Can I really buy?

If you are currently renting, maybe you shouldn't be. Everyone buys real estate. You can either buy it and own it for yourself, or if you are renting, you are buying it for someone else.

Consider this: if you are paying (for example) $1,200/mo in rent for your 2br, 2ba apartment or townhouse you can probably own a nice place for the same money. And it's yours!

That $1,200/mo rent probably equates to the same payment you would have on a $175,000 home! Interest rates are at all time lows. Today I see you can get a mortgage for around 4.5%. Of course this depends on your credit, but for the sake of argument, let's assume credit is good.

Here's how the numbers breakdown:
- A $175,000 home at 4.5% means that your payment to the bank for principal and interest would be about $897/mo.
- You have to pay property taxes (which you don't when you rent). Assume they are $2,000/yr. $2,000/12 = $167/mo.
- You have to pay home owners insurance to cover the home in case of fire, etc. That's probably around $44/mo. You are probably paying some of this now for your renters insurance.
- You have to pay mortgage insurance to the bank if you get an FHA loan (everyone gets FHA loans today because you only have to put 3.5% down). That's about $74/mo.
So, total monthly payment to own is $1,182!

When you are ready to move, you'll get money back (you won't renting!).

Just food for thought... why rent?

The Condo Problem/Opportunity

Condos, Condos, Condos... not too long ago, FHA (where most people these days are getting their loans) said that if more than 15% of a condo development is delinquent on condo fees FHA will not lend any money for mortgages in that development.

In today's economy, where people are losing work and investments are losing value, there are a lot of people using their money for things other than condo fees (like food, clothing, etc). That 15% delinquency is getting worse in lots of condo developments.

Then Fannie Mae and Freddie Mac made the same rule for their CONVENTIONAL loans. Delinquency rate over 15%... NO LOANS.

What's that mean? It means condos won't get sold because buyers can’t get a mortgage to buy them. Period.

Sellers still need to sell. So they lower the prices to fire sale pricing to attract cash buyers. That’s why prices are SOOOOO low for condos. Condos that were selling for $200k a few years ago and listed for <$100k now and still not selling (no mortgages!). My Doctor told me today that units in his development that sold for $300k 2 years ago (for 3,000sqft units) are listed for <$50k now. Sellers are trying to attract cash buyers. But… cash buyers won't buy condos because they cant sell them.

That's the problem. The opportunity is: When the condo problem is fixed and people can buy condos again, prices will go back up.

Prices are low now because there is no (buyer) demand. Once the problem is fixed and the demand is restored, prices will go up.

If you can wait for the condo problem to be fixed (who knows how or when it’s going to be fixed) you can get a condo at FIRE SALE prices now. What if you bought one at today's 40-50cents on the dollar and rented it until the problem is fixed and then sold it when prices were zooming back up? Good idea? who knows, but an idea just the same.