11/11   http://csua.org/u/dzn (Washington Post)
        Oops, a couple bought a townhouse under construction for $796K in May,
        but equivalent places are now selling for $699K, and their house isn't
        even done yet!
        \_ Here's the full context strongly implying the eager beavers did no
           research:
   "Lynn Edmonds and his wife, Sebnem, could barely wait to sign on the dotted
   line back in May when they committed themselves to pay $796,000 for a
   three-floor townhouse under construction in Alexandria's Cameron Station.
   But since May, the sales prices for the development have fallen -- and
   units like the one the Edmonds bought are now being sold for $699,900. The
   Edmonds are facing the prospect of a $100,000 loss in value before they
   even walk through the front door."
                "Lynn Edmonds and his wife, Sebnem, could barely wait to
                 sign on the dotted line back in May when they committed
                 themselves to pay $796,000 for a three-floor townhouse
                 under construction in Alexandria's Cameron Station. But
                 since May, the sales prices for the development have
                 fallen -- and units like the one the Edmonds bought are
                 now being sold for $699,900. The Edmonds are facing the
                 prospect of a $100,000 loss in value before they even
                 walk through the front door."
                [ reformatted - formatd ]
           Even though their on paper value has dropped, they apparently plan
           to live in it so the important thing is the interest rate they're
           paying, what would their costs be to live somewhere else for the
           additional time they didn't have this house to be in the same area,
           and what will the final selling price be years from now when they
           eventually do leave that house?  Being overly concerned about a
           single number without context is like saying you're a google ipo
           millionaire based on your unsold options.  Anything can happen
           between now and the sale date.
        \_ "... Sandra Cabral, a real estate agent with Re/Max Pros ...
           'Within two or three years, there's going to be a whole lot of
           foreclosures, because with all of the interest-only loans ...'"
           \_ Axiom 1: people are stupid.
        \_ ouch! that's a fast way to throw 100k down the drain.  well,
           maybe they got a consolation prize in a lower interest rate.
        \_ For reference:
           $796k @ 5.25% for 30 years: $4,395.54/month,
           total principle + interest paid over life of the loan: $1,582,394.93
           $699k @ 6.5% for 30 years: $4,418.16/month, total P+I: $1,590,535.97
           \_ For reference:
              - average length of time americans stay at a home: 5 years
              For reference:
              - 30 year fixed interest rate: current rate - lowest rate in last
                2 years: 0.9%
              For reference:
              - The additional $20k downpayment if put in the stock market and
              assuming a return of 8% per year, in 30 years, would earn: $200,000
              assuming a return of 8% per year, in 30 years, would earn: $200k
              For reference:
                assuming a return of 8% per year, in 30 years, would earn:
                $200k
              - Did you forget mortgage interest tax deduction?
              \_ between ~ June 1 and today, the difference is 0.8%
                 don't need to go back 2 years
                 not as big as the 6.5 - 5.25 = 1.25% that other guy posted
           \_ that's pretty interesting!
              \_ 8%/yr for 30 years?  Really.  Now if you had stuck $20k in
                 the stock market, say, 2 years ago...  How would that 8% be
                 looking?
                 \_ S&P500 was 1060 two years ago, and 1235 now, almost
                    exactly 8% per year.
              \_ None of these numbers take into account their current cost
                 of living somewhere else for 8-9 months if they had bought
                 now instead of in spring.  Are they in a house?  Probably
                 not or they'd be less desperate.  So what's their rent cost/
                 month?  Either way we just don't have enough info to know
                 if they got hosed or not.  The average person may stay in
                 a house 5 years but these people may stay 30.  And does that
                 5 year ownership number include all the speculator flips
                 which would drag the number down by some other unknown
                 number?  Basically, it looks like a scare article intro.
                 The people who are going to get hurt are those who paid $X
                 in the past and are now forced for some personal reason to
                 sell now at $X - $Y.  Everyone else can sit tight.  Anyway,
                 I wouldn't mind a huge housing crash.  I'd snap up a few
                 houses if prices dropped enough and rent em out for a few
                 years until prices recovered again but I fear they'll never
                 drop enough to fall back into my investment price range.