Should I continue renting and wait until the dollar collaspes or should i put my dollars to work and purchase property now?

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DEUS X MACHINA's picture
DEUS X MACHINA
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Should I continue renting and wait until the dollar collaspes or should i put my dollars to work and purchase property now?

I just sold my house and will rent.  I understand that values will continue to drop this year in my area.  should i rent untill the dollar collapses or should i purchase now and start building my solar power, gas generator, wood burning stove now while these things are still available????  anyone???

rocketgirl1's picture
rocketgirl1
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rent or buy

For what ever it's worth, I'm renting ATM as I believe that when interest rates rise prices will have to fall.  I can refinance into a lower interest rate later (hopefully) where as the principle can only be paid down.  If interest rates remain too high for too long then I will look to pay off the mortgage ASAP but the principle will still be lower in the next two to three years then principle today.  I would love to hear some feed back on this as well.

Thanks,

RG

Morpheus's picture
Morpheus
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Trinity and I are wondering

Trinity and I are wondering the same thing. We're actively house hunting (we live in a condo now, in an area that would be a disaster in a meltdown) and are looking at homes 50 miles from work.

We live in Ft. Lauderdale and the search area is North Palm Beach Co in the rural area. Here's where we stand:

1. Our present location would be extraordinarily dangerous in civil unrest and/or a supply chain crisis.

2. Our nice neighborhood is 1/2 mile from a bad neighborhood (that's S. Fla for you).

3. Properties in the area we are looking at are 50% below pre-meltdown levels due to the fact that they are:

    a. Semi-rural. No one wants them because they still want new glamour, homeowners assn's (yuk!!),

     b. and the glut in less remote areas is tremendous.

4. We're both country folk at heart so this is home.

5. The neighborhoods allow livestock on property!

We're REALLY concerned about the commute and energy usuage but we think the safety of the location, the size of the properties (acres, not fractions of an acre - food generation?) its location relative to other areas (in case we lose our jobs it gives us more options) and the price are huge pluses. We factored in a Priuus dedicated for commuting. That would cost us 2 gallons of fuel/workday if we commute together.

The savings is so substantial over southern Palm Beach Co or Broward Co (where we presently live) that we'll put in a 7.5-10 kW solar power system BEFORE we move in.

Contrary: A downturn is coming. What if we lose our jobs? Second. The commute. What if gas goes to 10 bucks a gallon? How much more "bottom" does housing have? What about interest rate hike risks?

Thoughts please? I want all of my bases covered here. Thanks.

Morpheus's picture
Morpheus
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BTW. I want to convey to all

BTW.

I want to convey to all of my friends here that I haven't "disappeared". Had a rough few months taking care of, and then laying to rest my father, a re-injury of my spine (had surgery 2 years ago and "something went wrong") and a few other crosses to bear. I wasn't blowing the place off.

Things are better now. That which doesn't kill you makes you stronger, right?

NewEnglandGirl's picture
NewEnglandGirl
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Struggling with the same

Struggling with the same question myself.  I currently rent a beautiful townhouse with a back deck big enough to container garden, but in a small city in which I am very much out of sync with the rest of the residents - there is zero hope of community building here.  Housing prices in the larger area have dropped significantly, but what is in my price range frequently needs major work to bring to code (or at least to emotional comfort levels).  As much as I miss home ownership, I also worry about the responsibilities involved as a single woman, the maintenance, the repairs, the being at the beginning of a mortgage if and when things get ugly.  I look at the house listings, and I ask myself, why do I want to do this?  And then I look around where I live and I think, I love my townhouse, I hate my neighbors, and I don't trust my landlords to do what is right if things hit the fan.  And I really don't know what would be the better choice.  I know Nicole Foss advocates renting, but it helps to be in a true neighborhood and to have a person rather than a corporation as a landlord.  Or maybe it doesn't?

Anyway, I also really look forward to seeing what the established folk here have to offer as suggestions.

goes211's picture
goes211
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Welcome back!
Morpheus wrote:

BTW.

I want to convey to all of my friends here that I haven't "disappeared". Had a rough few months taking care of, and then laying to rest my father, a re-injury of my spine (had surgery 2 years ago and "something went wrong") and a few other crosses to bear. I wasn't blowing the place off.

Things are better now. That which doesn't kill you makes you stronger, right?

Sorry to hear about your Father and your other problems.  I had to go through a similar time due to my father's cancer several years back and I know it is not easy.  When I saw your post I was wondering where you have been.  I am glad to hear that you are back!

Johnny Oxygen's picture
Johnny Oxygen
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MORPHEUS!!!!!!! Good to hear

MORPHEUS!!!!!!!

Good to hear from you again.

Sorry to hear about your father.

Full Moon's picture
Full Moon
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 Gee Morph ,  I thought

 Gee Morph ,  I thought you had got the shunning .    Sorry  you  have had so much to bare .    And yes it makes you stronger .  We learn and have more faith and confidence when times are rough .

 

  I hope you get some peace on the big decision of whether to move .   What is your heart telling you to do ?    Since you are STILL  in the city it is not like you are freaking and heading out  .

  I wanted out of the city for a long time ( not that I was miserable .. you know content enough)  But got out of there and settled ASAP. 16 years ago  LOL .     We went into the city of 60K  this week .. could not wait to leave Stocked up and got out of Dodge .   Looking at trends  people are still moving to the cities  and by now i thought it would have changed .    Does not give me any hope that  people have figured out that  they can not feed themselves .

 I personally do not think  things are going to change for the better ....  I do not think anyone has any rabbits to pull out of their hat . Places in the country are not coming down in price around here. 

  Count your blessing  that the Mrs. is country at heart  . 

  Remember  It takes a good while to get a country  place established  .      But only You two will know when the time is right .

FM

earthwise's picture
earthwise
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Good to hear from you, Morpheus!
Morpheus wrote:

BTW.

I want to convey to all of my friends here that I haven't "disappeared". Had a rough few months taking care of, and then laying to rest my father, a re-injury of my spine (had surgery 2 years ago and "something went wrong") and a few other crosses to bear. I wasn't blowing the place off.

Things are better now. That which doesn't kill you makes you stronger, right?

Condolence on your father's passing and good luck on your other difficulties. It's really good to hear from you again. I log on here every day and always hope to see a post from Morpheus; your input was (is) always a worthwhile read. Glad to have you back.  Now if we can just get Machinehead back on board...........

 

DEUS X MACHINA:

As far as whwhether to buy now or not, most analysis that I've seen is similar to this from Charles Hugh Smith:

http://www.financialsense.com/contributors/charles-hugh-smith/phase-shift-the-next-leg-down-in-house-prices

 

But then this says otherwise: http://www.financialsense.com/contributors/lee-adler/housing-prices-rise-in-response-to-reduced-supply-higher-employment   although the author bases most of his rationale on increased employment figures from the government and we know how reliable those numbers are.

 

My gut feeling is that prices will go lower, but price isn't  the only factor to consider.

BTW, Morpheus,  a 7.5-10 kW PV system???  Holy smokes!!! Are ya gonna light the place up like Disneyland??? I put in a 4.6 kW system and it dropped my bill from $250+ per month down to >$50.

 

rhare's picture
rhare
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Some other considerations...

Sorry to hear about your recent troubles, and glad your back.

Morpheus wrote:

The savings is so substantial over southern Palm Beach Co or Broward Co (where we presently live) that we'll put in a 7.5-10 kW solar power system BEFORE we move in.

Contrary: A downturn is coming. What if we lose our jobs? Second. The commute. What if gas goes to 10 bucks a gallon? How much more "bottom" does housing have? What about interest rate hike risks?

If you have fairly sizable savings and in something like PM, you might consider financing on fixed rate as much of the home/solar as possible.  That way you can either pay off the loan (sell PM) or let inflation erase the debt.  The only risk I can see to this strategy is if you get in a bind and can't make the payments, that's why you need a large amount in savings to make sure you can float over very tough times if necessary. 

Or if don't have many assets and sink them into the solar, I belive Florida allows a homestead exemption to bankruptcy - which is alway an option so best to have high leverage on a house if things look sketchy.

Also, 50 miles  (100 round trip)  is pushing it for most of the electric cars that are on the horizon.  With a large array you might want to do some research into potential cars and get a house that would be in the cars electric drive range.

 

 

 

 

DEUS X MACHINA's picture
DEUS X MACHINA
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that prius rocks!

just bought a prius a month ago... i love it! it's all that and a bag of chips

Ken C's picture
Ken C
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Posts: 753
Morph welcome back
Morpheus wrote:

BTW.

I want to convey to all of my friends here that I haven't "disappeared". Had a rough few months taking care of, and then laying to rest my father, a re-injury of my spine (had surgery 2 years ago and "something went wrong") and a few other crosses to bear. I wasn't blowing the place off.

Things are better now. That which doesn't kill you makes you stronger, right?

Morpheus,

Welcome back. I am glad that things are improving for you.

 

ken

 

SagerXX's picture
SagerXX
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welcome back!
rhare wrote:

Sorry to hear about your recent troubles, and glad your back.

Me too, Morph:  welcome back!

hucklejohn's picture
hucklejohn
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Posts: 281
On renting a house vs.

On renting a house vs. buying a house here is one man's guidance.  It is based upon the ratio between the annual rent on a house vs. its purchase price (or value): 

http://financialsurvivalradio.com/013-financial-survival-podcast-the-sim...

In summary here is his advice:

 

 

 

joemanc's picture
joemanc
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Posts: 834
I would buy now

I bought my house last summer, and while home prices have come down further, I don't care. I'm able to work on my garden this spring. I'm building incredible relationships with my neighbors and within my small town. If you can, consider buying something now. You want to buy a good piece of property, in a good location with good land before others do. At least, that was my strategy. I wrote about my Transition to a rural community last year. There's only so much you can do while renting or living in a condo. With a house, you have more control over your future.

I like what rhare mentions about putting a small down payment down and taking advantage of the low rates. That's exactly what I did. I'm using my cash to insulate the house, building up my garden, fruit trees and paying down the mortgage principal.

Morpheus - sorry to hear about your dad. I too live 50 miles from work, but I also live in a much safer location. I have a train stop 5 miles from home that gets me to work's front door. For now, I commute with my co-worker halfway and then train the rest. I look at it is gas at half-price. I'm trying to get 1 or 2 more people to share the ride and then I can divide my fuel cost by 3 or 4.

PastTense's picture
PastTense
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Posts: 47
Owning a fully paid for

Owning a fully paid for house is a good idea; it provides security.

Renting is a good idea: it provides flexibility (for example moving to a new area where you can find jobs which are lacking where you live).

Living in a banker owned house (you have a big mortgage, but still have substantial equity tied up in the house) is subtantially worse than either of the first two options (you can lose  your house if you lose your job, you have difficulty moving to a different city--if you do you lose your equity).

A fifty mile commute is ridiculous (unless it is a temporary transitional meaure). Doesn't everyone here understand that if the economy falls apart, the roads are also going to fall apart? Would anyone here drive faster than 20 mph or so on a road filled with potholes?

earthwise's picture
earthwise
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Posts: 848
Real Estate Now: Rent or Buy???

 

This writer addresses the point in question:

http://www.321gold.com/editorials/benson/benson040111.html

docmims's picture
docmims
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Posts: 644
I think we are entering a

I think we are entering a period of stagflation: ie rising energy and food prices without a concomitant rise in wages and home prices.  This is different that true inflation in which wages rise with rising housing andcommodity prices.

Locking in a home price now is probably a good idea if you can lock in a low interest fixed rate mortgage, because the savings in interest dollars will more than offset the price erosion of your home -- especially if mortgage interest rates soar back to 9 or 10 percent like the late 70s and early 80s.

Plus if you are going to add solar and drill a well you really need to own, because your landlord will simply kick you out and move into your 'tricked out' house.

Country is good but you need neighbors nearby.  There is a fundamental reason people congregate in towns and communities -- safety pure and simple.  If you are out in the wilderness by yourself, you best be the strongest, fittest, and a mean sob.

HuckleJohn I like your formula.

Pastense: it doesn't make a difference if the bank owns the house.  They really can't take it from you under current conditions if you fight them.

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