| Author |
Message |
Guest
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 Posted:
Thu Sep 22, 2005 5:30 am Post subject:
buy a house? |
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Hi,
I posted this a few times in misc.invest.real-estate hbut no responses
and full of spam, so thought I would try my luck in here w/the many
knowledgeable people contributing.
I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market? As
far as the market is concerned, I am quite agnostic to it as I don't
plan on selling it in one year. So, even if the prices go high, its
not going to help me much, as if I sell it and buy another house, even
that house will be more expensive and vice-versa in terms of the prices
going down.
I guess in my mind I do know the answer, but shelling out so much money
for a house seems preposterous to me. So I guess what I am getting it
is just the "opinion" of some people who are knowledgeable. (I know
that some of you might say that it would be better to talk to an
"expert", but my point here is to really just hear what people think
about it). If (hypothetically) you were getting a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a really expensive house? Or wait a
little while as the alleged "real-estate bubble" bursts?
Help is much appreciated. Thanks.
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Ed
Guest
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| Posted:
Thu Sep 22, 2005 8:02 am Post subject:
Re: buy a house? |
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<dufffman@gmail.com> wrote
| Quote: | It's really actually obnoxious how much people are
demanding for houses.
|
That should read:
It's really actually obnoxious how much people are
willing to pay for houses.
| Quote: | If (hypothetically) you were getting a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a really expensive house? Or wait a
little while as the alleged "real-estate bubble" bursts?
|
What if the market just goes flat and prices don't come down? What if they
continue to rise? What if they take 10 years to start coming down? I guess
what it comes down to is do you need a house now and does it have to be in
the NY area? |
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Bucky
Guest
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| Posted:
Thu Sep 22, 2005 8:02 am Post subject:
Re: buy a house? |
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dufffman@gmail.com wrote:
| Quote: | Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome
|
I never understood the line of reasoning to buy a house for "tax
breaks". If you were going to spend the money anyways, then sure, "tax
breaks" make sense. But it doesn't make sense to spend more to save
less.
You get more of a tax break by donating to a non-profit than buying a
house (principal payments are not tax-deductible). But I don't hear of
anyone suggesting to donate to charity for the purpose of getting tax
breaks.
Bottom line: If you want to buy a house, that's fine. Just don't do it
for the tax breaks.
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Steven L.
Guest
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| Posted:
Thu Sep 22, 2005 4:01 pm Post subject:
Re: buy a house? |
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Bucky wrote:
| Quote: | dufffman@gmail.com wrote:
Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome
I never understood the line of reasoning to buy a house for "tax
breaks". If you were going to spend the money anyways, then sure, "tax
breaks" make sense.
|
Of course you are "going to spend the money anyway," because you have to
live somewhere. So it influences your rent vs. buy decision.
The question is whether the after-tax monthly payment on a home mortgage
would be higher or lower than the rent on a comparable home.
If I buy a condo with an monthly after-tax mortgage payment of $1000,
that's better than renting a comparable apartment with a monthly rent
greater than $1,000. I end up with more disposable income with the
mortgage payment than I do with the rent.
--
Steven D. Litvintchouk
Email: sdlitvin@earthlinkNOSPAM.net
Remove the NOSPAM before replying to me. |
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Steven L.
Guest
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| Posted:
Thu Sep 22, 2005 4:01 pm Post subject:
Re: buy a house? |
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|
dufffman@gmail.com wrote:
| Quote: | I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market?
|
I believe the U.S. is in a true real-estate bubble and some sort of
shakeout may not be far off.
That doesn't mean you can't buy a home (after all, you have to have some
place to live), but you shouldn't max out on leverage.
Here in Massachusetts, the last time real estate prices skyrocketed,
some folks made the mistake of buying real estate with only 10% down (or
even less). When housing prices peaked and then fell much more than
10%, they ended up owing more on their mortgage than their home was
worth. And then they were faced with declaring bankruptcy. Lots of
homeowners got caught that way.
--
Steven D. Litvintchouk
Email: sdlitvin@earthlinkNOSPAM.net
Remove the NOSPAM before replying to me. |
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PeterL
Guest
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| Posted:
Thu Sep 22, 2005 9:15 pm Post subject:
Re: buy a house? |
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|
x-no-archive: yes
dufffman@gmail.com wrote:
| Quote: | Hi,
I posted this a few times in misc.invest.real-estate hbut no responses
and full of spam, so thought I would try my luck in here w/the many
knowledgeable people contributing.
I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market? As
far as the market is concerned, I am quite agnostic to it as I don't
plan on selling it in one year. So, even if the prices go high, its
not going to help me much, as if I sell it and buy another house, even
that house will be more expensive and vice-versa in terms of the prices
going down.
I guess in my mind I do know the answer, but shelling out so much money
for a house seems preposterous to me. So I guess what I am getting it
is just the "opinion" of some people who are knowledgeable. (I know
that some of you might say that it would be better to talk to an
"expert", but my point here is to really just hear what people think
about it). If (hypothetically) you were getting a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a really expensive house? Or wait a
little while as the alleged "real-estate bubble" bursts?
Help is much appreciated. Thanks.
|
You have got to separate the issues involved in buying a house. One,
do you want to buy a house because you want more space better
neighborhood house ownership etc.? Or do you want to buy a house for
appreciation tax breaks etc.?
If it's the former then it's a very personal decision. No one here can
give you advice on that.
If it's the latter my personal thinking is now is not the time to buy a
house. |
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Don
Guest
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| Posted:
Thu Sep 22, 2005 9:30 pm Post subject:
Re: buy a house? |
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|
<dufffman@gmail.com> wrote in message
news:1127349041.555333.30360@o13g2000cwo.googlegroups.com...
| Quote: | I posted this a few times in misc.invest.real-estate hbut no responses
and full of spam, so thought I would try my luck in here w/the many
knowledgeable people contributing.
I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market? As
far as the market is concerned, I am quite agnostic to it as I don't
plan on selling it in one year. So, even if the prices go high, its
not going to help me much, as if I sell it and buy another house, even
that house will be more expensive and vice-versa in terms of the prices
|
Something that should not be underestimated is that home ownership provides
a kind of forced savings: You have to make the monthly mortgage payment come
what may, and there is less temptation to fritter away the money on
non-essentials. Calculations whereby you invest the money that would
otherwise go to mortgage payments in something that has a higher return
sound good in theory, but in the long run, interest rates rise and fall in
unpredictable ways and these assumptions are risky. I would say buy a house
early in life and keep it. I did it and I am glad. |
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SD
Guest
|
| Posted:
Thu Sep 22, 2005 9:48 pm Post subject:
Re: buy a house? |
|
|
dufffman@gmail.com wrote:
| Quote: | Hi,
I posted this a few times in misc.invest.real-estate hbut no responses
and full of spam, so thought I would try my luck in here w/the many
knowledgeable people contributing.
I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market? As
far as the market is concerned, I am quite agnostic to it as I don't
plan on selling it in one year. So, even if the prices go high, its
not going to help me much, as if I sell it and buy another house, even
that house will be more expensive and vice-versa in terms of the prices
going down.
I guess in my mind I do know the answer, but shelling out so much money
for a house seems preposterous to me. So I guess what I am getting it
is just the "opinion" of some people who are knowledgeable. (I know
that some of you might say that it would be better to talk to an
"expert", but my point here is to really just hear what people think
about it). If (hypothetically) you were getting a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a really expensive house? Or wait a
little while as the alleged "real-estate bubble" bursts?
Help is much appreciated. Thanks.
|
How much is the rent for a similar house. Is (mortgage + insurance +
other expenses - tax break) a lot greater than rent. If yes then maybe
better to rent. If not then maybe better to buy.
However the calculation may not be as simple. How much does rent go up
every year? Mortgage payments will remain constant (that assumes on a
fixed rate mortgage or short length of stay - 3/5/7 yrs before you sell
or mortgage goes up). |
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Bucky
Guest
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| Posted:
Thu Sep 22, 2005 10:39 pm Post subject:
Re: buy a house? |
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Steven L. wrote:
| Quote: | Of course you are "going to spend the money anyway," because you have to
live somewhere. So it influences your rent vs. buy decision.
The question is whether the after-tax monthly payment on a home mortgage
would be higher or lower than the rent on a comparable home.
|
Right. But if your rent is $1000, and you're considering an after-tax
mortage payment of $1500 just to get a tax break, that's dumb. |
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Mark Freeland
Guest
|
| Posted:
Thu Sep 22, 2005 10:52 pm Post subject:
Re: buy a house? |
|
|
<dufffman@gmail.com> wrote in message
news:1127349041.555333.30360@o13g2000cwo.googlegroups.com...
| Quote: | Hi,
I posted this a few times in misc.invest.real-estate hbut no
responses and full of spam, so thought I would try my luck in here
w/the many knowledgeable people contributing.
I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area
have sky-rocketed. It's really actually obnoxious how much people
are demanding for houses. Now, I don't wish to spend all my
money in taxes and some tax breaks would be much welcome.
But is it really worth buying a 3 bedroom small house for 500K in
today's market?
|
Depending on the part of Queens, the house size may not be significant. We
sold a house this year in a Queens neighborhood of small houses where many
of the purchases being made were with the intent of razing and building mini
mansions. Queens is the most diverse county in the US, and you are still
seeing a lot of foreign money coming in, sustaining prices.
$500K was the ballpark for comps in the neighborhood. Take a look around.
If this is what's happening, then you are really paying for the land, and
the house is just a "bonus".
I don't know whether that makes the purchase more or less attractive, but it
is another factor to throw into the mix. It also suggests that the prices
might be more sustainable there than in other inflated regions. Or not :-)
--
Mark Freeland
nNeEwTs@sonic.net |
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Ed
Guest
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| Posted:
Fri Sep 23, 2005 12:01 am Post subject:
Re: buy a house? |
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"SD" <siddharthgdalal@COLDmail.com> wrote
| Quote: | However the calculation may not be as simple. How much does rent go up
every year? Mortgage payments will remain constant...
|
....but property taxes won't. My taxes have gone from $200/month to
$440/month.
My homeowners policy has gone up by 50%. My mortgage payment has remained
constant. It started out at $0 and it's still $0. |
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Flasherly
Guest
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| Posted:
Fri Sep 23, 2005 5:04 am Post subject:
Re: buy a house? |
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Taxes have risen 400 to 600 yrly; and at a comparable rate to exchange
at fair market value. A policy, (500ft from nearest firestation on a
10mile peninsula 50ft+ sealevel, 5th tier evacuation code), isn't
typically skewed to an initial 200 now at 1600; weather castles built
in sand neither needn't be besieged at x3 by amortization machinations,
nor divine intervention atypically underwritten, such furries as lay...
Ed wrote:
| Quote: | ...but property taxes won't. My taxes have gone from $200/month to
$440/month.
My homeowners policy has gone up by 50%. My mortgage payment has remained
constant. It started out at $0 and it's still $0. |
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SD
Guest
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| Posted:
Fri Sep 23, 2005 11:41 pm Post subject:
Re: buy a house? |
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Ed wrote:
| Quote: | "SD" <siddharthgdalal@COLDmail.com> wrote
However the calculation may not be as simple. How much does rent go
up every year? Mortgage payments will remain constant...
...but property taxes won't. My taxes have gone from $200/month to
$440/month.
|
Over what period of time? What annual% does that amount to. What % of
the mortage would that involve. Where I stay rent goes up 6-10% a year.
I doubt my total monthly payment (mortgage + tax + insurance) would go
up that much.
| Quote: | My homeowners policy has gone up by 50%. My mortgage payment has
remained constant. It started out at $0 and it's still $0.
|
Same questions about the policy - over what period of time. Also for OP
- homeowners insurance is generally a small amount/month. |
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David Wilkinson
Guest
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| Posted:
Sat Sep 24, 2005 12:01 am Post subject:
Re: buy a house? |
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SD wrote:
| Quote: | Ed wrote:
"SD" <siddharthgdalal@COLDmail.com> wrote
However the calculation may not be as simple. How much does rent go
up every year? Mortgage payments will remain constant...
...but property taxes won't. My taxes have gone from $200/month to
$440/month.
Over what period of time? What annual% does that amount to. What % of
the mortage would that involve. Where I stay rent goes up 6-10% a year.
I doubt my total monthly payment (mortgage + tax + insurance) would go
up that much.
The great things about a mortgage are that: |
a) some part of the payments goes to paying off the capital and this is
a form of forced saving, unlike rent all of which is straight down the
drain
b) the payments do not go up like rent although they can vary with the
interest rate
c) eventually you pay it all off and the payments drop to zero. Have you
thought of living rent-free? I paid off my fairly small mortgage about
12 years ago. It's great!
d) with a relatively small deposit you buy into a highly leveraged asset
that is almost certain to appreciate over the years. For property
inflation is on your side.
e) I think that in the US you even get tax breaks on the payments,
although these have been discontinued in the UK. |
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Jim
Guest
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| Posted:
Sat Sep 24, 2005 12:01 am Post subject:
Re: buy a house? |
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"SD" <siddharthgdalal@COLDmail.com> wrote
| Quote: | Over what period of time?
|
It doesn't matter. My point was that nothing stays the same. Nothing is
fixed.
"However the calculation may not be as simple. How much does rent go up
every year? Mortgage payments will remain constant...."
No, they won't. |
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