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New Would you recommend against buying now?
I'm looking at buying a four room house in a few months and renting the rooms out to students while I live in one. The plan is to hold onto it for 2+ years, then sell it, find a job in "rural"* Washington near a 4 year college, work for their IT department, and take classes like crazy.

Is this suddenly becoming a bad idea, or are housing prices not going to deflate, and instead we'll see massive inflation alongside stagnating house prices?

* Not Seattle.
When somebody asks you to trade your freedoms for security, it isn't your security they're talking about.
New Housing is a local market.
Don't let his graphs scare you. Make the decision based on what you know about your finances and the local market.

Buying housing can still be a good investment, or it can cause you to lose any hope of being financially secure. It depends on the market, how you buy, and what you plan to do with it.

E.g. It's probably a very, very bad idea to buy a small home in [link|http://realtor.com/FindHome/HomeListings.asp?locallnk=yes&frm=byzip&mnbed=0&mnbath=0&mnprice=0&mxprice=99999999&js=off&pgnum=1&lnksrc=&fid=so&stype=&mnsqft=&mls=xmls&areaid=45405&poe=realtor&zp=45405&sbint=&vtsort=&sorttype=&typ=1&x=51&y=13|45405] with the idea of selling it for a quick profit. (There's dozens of houses for sale there for less than $25k.)

How comfortable are you in living with people who keep long hours, may like loud music, may have housekeeping issues, may be tardy paying rent, etc.? I'd personally be worried about issues like that in the situation you describe.

Keep in mind that many people don't like to buy houses that they knew were rentals because they have a reputation for being used hard and not lovingly cared for. There also may be tax issues (a rental is a business so you can deduct costs of repairs, but that may trigger things when you sell) that you may need to consider.

Another thing to consider is the commissions and fees that you'll (or the seller, but it's in the price) have to pay to buy a place. You'd need good appreciation to make that back and not be in the hole after only 2-3 years.

If the numbers look good to you, and you're able to tolerate the social challenges, and the market looks good for rentals, then don't let the story change your plans. Just go in there with your eyes open.

My $0.02. Good luck!

Cheers,
Scott.
New My idea is to rent to a subculture.
Foriegn exchange students.

I've gotten to know a few of them, as well as their home situation, and they are neat, orderly, and quiet to a fault. It's kinda scary how different they are from the typical student...
When somebody asks you to trade your freedoms for security, it isn't your security they're talking about.
New Look out for the Gaijin Smash!___________________________:-)
New after the sweat and curry sinks into the wallpaper
you will only be able to sell to subcultures,
reminds me of a dutch joke my brudder told me
Dutch Doctor want to improve his house.
adds on a room, builds privacy fence, new rof and extensive garden.
Turkish neighbor see's same and does an exact copy.
Dutch Doctor asks him how much the Turk thinks the Turks house is worth.
Turk sez about 20k euros more than yours.
Dutch Doc puzzled sez they are exactly the same?
No sez the Turk, I live next to a Dutch Doctor.
think about it.
thanx,
bill
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free american and do not reflect the opinions of any person or company that I have had professional relations with in the past 50 years. meep
New Check out zillow.com
Nice way to check lots of comps.



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New Buy, sink the rent in to principle payments.
Sell when market slows or cools.
A positive attitude may not solve all your problems, but it will annoy enough people to make it worth the effort. (Herm Albright)
New Do your research very carefully
I'd say Seattle is in a bubble but is lagging San Diego, LA, and Bay Area. The party is already ending in CA - inventory is way up, sales are down, and there is evidence that prices are coming down, at least in SD and Sac (looking at comparable houses, not the median, which is still going up, which is expected).

For the bubble view:
[link|http://thehousingbubbleblog.com/|http://thehousingbubbleblog.com/] with links to more
SoCalMtgGuy isn't very active now, but his site [link|http://housingbubblecasualty.com/|http://housingbubblecasualty.com/] has explanations of option ARMs, I/O loans, 40 and 50 year loans, etc

Another interesting thing to do is to find information on the various sales of a single house - and see how much the selling price for a given house has increased since, say, 1998. Now think of valid reasons for the increase: How much inflation has there been? How much have wages increased (or decreased)? How much have rents increased (or decreased)? How much have jobs increased (or decreased)? How much has the population increased (or decreased)? None of the numbers for the Bay Area support the housing price increases we've seen, and I'm pretty sure Seattle is the same.

Then find the numbers on mortages - what percent is option ARM, straight ARM, Interest Only, the average mortage payment, and percent of income devoted to housing. In the Bay Area, the percents for Interest Only and ARM are very high - recent numbers are over 60% of new home loans are interest only. Also consider that interest rates are rising, more and more ARM loans are adjusing (something like $500 billion in 2006 and $1.5 trillion in 2007), and foreclosures are already increasing.

Based on all that, I'd say there's a very good chance house prices are going to be lower in two years, so if you buy a home, there's a good chance you might get stuck for a while. If that risk is OK, and you can pay the mortgage, taxes, insurance, utilities, and maintenance, then it may make sense to buy even if prices fall.

--Tony
     Theoretical physicist predicts housing market fall. 68 kB - (Another Scott) - (9)
         It doesn't take a PhD to know housing's going to tumble -NT - (tonytib)
         Would you recommend against buying now? - (inthane-chan) - (7)
             Housing is a local market. - (Another Scott) - (4)
                 My idea is to rent to a subculture. - (inthane-chan) - (3)
                     Look out for the Gaijin Smash!___________________________:-) -NT - (Another Scott)
                     after the sweat and curry sinks into the wallpaper - (boxley)
                     Check out zillow.com - (tuberculosis)
             Buy, sink the rent in to principle payments. - (jbrabeck)
             Do your research very carefully - (tonytib)

Hey, it's a hard day's work in the pits of Minas Morgul, orking cows all day...
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