...in regards to transit and housing (they are linked in more ways than you think if you don't think they are linked).
New developments since the thread first appeared:
Gas prices - [more than] doubled.
Housing market - fucked.
http://fastermustache.org/node/1595 <-- This is the thread I am referencing
Some fodder for the discussion:
http://www.ajc.com/business/content/business/stories/2008/05/29/tribute_...
Are we dealing with yet another "bubble"?
http://www.americanchronicle.com/articles/65093
http://seekingalpha.com/article/81394-speculation-and-the-price-of-oil
http://www.consumeraffairs.com/news04/2008/06/gas_prices259.html
http://www.rgemonitor.com/euro-monitor/252793/raising_commodity_and_oil_...
http://afp.google.com/article/ALeqM5j2Ml88we-PasRGU-4Q7dnoVNzXpw
So where does this put Atlanta? Gas prices are high and commuters are feeling it. Some are beginning to look at intown housing as a solution (or transit options). But if the price of oil is merely a bubble, then those potential home buyers and transit options become null and void, and we (Atlanta) are still left largely vacant.
What are your opinions?
One thing I didn't consider
One thing I didn't consider when I predicted a plateau was the lenders. We all know about the predatory lending and the uneducated borrowers. Kurt and I can tell you from experience that about 1.5 years ago he and I took out a mortgage and were repeatedly pressured into getting an ARM. Of course we didn't but many people did.
So I think many of the arguments were valid two years ago (we did see a plateau) but we didn't know about the bad lending practices so we couldn't have known that the plateau would drop!
forget ARM, a bank offered
forget ARM, a bank offered me principle amounts so large that the monthly payments would be greater than my monthly income!! thanks but no thanks.
yeah
Yeah, no kidding! They told Kurt and me that we could take separate loans and get our own places. In fact, they were encouraging us to consider it.
As the debate rages on over whether it is the lender's fault or the borrower's fault, my position is that its the lender's fault and its american society's fault. The lender is guilty of predatory lending. American society is guilty of convincing every joe blow that they can own their own home.
lenders again
because when they package the mortgates and sell them to investors, the borrowers lose a lot of the rights that were in their contract with the lender.
Should ?
Should every joe blow not own their own home? Either way a thought provoking question to me at least.
I'd argue that most joe
I'd argue that most joe blows should own their own home, and most joe blows can own their own home, but most joe blows can't own the home of their dreams, and that's where the trouble started.
The lending market got so out of whack that they were offering people way more than they could ever afford to pay back, and not surprisingly, many folks went for it. Given the opportunity to buy within their means, or get a big fancy house like they really wanted, many chose unwisely, because hey, somebody's offering it up, why not take it? Desire got in the way of logic.
There was an interesting piece on This American Life about the whole chain of bad decisions, from the buyers all the way up: http://www.thislife.org/Radio_Episode.aspx?sched=1242
I'm still of the opinion
I'm still of the opinion that a lot of real estate is over priced. Knowing what the average family pulls in, subtract food and transportation, and you are left with a very finite number for housing. Given the recent increases in both gas prices and food prices, the slice left for housing is smaller.
I just can't see how a 1800 square foot, 3/2 home can cost 300k... it breaks one of the most fundamental rules I used to think was true and that is ~$100 a square foot for middle of the road housing. When most of the homes in an area are breaking that rule, then where does the average person who lives ITP buy?
I can't speak for other cities, but to me it looks like the blame is on everyone's shoulders (buyers, lenders, brokers).
i think a big reason for
i think a big reason for overvalued home prices is our wanderlust in the U.S. We're incredibly mobile. And every time a house is sold, the seller expects to make money. Tack on 6% to agents plus X% that the seller expects in profit every time a house is sold.
*edit* more thoughts:
I met an elderly lady who paid $4,600 (four-thousand, six-hundred) for her house by Piedmont Park. Any arbitrary price point you pick ($100/sqft) will change over time.
Yeah I know about the amount
Yeah I know about the amount changing over time, the $100 mark was in today's market.
You can argue that property affects the price of a home, but the price of acreage is set when the municipality assesses the value for taxation. So those prices are fixed. Come to think of it, the value of the home is also assessed (improvement value)... so maybe the city is to blame for some of this?
Houses in the suburbs all fall within the $100/sqft range, but who wants to live out there when you work downtown?
doesn't the municipality set
doesn't the municipality set the prices for homes and for property based on recent comparable sales in the area? Wouldn't that suggest that prices are still set by the market?
From the
From the State:
http://www.etax.dor.ga.gov/PTD/adm/taxguide/gen/assessment.aspx
Assessed value is not the same as fair market value. Are they tied together? I really don't know, as I'm no tax man. It is something I am going to investigate though.
I recently fought the
I recently fought the assessment of my condo, because the assessed value was higher than the purchase price. I was turned down on the reduction and the reason they gave said specifically that my purchase price did not "reflect the actual market value." They specified market value, not assessed value. I don't think they understand the definition of "market value." What I negotiated after the place sat on the market for half a year was indeed the market value. Comparable sales in the area supported my position.
Are they tied together? It depends on the definition of assessed value and market value. By their definition, no.
Yes. Required by state law.
Yes. Required by state law. Appraisals based on recent comparible sales set the market value. Assessed value is something like 40% of market value (appraised value) and is just used as a multiplier to calculate property taxes.
I'd argue that most joe
I'd argue that most joe blows should own their own home, and most joe blows can own their own home, but most joe blows can't own the home of their dreams, and that's where the trouble started.
well said.
I agree with that and with
I agree with that and with Skip's comment. In theory, we should all own our homes instead of renting from some slum lord. But lets clarify ownership: I own my home but I don't OWN it. The bank owns it. I pay the bank and in 30 years I will own it. So what I should have said is that society has convinced the borrower that every joe blow should take out a mortgage and spend the next 30 years paying the bank until they can own a home...and I don't think thats right. Not every joe blow is a good candidate for that.