Buying is not always the smartest option.

[GiXXeRChicA]

As I've said,

http://www.boston.com/business/personalfinance/articles/2007/11/25/buying_isnt_always_the_smartest_option/

[The Black Knight]

I think that's been one of the biggest problems in the housing market. People's eyes to big for their wallets.
Your mortgage should be only a 1/4th of your Net income(or bring home pay) and no more then a 1/3 maximum. When people start closing in on 40% or 50% of their pay for mortgages is when things get out of control. It allows little if any room to grow and save. And it's a debt that will cause huge problems.

Living beyond means is what's started this whole housing slump. Sometimes it's best to only have a $650 house payment and live in a smaller home. As opposed to trying to scratch a $1500 a month house payment, wow all your friends with what you can afford. Yet in solitary reality, you can't afford it and it's eating away at everything you have.

Your best tool for building wealth is your income. So it's best not to tie it up with debt that commands all attention. The too much month left at the end of your money Syndrome happens alot. It's when people make the change and turn it into the, Too much money left at the end of your month, is what should always be strived for.

[merlin]

Living beyond means is what's started this whole housing slump. Sometimes it's best to only have a $650 house payment and live in a smaller home. As opposed to trying to scratch a $1500 a month house payment, wow all your friends with what you can afford. Yet in solitary reality, you can't afford it and it's eating away at everything you have.


$650 a month? If there was any such thing as a $650 a month house in a neighborhood where the ammunition bill was less than the electric bill- I would not be renting! How much fixed rate mortgage will $650 a month buy you? $75K? Less?

How much house in good repair and in a decent (or at least livable) neighborhood will $75,000 buy you these days? Not freaking much. Not enough for me, my wife and 2 cats. $75000 will barely buy a mobile home- and then you have to pay lot rent!

You can't even rent a decent size apartment for that. I've been looking for a place for several weeks- and for a free-standing house, in a semi-decent neighborhood, rent is well over $1/foot. For an apartment, it's $.90-$1.00 per square foot. I lucked out and got a 900 s/f house on top of a 900s/f garage for $950- all bills paid. It's in Combat City, but that's still the best rental deal I've seen in over 6 months of watching the market out here... I don't think I could buy that house for less than I'm renting it for.

Yeah- people buy houses that cost more than they can afford- because ALL the houses cost more than people can afford. Who's building 600-750 square foot houses? Everything I've seen in Denver that size is in downtown or Cap Hill, and they go for $150K or better.

Maybe all us poor folks should all just go buy mobile homes and pick out a nice lot in the trailer park? :eyebrows:

Merlyn

[DavidofColorado]

Hell even the lofts that they built where villa italia used to be are $750k +. And it may look like a yuppie part of Europe but its surrounded by the ghetto.

[Clovis]

I'm in real estate, specifically I'm a mortgage lender.

It's no secret that people in America live beyond their means. Our dependence on living on credit instead of what we earn has proven to be one of the greatest contributing factors into the current housing crisis.

I can't tell you the number of people I've met who earn a combined total of $60-70k a year yet have a $350k mortgage. ($60,000 a year = $5000 per month, before taxes - figure $3500 take home)

Just for example - a $350,000 mortgage on a 6.125% interest rate provides a monthly payment of $2,126 plus escrow (taxes/insurance) which here would run about an extra $300 per month.Some people have lost touch with realty and pursue the “keeping up with the Jones” mentality. A large number of these loans were done using “Stated income and stated assets” (aka SISA loans) – meaning that income and assets were stated but not verified. As long as the income was “reasonable” and the lender could verify the person was employed or self-employed they were happy to provide the mortgage. These SISA loans allowed people to “qualify” for mortgages and thereby homes which in reality they didn’t. Some people could afford the payments but between their mortgage, duel $50,000 car payments, credit cards, student loans and all of the other junk debt people have they didn’t have any money left over for savings. So when something unexpected happened they had nothing to fall back on except more credit. It’s a cycle.

On the flip side, just because you can afford a huge house doesn’t mean you need one. My wife and I live in a modest 3 bedroom, 3 bath house which we bought 4 years ago. Our total monthly mortgage payment is just over $1200 a month. Together we make well over six-figures and we could easily afford a $400,000 mortgage payment, but we don’t.

Sure, it would be nice to have a huge 5 to 6 bedroom house in Wolf Ranch but I don’t want to shell out $3000 a month for my house payment. My former boss and dear friend bought a house for $409k using stated income, stated assets. His base income at the time was $60,000 a year plus the occasional production bonus – which bumped him to about $75,000 a year (Mortgages one of the few industries where you take a pay cut to become a branch manager). His interest-only payment is $2100 a month + his escrow, probably another $300. It’s no secret that the mortgage industry has been struggling and we were laid off when Countrywide closed our branch two months ago. He’s been out of a job since then. I don’t have a huge mortgage payment because I want to know that no mater what I can make my payments without stress.

Anyhow, long story, sorry – I’m going to offer some suggestions in the next post.

[Clovis]

Okay, so as I said, you don’t need a huge house and thereby a huge mortgage payment. I learned this from my parents. When both of my parents were working they had a huge income yet lived in a 2000sq town house they bought in 1995 (This is here in the Springs). They live modestly but have fun. They travel often and up until the dollar began it’s freefall they traveled to Europe at least once a year. Now they just cruise every 6 months or so.

You want to own the house, not have the house own you.

With that said, take a look at Remax.com – It features a great search tool to find houses anywhere. In Colorado Springs, I did a quick search for houses up to $150,000 (a $150k mortgage @ 6.25% cost $923/mo = figure in escrows and you’re looking at about $1050 a month).

For $147,000 I found a 4 bedroom, 2 bedroom house with 1539sq feet located in Fountain.

http://propertiesinc2.colorado.remax.com/Listings/ListingDetail_r4.aspx?LID=34892657# (http://propertiesinc2.colorado.remax.com/Listings/ListingDetail_r4.aspx?LID=34892657)

Here’s another at $145,000 in the Springs – 3 bed, 2 bath 1600 sq feet.

http://propertiesinc2.colorado.remax.com/Listings/ListingDetail_r4.aspx?LID=37264041#aTop

Inexpensive starter houses are not hard to find and if you’re considering one I know a great realtor that can help you. I can also providing 100% financing including FHA and VA loans.

Just something to think about.

-Clov

[Beotch]

That is in Fountain though....for a 3 bed 2.5 bath anywhere in the suburbs around Denver, you are looking at well over $200K for anything that is in decent condition, in a neighborhood you would let your child walk to school in, and has a garage....

[Mae]

and people wonder why I prefer to save my money and put down large down payments before I buy something I have to finance.

yep I COULD get my bike right now if I wanted to, hell I COULD get a small house for that matter or even a lil condo. But no thanks. I'd rather save up my money and have less to pay off in a shorter amount of time. Ive HAD those really hard stressful times where Ive been unemployed (max was 6 months). If it werent for my meager living I probably would have been on the streets with nothing.

And there are houses out there under 150k that are actually nice...depends on how picky you are. Also keep in mind though...the money you are saving over getting that bigger house you can use to renovate and make your meager little house nicer if not outstanding...if you know what to look for and how to shop. You dont hare to get that really expensive tile when there is a tile just like it but slightly different that cost extremely less. Just gotta shop smarter.

[mtnairlover]

I'd like to hear something from the "older" crowd here about buying vs renting/leasing.

I've still got 3 kids to house, feed, send off to school (no way in hell I've got the $ to do that)...but, here's a for instance. I rented a house after my divorce and based my renting option on my kids. I wanted to keep them happy. I found a house in a nice neighborhood, close to an elementary school for my youngest and still within the boundaries for my two older kid's HS. But, I have nothing left over at the end of the month to honestly save for a rainy day (it's the 3 kids thing). I pay full gas/electric/water/sewer/trash, which is like owning a home. My payments on house plus utilities comes to ~1,200/month.

I'm not whining or complaining, but I'm "old" (43) and I'm not sure anymore, about my future. I'm waiting for my two older kids to graduate and they will both be done by '09. My oldest says he's gonna move out next summer. I don't want to stay in a house that will then be "too big" for myself and my 2 girls...so, then what? Do I save in order to purchase? And what do I buy? A house? A condo? A townhome? Or, because I'm so freakin old, do I just give up on the idea and rent for the rest of my life and let's face it that life could be very long still. There is longevity in my family.

So, yeah...I'm kinda stuck right now, yet I know I need to save. For what? I just don't know.

[Devaclis]

We purchased a "starter" home in Highlands Ranch 5 years ago. We will live in this house for quite some time. We got before they were offering interest only and all of the other weird loans. We were lucky enough to have a good chunk to put down on the house and got a good rate too. As much as I would LOVE a smaller house with a larger garage, I can't see us moving anytime soon.

Although, if any of you know where I can get a 2bed, 2 bath ranch with a 5 car garage, please let me know :)

[salsashark]

Although, if any of you know where I can get a 2bed, 2 bath ranch with a 5 car garage, please let me know :)

That would be schweet...

[Devaclis]

Yeah, that's my dream home.

[salsashark]

Put that on about 5 acres in the foothills and it's my dreamhome

[Mental]

Interesting read.

I bought my first house in 1995. $30K for a two bedroom one bath about an 800 sq foot home with on-street parking and no A/C. But it was a small town in Nebraska and there were no really "bad" part of town. In fact, I was the guy bringing the neighborhood down.

After moving, the wife and I bought a nice 3 bd 2 ba in Norman Oklahoma, 1300 sq ft 2 car backed up to a pond. We got the house discounted as we didn't use a realator. and sold it to a friend the same way. The only issue I had there was the subdivision was becoming a rental neighborhood.

Renters aren't bad, but there seems to be a greater potential for someone to let the yard and house go. I cannot cite any an evidence to support this, only what happened there and the condition of the lawns. It wasn't cars in the yard bad, but enough to annoy me. Nest door the couple sold their house to a man who rented it to his college son and two buddies. Nice guys, no parties or anything but they wouldn't mow the lawn, and then they left for the summer and I swear it got almost two feet high and overun with weeds.

There were a few other rental homes, and they kept things up, but they didn't have the same level of pride in ownership.

What drove us to buy a bigger home here was that I didn't want to plunk money down for a house and end up in a rental neighborhood. If I had bought the same house here, that's where I would be. So we upgraded to a home we didn't need, but could still afford. But it was a double what were paying in OK. Partially becuase of a more expensive market, both due to the timing and the fcat houses cost more here.

We bought new, which was at the peak of the market, and at the time the cheapest way to go. By the time the house was completed, we had equity just due to the ridiculous market growth. While we were shopping, every salemean was trying to slip us one of those trick mortgages. No, thanks, 30 year fixed. The interest rate was a bitter pill, but we just dumped 2 percent as the market corrects.

Of course I'm still the guy driving down the neigborhood values

I don't have kids, I have decent retirement account. I do have too much house, but no too much mortgage. I don't rent, even thought it would be cheaperbecuase I certian housing expectation that cannot be met with a rental, I hate apartments, and I have 4 dogs. So while I could save money, it is not the best choice for us. We made our choice based on things beyond money.

I did find the article interest becuase she made her choice based on other factors, namely adopting two kids. One advantage I have vs soem unfortune folks is I have a little more security in my career than most. That also seems to be a mitigated factor in a lot of peaple facing hard times. Savings go quick when you're supporting a household on it.

My only concern right now is if I have to move. There is no way I can sell my house in this market without taking a huge loss. But yeah, there is more than just the "how much can I afford?" mentality when buying vs renting.

[Kristian]

...

Although, if any of you know where I can get a 2bed, 2 bath ranch with a 5 car garage, please let me know :)

Make it a 2 bed, 2 1/2 bath(need a toilet in that garage you know) and it describes my dream home.

[vmax2003]

well make it under 100k w/ garage and im there...lol...if not then I am stuck renting for the rest of my days...lol

[pilot]

NOTE: None of the following rant will make sense unless you've read the previous comments by our astute members. Even then it might not...

Old! Cathy, come on now. Respect me for I am your elder. In the end, Cathy, you and I will be living in one of those beat up "old" folk's homes. Having worked hard all of our lives, well, at least you have. Kid's will visit once in a while and then less and less. OK, enough fantasy.

Reality: You can live on federal land for free or nearly that. As long as one does not build a permanent structure--so build a 1000 sq ft teepee-- you can set up on national forest land for up to three years. Hunt, fish, cut down trees (with your permits) and drive to and from work along Hwy 285 near Conifer.http://tbn0.google.com/images?q=tbn:Ub6xI8oTZZhOFM:http://tnas.files.wordpress.com/2007/08/teepee-001-2.jpg

Hell, it wouldn't be easy, but your relatives lived in homes without electricity, running water, WalMart, and cell phones.

Why does one have more than "X" amount of kids nowadays? Sure, you love them and hug them and feed them and pay for their $500 worth of sports uniforms each school season. But children use to do the "chores", like cutting hay and milking cows.

The reason homes are so expensive, at least compared to what they use to cost--want relatively cheap??? Go to Arkansas--is because speculators drove up the general price by selling from one to another on a profit scheme. No need to argue with me on this one. If you do, you are an idiot. I have spent nearly the past 20 years in the construction business doing everything from digging holes by hand to asking division presidents about their petty cash flow or land acquisition monument budgets.

One of the saddest things I saw was the greedy bastards all up and down the line toasting champaign about how much money they were making as the prices went through the roof. I unhappily remember the a-holes celebrating the start of the war/conflict with Iraq and chanting how much tax money it was going to bring the Springs and then how much more money it would bring one year later when all the body bagshttp://www.thewe.cc/thewei/_/images_3/us_terror_state/carries_body_bag.jpe, er, I mean troops come home with that hazard pay. Now, most, if not all, are crying in their empty beds.

Speaking of hazard pay and the military, the government is concerned for your well being. At least if you are motorcyclist and coming back from the "War". They've found that more guys and gals are heading home with a pocket full of cash and testosterone. The next day they are at your favorite (insert motorcycle dealer here) shop spending that cash for that brand new ZX-6 or R-1. Then, with little or no training, God bless the military's requirement for the MSF, they hit the twisties, or go out for some fast stoplight to stoplight action--thus getting their excitement fix. Until they crash. Hence, Uncle Sam is looking at several programs to fix this issue--another reason I might be able to pay the rent.

So, if you think it is bad now (not you cuz your lucky/smarter-but the other you who is looking for a roommate or three, trying to find a job other than for $7.50 an hour) just wait until the banks adjust things to get out of the red.

Yes, the banks, the ones that control the economy. They are sick and tired of not making money by moving things around. Soon they will take all those foreclosed homes and drop the price by a good 15-20 %. Out the window will go any hope you had for a bit of margin on your over mortgaged home. Not to mention trying to use a bit of equity to pay off that second. Are you ready for a 30 to 50 grand punch in the gut???

Now in the old days, say the 90's and before. America could take a financial punch as it would hit a local region like Silicon Valley or Seattle or Detroit. Those folks would suffer while the rest of us moved on. Then those out of work, undervalued persons would grab a U-Haul and move to say, Denver, remember all the California plates a while back. Man, did they bring in the dough!

Today, that don't count, to hell with all the government #'s. This month they'll tell you that margins are up and unemployment is down. In two months they'll tell you that some data wasn't included and the numbers weren't so rosy. Pay no attention to the man behind the curtain.

As for myself, I too am to blame. We didn't hold ourselves, or kids, to high enough standards. We bowed down and let the liberals and conservatives have too much. What happened to the middle ground?

Yes, I could work for the "man" and make big bucks managing this or that, but I have chosen to work in our little cottage industry of motorcycling. No money just yet, but we'll see how this goes.

Good luck to all on that.

God bless the poor folks in Fountain. I've a few friends that live there and they tell me of gunshots all the time.

Credit cards are your friends. The government wants to get rid of cash as soon as possible. No cash, no illegal drug sales. Who is going to pay for drugs with a credit card? No cash, no underground income--everything will be just Jim-dandy. Your M-1 and M-2 money supply will be well in check or should I say: card.

http://www.cosportbikeclub.org/forums/attachment.php?attachmentid=6238&d=1195574364 Pueblo Motorsports Park is where we all can live. Ever noticed how cheap it is to park your motor home there? Just think, every morning we can fire 'em up and live the life of Charles Bronson picking watermelons in the valleys of Pueblo.http://www.austinchronicle.com/binary/0d26a237/screens_DVD-20836.jpeg

[mtnairlover]

You crack me up, Pilot.

Ok, so I was emphasizing my age, cuz relatively speaking, I'm feeling like I'm stuck right now, between a rock and a hard place. I'm not whining like I said, but just hoping to make the right decision for my future without my children.

Even if my two girls stay with me for a while...well, the youngest still has at least 8 years with me, but even if they stay, I'm making the older of the two pay rent. And, her living conditions will change in that she will be more like a boarder than a child of mine...she won't be skating happily through life. It's going to be tough, cuz life is not easy and never was for me.

I have a couple of elders to look at as far as decision-making. One started investing when he was 50 and did that in the late 80's and 90's. Made a killing (relatively speaking) and now lives part of the year in his home in the mountains and the rest of the year in Europe. He lives simply, though. No extravagent purchases...hell, some of the gifts he's given have included socks, scarves, etc. I digress. Another elder stayed in the townhome she bought back in the late 70's in Boulder until she died at 90. And, yet another, lives on disability and in senior housing. She pays a monthly rent based on her income and also lives simply.

I do not, I repeat...do not plan on being sent away to an "old folks home". If my body ever gets to that point, give me a gun and drop me off in the woods. Seriously...no one can take better care of me than me, end of that story.

So, the question still remains...do I put what lil extra I end up with at the end of the month in order to purchase something in 9 months to a year, or do I just rent at a rate that will afford me a larger savings chunk so that when I do retire, then I can play more? Just so many decisions and I never really thought about these things when I was in my 20's...funny how that comes about.

[rforsythe]

Now in the old days, say the 90's and before. America could take a financial punch as it would hit a local region like Silicon Valley or Seattle or Detroit. Those folks would suffer while the rest of us moved on. Then those out of work, undervalued persons would grab a U-Haul and move to say, Denver, remember all the California plates a while back. Man, did they bring in the dough!

Actually starting in late '98, and coming to a head in 2000, we had this thing called the Dot Com bust. All of those investors who had literally pumped billions upon billions of dollars into anyone with a website and anything resembling a business plan suddenly realized that good old fashioned business principles were still true, and profit doesn't generally materialize out of nowhere (or at least for any sustained period of time). These investors stopped adding any more to dumb ideas and in some cases even took money back out, and literally overnight in some cases, entire companies shut their doors. Silicon Valley took a hit, but believe me - it had ramifications around the country and the world. What we're seeing now is a return to normalcy, where the BS venture capitalism just doesn't exist anymore, pay is commensurate with experience, and there is even something of a talent shortage depending on what you do. Many of the undervalued morons actually went to work in the mortgage industry, funny enough.

Yes, I could work for the "man" and make big bucks managing this or that, but I have chosen to work in our little cottage industry of motorcycling. No money just yet, but we'll see how this goes.

It really doesn't matter what you make or do, just whether or not you live within your means or contribute to the idiocy that's happening now. People with meager salaries can definitely build wealth, and people making six-figures and driving their $80K cars can piss it away with amazing speed. Therein lies the rub - the difference between being rich, and being wealthy.

Credit cards are your friends. The government wants to get rid of cash as soon as possible. No cash, no illegal drug sales. Who is going to pay for drugs with a credit card? No cash, no underground income--everything will be just Jim-dandy. Your M-1 and M-2 money supply will be well in check or should I say: card.

First, you assume drug sales only generate profit for the drug dealers. Second, the only reason they're illegal, is because there is no taxation platform for them. It's the reason alcohol was prohibited, and then allowed to become the household commodity it is today. For a while the ATF was actually responsible for both collecting taxes administratively and enforcing the law against those who didn't pay (sounds sort of mob-ish, doesn't it?). In '03 the Homeland Security Act separated those duties, created the Alcohol and Tobacco Tax Bureau, and left the ATF to go about enforcing the law (also then moving ATF under the DoJ). There's a lot of interesting history on how the ATF came to be and why it revolved around tax collection, available with a little research.

Back on topic, I'm still glad I own my home, though the aforementioned Dot Com burst almost made me lose it due to being laid off of work. When I bought it I think I was a little over-extended and also credit happy which made losing jobs (plural) to the economic bullshit going on pretty painful, but it was also an educational experience I don't plan to repeat. We're planning to stay here for another 3-5 years most likely, but we will see what the economy brings. I don't think this place will depreciate as badly as the insanely-overvalued places out there, which will work to our advantage when we decide to sell here and get a house up in the mountains somewhere. :eyebrows: Or who knows, maybe we'll keep this place and rent it out, and let someone else make the mortgage payment on it. Only time will tell...

Money is an interesting thing. You can lose a lot of it very quickly, but there are always ways to make more of it, and always ways to use what you have to generate wealth, even in hard times. They aren't as obvious and might carry some additional risk, but the possibilities are out there.

[dchd1130]

$650 a month? If there was any such thing as a $650 a month house in a neighborhood where the ammunition bill was less than the electric bill- I would not be renting! How much fixed rate mortgage will $650 a month buy you? $75K? Less?


Merlyn

I have Condos off of hampden and wadsworth that go for about that. Most of them are 1 bedroom and those go for a little less. 2 of them are 2 bedrooms and sell for 80K

[CYCLE_MONKEY]

Honestly, sorry for all those that WILL lose major $$ when the WAY-overpriced CO housing market tanks back down to reality, but hopefully that will give me a second chance to buy something nice for reasonable money. Seeing the price of the house I grew up in go from $44k ('75) to $425k (now) is just insane, and it's time to stop.

We used to have a pretty nice house in Lvld, in a great location. 3bdrm/3 ba, full 9'-high basement, 26' x 20' garage, upgraded carpet/floors and some of my custom mods, and GREAT views (could see the Flatirons on a clear day!). 100% financing on $206k gave us a $1,500/mo mortgage. Wish we still had that, as I'm paying $900+ for my friggin' 1br/ba 950sq ft apt.

[McVaaahhh]

I bought my house two years ago and still love that fact that I broke down and bought it.

Is it more expensive than renting? You bet your ass it is. But, not in the long run.
I am planning on paying it off within 20 years. If I stay in it that means that by the time I'm 50 I will not have a monthly "Rent". (Granted, that's if I stay in the house.)

The point is, if you rent, you will ALWAYS rent. You will be retired and have to pay rent. You will have to write a check to a landlord every month for the rest of your life. If you buy, at some point, you pay that house off and no longer have to write that big check. Rents will continue to rise with the housing market, but a 30 yr fixed mortgage won't change, well a little as taxes and ins increase over the years, but that $1500/month mortgage really won't feel that expensive in 10 years when inflation changes how much $1500 is.

My dad always talks about his first house 30 years ago. It was only 27k, etc. etc., but he was also only making 11k/year. A new car cost 4k and all that other nonsense. I bet your typical apartment was less than $100/month back then. It's all relative.

(Please remember, this is somewhat hypothetical, I know that "most" people upgrade, or move, etc. But I'm just making a point)


Another thing about buying: Pride of ownership.
I love looking at my house and saying: "This is MY house, not just some temporary place to live, it's all mine and I can do whatever I want to it. I don't like that carpet, I think I'll pull it out and put tile in."
When I pull in the garage every day, I just smile and think "I've come back to MY home".

My advice: If you want your own place, and can afford it, than buy. Yeah the market has had it's problems over the last couple years, but real estate is generally considered a very safe investment. I know I probably can't sell my house for what I owe on it right now, but when the market settles that will change, and in the long run I know that I'm better off for having bought my house instead of still renting.

[Clovis]

God bless the poor folks in Fountain. I've a few friends that live there and they tell me of gunshots all the time.


Your friends must live in a different town then I do! The Fountain of serveral years ago (ie, the south side) had a run down look to it but in the past 5 years a great deal of that has changed. I've never heard gun shoots, good lord. Occasionally you'll hear a boom in the distance from artillary practice at Ft Carson but no gunshots, good lord!

[Clovis]

Cathy,

If you're looking at buying a house but don't have money for the down payment there are a variety of down payment assistance programs out there.

http://www.downpaymentsolutions.com/

Has some info.

An FHA loan is easier to qualify for then a conventinal loan - No fico requirements, no asset requirements, low rates and up to 97% LTV.

Just a couple of requirements.

No BK in the past 24 months
No forclosures in the past 3 years
Full doc (proving your income with W2s and Paystubs)
Able to debt/income ratio

Also, FHA isn't just for purchasing homes, its also fantastic for refi's too.

Call me with any questions - 719-201-9383.

-Justin

[The Black Knight]

$650 a month? If there was any such thing as a $650 a month house in a neighborhood where the ammunition bill was less than the electric bill- I would not be renting! How much fixed rate mortgage will $650 a month buy you? $75K? Less?

How much house in good repair and in a decent (or at least livable) neighborhood will $75,000 buy you these days? Not freaking much. Not enough for me, my wife and 2 cats. $75000 will barely buy a mobile home- and then you have to pay lot rent!

You can't even rent a decent size apartment for that. I've been looking for a place for several weeks- and for a free-standing house, in a semi-decent neighborhood, rent is well over $1/foot. For an apartment, it's $.90-$1.00 per square foot. I lucked out and got a 900 s/f house on top of a 900s/f garage for $950- all bills paid. It's in Combat City, but that's still the best rental deal I've seen in over 6 months of watching the market out here... I don't think I could buy that house for less than I'm renting it for.

Yeah- people buy houses that cost more than they can afford- because ALL the houses cost more than people can afford. Who's building 600-750 square foot houses? Everything I've seen in Denver that size is in downtown or Cap Hill, and they go for $150K or better.

Maybe all us poor folks should all just go buy mobile homes and pick out a nice lot in the trailer park? :eyebrows:

Merlyn

Actually Merlin, I was using Bankrate.com mortgage calculator to get some figures. I only used $650 as just an example. I have been looking at Townhomes though, and with some figures I've run, I could have something around $100k for close to $590(30 year fixed at 6%) or a little over $800(for a 6% fixed 15 year mortgage) a month.

I myself am looking for a 15 year fixed. Mainly because more principle is paid on and term is shorter. I've looked around and for $100k in a Townhome will get you in a very nice neighborhood in Colo. Spgs.(Briargate for example). I've seen them range from $80 to $100k and you can find some very nice townhomes in very nice neighborhoods. Obviously a $100k House won't get you far.

But again, that's what I'm talking about living within your means. If all you can afford is say $120k Max. Then you might want to think where you want to spend that $120k. $120k will buy you a great townhome but the downsides are living in a HOA controlled area. Upside is in a nicer part of town, your value will at least stay at or go up slightly(townhomes don't usually yield high change). Or get a $120k House. Well $120k nice homes are out there. You have to search. Downsides are it might be older and need upgrades and the value will probably stay the same. Upsides are you own land with it and will probably be out of a HOA environment(meaning more freedom). So you can kick the ball around between the two and see where you want to put your money. Myself I'd probably go with a townhome, because it is maintenance free and if I'm going to have a crappy HOA, then they are going to do all the work themselves to maintain. Plus I can get something that's my size and when Marriage happens, then I can sell it and move on to something else.

Then there's always mobile homes. For $120k you can buy a loaded mobile home. Only drawbacks are, Mobile Homes are like cars. They depreciate at a rate that could make you cry and regardless if it's on land. It's still a mobile home. But you can put a mobile home on land anywhere. Have lots of acre's to have fun with. And some of the double and triple wides I've seen, would literally make you think twice about getting a regular home. Some are top notch.

All I was commenting on, was that the fact people are letting their eyes decide where the dollar goes, instead of their minds. Yeah it's nice to have a huge home. I scratch a $600 a month rent check to my parents, because they have a 3000sq ft home. I live downstairs and they are upstairs. Both top and bottom are equal in square footage(1500/1500), so it's like I've got a nice apartment that I rent. I get along great with my Parents and they don't bother me, so I don't mind renting from them. Besides I'm helping them out with their mortgage and I don't mind doing that. I don't mind renting now, because I'm paying stuff off and saving up for a future home purchase in about 2 years. I guess I could probably cut the $600 a month in half if I roommated with friends. But I like my space and don't like being bugged. And I can't live in a house with a bunch of buddies, it would just drive me nuts. At least my parents are quiet and it's just me and my dog.

Like I say, it's just about living within your means. For me my range as a single person is from about $600 to $900 a month. Because it's at least 1/4 of my net income and no more then 1/3 of my net income. Sure I've looked at the numbers and could possibly run close to 40% of my income and that would put me close to $1100 or $1200 a month. But that's just way to much, and I'm all about savings. Savings in 401k's,457's and Mutual Funds. I'm about being debt free before I purchase my home, so that my only focus is my home. I'm willing to get stuff paid off, so that I can crank up my percentage to between 15%-20% in retirement accounts(mutual funds, PERA, 401k's). I'm willing to live like no else now, so that later I can live like no one else.

[Canuck]

I'm willing to live like no else now, so that later I can live like no one else.

Wow, Dave Ramsey.

[pilot]

Actually starting in late '98, and coming to a head in 2000, we had this thing called the Dot Com bust. All of those investors who had literally pumped billions upon billions of dollars into anyone with a website and anything resembling a business plan suddenly realized that good old fashioned business principles were still true, and profit doesn't generally materialize out of nowhere (or at least for any sustained period of time). These investors stopped adding any more to dumb ideas and in some cases even took money back out, and literally overnight in some cases, entire companies shut their doors. Silicon Valley took a hit, but believe me - it had ramifications around the country and the world. What we're seeing now is a return to normalcy, where the BS venture capitalism just doesn't exist anymore, pay is commensurate with experience, and there is even something of a talent shortage depending on what you do. Many of the undervalued morons actually went to work in the mortgage industry, funny enough.

It wasn't just the guy on the IT side that took the hit. For every Dot job there were three or more jobs on the side. The candlestick maker, baker and butcher to name a few. And, the Dot bust didn't effect the economy the way the home finance business has. It is not the same set of issues. Everyone either rents from someone who owns who in-turn pays a mortgage, on average, or else lives under a bridge. Have this conversation with me in two years and we'll see how it all turns out. My bet, nasty. Just ask the IT wiz sitting next to you wondering why her holiday bonus and merit increase is smaller even though the company may be claiming to do better than before to their shareholders.




It really doesn't matter what you make or do, just whether or not you live within your means or contribute to the idiocy that's happening now. People with meager salaries can definitely build wealth, and people making six-figures and driving their $80K cars can piss it away with amazing speed. Therein lies the rub - the difference between being rich, and being wealthy.

The idiocy is that the average person has to have two computers, three TVs, a cell phone in every pocket. It is all about nickel and dimes. Prices are always falling. And of course it matters what one does. Manufacturing crack is illegal and therefore not within the system of reasonable means. Also, I don't know too many people earning 7.00 to ten an hour that are building wealth. Not to say that someone isn't. It just isn't the norm. A quick drive to Federal and Harvard streets will play that one out.



First, you assume drug sales only generate profit for the drug dealers. Second, the only reason they're illegal, is because there is no taxation platform for them. It's the reason alcohol was prohibited, and then allowed to become the household commodity it is today. For a while the ATF was actually responsible for both collecting taxes administratively and enforcing the law against those who didn't pay (sounds sort of mob-ish, doesn't it?). In '03 the Homeland Security Act separated those duties, created the Alcohol and Tobacco Tax Bureau, and left the ATF to go about enforcing the law (also then moving ATF under the DoJ). There's a lot of interesting history on how the ATF came to be and why it revolved around tax collection, available with a little research.

What's in your wallet? Cash is nearly out the door. Who else do Illegal drug sales benefit? I'm not talking about a dime bag of weed here. Money is striped so that it can be seen by x-ray machines if it is being transported out of the country. It appears as lines of metal. It is harder to get the cash out than the drugs in. The ONLY reason = tax. Come on Ralph who are you kidding? So when they can tax Meth...legal? I don't think so.

Back on topic, I'm still glad I own my home, though the aforementioned Dot Com burst almost made me lose it due to being laid off of work. When I bought it I think I was a little over-extended and also credit happy which made losing jobs (plural) to the economic bullshit going on pretty painful, but it was also an educational experience I don't plan to repeat. We're planning to stay here for another 3-5 years most likely, but we will see what the economy brings. I don't think this place will depreciate as badly as the insanely-overvalued places out there, which will work to our advantage when we decide to sell here and get a house up in the mountains somewhere. :eyebrows: Or who knows, maybe we'll keep this place and rent it out, and let someone else make the mortgage payment on it. Only time will tell...

Money is an interesting thing. You can lose a lot of it very quickly, but there are always ways to make more of it, and always ways to use what you have to generate wealth, even in hard times. They aren't as obvious and might carry some additional risk, but the possibilities are out there. The average person earns a living off of sweat. You may sweat, but you are far from the average. I'm sure you have worked hard and smart for your wealth and experiences. But the average Joe or Jane relies on you to help them create even the meager funds they have in savings if any. I'm not entirely sure what you did/do for a living. But I went door to door listening to people complain about the seams in their carpet after living in their 95% mortgaged homes for over a year. Oh, and we sat at a $20 dollar card table they bought at WalMart--cuz that was all they could afford for furniture... but they had cell phones.

[pilot]

Your friends must live in a different town then I do! The Fountain of serveral years ago (ie, the south side) had a run down look to it but in the past 5 years a great deal of that has changed. I've never heard gun shoots, good lord. Occasionally you'll hear a boom in the distance from artillary practice at Ft Carson but no gunshots, good lord!It may look a bit cleaner because I paid junk collectors to go up and down the streets to pick crap out of people's yards so that we could sell new homes built built in FEMA flood zones. I suppose we could draw upon FBI crime reports for further data on the area.

[The Black Knight]

Wow, Dave Ramsey.

Yep your right and I'm working the baby steps right now. Total Money Makeover, has got to be one of the best books I've read in a long time.

[mtnairlover]

If you're looking at buying a house but don't have money for the down payment there are a variety of down payment assistance programs out there.

http://www.downpaymentsolutions.com/


Thanks Justin. Actually, last night I visited with my real estate agent. She helped me and my ex escape foreclosure. Haven't seen her in over 3 years. Anyway, I'm doing the "baby steps" thing. Being on my own makes me a whole lot more cautious than when I was married. But, I do know that I can qualify...for how much? I don't know. My agent is going to put me in touch with a mortgage broker. We talked a whole lot about what I hope to do in the year to come. And, I'm going to work toward building upon my savings first before jumping.

I found that there are bargains out there that would fit myself and my kids, though. And, wouldn't be that hard to maintain after my kids are all gone. http://www.servingftcollins.com/details.html?mlsid=38-552680 This home has been on the market for 4 days. It's got just about 1600 sf all on one level. It has a family room and a living room, 3 bedrooms, 2 1/2 baths, a one-car garage...and more. It's walking distance to the elementary school and high school. I was blown away with the price of 132,500. I used to live close to that neighborhood and my youngest went to that elementary before my divorce. It's a sweet deal, but because it's owned by the bank, they want it gone before the end of the year...and like I said, I'm not jumping.

If there is one thing I've learned, it's that if you dream it can happen, it will, it just takes patience and baby steps.

[pilot]

http://anesthesia.duhs.duke.edu/education/aig/images/cartoon1.jpg

People using cash will someday be like smokers. "Hey you, if your gonna do that, go over there."

[rforsythe]

It wasn't just the guy on the IT side that took the hit. For every Dot job there were three or more jobs on the side. The candlestick maker, baker and butcher to name a few.

Yes, that's my point as well.

And, the Dot bust didn't effect the economy the way the home finance business has. It is not the same set of issues. Everyone either rents from someone who owns who in-turn pays a mortgage, on average, or else lives under a bridge. Have this conversation with me in two years and we'll see how it all turns out. My bet, nasty. Just ask the IT wiz sitting next to you wondering why her holiday bonus and merit increase is smaller even though the company may be claiming to do better than before to their shareholders.The IT wiz sitting next to me will tell you that her bonuses have increased, because the company is doing better than ever before, and it's now something they must do to retain competent staff, rather than just people who can fill seats. For a while there was market flood with people that read a book and got a cert, but since they've lost interest and moved on, the ones with actual skill and experience are in a good place right now.

Of course nothing in the economy is ever completely stable, and reduced consumer spending will ultimately dictate much of what happens in the tech industry over the next 3-5 years. Time will tell.

Here's an interesting Wikipedia quote:
"Some believe the crash of the dot-com bubble contributed to the housing bubble (http://en.wikipedia.org/wiki/United_States_housing_bubble) in the U.S.. Yale economist Robert Shiller (http://en.wikipedia.org/wiki/Robert_Shiller) said in 2005 (http://en.wikipedia.org/wiki/2005), "Once stocks fell, real estate became the primary outlet for the speculative frenzy that the stock market had unleashed. Where else could plungers apply their newly acquired trading talents? The materialistic display of the big house also has become a salve to bruised egos of disappointed stock investors. These days, the only thing that comes close to real estate as a national obsession is poker (http://en.wikipedia.org/wiki/Poker)" (from Barron's Magazine (http://en.wikipedia.org/wiki/Barron%27s_Magazine)'s article "The Bubble's New Home (http://online.barrons.com/article/SB111905372884363176.html)", 20 June 2005)."

The idiocy is that the average person has to have two computers, three TVs, a cell phone in every pocket. It is all about nickel and dimes. Prices are always falling. And of course it matters what one does. Manufacturing crack is illegal and therefore not within the system of reasonable means. Also, I don't know too many people earning 7.00 to ten an hour that are building wealth. Not to say that someone isn't. It just isn't the norm. A quick drive to Federal and Harvard streets will play that one out.The "need for crap" affects all levels of the income tier. The guys making six figures just do it with expensive cars, $20K home entertainment systems, etc. They also still have a bunch of computers, a house full of TV's, and cell phones (as do their brat kids, but anyway). You can be rich, and not be wealthy. I know and have known a lot of people who make a shit ton of money, who I'd consider "rich", that have zero actual wealth. When that high-paying job goes away, they're selling off everything they own.

The "norm" is that people spend, spend, spend, and never save anything. It has nothing to do with income level. Wealth is a state of mind and a behavior, not a paycheck. There are a greater percentage of people building wealth who also have a bigger check just because they have more means to do so, but there are definitely people making the lower wages who are doing it in their own way.

What's in your wallet? Cash is nearly out the door. Who else do Illegal drug sales benefit? I'm not talking about a dime bag of weed here. Money is striped so that it can be seen by x-ray machines if it is being transported out of the country. It appears as lines of metal. It is harder to get the cash out than the drugs in. The ONLY reason = tax. Come on Ralph who are you kidding? So when they can tax Meth...legal? I don't think so.About $30 at the moment, it varies between zero and a couple hundred usually. But I don't spend with CREDIT cards, I spend with debit. Vast difference, in that I'm still using cash, I am just doing it via electronic transaction. Yes I know there won't be drug deals with debit cards because of the evidence trail, but I still spend my cash. However I am quite certain that if all hard currency were negated tomorrow, the drug dealers would still find a way to launder those funds in some way that concealed their true purpose. I don't expect to see your friendly neighborhood dope dealer on the corner with a card swipe and a PIN entry pad, but they will find a way.

Do I think they're just going to legalize meth and crack if they figure out how to regulate production and tax it? Not really. But for lesser drugs like Marijuana (which is also imported by the truckload illegally), absolutely. Ever notice how the government always profits in one way or another for pretty much every hedonistic little pleasure you can do legally? That isn't by accident. Even the Internet (which is supposed to be a global entity, free to access aside from ISP costs) has been under near-constant proposal for taxation of US residents for the past several years.

The average person earns a living off of sweat. You may sweat, but you are far from the average. I'm sure you have worked hard and smart for your wealth and experiences. But the average Joe or Jane relies on you to help them create even the meager funds they have in savings if any. I'm not entirely sure what you did/do for a living. But I went door to door listening to people complain about the seams in their carpet after living in their 95% mortgaged homes for over a year. Oh, and we sat at a $20 dollar card table they bought at WalMart--cuz that was all they could afford for furniture... but they had cell phones.If you could, please define who the "average person" is for me. Most of the people on this board have desk jobs. When I drive up the street I see a lot of retail, hardly what I would call "sweat" or "labor" jobs, at least in comparison to say a landscaper or roofer. There are plenty of labor-based trades and plenty of people doing them, but I see most jobs out there as supporting the flow of money in some way - corporate-type jobs that keep companies going, retail that let workers spend their money, banks to accept money, bars to let people drink away the realization that they have spent all their money, etc.

I work in tech, as a computer security expert. Am I really that far from average? I started out making $6 an hour with no experience - that was a long time ago. Since then I have spent over a decade in the real world, building skills, experience, and knowledge, to get where I am today - I didn't just wake up one day and instantly acquire that. If someone spends 10 years working a retail counter and never strives to be anything more, I'll be in there spending money for the things I need (and sometimes, things I want) - but I certainly won't feel bad for them because they lack the initiative to better themselves, and rely on my expenditures to justify their $10/hour job and meager savings.

So maybe you're right, maybe I am far from average, because I don't expect the world to generate success for me. I went out and got mine. I don't feel one bit of guilt for it either, because I worked my ass off to do it. What I didn't do, was expect a fat check and the perks just for doing base-level work and never growing beyond it.

If someone makes $7-10 an hour for several years, there's a reason for it. There is also ample opportunity to do better, for anyone with the ambition to do it. I'd expect someone starting out to make crap wages - that's just how it works. However if someone is pissed because they're in the same place after years of doing the exact same thing, they have nobody to blame but themselves. Bottom line, if you want a better station in life, go get it. Don't sit there and whine because it doesn't just happen with no effort expended. That same mentality is also what builds wealth. So many people at all wage levels spend every dime they make (I've done this in the past as well) and then can't figure out why they never seem to change their way of life.

The average person spends it all and gets to the point where everything they have is secured by debt and all of their money goes to pay it. It's the pandemic that will affect society even after the housing crisis corrects itself. It's also accelerating, because people are not being taught anything about managing money - just how to spend it. Maybe that's what you mean by me not being average? 5 years ago I would have been in the same spot, maxed out on debt. Not anymore, and not ever again. I have equity in my home, one nearly-paid credit card left, and just bumped the percentage of money that goes into savings and investment vehicles.

I look forward to the day when "average" describes the type of person that can see the bigger picture. It starts with teaching people what that means, which is actually catching on - schools are actually starting to have classes on money management and growth, which means those kids have a fighting chance at avoiding the "average person" way of life from the start. That will have interesting ramifications for industries like retail decades from now, but I think it's a positive step regardless.

[rforsythe]

Wow, that was the first post I've ever written on here that exceeded the character limit. Just call me Vance.

[CYCLE_MONKEY]

Wow, that was the first post I've ever written on here that exceeded the character limit. Just call me Vance.
Gonna have to fight it out with Black Knight for that one!:)

[The Black Knight]

Gonna have to fight it out with Black Knight for that one!:)

My posts aren't that long. I can count on one hand the times I've actually exceeded max character allowance and had to restructure my post. Hey and I prefer posts with some content and length to them. Better then some of the one-liners or run-on paragraphs I've seen in the past.

P.S.
At least you can never accuse me of "post-whoring". Just dropping a few lines to run my total up.

[lovinCO]

I want to offer a positive perspective on the Denver housing market, just my own opinion...

Personal experience: I purchased a home that needed some fixing up in october 2003. I fixed it up sweat equity style for around $4,000. I sold it in april of this year for $45,000 more than I bought it for. It was my home and I loved living in it, it was not an investment plan or other. I consider that to be reasonable appreciation on my home, and we're in a "bad" market.

More personal experience--sales in my real estate office are way up in the 4th quarter. Sales are also looking strong for 1st quarter 2008, a positive sign for next year overall. There are more buyers perparing to purchase now, and less homes on the market. The number of 2007 listings are down from 2006 numbers, and we expect there to be even less homes for sale in 2008. This points to the market shifting back to a balance in supply/demand, which will make everyone happier.

[salsashark]

More personal experience--sales in my real estate office are way up in the 4th quarter. Sales are also looking strong for 1st quarter 2008, a positive sign for next year overall. There are more buyers perparing to purchase now, and less homes on the market. The number of 2007 listings are down from 2006 numbers, and we expect there to be even less homes for sale in 2008. This points to the market shifting back to a balance in supply/demand, which will make everyone happier.

Sure would make me happier... At some point I would like to sell my townhouse and not take a total bath on it. If I wanted to be a landlord, I would have done it full time.

[pilot]

Wow, that was the first post I've ever written on here that exceeded the character limit. Just call me Vance.Ralph, that was a darn fine retort. Average to me is just that = income, housing, transportation. The kind of person that works 40 hours or so a week and still can't find enough money to afford those damn text books for college so that they can get a better place in life. Oh, that and feed their kids.

Perhaps a poll on type of job: based on some nationally recognized system would be of interest since you brought up that most of the members here are deskies.

I can personally say that I've met all walks of life on this board: Security guards for HHS-about 8 an hour. WalMart employees- 7-10/hr. Cell phone sales reps- 9/hr. Owners of Server Corps $$$$$$$, but still it's tight because they way life deals cards. Teachers that don't seem to be paid what they're worth. Drywallers that hire a bunch of other guys to get er done and make nice bucks.

I think luck, along with who one knows, a bit of education have a strong set of factors in whether or not one makes it to wealth.

But what is wealth? Money, spiritual, love, education...

I want to offer a positive perspective on the Denver housing market, just my own opinion...

Personal experience: I purchased a home that needed some fixing up in october 2003. I fixed it up sweat equity style for around $4,000. I sold it in april of this year for $45,000 more than I bought it for. It was my home and I loved living in it, it was not an investment plan or other. I consider that to be reasonable appreciation on my home, and we're in a "bad" market.

More personal experience--sales in my real estate office are way up in the 4th quarter. Sales are also looking strong for 1st quarter 2008, a positive sign for next year overall. There are more buyers perparing to purchase now, and less homes on the market. The number of 2007 listings are down from 2006 numbers, and we expect there to be even less homes for sale in 2008. This points to the market shifting back to a balance in supply/demand, which will make everyone happier.Builders are on a steep path to reduction. That affects numbers. Current used values are down and people don't want to loose money in a sale. 2008 will not be a positive year for most in the RE trade or it's associated fields--excluding commercial. But that is running on razor wire, too.

I really don't think "everyone" is going to be happier. Some yes, most no. For a house to sell fast one must practically make it look Holiday Inn. Competition is stiff. Nothing like new carpet, paint and tile to dress up a 220k home to compete in the run down areas. Saw that yesterday. Of course those were just band aids to structures that are built with nominal materials and low levels of initial craftsmanship.

What you did in your adventure in sweat equity flipping is rare for a person to do. It helps to be "connected" to accomplish those tasks and increase margins as you may have done. Without knowing what your in and out was the 41k in margin (45-4sweat) is not workable number. On a 150k home you did well, on a 400k home it is marginal for profit in 3yrs 6 months.

Nonetheless, you made $ and you are happy and that goes a long way. Nice.

For the rest of you that want to discuss how a person can "grab themselves by the bootstraps and make good". I say... even it times of war bomb makers make a buck. A motivated bomb maker will make more.

Again, give it a few more years. When gas hits 5/gal and insurance rates go through the roof and bread costs 3 a loaf, then we'll have a good conversation. I'm not saying it won't be good again someday. Hell, I remember my grandfather telling me stories of how he would haul a wheel barrow of cash around to go shopping for groceries. Of course that was before WWII. Oh yah, then there was the depression.

[wulf]

Yep your right and I'm working the baby steps right now. Total Money Makeover, has got to be one of the best books I've read in a long time.

The first half of that book was completely useless to me. The second half wasn't all that great either. My brother swears by it.


And i didn't even know there was a character limit...

[The Black Knight]

The first half of that book was completely useless to me. The second half wasn't all that great either. My brother swears by it.


And i didn't even know there was a character limit...

Really? what parts didn't you get? I thought the debt debunking was great. I really enjoyed the "Baby Steps" program. Planned out, it should work for anyone.