That's insane

Post #117,881

by drewk

9/15/03 5:05:37 PM

That's insane

We've some very young newly wed friends whose income (combined) is $40,000. They just closed on a $210,000 home.

Their payments have to be well over $1,500/month. Who told them they can afford that?

===

Implicitly condoning stupidity since 2001.

Post #117,883

by imric

9/15/03 5:17:15 PM

Same as rent.

Average rent on a one bedroom apartment here is $800.00 / mo.

If each were living by themselves, the two rents together would be $1600/mo.

Housing is out of control.

Imric's Tips for Living

Paranoia Is a Survival Trait
Pessimists are never disappointed - but sometimes, if they are very lucky, they can be pleasantly surprised...
Even though everyone is out to get you, it doesn't matter unless you let them win.

Nothing is as simple as it seems in the beginning,
As hopeless as it seems in the middle,
Or as finished as it seems in the end.

Post #117,884

by JayMehaffey

9/15/03 5:25:42 PM

People overbuy houses

Young couples often buy houses that are really more then they can afford now, on the theory that in the decades they will spend paying it off their income will go up.

That idea has been really dangerous though in the past decade or so as jobs have become less stable and pay raises smaller. Back in the 60s and 70s people expected to get a pay raise every year that was larger then inflation.

What I find amazing is how often people with no savings and large debts can get that kind of financing. I know people that have used financing to get money to pay the downpayment on their house, something that banks used to never accept.

Jay

Post #117,889

by a6l6e6x

9/15/03 5:49:15 PM

The term "house poor" comes to mind. :)

A big expensive house with no furniture in the living room.

Alex

"Don't let it end like this. Tell them I said something." -- last words of Pancho Villa (1877-1923)

Post #117,930

by mmoffitt

9/16/03 9:38:11 AM

Loans for downpayments? I've one better.

Consider a good friend of mine. Household income: $80,000/year.
First house mortgage: $94,000.
Second mortgage on first house: $22,000.
Line of credit balance on first house: $13,000.

He goes to the bank and they give him $40,000 to buy a lot, then give him another $200,000 to build a new house. He finally sold the first house after making payments on all five of those loans for over a year. He's not out from under yet because his first house sold for $103,000 (yep, he'd borrowed $129,000 on a $103,000 house). Now he's just got a "reasonable" 3 year gross debt.

bcnu,
Mikem

The soul and substance of what customarily ranks as patriotism is moral cowardice and always has been...We have thrown away the most valuable asset we had-- the individual's right to oppose both flag and country when he (just he, by himself) believed them to be in the wrong. We have thrown it away; and with it all that was really respectable about that grotesque and laughable word, Patriotism.

- Mark Twain, "Monarchical and Republican Patriotism"

Post #117,935

by orion

9/16/03 10:05:13 AM

Depends on where they live

property values may be more on the west coast. A house and land that cost $120,000 in the Missouri, may cost $210,000 in California. Maybe that was the cheapest house in their neighborhood.

Here in Missouri the place I live in has higher property values than the place my mother and father live in, which is no more than 10-15 miles away. There are a lot of farms and businesses near my property, and mostly residential near my parent's place. Down a few streets and a mile or so away is a lot of mansions worth a lot. The Behlmann Mansion got tore down to create Behlmann Farms, where they are building new homes. It is not that far away from my house and may send property values up again.

Also they are paying more in property tax and interest, which means they will get a bigger tax refund.

"Lady I only speak two languages, English and Bad English!" - Corbin Dallas "The Fifth Element"

Post #117,938

by jake123

9/16/03 11:10:32 AM

No it doesn't.

It's not the price of the house, it's the ratio of the money they borrowed to their income.

--\n-------------------------------------------------------------------\n* Jack Troughton                            jake at consultron.ca *\n* [link|http://consultron.ca|http://consultron.ca]                   [link|irc://irc.ecomstation.ca|irc://irc.ecomstation.ca] *\n* Kingston Ontario Canada               [link|news://news.consultron.ca|news://news.consultron.ca] *\n-------------------------------------------------------------------

Welcome to IWETHEY!