Cheaper to rent than buy a house?

[Flubber]

Originally posted by Kidicious
...

best thing you have said yet



Kid what I so frequently reject in your comments is the absolutism of them. You keep saying that "Everyone" does x or y when it is patently obvious that "everyone" does NOT.

The second thing is the idea that money is always governing. I reject that unless you want to assign dollar values to many other factors that go into decision making ( even things that do not necessarily have economic consequences)

[Kidlicious]

The forecasts for the California housing market aren't nearly as good as Oerdin claims. This was in the Fresno Bee .

Housing fuels state economy


Renowned UCLA forecast warns booming sector is 'unsustainable.'

By E.J. Schultz / The Fresno Bee

(Updated Tuesday, March 15, 2005, 6:00 AM)




The best-case scenario for California's economy the next two years is tepid growth, according to a forecast made public today.


The worst case: The housing bubble bursts, leading to a recession.

Hailed as an economic savior in recent years, the booming real-estate market "is clearly unsustainable," according to the UCLA Anderson Forecast, whose quarterly forecasts are among the most widely watched in the state.

And if other sectors do not pick up the slack, "look for another downturn in the state," the forecast predicts.



The rapid rise in home values has driven consumer spending and created an overwhelming percentage of new jobs in the state — no more so than in the central San Joaquin Valley, where houses are sprouting like spring wildflowers. But with the expected slowdown in housing, "that's all at risk," said Christopher Thornberg, a senior economist with UCLA Anderson Forecast. "It's a ticking time bomb."

Home price appreciation created more than $1 trillion in wealth in the state from 2001 to 2004, according to the forecast.

But because home values can fluctuate, some of it is paper wealth and can disappear if values rise more slowly or decline.

Thornberg compared it to collecting a check each month in your mailbox and "a few months later you find out that the check is fake."

According to the forecast, nonfarm jobs will grow by 1.5% in the state this year, up from last year's 1% growth, but in 2006, the growth will slow to 1.2%. "I think that 2005 is going to be a decent year, but 2006, I've got huge concerns about," Thornberg said.

The best case is that the economy grows slowly, according to the forecast. "On the other hand," Thornberg writes, "a sudden rise in interest rates or some other spark that could cause the housing sector bubble to implode at a faster rate could cause another recession, both in California and the United States."

Though Thornberg says he is not certain about how the different forces may play out, "what is clear is that the downside is far more likely than the upside."

The forecast is especially ominous for the central San Joaquin Valley, where the building boom has fueled some of the strongest job growth in the state.

Of the 3,900 net new nonfarm jobs created in Fresno County last year, for instance, 2,100 were created in construction, an amount 31/2 times greater than that added in manufacturing, according to state jobs data.

One local economic development official is not overly concerned.

"I would not expect to see an immediate downturn," said Fred Burkhardt, director of economic development for the city of Fresno. "I just would not expect to see it expanding as it has." If anything, he said, a slowdown in residential construction could be offset by growth in commercial building, which is showing no signs of letting up.

"It's good. It's solid. It's consistent," said Burkhardt, noting that his department is getting about six inquiries a week from developers looking to build commercial projects.

Another good sign is that industries such as technology and tourism are showing signs of life, according to the forecast.

Indeed, business spending may be the economic key in the next two years.

The 2001 downturn was led by job losses in the so-called external economy, which includes industries that sell goods to customers from outside the area — manufacturing, for instance, according to UCLA Anderson Forecast.

But, unusually, the job losses did not spill over into the "internal economy," which is driven by construction, retail, education and health care, the forecast notes.

The reason: Rising home values have given a jolt to consumer spending.

From 2001 to 2004, the value of California's 7 million homes has increased by about $175,000 per home, resulting in a total rise of more than $1.2 trillion according to UCLA Anderson Forecast.

Appreciation of apartments has added an additional $440 billion.

"To put this in context, the personal income for the state was $4.7 trillion over the same period of time," the forecast states. "Hence, Californians have been essentially given a 30%-plus boost to their annual incomes due to the housing bubble we are currently experiencing."

Meanwhile, of the 243,000 private payroll jobs added in the state in the past two years, 122,000 can be directly tied to the housing market, according to UCLA Anderson.

"In short, a sector of the economy that makes up 10% of total private sector jobs is accounting for 70% of the total job gains."

The appreciation in housing prices has been keeping the US economy alive at least as much as the tax cuts. I forecast a bubble burst followed by a recession. This time the cause is going to be falling consumer spending due to falling asset prices.

Flubber,

I make statements based on other things not changing. It's called ceterus parabus. You always bring up other things changing just to troll. And no I don't make universal statements. If I do I call them that. Stop trying to get me into your ridiculous arguments.

[Flubber]

Originally posted by Kidicious


You live in a silly world. People generally already make the best decisions for themselves and no one wants to work or rent for others all things being equal. No one would pay more to rent when buying is an option and no one would work for others when it's just as easy to work for youself for the same pay.

THis looks pretty universal to me. I take "no one" to mean zero people so it strikes me as a blanket statement . . an absolutism.

Oh and I don't troll. I just fundamentally disagree with about 90% of what you say .

[Ming]

Enough with the "personal" stuff... stick to the topic.

[MRT144]

Yeah, same down near my parents in West Palm Beach.
The prices have risen 50% in less than two years, and show no sign of cooling off. Darn, I had planned to buy a few with my older brother back then, but he couldn't pull the trigger.

Necromanced for hilarity.

[MRT144]

i'm really not seeing how home ownership can be universal. There will always be people who make bad choices or who don't have the qualifications to get a high enough paying job to afford a home. Drug addicts who spend all of their money on drugs, the mentally retarded, and even just some lazy people won't ever save up the necissary capital.

The government can subsidize home loans to make them more affordable (as they do in the US) but then we'll hear more people claiming there is a housing bubble.

Looks like those claims were right.

[MRT144]

Leverage is the #1 reason to own property. I put up slightly less then $100k (thank you dad) on my house yet I bought a $400k house. I get appreciation on all $400k even though only 25% of that money is mine; sure I have to pay interest on that loan but with equity and the 15% per year appreciation I'm doing very well thank you.

Let’s do the math. The interest probably costs me around $8k per year but equity goes up around $16k per year with appreciation adding up to $60k per year. I’m $68k per year ahead. A man can work his ass off and not make that much money per year.

How are you doing right now?

[DaShi]

Enough with the "personal" stuff... stick to the topic.

Good times.

[Kidlicious]

The forecasts for the California housing market aren't nearly as good as Oerdin claims. This was in the Fresno Bee .



The appreciation in housing prices has been keeping the US economy alive at least as much as the tax cuts. I forecast a bubble burst followed by a recession. This time the cause is going to be falling consumer spending due to falling asset prices.

Flubber,

I make statements based on other things not changing. It's called ceterus parabus. You always bring up other things changing just to troll. And no I don't make universal statements. If I do I call them that. Stop trying to get me into your ridiculous arguments.

YES! I'm that good! Forcasted the housing bubble bursting.

[Flubber]

yes

although in fairness, meany of us were citing situations and examples of negative equity so its not like a retreat or crash in prices was an unusual thought.

THis thread is actually pretty tame-- I can recall some with titles like" rent is unfair tax"or something similar back when you copmpletely opposed the accumulatrion of capital-- THose threads went on and on

[Kidlicious]

If you predicted the crash site your evidence. I didn't relive the frustration of debating you so you could be right but I call you on it anyway.

[Provost Harrison]

You don't mind if I have a little "Mwahahahahahahaha". I am renting, don't own a property and they show no signs of increasing around here for a long while (Manchester). I'll just accumulate more cash and jump in at the right time.

[rah]

I bought so long ago that no matter how far it falls, it will never fall to where I purchased. But more importantly, in less than 5 years, i'll own it and will be paying neither rent or mortgage payments.

[rah]

And for the record, the places we were looking at in Florida are still worth more than we would have paid for them. Just not as much as we would have thought back then.

[Flubber]

If you predicted the crash site your evidence. I didn't relive the frustration of debating you so you could be right but I call you on it anyway.

I didn't predict the crash-- but I and olthers used several examples where a crashed house price could result in negative equity. So we were not all assuming things stay rosy for ever.
On my side, I bought in 2001 and within 4-5 years my house was worth double what I paid. Its fluctuated up and down a fair bit since then but still around double.


WAs I frsustrating for you to debate kid?? I probably wouldn't be so frsustrating for you now. Haven't you moved away from a lot of your former beliefs?