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Monday, August 18, 2008
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22 comments:
Housing Wire:
FHA loans taking up market share
A link from the links at calculated risk.
Ginnae Mae and FHA may be the only way left to get a truly low-downpayment loan. Which explains their sudden surge in popularity. What scares me is that the DAP (down-payment assistance) isn't dead quite yet, so some portion (not listed in the article) or these loans still don't even have the 3% down.
Random observation -
Luxury condos by the Courthouse Metro, N Arlington.
This high-end loaded near top floor unit is listed at a $55K loss...
Odyssey #1114, 2/2, 1125 sf
List Price: $689,900
07 Tax Asmnt: $605,600
Last Sales: 8/29/2006 $744,900
This is a newly re-listed foreclosure sale, dropped from $879,900 in Apr. 1st flr, bulder grade interior.
Odyssey #114, 3/2/1, 1698 sf, BANK OWNED
List Price: $695,000
07 Tax Asmnt: $621,400
Last Sales: 6/6/2006 $650,000
(no foreclosure record yet)
$/sf for the first home is $600. seems too high as the market hasn't responded since 5 months ago. 2nd hom is just relisted at $400/sf, so we'll see what the market has to say about that.
I remain staggered by prices like this for condos when you can buy an actual house for this kind of money a block away. This is particularly bewildering as the assessments for single family homes in this area routinely attribute 75% percent of the value of the property to the land the structure sits on. So who in their right mind would pay 3/4 of a million dollars for condo next door? Mind boggling.
I always thought the point of condos was they were cheaper than a single family home. Is there really no relationship between the cost of a condo and the cost of a house, or is this just one more thing, like the cost of renting versus cost of ownership, that's gone off kilter over past six years?
gruntled and mm
Don't miss the $500 monthly HOA fee for the ammenities that "come with condo living". If these things come down to reasonable prices, that $500/month will no longer be a drop in the bucket. (In addition to being a car payment. Oh wait, it is a car payment, the money you're paying to not need a car, get it?)
As a homeowner, I think putting just $6k a year ($500 a month) into annual maintenance / repair / replacement for the property is pretty cheap, quite honestly. Last year, for example, I dropped 15K just to have a dead oak removed before it killed somebody. So the HOA fees, from my perspective, if they're applied properly, are a pretty inexpensive way of taking care of your property.
But I would be increasingly concerned over the number of condo owners who have simply stopped paying their HOA fees. That would get really expensive for the people who are still trying to maintain the property.
Do HOA condo fees include utilities?
Wow, 15k for removing an oak?
You got raped.
Cost me $3500 and the tree was HUGE.
Powerlines and two days with a crane. First two bids I got were over $22K...
aint too many oaks in a high-rise condo
Gruntled said...
I remain staggered by prices like this for condos when you can buy an actual house for this kind of money a block away.
A TH across the street from Odyssey sold within days for near $900K. There hasn't been any 'actual house' in the $700K range a block away on the market for a long time.
So yeah, I think you're right to say that the cost of a condo and the cost of a house has gone off kilter over past six years.
NY Times graphic on american debt
This is a really cool graphic for seeing which segments of the population have undertaken the most crushing amounts of debt. Not surprisingly young people making a lot of money are in the deepest debt positions (presumably due to the combination of availability of credit and expectation of futures earnings, as well as lack of time to have accumulated savings to use instead of borrowing).
grrr. that link goes to whole series not the graphic directly. Anyway it's called "compare your debt" and its at the end of the series.
"Cara said...
Not surprisingly young people making a lot of money are in the deepest debt positions (presumably due to the combination of availability of credit and expectation of futures earnings, as well as lack of time to have accumulated savings to use instead of borrowing)."
I wish this graphic allowed you to plug in asset values as well (Cash, stock, tangible property, etc). As it stands, I am in the top 1% in terms of the amount of debt I hold. This would suggest I am in dire financial straights and am headed for imminent doom.
As it turns out however, I am quite comfortable in my financial condition in that I heavily engage in interest rate arbitrage.
For example, my wife and I have student loans for about $80,000. I could pay them off in full but instead I have them payable over 30 years at an absurdly low 2% rate (fixed).
Same thing with an auto loan 12,000 with 0% interest. For these debts, I have the cash on hand to pay them off in full - today. Yet I keep them in very low risk investments earning about 4-6% per year.
Thus so long as I am making money on the spread, I have no incentive to make anything other than minimal payments to each. Yet if push came to shove I am confident I could pay them off in full at any time.
Perhaps my situation is an exception rather than a commonality. However this graphic would suggest I have a crushing debt load when in fact I would like to think I am being very fiscally responsible with my money.
crt,
I'm sort-of in the same situation, half the student lows, double the car, same interest rates, yet I too have the cash to pay it all off today. Managed wisely, debt can be very useful. I read a saying (and I'll butcher it) something like, you use credit when you don't need to use it.
I would venture to guess that this type of situation is the odd-ball situation.
I believe the graphic also shows savings . . . and that's a key figure. If the avg. debt is 120k and avg. savings is $200 . . . it is soooo far out of whack-it's going to be hard to realistically accumulate wealth or have a better standard of livign. I would also venture to guess that you prob. save a decent amount as I do.
Debt isn't necessarily evil, just like money, tv, internet . . . etc. It's the misuse of it that burns people.
how on earth do you have 2% interest on your student loans?
You can have 2% student loans if you consolidated, like I did, in 2004. Then after paying on time for 36 consecutive months, I got a 0.25% reduction. Mine are actually at 1.67%. But don't be too jealous--I have $50,000 worth of those federal loans. I also have private loans with much higher interest rates, but those will be paid off by the end of the year.
I also have enough saved to pay them all off, but I'm aggressively saving for a DP. Besides, where am I ever going to find 1.67% again? I'll be paying those off as slowly as possible.
My car is 10 years old and paid in full, we rent a small apartment, and we save most of what we earn.
LIAR LOANS TO PROLONG CRISIS
http://www.wtopnews.com/?nid=111&sid=1462010
buhhaahaha
GTE - yes my savings profile is rather like yours. However, as you noted the average savings noted is paltry (I missed that before), so you are probably correct in that people in our situaiton are the exception rather than the rule.
The other point I was trying to make which you astutely picked up on was that debt in and of itself is not evil or something to be feared. If you know how to use it effectively, it is a valuable tool for building wealth - something that should not be fogotten on this blog.
Pluckyshucker - WW has it right. There was a brief period around 2004 or so where student loan consolidation could be had for about 2% - it too was another product of the bubble where credit got too cheap for too long. Those days are now a distant memory.
Yep, my wife has student loans that are around 2%, and those were only available during a brief window a few years ago. Normally, I'm the type of guy who would pay off his loans early, but the interest rates are so low that it makes more sense to draw them out for as long as possible.
My wife has some student loans at a very low interest rate.(not quite 2%)
Besides that we are debt free and saving quickly.
Glad people had fun with the graphic. There were lots of tidbits that could be gleaned. One interesting perspective for me was the average house debt for the 35-44 age range and second to highest income bracket shown was around $180k. Just goes to show how out of whack our market was/is in terms of affordability.
Just food for thought. No, debt is not inherently evil. True usury levels of interest is, but not debt in general. Though my savings account has been down at 3% interest all year, so no arbitrage for me.
My student loan consolidated in 2003 is at 3%, but it's also less than my car loan in amount. What's scary is younger friends of mine were saying their student loans are at 10 and above, I had a consumer loan to pay off accumulated credit card debt that was only 6.5%. 10%? That's just wrong (imho).
Never pay interest on a depreciating asset.
That goes for homes as well as cars.
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