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Old 10-26-2006, 12:02 PM   #51
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TOLD YOU SO!
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Old 10-26-2006, 12:03 PM   #52
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Quote:
Originally Posted by Petrus View Post
You only lose when you sell.
You also lose by having a higher mortgage payment than you would have had if you had waited a little bit. But, if you find something that is your absolute dream home, pick it up.
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Old 10-26-2006, 12:04 PM   #53
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Quote:
Originally Posted by dcmomentum View Post
Losing $100k on a $430k investment is pretty stupid in just about any situation.
It isn't stupid, it's unfortunate. If you had a crystal ball, it would be stupid.
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Old 10-26-2006, 12:06 PM   #54
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It isn't stupid, it's unfortunate. If you had a crystal ball, it would be stupid.
Because people chose to ignore all of the obvious warning signs? Do you remember that thread where I wasn't sure if I should buy a new car or a condo?

I chose wisely. Everyone told me to get a condo, b/c the car will depreciate (big deal, so I lose a few $k/year). But, all of the obvious warning signs told me that the market is in for something really big. It's too bad that common sense = crystal ball I guess.
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Old 10-26-2006, 12:08 PM   #55
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Oh Magic 8 ball...should I sell my home before The Looter can afford my house? Housing is still going up all around me so these stats are a lil off I'd say.
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Old 10-26-2006, 12:10 PM   #56
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Quote:
Originally Posted by dcmomentum View Post
Losing $100k on a $430k investment is pretty stupid in just about any situation.
Quote:
Originally Posted by Petrus View Post
You only lose when you sell.
.....
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Old 10-26-2006, 12:11 PM   #57
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Oh Magic 8 ball...should I sell my home before The Looter can afford my house? Housing is still going up all around me so these stats are a lil off I'd say.
It depends on where you live. Prices are going up around me, also, but it is a reflection of a recent influx of jobs into the area.

In case you missed it from when I posted it in another thread:


Places that saw astronomical price increases in the past 5 years (e.g. SF, LA, LV, DC, etc) are seeing prices drop now.
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Old 10-26-2006, 12:16 PM   #58
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.....
It doesn't matter. You still paid $100k more relative to someone else who waited for the burst, then bought the same property.

$400k mortgage on a condo = $2,334.29 a Month
$300k mortgage on that same condo = $1,750.72 a Month

If that's not losing, I don't know what is.
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Old 10-26-2006, 12:22 PM   #59
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There are still a trillion, yes TRILLION, dollars worth of toxic loans looking to reset next year. Wait till those homes come to market as people can't affort their mortgage along with all the new construction still being built out. This is just the start of "a soft landing" as many call it.
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Old 10-26-2006, 12:24 PM   #60
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Quote:
Originally Posted by dcmomentum View Post
It doesn't matter. You still paid $100k more relative to someone else who waited for the burst, then bought the same property.

$400k mortgage on a condo = $2,334.29 a Month
$300k mortgage on that same condo = $1,750.72 a Month

If that's not losing, I don't know what is.
To you it is, not everyone. For some people living in that condo for year is worth the extra mortgage payment. That condo could have cut their commute time down from 2 hours to 5 minutes. What's 500 hours (50 wks. x 10 hrs.) of your time worth? What's the lessened stress of not dealing with a long commute worth? Etc. Like I said lots of variables.
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Old 10-26-2006, 12:28 PM   #61
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meh.. if this is what the "sky is falling" is like for real estate... I'm going to be buying more and more real estate for the rest of my life.

it really isn't that bad of a downside... and there is so much on the upside in the long term.

ps. 400k condos last year being bought for 300k now- I haven't seen that.
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Old 10-26-2006, 12:29 PM   #62
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Originally Posted by docwhorocks View Post
To you it is, not everyone. For some people living in that condo for year is worth the extra mortgage payment. That condo could have cut their commute time down from 2 hours to 5 minutes. What's 500 hours (50 wks. x 10 hrs.) of your time worth? What's the lessened stress of not dealing with a long commute worth? Etc. Like I said lots of variables.
If you want to cut down your commute time, you could also rent just as easily. You be "out" $18k/year, but have zero liability and have a place to live for a year. You could walk away after that year, and not have any debt. You also wouldn't pay taxes or upkeep either.

I think that you're missing the point. I'm saying that someone whom bought a piece of real estate a year ago vs. one whom bought the property 12 months from now, will be much worse off. People are arguing that they only lose money when they sell.

I'm arguing that you're paying a much higher mortgage than the guy next to you, for the same property. That's because the person ignored the warning signs and bought into a market at it's peak.
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Old 10-26-2006, 12:30 PM   #63
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Originally Posted by WRXVT View Post
meh.. if this is what the "sky is falling" is like for real estate... I'm going to be buying more and more real estate for the rest of my life.

it really isn't that bad of a downside... and there is so much on the upside in the long term.

ps. 400k condos last year being bought for 300k now- I haven't seen that.
Post 44.
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Old 10-26-2006, 12:35 PM   #64
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Meh, I LOVE my house. I have a view all the way across the SW corner of the valley that can never be obstructed, and that view is unheard of for a house in my price range. I could not have that view if I had not bought the house I bought and when I bought it.

Having put so many upgrades in my house, I'm confident that it would sell pretty quickly if I was in a pinch, although I wouldn't expect to recoup my upgrade investment short-term.

Then again, my plan for this house is 5+ years, and if rent keeps going up like it is around here, I'd like to rent out the house instead of selling it later on. The floor plan is a perfect roommate arrangement.
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Old 10-26-2006, 12:38 PM   #65
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Originally Posted by dcmomentum View Post
If I think that you're missing the point. I'm saying that someone whom bought a piece of real estate a year ago vs. one whom bought the property 12 months from now, will be much worse off. People are arguing that they only lose money when they sell.

I'm arguing that you're paying a much higher mortgage than the guy next to you, for the same property. That's because the person ignored the warning signs and bought into a market at it's peak.
My point is - depends when you sell. Say person A, who bought for $400k, sells the condo is 5 years for a price of $500k. They made $100k. While person B who bought the place for $300k, made $200k. Both made money. Could person A have invested wiser - yes. But they didn't lose any money. Ever invest in a stock that yielded 7% while another stock yielded 10%? Did you lose any money?
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Old 10-26-2006, 12:39 PM   #66
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meh.. if this is what the "sky is falling" is like for real estate... I'm going to be buying more and more real estate for the rest of my life.

it really isn't that bad of a downside... and there is so much on the upside in the long term.
Ditto and agreed.

- Janq
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Old 10-26-2006, 12:39 PM   #67
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I'll post in this thread again when I want to sell my house (5 years+). Until then, I don't really care as long as we don't go into a recession.

Have fun running around like Chicken Little, ben et al while I continue to build equity in my house...
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Old 10-26-2006, 12:40 PM   #68
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My point is - depends when you sell. Say person A, who bought for $400k, sells the condo is 5 years for a price of $500k. They made $100k. While person B who bought the place for $300k, made $200k. Both made money. Could person A have invested wiser - yes. But they didn't lose any money. Ever invest in a stock that yielded 7% while another stock yielded 10%? Did you lose any money?
I know what you're saying. However, person A also pays considerably more per month for their mortgage than person B. Person B can continue to live there, and is only paying on a $300k mortgage, person A is paying on a $400k mortgage. Is it "losing" money? I guess that's up to individual definition.
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Old 10-26-2006, 12:41 PM   #69
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My point is - depends when you sell. Say person A, who bought for $400k, sells the condo is 5 years for a price of $500k. They made $100k. While person B who bought the place for $300k, made $200k. Both made money. Could person A have invested wiser - yes. But they didn't lose any money. Ever invest in a stock that yielded 7% while another stock yielded 10%? Did you lose any money?
I don't believe I'm defending DicMo, but investors calculate "opportunity cost" all the time: What it COST them to make one decision over another.
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Old 10-26-2006, 12:45 PM   #70
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I don't believe I'm defending DicMo, but investors calculate "opportunity cost" all the time: What it COST them to make one decision over another.
That's not an example of opportunity cost.
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Old 10-26-2006, 12:46 PM   #71
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Over a short term, real estate may prove to be a bad investment. But, over the long haul, it's very hard to beat. Once we run out, they aren't making any more.
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Old 10-26-2006, 12:48 PM   #72
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I know what you're saying. However, person A also pays considerably more per month for their mortgage than person B. Person B can continue to live there, and is only paying on a $300k mortgage, person A is paying on a $400k mortgage. Is it "losing" money? I guess that's up to individual definition.
I know. But you said losing in prior posts. Is making $100k losing? Yes hind sight is 20/20 (there was always something better to invest in). But if you sell for more than you buy (inflation adjusted) I don't consider that losing.

Quote:
Originally Posted by imprezton
I don't believe I'm defending DicMo, but investors calculate "opportunity cost" all the time: What it COST them to make one decision over another.
Right, but I'm talking about people that buy a house to live in. Not someone buying a house as solely an investment. Your house for example, sounds like you did not buy it solely as an investment. 5 years from now will you be losing if your house only sells for 20% more than what you paid, if houses in another area are going for 30%?
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Old 10-26-2006, 12:49 PM   #73
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That's not an example of opportunity cost.
It's a perfect example of opportunity cost. Calculate your return from refraining from buying a property, continuing to pay rent and investing the rest of the escrow/downpayment/mortgage/move-in expenses in another form af investment, cashing out the investment in 18 months and then buying a similar property for 10% less. Then calculate your return from buying that property immediately. The difference is opportunity cost.
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Old 10-26-2006, 12:51 PM   #74
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Right, but I'm talking about people that buy a house to live in. Not someone buying a house as solely an investment. Your house for example, sounds like you did not buy it solely as an investment. 5 years from now will you be losing if your house only sells for 20% more than what you paid, if houses in another area are going for 30%?
On paper, I would be losing. In reality, I wouldn't trade my house/location for anything. Quality of life is an intangible that can't be calculated into the profit formula. So in that sense I agree with you.
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Old 10-26-2006, 12:57 PM   #75
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It's a perfect example of opportunity cost. Calculate your return from refraining from buying a property, continuing to pay rent and investing the rest of the escrow/downpayment/mortgage/move-in expenses in another form af investment, cashing out the investment in 18 months and then buying a similar property for 10% less. Then calculate your return from buying that property immediately. The difference is opportunity cost.
Kinda. That assumes that buyer A chose to do something else with their money for the period of time during which the condo gained $100k in value for Buyer B. In other words, it's not a comparison between two entities who could have done the same thing. It's a comparison between the return on two seperate and mutually exclusive investments/actions that require the same resources. So you'd talk about the opportunity costs of sinking $5k into a turbo kit instead of investing in stocks, not when comparing person A's action to person B's action.

It sounds like you're talking about it in terms of "a missed opportunity" (which is right) based on waiting too long (which is wrong)...

I hate to quote Wikipedia, but they explain it pretty well:
http://en.wikipedia.org/wiki/Opportunity_cost
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