"anoop" <ghanwani[at]gmail.com> wrote in message
news:1154458592.774402.324470[at]m79g2000cwm.googlegroups.com...
- quote -

O.K. Granted -- that's an expense that is not (for you) "keeping
up with the Jonese" -- but my point still stands. It's an expense you
did not have back in 1981. Am I correct?

- quote -

I only have to work 14 hours each month to service my mortgage.

How positively un-American of me. I need to buy a McMansion!

bo peep wrote:
- quote -

Indeed, the health standards are lower for bottled vs. tap water. And
$35/750ml "designer" water is only bought by those keeping up with the
Joneses (who are these Joneses anyway?). Heard about that on NPR's
weekend Marketplace last week (as well as the health standards).

-Will

woessner[at]gmail.com wrote:
- quote -

Actually, mortgage rates are closely tied to mortgage backed
securities. HELOCs use the Prime rate as an index and can be
considered a ARM by nature.

- quote -

is currently being scrutinized for allowing its advertisers to
participate in bait and switch pricing tactics
(http://www.realestatejournal.com/buy...13-hudson.html).


A more reliable source for interest rate benchmarks would be the
Freddie Mac site (after all, FreddieMac purchase a majority of the
loans originated in the secondary market and see the rates first hand);
http://www.freddiemac.com/dlink/html...MSOutputYr.jsp.
According to Freddie Mac, the average note rate for a 30 YR FXD loan is
6.72% with 0.3 points.

Regards,

H. Scott Miller
National Commercial and Residential Lender/Broker
Carteret Mortgage
TOLL FREE PHONE#: 1.877.716.6495, ext. 5
TOLL FREE FAX#: 1.877.578.2041
EMAIL: hugh.miller[at]carteretmortgage.com or EZMortgageLoanz[at]aol.com

Real Estate Help Desk (www.RealEstate-IQ.com)
Automated Loan Assistant (www.EZMortgageLoanz.com)

"jIM" <noreplysoccer[at]hotmail.com> wrote
- quote -


- quote -

I was trying to make a financial and investing point.
Namely, imagine the future 25 years from now. Will the
technology continue to develop? Difficult though this may be
to imagine, and cynical though I am about people's and
corporation spending habits, I am happy betting on it via
stocks, for many reasons. We may be doing through a period
that will throw some income classes into a tizzy, but these
things tend to be cyclic.

Elle wrote:
- quote -

Compare any 50 year period in history and decide if someone went ahead
in time, could they live/function.

I'd think the time between 1850-1900 was the biggest time for
invention/improvement.

Do the reverse- could you go BACK in time 50 years and still live? I'd
think the toughest park of living in 1955 would be the limited used of
air conditioning.

Change is constant, the impact of the changes is the bigger question.

anoop wrote:
- quote -

Bottled water often has a greater amount of bacteria in it than what is
allowed in tap water. So, pick your poison...

John Cowart

Sgt.Sausage wrote:

- quote -

I don't think that drinking bottled water can be considered
part of "keeping up with the Joneses". A lot of water nowadays
is contaminated and the purification process itself can add
harmful chemicals. I switched to drinking bottled water
back in 1999 when I received a memo from the town of
Billerica (which is where I lived back then) which said
"water may contain a higher than acceptable concentration
of a chemical known to cause cancer in rats". I used
to use Brita back then and called the water department to
ask if it was safe to drink if used with Brita. They said
they couldn't comment on the safety of the water (the
person at the other end of the phone said he still drank it)
but that Brita wouldn't be able to filter that chemical. I would
need a special kind of filter that specifically says it will filter
that chemical (I've forgotten what it was now). Anyway, that's
when I thought it's just easier to switch to drinking bottled
water.

Anoop

"Sgt.Sausage" <nobody[at]nowhere.com> wrote
- quote -

... ensuring my steady income of steadily increasing
dividends.

If all that Jones stuff is so repugnant, I know in the same
breath I need to admit that it now pays for my life of
leisure.

snip
- quote -

By comparison, what do you think of the 25 year period from
1956-1981?

Automatic transmissions, color television, calculators, air
conditioning replacing the manual tranny, black and white TV
or radio, slide rules, fans.

I don't think the drive to own doo-dads or keep up with the
Joneses is new.

- quote -

I think we are again facing massive redistribution of wealth
from poor to rich.

joetaxpayer wrote:
- quote -

Is that after tax?

My own view is that if *real* interest rates have dropped, permanently,
then you can see a readjustment in housing prices-- a structural one
off gain (the same happens for the PE of stocks: stocks are a real
asset, so are housing, if debt becomes cheaper then they should become
more expensive). If *nominal* interest rates have dropped, there is no
reason why houses should be less expensive-- a drop in nominal rates
shifts the burden of repayment from the front of the mortgage term to
the back (the value of the mortgage is not so reduced by inflation),
but it doesn't reduce the burden of the mortgage.

That accounts for the 'P/E' of houses. Clearly if 'E' as measured by
median family income, has a real rise, then housing prices should rise.

It is also true that some parts of the US have had much less housing
inflation than others. Roughly, the zoning controlled coastal areas
have had housing price inflation significantly in excess of inflation
and real incomes, and the cities in the middle have not.

- quote -

The gearing to interest rates is quite key, though, at these debt
levels. A 1% rise has a much bigger proportionate impact than it did
in 1981.

- quote -

The best guess (Gleaser at Harvard studies this) is affordability has
declined because zoning has tightened up (a lot).

Sgt.Sausage wrote:

- quote -


A remarkable point of view I hadn't really considered. Thanks for
posting that. Something to think about.
JOE

joetaxpayer <joetaxpayer[at]nospam.com> wrote:

- quote -

Average square footage in 1982 (I don't have '81) was 1,710, according to CNN.

http://money.cnn.com/2006/07/24/real...hing/index.htm

- quote -

Average square footage in 2005 was 2,434. So it looks like those hours bought a
lot more house.

-- Doug

"joetaxpayer" <joetaxpayer[at]nospam.com> wrote in message
news:5cOdnan6n8eyyVDZnZ2dnUVZ_rOdnZ2d[at]comcast.com...

- quote -

But ... the affordability of "living", in general, has gone up. Folks are
spending too much money on too much stuff. Keeping up with the
Jonses.

In 1981, how many folks had cell phones? In 1981 how many had
cable television and/or satellite? How many had game consoles? A
television and telephone in every room. How many had computers
and ISP bills, wireless and routers in their own homes -- with
*multiple* computers available in the household? A dishwasher was
still (as I remember it), in 1981, pretty much optional. Some houses had it,
some didn't. I defy you to find a house built in the last 5 years that
does not include a dishwasher. Folks are buying bottled water
instead of drinking the stuff they already pay for out of the tap.
Folks are heating about 1/3 more square footage of a house
than they were in 1981. How many folks paid for CallerID on
their phone service in 1981? In 1981 I bugged my mom to death
for 30 cents to buy a comic book. Today, kids are bugging their
parents to death for the latest $50.00 video game for their console.
IPods and ITunes were non-existent. We lived with what was "free"
on the airwaves. Today, kids have hundreds upon hundreds of CDs
in their bedrooms. In 1981, a swimming pool was a rare find, indeed,
in my neck of the woods. Today -- every 4th house has one. In 1981,
most households did have 2 cars, but the second one was a "junker".
Today, a large portion of households have two NewAndExpensive
models in the garage. Tivo? What's that. If you were lucky, in 1981
you might have had a VCR -- but they were quite rare where I lived.

The point is -- even if housing has remained constant (or even
creeped down a tad) the remaining living expenses that most Americans
expect to pay has gone up considerably. Most of the above are expenses
that were either (a) not common for a household back in 1981, or were
(b) completely non-existent at the time.

I would think that, even with housing the same, it's far more difficult
for the folks today who feel they "need" all the other doo-dads and
expenditures that go along with the modern American lifestyle.

darkness39[at]yahoo.com wrote:

- quote -

Every time my mother-in-law remarks about the price of something, I ask
"but what was the wage back then? How many hour's wages did it take to
buy that?"

I look at housing for example. The Chicago Mercantile Exchange has a
nice flyer on line for "CME housing futures and Options" which is where
I got this data.

1981 - Median Price Home $50,000 Mortgage rate - 14% I calculate a
payment of $592.44. Then I divide by hourly wages, $7.43 for a monthly
payment of '79 Hours' (which is bad, but considering dual income
families, falls in line with my expectation)

2005 - Median Price Home $200K Mortgage rate - 6% Payment of $1199.10.
Hourly wage of $16.11 for a result of '74.43 hours'.

Housing precisely quadrupled, rates came down, wages went up and the
hours it took to pay the mortgage dropped by just under 7%.
Considering the numbers, +300% for home prices, +116% for wages,
mortgage rates down 57%, I find it intriguing that the hours needed to
pay the mortgage went down this slight number, but down nonetheless.

I'm not sure if there's a further conclusion to reach here, or just that
the affordability of housing has actually crept down over the last 24
years.

JOE

BreadWithSpam[at]fractious.net wrote:
- quote -

I agree, and one of the reasons I am very cautious about just about any
Anglo Saxon housing market you could name.

Housing prices can only rise faster than incomes, by increases in the
amounts that lending institutions are willing to provide as debt, and
increases in the multiple of incomes that they are willing to allow
(debt: income ratios).

AFAIK in all Anglo Saxon countries (I am calling Ireland 'Anglo Saxon'
in this regard ;-) these multiples are now above any previous historic
high: a *lot* above the historic high.

And history has shown that financial valuations (and I count houses as
a financial asset) regress towards the mean. As has happened, for
example, in the period 1989-2003 in Japan.

Whether this will be achieved by a long term stagnation in property
prices *or* a sudden collapse over the course of 2 to 3 years (the
latter being historically the pattern), remains to be seen.

darkness39[at]yahoo.com writes:

- quote -

Assuming you can comfortably make those payments, there is still
one potential major danger - after the term of that IO mortgage
is up, you need to either get a new mortgage (at whatever the
prevailing rate is, and with whatever income you may have at
that time) - or have enough cash to pay off the house - or sell
the house and move.

Admittedly, that might be 30 years in the future.

But if one gets an IO mortgage and does *not* start saving
(and investing) the money which would otherwise have been
paying down principal over that time, one could get into
trouble.

I'm in no rush to pay off my house. I got a 30 yr fixed
and have no interest in prepaying any of it - the house
is appreciating nicely, as have been the the investments
I've made with money that could otherwise have been used
to pay the house off.

But not everyone manages to actually make that savings.

If one gets an IO mortgage because it's the _only_ way he
or she can "afford" the house, I'd say that he probably
can't really afford it and ought to be considering a
bit less house.

- quote -

I wouldn't necessarily bet on that. But I would want to be
certain that if that were to happen, it wouldn't wipe me out.

- quote -

In theory, there's nothing wrong with an IO. In practice,
they seem often to be used by folks who probably ought not
be using them.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

HW "Skip" Weldon wrote:
- quote -

If you think housing prices are going to continue going up, it is not
irrational to borrow on an interest only basis. This is effectively
what something like 1/3rd of UK housebuyers do.

Your equity will keep rising-- you have borrowed to purchase an
appreciating asset (and one which is highly tax favourable, at least in
the UK: no capital gains tax on principle residence, and an effective
cap on property taxes-- your taxes cannot be more than double those of
the average property in your borough). Another way of doing this is to
take on the more than 25 year amortisation mortgage-- 40 years is now
on offer, here.

There is lots of evidence that when capital markets are opened up, and
people can borrow more, they do.

So for example in the 1930s, Britain had a housing boom. It became
possible for 'unsuitable' borrowers, like policemen, civil servants and
schoolteachers, to take out mortgages-- hitherto these had been
reserved for the upper middle classes.

Whether it is a good bet for people to keep on borrowing to invest
*now* in housing is a moot point. For people with families, the rental
market may be so difficult or tight (many landlords in the UK won't
rent to families) that they have no choice.

If you hold on *long* enough, the bet is not a bad one. My own view is
property prices will fall by 30%-- but I am quite a stale bear on this
;-).

, insurance, etc. And then, children need braces, cars
- quote -

Elle wrote:
- quote -

Elle, your descriptions have me confused about what this "Borek"
individual is saying. =)

What I said, meant to say, whatever, was that if there's a widespread
trend towards interest-only mortages ('renting from the bank'), and
borrowing out home equity periodically, with the excess dollars going to
immediate consumption, then

a) this should result in higher home values vs. a world of 30-yr
mortages, because I/O reduces the nominal monthly cost of ownership, and

b) this would result in poorer retirees, because they've chosen to spend
the money earlier in life instead of building up home equity through
paydown of principal and home appreciation.

Also - negative-amortization - bad idea!

That's all!

-Tad

On Mon, 24 Jul 2006 20:50:15 -0500, Tad Borek <borekfm[at]pacbell.netwrote:


- quote -

Good comment. In my experience most of the folks choosing the
interest only loan are doing so because they can't afford the same
house with conventional financing. (There are exceptions, but they
are just that: exceptions.)

What happens next is that because of their tight cash flow, most of
these "owners" can't afford upkeep - those little bumps in the night
called roofers, painters, electricians, plumbers, yard workers,
property taxes, insurance, etc. And then, children need braces, cars
need replacing, etc. So they start building equity line and credit
card balances. I can't recall an interest-only user who did not also
have other consumer debt. And as for a decent emergency fund, next
car purchase fund, vacation fund, etc.... forget it.

In the end I agree that in most cases this is simply a picture of
someone making bad choices and living beyond their means. If the
interest only loan hadn't some along, it would be something else.

-HW "Skip" Weldon
Columbia, SC

"Will Trice" <wwtrice[at]paragondynamics.com> wrote
- quote -

My only point was that the interest only lendee would not be
destitute. (But nor was destitute what Borek actually
claimed; he said only that the interest only person would be
"poorer." And he is, but not significantly, assuming home
values don't plummet over 15 years, and assuming our
interest only person is disciplined.)

- quote -

House appreciates to a million dollars. Interest only lendee
nets $960k. Conventional mortgage lendee nets a $1000k.
Percentage difference = 4%. The more the appreciation, the
smaller the difference.

Compare to the percent difference with no house
appreciation: 40k/200k = 20% .