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| 11/23 |
| 2003/11/25-26 [Reference/RealEstate] UID:11222 Activity:high |
11/24 Don't overlook a condominium as an affordable first investment. Unlike
years past, when condos were considered a lousy investment by
comparison with detached homes, condos are now appreciating at twice
the rate of single-family residences.
http://csua.org/u/53b
\_ Not a condo, but the whole condominium is a good investment.
A single condo still sux balz!
\_ Sure, but that will stop when they approach the cost of a SFR,
which will always cost more - and the SFR will hold its value
better, too.
\_ Another factor I have heard is that the boomers are starting
to reach retirement age, and their kids are leaving home, and
because of that, many will be downgrading from house to
townhome or apartment.
\_ This was supposed to happen with WWII-era seniors when the
boomers left home. It didn't quite work out that way as the
boomers moved south and west and built more suburbs. The big
change is the increase of single adults (with and without kids)
with homes and immigrants.
\_ OTOH, watch prices on 2-storey units drop as Boomers like my
Mom and Dad realize they won't be able to make it up the
stairs much longer.
\_ Supply and demand affects condo prices more than homes
because it is easier to increase the supply in a given
neighborhood. If there are lots of condo developments
and/or free land nearby, be wary. In as city like SF, you
are prob safer from this kind of thing happening.
\_ hehehe another bitter renter trying to delude himself into
thinking the home he can't afford is a bad ivnestment.
\_ Considering the fervent responses on the motd everytime
someone questions housing prices, looks more like a
bunch of heavily mortgaged home owners worried about
the prices of their houses. Makes good troll bait.
- happy owner of big house not in BA.
\_ Not at all. I was in the bitter renter hoping for a housing
crunch mode until I finally got a clue and just bought
something. I'm up over $150 in 4 years, thanks and not
even close to heavily mortgaged. I'll own it 100% in
~7.5 years.
\_ Down with the Kapitalist bourgeiosie!
\_ What makes you think the next 4 years is going to
be like the last 4 years? The housing price
increase rate during the bubble and interest rate
cutting years is not sustainable. Home price
increase first half of this year - San Jose -1%,
Oakland 1%, SF 1%. That doesn't sound like good
enough reason to rush out to buy a house at all
cost. Interest rate can't go any lower. Latest
news is housing sales went down. Economy is still
uncertain. Besides, the Op may just be considering
uncertain. Besides, the op may just be considering
to buy a house. Just because you have no clue for
a long time, and then made a "smart" move doesn't
mean you
whether it's worth it to buy a condo, or save more
to buy a house. You said you had no clue for some
time before making a "smart" move to buy a house.
Perhaps you should consider the possibility that
you may be quite clueless about what will happen in
the next four years instead of jumping to conclusions
that anyone less than 100% bullish abouthousing
prices is a "bitter renter". |
| 11/23 |
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| csua.org/u/53b -> www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/11/23/REGRH37M1J1.DTL Lenders look at a number of variables when theyre considering whether to approve a mortgage. Among those variables is the amount of cash the borrower has available for a down payment and closing costs. Also important are the borrowers employment and credit history and debt- to-income ratios. If a borrowers debt-to-income levels dont fall within certain guidelines, the mortgage might not be approved. The first number of the equation, called the front-end ratio, is determined by dividing your proposed monthly housing expense principal, interest, taxes and insurance, also called PITI by your gross monthly income income before deducting for income taxes. The second number, called the back-end ratio, is determined by dividing your total monthly debt including your proposed PITI by your gross monthly income. A borrower with good credit, a front-end ratio of 28 and a back-end ratio of 36 had no trouble qualifying for a mortgage. But today, if your back-end ratio is less than 50 percent of your gross income and you have good credit, youll probably be approved for a mortgage. This liberalization of qualifying ratios makes it easier for borrowers to qualify for larger mortgages, which is good news for buyers who are trying to buy a home in an area where home prices are high. In New York City or San Francisco, for example, its not uncommon for buyers to pay more than $500,000 for a starter home. But if you can scrape together enough cash for a 5 percent down payment plus closing costs and you have good credit, you can become a homeowner if your front-end ratio is under 45 and your back-end ratio doesnt exceed 50. There is a downside to easy mortgage money, and that is that Americans are taking on more and more debt. According to a study by Harvard Universitys Joint Center for Housing Studies, 3 in 10 United States households are spending 30 percent or more of their income on housing. If one of the partners is laid off, leaving the couple with one income instead of two, the percentage of income that goes to housing can skyrocket. A larger mortgage means a bigger tax write-off because interest paid on a home mortgage is generally tax-deductible. There are also benefits to be derived from using as little as possible of your own money to purchase a valuable asset, called leverage. House-hunting tip: However, before you saddle yourself with the largest mortgage you can get, consider what makes good sense in terms of your quality of life, your overall financial situation and your long-term economic goals. Many buyers are deciding to keep their cost of housing down so that they can diversify their investments, avoid being house-poor and have plenty of cash reserves to handle unexpected emergencies. Deciding on a smaller mortgage will mean buying a less expensive home, unless you have enough cash saved to make up the difference. However, keep in mind that whatever you buy should suit your needs for at least five years. Buying with a shorter time frame in mind is risky because real estate markets tend to be cyclical. The closing: Dont overlook a condominium as an affordable first investment. Unlike years past, when condos were considered a lousy investment by comparison with detached homes, condos are now appreciating at twice the rate of single-family residences. Dian Hymer is author of House Hunting, the Take-Along Workbook for Home Buyers, and Starting Out, the Complete Home Buyers Guide, Chronicle Books. |