friends feel the need to do that? Along with saying we should have kids lol. Guess it's cuz we're such a good looking couple.

WASHINGTON - The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.

High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.

"We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's in New York.

The National Association of Realtors reported Thursday that sales dropped 4.8 percent to 4.91 million units in 2010. That was slightly fewer than in 2008, which had been the weakest year since 1997.

The poor year for sales did end on a stronger note. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units in December, the best sales pace since May and the 12.8 percent rise from November was the biggest one-month surge in 11 years.

Gains in mortgage rates may have spurred some fence-sitters to buy homes in December before rates moved higher, analysts noted.

The increase was an encouraging sign after a dismal year for home sales, said Mark Zandi, chief economist at Moody's Analytics. But he cautioned against raising expectations for a rapid recovery in housing.

"The job market is still very weak, and unemployment is very high. Until we get more jobs, people will be reticent about buying homes," he said.

Zandi said home prices would fall another 5 percent this year. Sales of previously occupied homes would likely exceed 5 million. That's a slight improvement from last year, he said, but it will probably take until 2013 or 2014 for sales to reach a healthy level of 6 million units a year.

Home sales will benefit from an improved hiring market. Many economists predict employers will double the number of jobs added this year compared with 2010. A reason for more optimism is a decline in the number of people applying for unemployment benefits over the past four months.

Last week, applications fell to a seasonally adjusted 404,000, the Labor Department said. That followed a spike in applications in the previous week, which is typical after the holidays end and employers let temporary workers go. Even with the holiday bump and this past week's decline, the latest figures were only slightly higher than the 391,000 level reached last month — the lowest in more than two years.

Fewer than 425,000 people applying for benefits is considered a signal of modest job growth. Economists say applications must fall consistently to 375,000 or fewer to substantially reduce the unemployment rate.

Still, the unemployment rate is not expected to fall much below 9 percent this year. And the housing market cannot fully recover until the glut of foreclosed homes is cleared.

Last year, a record 1 million homes were lost to foreclosures, and foreclosure tracker RealtyTrac Inc. predicts 1.2 million more will be lost this year.

Foreclosures or distressed sales such as short sales — when lenders let homeowners sell for less than they owe on their mortgages — are forcing home prices down in many markets. That has made it difficult for some potential buyers looking to upgrade, because they would have to accept less money to sell their current home.

Even historically low mortgage rates have done little to boost the sales.

The average rate on a 30-year fixed mortgage rose to 4.74 percent this week, Freddie Mac said Thursday. That's up from a 40-year low of 4.17 percent in November. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent last week. That's nearly half a point higher than the 3.57 percent rate in November — a 20-year low.

For December, sales rose in all parts of the country, with the strongest gain a 16.7 percent increase in the West. Sales rose 13 percent in the Northeast, 10.1 percent in the South and 11 percent in the Midwest.

The median price for a home sold in December was $168,800, down 1 percent from a year ago.

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Here's an article to make Kris and Matt feel good.

http://www.jamesaltucher.com/2011/03/wh ... ome-again/

Why I Am Never Going to Own a Home Again
Posted by James Altucher on March 19th, 2011

Many people have said to me in the past month, “I’m going to buy a home.” Or, “What do you think of the idea of me buying a home?” I like the second batch of people. They are my friends and it seems like they are sincerely asking for my advice. And I’m going to give it to them. Whether they meant it or not.

I have some stories about owning a home. One of them is here: “What It Feels Like to be Rich” where I describe my complete path into utter depravity and insanity. The other one is still too personal. Its filled with about as much pain as I can fit onto a page. Oh, I have a third one also from when I was growing up. But I don’t want to upset anyone in my family so I’ll leave it out. Oh, I have a fourth story that I just forgot about until this very second. But enough about me. Lets get right to it.

There are many reasons to not buy a home: [By the way, I also put this in the category of Advice I want to tell my daughters, including my other article: 10 reasons not to send your kids to college.

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. “But its an investment,” you might say to me. Historically this isn’t true. Housing returned 0.4% per year from from 1890 to 2004. And that’s just housing prices. It forgets all the other stuff I’m going to mention below. Suffice to say, when you write that check, you’re never going to see that money again. Because even when you sell the house later you’re just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: “$100,000 R.I.P.”

(you might as well set this cash on fire if you buy a home)

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you’re going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn’t work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

D) Taxes. There’s this myth that you can deduct mortgage payment interest from your taxes. Whatever. That’s a microscopic dot on your tax returns. Whats worse is the taxes you pay. So your kids can get a great education. Whatever.

E) You’re trapped. Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes. So they can’t move away and get new jobs. Job salaries is a function of supply and demand. If you can’t move, then your supply of jobs is low. You can’t argue the reverse, since new adults are always competing with you.

F) Ugly. Saying “my house is an investment” forgets the fact that a house has all the qualities of the ugliest type of investment:

1. Illiquidity. You can’t cash out whenever you want.
2. High leverage. You have to borrow a lot of money in most cases.
3. No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.

Personal reasons to not own a house. [Also, Follow me on twitter. ]

A) Trapped, part 2. Some people like to have roots. But I like things to change every once in awhile. Starting March, 2009 I was renting an apartment directly across the street from the New York Stock Exchange. It was fun. I’d look out the window and see Wall Street. How exciting! Before that I lived in The Chelsea Hotel with Chubb Rock. Last year we decided to relax and move a little north. Now I look out the window and see the Hudson River. And its quiet and I can walk along the river in the morning with no noise. It took us two weeks to pick a place and move. No hassles. I like to live a hassle-free life.

(click for my favorite Chubb Rock song)

B) Walls. You can’t change the walls when you rent. A lot of people seem to want to tear down walls. Or paint them. Sometimes when you rent you can’t do these things. Well, make sure you have a landlord that lets you tear down walls. There must be some ancient evolutionary tic that makes us want to tear down walls or put nails in them or paint them. I don’t get it. I like the walls to stay right where they are.

C) Rent. People will argue that the price of the mortgage, maintenance taxes, etc is all baked into the price of rent. Sometimes this is true. But usually not.

D) Psychology. Look at your personal reasons for wanting to own. Do you feel like you can’t accomplish something in life until you own a house? Do you feel like its part of getting married and “Settling down”, i.e. creating a nest for your future children? For you, is it a part of becoming an adult. Is this what your parents taught you? Examine the real reasons you want to own and make sure they are coming from a good spot in your heart.

E) Your time. Do you really want to spend all that time working on your house? Is this where your time is best spent towards creating a happy and fulfilled life for yourself?

F) Choices. I feel when I rent I always have the choice to leave. To live wherever in the world I want whenever I want. Adventure becomes a possibility even if I never take advantage of it.

G) Stress. For me (not for everyone) owning a home equals stress. I saw what my parents went through at their worst moments owning a home. I saw what I and others went through in the Internet bust when I first owned a home. I saw what people went through in 2008. People were killing themselves. I don’t like that sort of stress. This is how I deal with stress.

H) Cash is king. I like cash in the bank. I like having access to it. I don’t like it all tied up in one illiquid investment. I want to fill a bathtub with all the dollar bills I would’ve used as a downpayment on a house. I want to bathe in that bathtub. I’m going to do that later today in fact.

By the way, this is going to sound like a contradiction: but I think housing is a great investment right now. I think housing prices have gone down far enough and I can list the reasons why housing as an abstract investment concept is going to go higher from here. But I don’t like to write about investing on this blog. Suffice to say there are many stocks you can buy, with leverage if you want to take advantage of the rise in housing. But I’m never going to buy a home again. And sit there in the middle of the night thinking, “why the hell did I do this to myself again.”

In the Tampa Bay area, there are a pretty good amount of foreclosures, as well as short sale opportunities. I have seen rental signs for 3/2/2 houses for as little as $800 a month.

We currently have our house up for sale, just because I would sell if we got our price. I'm not planning on moving, or looking for another house...it just has a For Sale sign in the yard.

If I sell it, I will probably buy another house...a little bigger than we have now, but I'm not holding my breath.

I think I read somewhere that one in every five or six houses in Florida is vacant now. If so, that's nuts.

I read, at some point, that Florida was second in the nation in foreclosures....with California being #1.

Has anyone here ever owned a rental property?

I own a condo in South Beach that has turned out to be a great investment thus far..I can hardly keep up with the rental requests..That being said, I dont think I will own a home to live in for a very long time if ever..selling our place in NY was a piece of cake but only because people want to live there..

Yes. I have had decent luck. Only been really screwed once, and the security deposit covered most of the problems, since I did the work myself.

In the right area, at the right price, I would certainly consider doing it again.

I have an extra house that's on my property that I just rented out.

Where were you in '03, pal?

I've been toying with the idea of buying a rental property. I'm just afraid of the extra stress that would involve.

I think it comes down to whether or not you could cover the second payment, if need be....

If the house setting empty for more than a month is going to put a financial burden on you, I wouldn't suggest it.

I keeping think that at some point we are going to have inflation and that buying a second house now will make the mortgage payments easier in the future. Or I could be letting my economic ignorance shine again.

I heard the same stat, 20%.

That's not an issue for me. I'm more concerned about the hassle of finding renters, repairing crap, etc. And if I decide to go with a property manager, finding a good property manager... And all the legal crap like setting up a corporation, etc.