Home Ownership, Is it for Me?

[David Flores]

For as long as I can remember people have been telling me to buy a house and I can't recall a time in the last ten years when in someone's opinion it wasn't the time to buy a house. In my twenties I could make the excuse that I was too young and didn't want to be tied down to a house or house poor as someone put it, but as I grow older I the idea sounds more appealing to me.

My main concerns are I don't see a house as this worry free investment, like it has been sold for so long. Inflation is growing at a much higher rate than house values. House values are at about what they were ten years ago here in Portland. Houses seem like they can become a money pit in regards to repairs. I can't always depend on making steady money or necessarily as much money as I currently do. It would also mean that making a decision to live in Portland for the foreseeable future. But also realistically I don't see myself being able to afford to buy a house in neighborhoods I would like to live in and could potentially mean moving to suburbia. Also I would be clearing out my savings to put a down payment down and do any repairs necessary.

On the other hand the best thing I can think of is it will be my own house to do what I want with and not have to deal with a landlord or neighbors being right next to you or on top or below you. In the end whether you make a lot of money or not, renting you lose all your money even if rent does seem to be much cheaper monthly. I know there are tax write offs, but I figure property taxes will cancel those out.

I guess what it really comes down to is I have no debt, I live comfortably within my means and I have a lot of money in the bank and I don't want that to change. I see younger people than me with credit card and school debt that make less money, buying houses that I can't afford with no money down and I just don't understand how they do it. I don't want to be the last one to this party, but also don't want to fix something not broken. I know the opinion of people I talk to everyday, just thought maybe someone else would have some wisdom on the subject.

[ShawnPorter]

It's a mixed blessing.

I went five years at my old (rented) place without a rent increase; and then the building changed owners, my lease was rewritten and I had a $100/month rent increase the following two years. Had I not moved I'm sure it would have kept going up and I would have eventually had to move out.

When I bought my house, I put $25k down (which was a kick in the nuts) but quintupled my space, was able to customize everything (hardwood floors, rooms the colors I want, etc) and ended up living the dream.

Then the skylight had a leak.

$1000 out of pocket.

Still... I still pay the same as I did in 2007 and even if I don't refinance I'll still end up paying significantly less than the rent paid by most of my peers.

[Scott R]

Buy, if you have lots of money in the bank grab a 15 yr note they are crazy low right now. You cant count on the market to make you money and burying in the yard is a loosing cause with inflation. I think a home in a good neighborhood is a time tested good investment

[Reyeslv]

If you can remain in the house until the note is paid, then buying makes sense. Of course you have to be willing to part with a large portion of your savings. That's my current dilemma, I don't want to land-lock myself to living in Arizona. Since this housing market here ranks amongst the worst in the country there is still time to wait. Prices are not at the bottom and no need to jump while the prices are still going down. Why blow savings and buy a depreciating asset? We were all taught taught home ownership equals financial stability. I don't feel that is the case these days.

[RoryQ]

I identify with many of the points made in the base post. Except for a snag I almost bought at the absolute height of the property bubble in Ireland. If I had, I'd be neck-deep in negative equity right now. Through blind luck, I didn't, and since then (a number of years at this point) the prices have continued to tumble down and I've kept my powder dry. I don't say that in a gleeful way, because to be honest it's just made me even more inclined to weigh up the real pros and cons of such a big financial commitment.

The outlook for the country and the Eurozone as a whole worries me - anything could happen in the next number of years. I'm not an alarmist, but we're on the cusp of oil shock, a greek default, pressure to harmonise tax rates ... That's this year alone. I kind of like the idea of being able to up sticks and leave the country if it finally gets to the point where my paycheck contains not that much more than our social welfare checks do. I'm part of a 'squeezed middle' that is getting smashed from all sides by austerity measures and vested interests intent on protecting some groups and institutions at the expense of anything else. If it gets to a banana republic stage I'd like to be able to simply emigrate, however drastic an option that sounds. Actually - fuck it, I am an alarmist.

My GF on the other hand - house-hunting as we speak, so who knows where it will end. She agrees with a poster above - that a house in a time-tested area is going to be a good investment come-what-may. I can see the logic there too, and to be honest I don't like the idea of renting if we ever had a family.

One observation - don't know if it's the same in the US as it is here, but really you won't get a mortgage in Ireland past the age of 35 or so - they aren't interested. That means either way I have 4-5 years left to dither tops.

[Reyeslv]

One observation - don't know if it's the same in the US as it is here, but really you won't get a mortgage in Ireland past the age of 35 or so - they aren't interested. That means either way I have 4-5 years left to dither tops.

Never heard of that as an issue but I bet it will be on play now. Why give a 40 year old person a 30 year mortgage?

[JAllen]

do loads of research, proper research not just about what to look for in buying a home but interest rates, property taxes, insurance, how the lender would handle escrow...also is the lender a small company that will be selling your mortagage or are they a stable lender with capital. i really think if you can get a good rate from a local credit union that is the way to go. don't give your money to these corporate banks. if you have no debt you are in a good position but really ask yourself if you want to live in that location for the next 20-30 years.

[David Flores]

@RoryQ I felt the same way in 2007. Almost everyone I knew was buying a house even though house prices had more than doubled. I don't know how many people were convinced that prices were just going to go up, but it just didn't make any sense to me and I am glad went with my gut. But I still see the upside of owning a home under the right conditions.

@Reyeslv, you bring up a good point about buying a depreciating investment. I think it's hard to determine when rock bottom is really going to hit. I have a few realtors that I trust, but I know at best they are making an educated guess. And bottom line they are there to make money and sell houses for people as well as find me a house so they aren't exactly objective.

@JAllen, great point, I have looked at rates and have a local bank, but never thought about investigating the mortgage company.

@ShawnPorter , sounds like it worked out for you quite well.

Thanks for the advice, I really appreciate it.

[ShawnPorter]

David-

It's been ups and downs.

The house was inexpensive because it's in a questionable neighborhood and the owners invested in a major refurb then couldn't sell it.

I put 1/4 of the price of the house down, and every year pay a minimum four extra payments on the principal.

[David Flores]

David-

It's been ups and downs.

The house was inexpensive because it's in a questionable neighborhood and the owners invested in a major refurb then couldn't sell it.

I put 1/4 of the price of the house down, and every year pay a minimum four extra payments on the principal.

Yeah the guy i work for says he chose to get a 30 year loan because the payments would be cheaper and anything you can pay extra will go straight to the principal. There aren't too many questionable neighborhoods in Portland, but my guess is when I do buy it will be farther out of the city than I prefer and will probably need some work right away so I probably won't be able to put all the money i have saved down but still a good chunk.

[Jaycel Adkins]

Two Cents:

Look at the total costs of owning a home, i.e. principal plus the interest you are going to pay on the mortgage. I doubt that when both are added up and you come to sell the home or your descendants decide to sell the home, that you will have made a significant amount of money on it.

Going into debt for the sole purpose of an investment is NOT the way to go. I mean, is the home you are going to buy going to appreciate more than the interest you are going to be paying for the debt to own the home? That's the ONLY question I think that matters in terms of looking at the house as an investment.

But, a house for many people isn't an investment, it's a home. If that's your goal, then go forward. The other stuff doesn't matter, if you are reasonably sure of your ability to make payments for the next 15 to 30 years.

If your goal is an investment, look elsewhere.

But good luck to you, it's a great thing to have no debts, just really think hard (as you obviously seem to be doing) about adding a five or six figure debt.

@Reyeslv Agrees with your major point. In this economy, financial stability isn't in a house, it's in money in the bank. Or better yet, a high margin business.

[David Flores]

Two Cents:

Look at the total costs of owning a home, i.e. principal plus the interest you are going to pay on the mortgage. I doubt that when both are added up and you come to sell the home or your descendants decide to sell the home, that you will have made a significant amount of money on it.

Going into debt for the sole purpose of an investment is NOT the way to go. I mean, is the home you are going to buy going to appreciate more than the interest you are going to be paying for the debt to own the home? That's the ONLY question I think that matters in terms of looking at the house as an investment.

But, a house for many people isn't an investment, it's a home. If that's your goal, then go forward. The other stuff doesn't matter, if you are reasonably sure of your ability to make payments for the next 15 to 30 years.

If your goal is an investment, look elsewhere.

But good luck to you, it's a great thing to have no debts, just really think hard (as you obviously seem to be doing) about adding a five or six figure debt.

@Reyeslv Agrees with your major point. In this economy, financial stability isn't in a house, it's in money in the bank. Or better yet, a high margin business.

The other day I was talking with someone who has owned his own his for about ten years. He pointed out that before he bought his house he rented an one bedroom apartment for about $400 a month. His property taxes are now $400 a month, so even if his house is paid off free and clear, he will still have a $400 payment to make. He doesn't regret his decision and likes having a house and clearly it is much bigger and nicer than his apartment which today would probably rent for $650-$700 a month today, but still something to think about.

[slayer9019]

The other day I was talking with someone who has owned his own his for about ten years. He pointed out that before he bought his house he rented an one bedroom apartment for about $400 a month. His property taxes are now $400 a month, so even if his house is paid off free and clear, he will still have a $400 payment to make. He doesn't regret his decision and likes having a house and clearly it is much bigger and nicer than his apartment which today would probably rent for $650-$700 a month today, but still something to think about.

maybe I've been in the NYC/NYC area too long, but $400, even 650-700 is CRAZY cheap. Hell, even Newark is a tad more expensive, and you couldn't pay me to move back!

[David Flores]

maybe I've been in the NYC/NYC area too long, but $400, even 650-700 is CRAZY cheap. Hell, even Newark is a tad more expensive, and you couldn't pay me to move back!

Yeah if you outside of downtown or some of the trendy districts in Portland it's pretty cheap. I had a one bedroom right downtown next to the university for about $700 3 years ago. I moved just west of downtown off the highway and I pay $860 for a 3 bedroom.

[slayer9019]

Yeah if you outside of downtown or some of the trendy districts in Portland it's pretty cheap. I had a one bedroom right downtown next to the university for about $700 3 years ago. I moved just west of downtown off the highway and I pay $860 for a 3 bedroom.

Damn, and I thought I was getting a deal in NJ for a 1 bedroom 4th floor walkup, with no parking for $1200...

[deaddreamnation]

For whatever it is worth i would do it now while the market is completely thrashed. There are house around my area that are just crazy cheap.

We bought our house about 6 years ago at the height of the boom. At that time the housing market here in athens was ridiculous...anywhere from 175 - 300 for a small craftsman style or a 60's ranch. So we opted to move about 15 miles outside of town where we got a much bigger house with more land ( 108 year old farmhouse) and spent about 132k.

Since the market shit the bed, all of the higher end homes in athens mentioned above are now going for around 170 in town and ours is probably now worth less than 100.

Basically all i am trying to say without a giant back story is how much lower can it go! Buy now while it seems to be at rock bottom...maybe do a 15yr with these super low rates and in 5-7 years you may be sitting a nice profit if you sell.

Hell i am thinking about defaulting and having my wife buy in her name back in athens since it is so cheap.

[Tight-Lines]

This thread pisses me off. Im paying 995 for a third floor studio on Lake Merritt. I cant even see the fucking lake.

[David Flores]

For whatever it is worth i would do it now while the market is completely thrashed. There are house around my area that are just crazy cheap.

We bought our house about 6 years ago at the height of the boom. At that time the housing market here in athens was ridiculous...anywhere from 175 - 300 for a small craftsman style or a 60's ranch. So we opted to move about 15 miles outside of town where we got a much bigger house with more land ( 108 year old farmhouse) and spent about 132k.

Since the market shit the bed, all of the higher end homes in athens mentioned above are now going for around 170 in town and ours is probably now worth less than 100.

Basically all i am trying to say without a giant back story is how much lower can it go! Buy now while it seems to be at rock bottom...maybe do a 15yr with these super low rates and in 5-7 years you may be sitting a nice profit if you sell.

Hell i am thinking about defaulting and having my wife buy in her name back in athens since it is so cheap.

I have known a few people who have defaulted and re bought houses, and it seems to have worked out for them, but seems a little scary for me. Plus doesn't that screw your credit for 7 yrs. I guess it doesn't matter as long as you have your house and all goes well.

The only thing that concerns me is once you sell a house , then you have to go find a new house and if all the prices of houses have went up do your really end u making any money or are you any closer to paying off your house? Probably the guy putting the most pressure on me to buy a house, just found out a house he has been paying on for 10 years and put a lot of money fixing isn't worth a penny more than he bought it for. Both scenarios are pretty lame to me, but on the other hand rent is getting expensive and there just aren't that many places in the areas I want to live in up for rent. When buying becomes more affordable than renting seems like the optimal time to get in on this and that point is almost there.. I just want an affordable house that I can put a little money into from time to time and just live there for the next 40 years.

[deaddreamnation]

Well i had another long rant, but apparently forget to submit it...so long story short...i think if you are looking to stay put for a while...home ownership is a good move..home prices are down, the interest rates may never get this low again for a long time once they start moving up again. I say go for it! better than paying someone else's mortgage.

[David Flores]

Well i had another long rant, but apparently forget to submit it...so long story short...i think if you are looking to stay put for a while...home ownership is a good move..home prices are down, the interest rates may never get this low again for a long time once they start moving up again. I say go for it! better than paying someone else's mortgage.

I think I might have found a house, it's in my price range, has good schools and less than a block from the shop, so hopefully it's meant to be, I just need to get my wife convinced. It has been on the market for awhile, I just never looked at it because from the front it didn't look like much but once i went around back the back yard was huge and I could see how nice everthing was on the inside. If the worst thing I have to do is paint the outside and put in a gate I am in.

[David Flores]

As soon as I posted this, my realtor called back and said their was an accepted offer already on house, but no to worry because they were only accepting cash offers so unless i had 149k laying around I was SOL anyway.

[deaddreamnation]

As soon as I posted this, my realtor called back and said their was an accepted offer already on house, but no to worry because they were only accepting cash offers so unless i had 149k laying around I was SOL anyway.

wow man that blows.

[David Flores]

Meeting on Thursday with realtor in attempt to be more proactive in this endeavor. So hopefully the next one doesn't slip away.

[hgiles]

Yeah, I say buy. Hurt yourself to get it and get a lot of the principle out of the way early. Do it while you're young and earning good money and don't fall into the re-fi trap.

[David Flores]

Had a crazy weekend of looking at houses and even tried to put in a couple offers, but got beat out on some and others just didn't work because the sellers owed exactly what they were asking for the house, so there was no wiggle room. It would have worked out but what they owe is 20K or so more than it's worth. Right now there really aren't that many houses on the market, but my realtor says for some reason March seems to be when people starting deciding to sell homes, so hopefully something will come up soon.

I have concentrated my efforts to the St John's neighborhood of North Portland. While it is not as close to downtown as I live now, it is an actual neighborhood with lots of small businesses, old time barbers, neat parks, and cool bars. One of them even brews beer outside on the sidewalk as you pass by. It will be a little more than living in Suburbia, but of all the real neighborhoods in portland it seems to be the most affordable.