Slayer rocks! (even at 5AM)

I wouldn’t place too much faith in the CPI as a true measure of inflation. IMO it is skewed to understate inflation, which of course helps limit entitlement programs like social security.

In fact, I can’t say I agree with capital gains on a sale of a home at all for the average Joe, in light that Joe has been paying property taxes every year while owning said property. Seems like double taxation to me (just like paying sales tax with money that has already been through the income tax machine).

This place looks nice - what makes it a condo? Is it attached to another similar unit (hence the “1 common wall” in the listing?). With these common walls, can you still crank your stereo/home theater and not disturb the neighbors?

Redfin shows the list price as $565K, where did the $495K price tag come from?

I actually like this (except for the cabinets). I still think there’s a ways to go however; price is high for a condo, and ~$400 for HOA fees are no fun… we’re getting closer to normal. We’re not there yet, but we’re getting there!

One more thing I just noticed from the sale history - this sale appears to coincide perfectly with a 5/1 Option ARM. Purchased 12/04… five years later it’s time to get out while you can!

I thought about riding that train when seemingly everyone I knew was doing it (even going back to 2003 when I first started paying attention to what was going on), but the thing that held me back was the thought of “What am I going to do in five years when everyone else doing this decides to sell their homes because they can’t afford the fully-amortizing payment? Won’t that mean lots of homes coming on the market all at once? What will that big inventory of homes on the market do to asking prices?”

It’s annoying to watch banks that would have collapsed a year ago now minting money at taxpayer expense.  But that’s the way monetary stimulus always works. Obama knew it as an exchange to get Wall St’s support for running next election.

My fellow Patriots - it is time to shop!

When you click on the address the price is now $565,000. It looks like they raised it from $495 to $565 on October 26. Wow, that’ a big jump. Being a long time Woodbridge resident, the $495 seemed like a good deal to me for that place.

It’s weird how that place is listed as a condo.

It looks like a SFH.

Any reason why it’s listed as a condo?

Has more to do with the legal way of owning then the property.

You own the `air space` of the property and an undivided interest in the land of the community instead of the land and structure outright.

They took that picture at an angle where you don’t see the other condo(s) attached to it. Those condos go up and down W and E Yale Loop, some older, some newer. This one looks very nice on the outside.

They also have a few 2 story models which are quite large.

Absolutely excellent work IR!

How can this be a pre-foreclosure.  From the pictures, looks like the property is empty.  The owners seems to have left their old CRT TV in the living room though.  Free disposal I guess…

The govts artificial economy is losing steam.  And it’s starting to show in the stock market.

Yesterday’s News:

Dow’s Gain: 199.89 as GDP Wows Wall Street.  NEW YORK (TheStreet)—A better-than-expected pop in third-quarter GDP pumped stocks Thursday, making up for losses earlier in the week, while oil marched ahead. <-Bullshit!

Today’s news:

NEW YORK (TheStreet)—A strengthening dollar compounded on earlier profit-taking and a soft consumer spending report, pushing stocks further to the downside.  The Dow Jones Industrial Average lost 203 points, to 9760, while the S&P 500 fell 24 points, to 1042. The Nasdaq trailed 42 points, at 2056.

The govts actions of bullshitting the American people is ending.  We cannot spend ourselves out of this debacle.

I think equities will lead the next step down in real estate.

Whether or not somebody lives in a property has little to do with it’s foreclosure status.

IR,

I just wanted to thank you for this week posts.  They were extremely informative, and goes deep into the details of home ownership costs.  A lot of my friends are now beginning to look for their first home.  I am definitely recommended everyone of them to come to this week’s post… its time to see exactly what they would be paying for.

I agree the post was very informative.

However, I felt like I was left hanging waiting for the analysis of lost opportunity money over time.  IR mentions being tied to mortgage rates, but other than that how can one determine the value of their money vs. sinking it into home ownership?  I guess I was looking for an example to provide some idea as to the magnitude of the lost opportunity.

Thanks!

The lost opportunity is whatever you feel you can make in a competing investment.

I find it interesting that some people believe they should max out their home loan to “free up” investment capital as if they can consistently achieve a higher rate of return than their home mortgage. These are people that would put in an opportunity cost rate higher than the interest rate. Under those circumstances, the cost of your equity is so high that you would rather have a loan. In the real world, people put money into all kinds of investments, but for the sake of comparison, I chose the very conservative return of CDs.

In today’s market, you can tie your money up in real estate, or you can tie it up in 2-year CDs at 2.25%. I suppose you could have put it in the stockmarket in March and had a 66% rate of return, too. I wouldn’t count on that continuing forever.

To be even more accurate, one needs to add the property tax paid as an itemized deduction when comparing to standard deduction. For properties priced low (around $200K or less), it may not been very advantageous to itemize if buyers are a married couple since they already get the higher standard deduction. Disclaimer: Always consult your tax consultant or your trusted tax software

I stopped reading when you wrote 50K of mortage interest in a year.

Damn, my wife and I make damn good money together, we don’t pay half of that and we’re like scratching our heads trying to figure out how to pay for our kids’s college tuition.

We don’t have fancy cars either.

Sorry, maybe I’ll finish reading this one later…. I just can’t wrap my head about paying so much interest on your mortgage.

Love the Dali though.  Salvador was always a shrewd businessman, did you know that?  Ever been to Cadaques?

I think you should talk about transaction costs if you are going to talk about cap gains.

I am looking at my closing statement now on a house I owned for 10 years.  Besides the usual relator fees (which total 5%, which is lower off the older 6%) there are escrow fees, title charges, counter transfer taxes, processing fees, etc., etc.  THOUSANDS of dollars in transaction fees come off the gain - or add to your loss.

Good point. Do these fees count against capital gains? Say for example if I buy a house for $300,000 and have 2% or $6,000 in transaction fees. When I go to sell my house for $400,000 in ten years, is the capital gain $100,000 or $94,000?

Just to clarify, total cash outflow of the home for the buyer my example would be $306,000. Sale value would be $400,000.

Of course, there are also transaction fees with selling a home, such as commissions. How would this effect the gain figures?

“...we don’t pay half of that and we’re like scratching our heads trying to figure out how to pay for our kids’s college tuition.”

Everybody should be scratching their heads thinking about how they would pay for their kids’ college.  Turns out tuition fees are bubble-ized too, thanks, again, to our government.  Here’s an excellent article courtesy of Mish:

http://globaleconomicanalysis.blogspot.com/2009/10/remarkable-comparison-affordable.html

I hope our generation really rallies to prevent the credit bubble scamsters from ever operating in our lifetime again.

Love it.

Perhaps the carrot can be replaced with the ever popular KFC bucket?

The capital gains tax break is not really all that great for retirement - it depends on you selling your dwelling, for heaven’s sake.  THen you get a cap. gains tax break but you’re homeless.  It’s only good for feeding the real estate churn.

Maybe the nice exterior is proof that the $400 HOA fees are well spent.

Also as the price for a relatively gentle deflation.  Think what would have happened if not for gov’t intervention - failed banks across the board, mark-to-market, price declines of about 80% in one year in Irvine. 

Do you prefer to work the band-aid loose gradually or yank it off?

I recall being told that I was not “smart enough” to understand the value of 125% home loans.  Only 60% of my income to mortgage servicing. 

The extra 25% was to be used for extra goodies and to pay for monthly mortgage payments until the money ran out or one sold their house a profit.  Too bad the “smart” people got trapped with a house under water.

For many, it was best to buy a second house in the down market with the extra money and walk away from the first house. 

Only us dumb people are still renting, didn’t party on the loans and are left to pay for the bailouts of the toxic loans.

Yank it! Why prolong the pain? Besides, how is bank failure a bad thing? Banks fail all the time, even in a good economy. The only difference now is that we have zombie institutions (Freddie, Fannie, Ginnie, AIP, CIT, GM, etc etc) pretending to be solvent, propped up with printed paper. All is well! Pay no attention to the man behind the curtain!

Popeye’s!