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I heard on the radio this morning that a study was done investigating whether mortgages today are breaking the budget. (I'll try to find a link)

They found that compared to a generation ago (assuming adjusting for inflation), that monthly mortgage costs are up 50%. That sounds bad, right? NOT. The size of housed are also up 50%. People are living in bigger houses with less people. So the bottom line is that people are living beyond their needs and/or means compared to a generation ago.

Personally I can relate. My house for just my wife and I is twice the square footage as the house I grew up in with 2 parents and 5 kids. Fortunately it has no affect on the budget.
 

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I would think the person would have bigger issue with Taxes in some loctions. i.e I am renting my house in Colorado Springs yearly taxes for 06 were 730.00 I am renting a similar floorplan (and lot) in N IL and the taxes for the house are 4K.
At least a 15 ot 30 yr mortgage the payments are fixed you cannot say that about the taxes.
 

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My opinion is the budget is broken by the one who manages it. Everyone has their own circumstance. If it turns out that too many people have overextended themselves with respect to housing, then maybe the case is as you have pointed out. In the long run, if this is true, we all will pay for the poor judgment of the rest, in one way or another.
 

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I think a big piece of the equation is where you live. I have lived 20-25 miles North of Seattle since buying my first home in 1967. We paid $20,900. At the time I made $5,000 per year and my wife made $4,500. So we paid about two years of our earnings for our home. Our interest rate was 5.5% on a 30 year fixed. We put 5% down ($1,000) and our payments were about $115.00 per month or 12% of our income. Today, the house is valued at $349,000. (You can check it out at zillow.com The address is 6118 185th Pl SE, Lynnwood, WA) It is a 1350 Sq Ft home so I wouldn't consider it extravagant.

Now, my youngest son and his wife are buying a house. They have decent incomes. He makes $80K and she makes $50K. If they were to buy this same house as their first home it would cost 2.7 times their annual income. They would need $17,500 plus closing costs for a down payment. Their payments (assuming 6.5% interest) would be $2095 per month or 16% of their income.

I think the cost of real estate is getting to the point that most young people aren't able to afford a new home.. While I agree many people are buying more home than they need, that's a choice they make. First time home buyers are lucky if they can afford anything livable.

Fortunately, as an old guy my house is paid for. But as mentioned earlier, the taxes continue to increase. I pay almost as much in taxes per year on the home I have today as I paid to buy my first home.
 

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Yeah, being young sucks.

It's all about priorities and the choices we make.

My fiance has a car she pays $150/mnth on. I have a bike I pay $300/mnth on. Once we get the cars paid off, we'll have enough to buy a house... assuming the market stays somewhat the same.

Right now, we're choosing to have more fun outside the home. When we're married and thinking about kids, we'll want the home.

The house we're currently in, we rent... we will probably get an option to buy it in the future (owned by a relative).
 

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Housing prices are absolutely ridiculous. I got lucky, bought my house right before the boom and paid 40% less than I would have if I had waited another year. And frankly my neighborhood sucks! Honestly, I don't think I could afford to buy my house now if I had to do it over again....

Unless your combined annual income is over 100k you're not going to get a decent house anywhere in the Norfolk area. About 5 years ago you could get a decent starter home in this area for around 100K, those same homes have doubled since. The real problem is the payscale has not risen accordingly and the market is now in the dump. I have 4 homes for sale on my block alone and can count another 30 or more in my neighborhood that are just sitting there.....
 

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Discussion Starter #8
Shaw_2112 said:
Housing prices are absolutely ridiculous. I got lucky, bought my house right before the boom and paid 40% less than I would have if I had waited another year. And frankly my neighborhood sucks! Honestly, I don't think I could afford to buy my house now if I had to do it over again....

Unless your combined annual income is over 100k you're not going to get a decent house anywhere in the Norfolk area. About 5 years ago you could get a decent starter home in this area for around 100K, those same homes have doubled since. The real problem is the payscale has not risen accordingly and the market is now in the dump. I have 4 homes for sale on my block alone and can count another 30 or more in my neighborhood that are just sitting there.....
You chasing all the neighbor's away? :265:
 

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Since income, as a rule, doesn't rise like the housing costs of the last decade, in order for an equilibrium to be reached housing prices will need to fall to incomes to balance. The process has only begun. I'm sure it will extend out for at least two years or more. Things move slow but it will happen. The average Jane and Joe will be able to afford the average home once again.
 

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thatoldbike said:
You chasing all the neighbor's away? :265:
DOIN MY DAMNEDEST!!! Trying to get rid of all the slumlords, ganger, hookers and dealers. Actively involved in the Neighborhood Watch and Civic League and we're cleanin up. Problem is the only people who can afford to buy don't want to live here, but they can't afford better so they just continue renting or get in over thier heads with a BS mortgage...
 

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The population has increased. to buy a home in an establised neigborhood is going to be expensive, if it is close to work. To buy a similarly sized house out in the sticks(a newly developed area), is much cheaper. if you look at houses with 1350 sq ft 40 mi out, you will see some that are affordable. But people are snobs they don't want to live with people that live where they can afford to live.
 

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I think a lot of has to do with the area. Not neighboorhood, but city, etc.

Where I live 200k will buy a brand new 2200 sq foot house.

Talking about the 1350 sq foot at 349k.......wow. That much would buy a freaking mansion here.

Seriously 349k would be 1 acre+ lot, over 3000 sq ft, probably in ground pool, 4 bed, 3 bath.

A decent 1350 sq ft house that is in good shape but older sells for around 50-70k.
 

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part of it is the cost of trading houses.

realtor fees are 12% (6% per realtor - buyer, and listing, correct?) of the cost of selling a house.

at $200k, that's a TON of money to pay, for some old lady with a Glamour Shot photo on her Business Card to walk folks thru your house.

some realtors are offering discounted fees.

but 2 guys at our work sold ~200k houses, moved (tampa, seattle) bought 250k houses, and a year later, have MOVED back.

guess what? that's 4 times they will have to pay Realtor fees.

i would sell my house and go smaller, we had 5 people in the last house, bought this house, moved up here, and NO ONE moved with us.

so now we have a huge house to heat & cool & clean. 2 rooms are basically empty - storage.

and taxes & Ins are ~1k each.

it's just not like a bike or a car, where you can go "this no longer fits my family, i need to trade up or down"

the market is crushed here in SC, and also in Seattle. buddy says builders are finishing new houses, and just giving them to the bank to Repo.
 

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Shaw_2112 said:
DOIN MY DAMNEDEST!!! Trying to get rid of all the slumlords, ganger, hookers and dealers. Actively involved in the Neighborhood Watch and Civic League and we're cleanin up. Problem is the only people who can afford to buy don't want to live here, but they can't afford better so they just continue renting or get in over thier heads with a BS mortgage...
But like you said...they are not selling now which will drive the prices back down.
 

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The problem is the "Jones." They want a bigger house than the one they are in right now. So they build it and move into it. But then they want a bigger one again. If someone would just take away the Jones' resources the problem would be solved.
 

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04ctd said:
part of it is the cost of trading houses.

realtor fees are 12% (6% per realtor - buyer, and listing, correct?) of the cost of selling a house.
I think that realtor fees are normally 6% total, 3% to the listing broker and 3% to the selling broker. The broker makes the deal with the agent. Many will work for less.
 

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04ctd said:
part of it is the cost of trading houses.

realtor fees are 12% (6% per realtor - buyer, and listing, correct?) of the cost of selling a house.

at $200k, that's a TON of money to pay, for some old lady with a Glamour Shot photo on her Business Card to walk folks thru your house.

some realtors are offering discounted fees.

but 2 guys at our work sold ~200k houses, moved (tampa, seattle) bought 250k houses, and a year later, have MOVED back.

guess what? that's 4 times they will have to pay Realtor fees.

i would sell my house and go smaller, we had 5 people in the last house, bought this house, moved up here, and NO ONE moved with us.

so now we have a huge house to heat & cool & clean. 2 rooms are basically empty - storage.

and taxes & Ins are ~1k each.

it's just not like a bike or a car, where you can go "this no longer fits my family, i need to trade up or down"

the market is crushed here in SC, and also in Seattle. buddy says builders are finishing new houses, and just giving them to the bank to Repo.
Realator costs are a total of 6%. 3% to each. If the house is over $300K you can usually get them down to 5%. Still a ton of money but not as bad as 12%. You can usually figure a total of 8 to 10 % to sell including taxes, fees, title insurance, etc.

The Seattle market has slowed down as far as sales rate and prices have dipped a little but they are still up over last years prices. Unfortunately, nobody is giving houses away. They are still ridiculously expensive up here. If all of the Californians would move back to California and quit Californicating:laugh: Washington, we might get back to reasonable prices.


Housing prices stall while inventory climbs

By Elizabeth Rhodes,
Seattle Times business reporter

The county's median single-family home price was $450,000, according to the September sales report released this morning by the Northwest Multiple Listing Service.

That's just below last March's median of $457,500 and almost $32,000 less than this year's high of $481,750 in July. However compared to the previous September, house prices are up 5.9 percent.

Meanwhile sales are lagging. Last month offers were accepted on 1,541 King County houses — a 32 percent drop from the previous September's 2,271 sales.

The same situation is occurring with the county's condominium sales. September inventory was up 74.2 percent, while pending sales were down 26.7 percent.

Despite this, King County's condo prices continue to climb. Their median sales price was $299,900, up 14.8 percent over the previous September and up $15,000 from August. Condos comprise a third of all homes sold in the county.

"The turbulence in the mortgage market has definitely had an effect on sales activity," says Lennox Scott, chief executive of John L. Scott. "We knew it would be this way for August and September, and w're still seeing the major effects here in October."

Within the four-county region that also includes Snohomish and Kitsap, Pierce was the one county to post year-over-year dips in both median house and condo prices. Last month houses there sold for a median $277,000; a year earlier it was $279,950. Pierce County condos fetched a median $215,000 last month, or $10,000 less than a year before.

Snohomish County's single-family home prices were up 2.7 percent year-over-year to last month's $368,000. Condo prices, meanwhile, showed robust growth: up 9.1 percent over a year earlier to a median $239,950.

In the four-county region, Kitsap County reported the highest year-over-year price growth for single-family homes — up 12.8 percent. Last month's median was $304,597 compared to a year ago's $269,900. Just 32 condos sold in Kitsap County last month.
 

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i stand corrected - 6%, 3% to each sounds more correct.

so, on $200k, that is $12,000 in realtor fees

I paid that 3 years ago, so i guess the $12k stuck in my throat, as 12 something, just not 12%

buddy's house is in Kitsap county.

even at 6%, if they buy 2 houses and sell 2 houses, they could pay $44000 in realtor fees just due to moving for the job.
 

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It gets worse, in Ca. Prob 13 made it a law that you real estate taxes stayed the same based on what was paid for the home. If you bought a home 12 years ago for 200k, and that home is now worth 550k, you are still paying taxes based on 200k.
Now, your job moves you 300 mi away, where you have to pay 650k for a similar home. Now, you just paid 6% fees to sell or 33k, so you made 317k and came out with more because you owed less on the house.

If you put 300k down, your payment is now almost 2x as much and taxes are more than 3x as much. In many counties, their are extra fees based on what the county was able to pass (Ross Loos taxes). I think they refer to extra for schools to be built because of the new building.

Many people in a situation like this are better off weighing what one breadwinner will make against what the other might be able to get. Many will quit and try to find local work for short money because the family will be better off.

This also keeps empty nesters in the family home and it isn't available for a new family. It is really sad to see the old home were you grew up with no kids around, the parks are empty, the schools are full of inner city kids that get bussed in.
 

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around here, unless you're a sucker, realtor fees are negotiable. The 250k housing market has taken a hit, 500k a big hit, 750 has tanked. Sherriff sale lists look like small newspapers.
My place is assessed at 225K, would sell for around 400k and I pay a tad over 6k this year in tax.
 
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