home ownership?

[felice]

I see no reason why a bank should have to lend 100% against an illiquid asset whose value is uncertain (I mean, it probably changes hands once a decade on average). It's not a right to buy a home, nor should it be.

It should be a right to have somewhere to live, though, and forcing people to rent when they'd rather buy (within their means) doesn't seem beneficial to society as a whole. Everyone who can afford to rent should be able to afford to buy an equivalent property - their rent is presumably enough to cover the landlord's mortgage and maintenance costs plus profit.

[Swordfish]

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It should be a right to have somewhere to live, though, and forcing people to rent when they'd rather buy (within their means) doesn't seem beneficial to society as a whole.

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<p>Thank you for so eloquently illustrating the problem.</p>

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Everyone who can afford to rent should be able to afford to buy an equivalent property - their rent is presumably enough to cover the landlord's mortgage and maintenance costs plus profit.

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<div>Mortgages are fixed costs.</div>

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<div>Rent is not.</div>

[felice]

Depends on your personal wants and needs.

Oh, there are certainly legitimate lifestyle reasons for some people to prefer renting. But for people who'd prefer to own a home, I think it makes sense to do so.

Monetarily, if you save $100/mo renting and put that somewhere that it earns 5% per year, over the 30 year period you'll have $89,000. If it's $150/mo you'll have $130,000.

Still much less than the value of the house.

[Tormund Ukrainesbane]

It should be a right to have somewhere to live, though, and forcing people to rent when they'd rather buy (within their means) doesn't seem beneficial to society as a whole. Everyone who can afford to rent should be able to afford to buy an equivalent property - their rent is presumably enough to cover the landlord's mortgage and maintenance costs plus profit.

Why?

Still much less than the value of the house.

Not terribly less, but you also have to consider that the home buyer would have to sell or remortgage the house in order to obtain those funds, thereby becoming a renter anyway. A renter could keep right on renting and have the liquid assets (which would continue to gain interest) to boot.

[Lord of Oop North]

It should be a right to have somewhere to live, though, and forcing people to rent when they'd rather buy (within their means) doesn't seem beneficial to society as a whole. Everyone who can afford to rent should be able to afford to buy an equivalent property - their rent is presumably enough to cover the landlord's mortgage and maintenance costs plus profit.

Not, not necessarily at all. The landlord may be splitting the mortgage of the property through 2 or more tenants.

[Lany Freelove Cassandra]

in regards to the % of the downpayment, mortgages that had a loan to value ratio of greater than 80% were required to have primary mortgage insurance against defaulting.

before I "left" my job, one of the big problems we had was trying to collect the money from these insurers. they should have prevented or at least moderated the default situation for banks.

before the 1960's a 20% down payment was always required. In 1960, before PMI, how ownership was 61%; with PMI after 1961, the rate only increased to 66 in 2000 and someone posted above 68% currently.

You would think with PMI, the percentage of owners would have increased a great deal, but it obviously didn't.

I know the price of the average house is likely much higher after adjusted for inflation now. If the prices could somehow be adjusted, it seems that we could once again go back to a 20% down payment. But since there is no way the cost can be adjusted, there is no way a return to the 20% down payment system.

shit, I think I am rambling again :P

[ThinkerX]

Then again, I'm one of these guys that built his house from the ground up, mostly out of pocket, doing most of the work myself save for a few specialty items I *had* to hire others to do. I spent about 30 grand doing that, about a third of which was a construction loan I paid off inside of a few years. The borough ('county' to most of you) tells me my pad is currently worth about $100,000, give or take a few nickles. So...does that mean I made a good investment? Or is it simply a bizzare fluke?

I'm considering going the same route to build a duplex on another lot I own next door. Figuring $40-50 grand to get it built, again mostly out of pocket, again doing the bulk of the work myself (assuming my back don't give out).

How would Tormunds crew rate that as an investment?

[Swordfish]

Then again, I'm one of these guys that built his house from the ground up, mostly out of pocket, doing most of the work myself save for a few specialty items I *had* to hire others to do. I spent about 30 grand doing that, about a third of which was a construction loan I paid off inside of a few years. The borough ('county' to most of you) tells me my pad is currently worth about $100,000, give or take a few nickles. So...does that mean I made a good investment? Or is it simply a bizzare fluke?

I'm considering going the same route to build a duplex on another lot I own next door. Figuring $40-50 grand to get it built, again mostly out of pocket, again doing the bulk of the work myself (assuming my back don't give out).

How would Tormunds crew rate that as an investment?

Bizzare fluke.

Completely impossible in many areas of the country.

[Lany Freelove Cassandra]

Bizzare fluke.

Completely impossible in many areas of the country.

Not only impossible, but how many people really have those kinds of skills?

[ThinkerX]

Not only impossible, but how many people really have those kinds of skills?

Lots of blue collar types - the ones that keep Home Depot in biz.

Then again, I did grow up building stuff - garages, another house, rebuilt a couple of mobile homes, plus other assorted sheds, cabins and whatnot. I am not a professional - but I do know how to use the tools, build the frames, stand them up, slap on the siding, do the wiring, and if I absolutely have too...even the plumbing.

Fine cement work (properly finished) I leave to the pro's, though I can get the footings and whatnot prepped.

Furnaces...I also leave to the pro's.

I'm about twenty years past my prime for hanging sheetrock, so I leave that to the pro's. I do slap on my own 'mudd' and paint it myself...but my work there won't win any awards - falls into the 'very basic' catagory.

For that matter, I'm about the last person you'd want for interior decorating of any sort. (What are 'clashing colors', anyhow?) I tend to go with cheap, simple, and durable over artistic/complex/expensive.

My work has stood up better to the elements than some of the stuff done by the pro's around here, anyhow.

I have this very strong suspicion that a lot of the places built during the last couple years of the bubble will probably either fall apart or need to be completely rebuilt within the next six or eight years. To me, it looks like far, far too many corners got cut in their construction.

[mor2]

Why?

why everyone who can afford rent should be able to afford it (not necessary true) or why it beneficial to society? because the later is easy, a house provides you with security and independence, while renting is equivalent of washing your money down the drain...

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@ThinkerX, I too did my share of "redesigning and decoration", still making a whole house?! that is out of my league, my compliments to you. still I assume that this skill only applies in low density urban areas, thus not really something we can all do, even if we had the skills.

btw, out of curiosity how did you start something like this, from my experience those city inspector are ruthless and I cant Imagine what invloved in making a detailed construction plan that is up to code(which is kind funny, since my job involves something very similar, thou we got departments of people who triple checks every design I make) .

[Swordfish]

why everyone who can afford rent should be able to afford it (not necessary true) or why it beneficial to society? because the later is easy, a house provides you with security and independence, while renting is equivalent of washing your money down the drain...

is this supposed to be irony?

Given what we've gone through the last 3 years, it's the only rational explanation.

[mor2]

are we talking about the benefits of owning a house vs rent or banks being to liberal with loans and regulations?

[Lany Freelove Cassandra]

are we talking about the benefits of owning a house vs rent or banks being to liberal with loans and regulations?

Unfortunately, they combined over the past 20 yrs.

Bad loans, over priced houses and what should have been "security" turned into a trap for many people.

We considered selling, but would have lost* about 30,000, and our loan was 100,000 less than the "appraised" value when we did our refi, and we were lucky as we found a way to stay in the house, too many were not.

*by lost I meant we still would have still owed 30,000 after selling, losing 55,000 with our downpayment

edit for clarity

[ThinkerX]

@ThinkerX, I too did my share of "redesigning and decoration", still making a whole house?! that is out of my league, my compliments to you. still I assume that this skill only applies in low density urban areas, thus not really something we can all do, even if we had the skills.

Errr...thanx.

I don't see it as anything special, like I said, its something I've grown up doing, and there are aspects of it that I *will* pay others to do for me (finishing cement, furnace installation, hanging sheetrock).

btw, out of curiosity how did you start something like this, from my experience those city inspector are ruthless and I cant Imagine what invloved in making a detailed construction plan that is up to code(which is kind funny, since my job involves something very similar, thou we got departments of people who triple checks every design I make)

Not sure what you mean.

Most of the 'previous' projects were for other people (so and so is putting up a garage, needs help).

With my place, I started looking for land, found one inside city limits without covenants. ('edge of town' rural subdivision)

Drew up a set of plans, took them to an architect, gave him a couple hundred bucks to make the official drawings.

Had a contractor come in to do the site prep - run in city sewer and water, do the base for the pad, put in a driveway, that sort of thing. He had to have the permits from the city for that.

From there, it was just a matter of getting on with laying out the batten boards and strings for the outline of the house, and starting in on the compacting and footings and whatnot.

City did give me a list of what they were looking for with each inspection. Footings, Framing, rough electrical, rough plumbing (those three being the 'triple whammy'), then insulation, and final move in. Didn't have any real serious problems...but again, I've been doing this on and off for my entire life.

Don't know if that helps you or not.

[The Progressive]

Interesting thread. Some thoughts:

1) I think that the desire to own property is universal and isn't uniquely American, despite our wish to think that we're such unique snowflakes.

2) Other countries don't have the equivalent of Fanne/Freddie, but they also have their own housing bubble problems ............. that means that people who blamed F/F for the housing bubble is quite stupid.

3) Another point to show how stupid the anti F/F crowd is that the loans which F/F bought are performing at better than average................ I agree with Shryke that when it's Data vs. Tormund's anecdotes, Data wins. However, I could be persuade though if Tormund could present data that the F/F loans are in the shit.

4) The primary mean by which the government has artificially inflated people's desire to own houses has always been the mortgage interest deduction, which has ironically benefited the middle class.

5) The most effective measure which would have prevented the spread of shitty home-loans, shady loan-approval tactics, and even shittier mortgage-based derivatives would have been the requirement for loan-issuing institutions to keep a large percentage of their home-loans on their own books.

[Tormund Ukrainesbane]

I honestly wish I could provide my data, but it's company info. Suffice to say I have personal involvement in the hundreds of millions in real estate with the gse's. And that's just me, one guy at one company.

[felice]

Not, not necessarily at all. The landlord may be splitting the mortgage of the property through 2 or more tenants.

If the tenants are only renting part of a property, they can only buy part of a property, obviously. That's not a problem; plenty of people own apartments in a multi-unit building.

The one thing that seems to be a huge deterrent just for me personally is uncertainty.

...

Renting doesn't sound so bad.

To me uncertainty is a huge deterrent to renting; I've been kicked out of my home by landlords too many times, which is a nasty drain on time and money (packing, looking for a new place, assorted moving costs)

[litechick]

Thank you Thinker, you comfort me. I grew up in the environment you describe and I have the greatest esteem for people who build one step at a time. However, on this board that is derided as 'bootstrapping'.

For the most part, I feel that I am so far at odds with the general population here that it's probably best to just say nothing.

[MinDonner]

Thank you Thinker, you comfort me. I grew up in the environment you describe and I have the greatest esteem for people who build one step at a time. However, on this board that is derided as 'bootstrapping'. For the most part, I feel that I am so far at odds with the general population here that it's probably best to just say nothing.

No. What is derided here as "bootstrapping" is the assumption that everyone already has the skills and the opportunities to do what Thinker has done, and then castigating them for not doing so (because they're obviously just lazy). But please continue to believe that libruls are just vindictive slobs who hate hard work and love handouts. :thumbsup: