Having been one of those guys who came darn close to buying some wrecks at various points over the years let me tell you what I think it is. I think the guy buying the $500,000 dump is stretching like crazy. He knows the house is overpriced but there’s nothing else at that price range and as everyone knows it’s always better to buy than to rent. (Thank God I never believed that- see above post). So he borrows from his parents, etc. and gets the money for the down payment. He just doesn’t have the money to raze, design and build on the new site. Nor does he have the money to live in his apartment for the six months that he’s supporting the new place.
And that’s what’s insane about this. The guy in that article that’s refinanced 5 times in 5 years? What’s the point of that? What’s he doing with the money?
I refinanced our place in Virginia in 2001. The status quo had changed so much that I refinanced from a 30 to a 20 year note and still reduced my payment. THAT makes sense.
Or refinancing to consolidate debt and get the mortgage interest deduction. That’s great. But it’s not so great if you’re only going back into consumer debt again. That’s a recipe for disaster.
Not to mention that all of this is continually based on the fallacy that ‘there is ALWAYS a buyer for what you want to sell’. The simple fact is that while it looks that way it’s simply not true. Sooner or later the music stops and someone is left without a seat. And when that happens bad things occur.
Y’all should be glad you don’t live in SE England. I have a 3-bedroom - 2x 10’x12’ and 1x 8’x8’ - semidetached house in a non-premium area and it’s worth over US$300K
Alan Greenspan has not critisized our exuberance as being irrational so we may continue to buy willy-nilly with low cost money live happily with continued price increases and instant wealth.
It’s located in a mostly residential area in the Northeastern part of the Houston metro area near Lake Houston. I’ve been out in that area a couple of times and it’s like the majority of the “bedroom communities” in the Houston suburbs. It’s about 15 miles to Bush Intercontinental Airport and 30 miles to downtown Houston.
Jesus, i’m checking realtor.com and alot of 3000 sq ft homes built in the last 30 years are only 150k in Houston. I’d move there if it weren’t 110F all the time.
Taxes are also high too, many of those homes had $4500 a year in property taxes. Plus in another thread people talked about how flood insurance was alot higher so a 150k house could end up with 1400 a month in payments in the end.
