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amiller92
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Re: Renting vs. Owning | Apartments vs. Condos

Postby amiller92 » April 27th, 2016, 3:00 pm

Last October. Worked with Tom Ahles at Edge Home Finance: http://www.edgehomefinance.com/index.ph ... homasahles Was happy with the experience.

Probably should have shopped more but I just went with the guy our realtor, who is also sort of a family friend, recommended. So, you know.

Don't know anything about those programs.

Already thinking about refinancing in the not so distant future as we've done some work that would reduce the loan-to-value and assume I could get a bit lower rate.

MNdible
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Re: Renting vs. Owning | Apartments vs. Condos

Postby MNdible » April 27th, 2016, 3:21 pm

I'd recommend going through a broker. I've mortgaged and refi'ed a number of times on different properties, and the broker always has gotten me a better rate with lower closing costs than either USB or WF could offer. And curiously, in all cases, my mortgage ended up getting purchased by USB or WF after the fact.

kirby96
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Re: Renting vs. Owning | Apartments vs. Condos

Postby kirby96 » April 27th, 2016, 3:49 pm

mattaudio wrote:
Twin Cities renters who are waiting to buy estimated they would need to save an average of $28,008 for a down payment, but reported having only $5,622 saved so far, which means they won't have enough for nearly 10 years.
In what world are people who, by their own admission, are on track to buy a house... only able to save $2239 a year for it?!? $186 a month? Ridiculous. Get mustachian, people. I think there are plenty of reasons why Millenials aren't buying homes (maybe because they want homes in expensive urban neighborhoods and not starter homes in Rogers) but I don't buy the fact that they aren't able to save for a down payment over the course of a few years. Even with student loans.
I guess I don't think 'on track to buy a house' automatically means 'willing to drastically cut back living standards', nor do I think that is necessarily an irresponsible decision. When I was that age and first started considering buying a house saving the down payment was definitely something I thought long and hard about, and I had what would be considered a very good job (basically the Google or Facebook of the late 90's). If it wasn't for tech company options and a stock market rally of historic proportions I would have probably waited five more years myself. Not because I had to, but by conscious choice.

Buying a house was a B+ priority. Important? Yep, but I certainly wasn't going to forego the benefits of freedom at that age (and the concurrent expense of such) to save even more than I was already. There's a far cry between that decision and financial profligacy (not that you were suggesting that explicitly).

Viktor Vaughn
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Re: Renting vs. Owning | Apartments vs. Condos

Postby Viktor Vaughn » April 28th, 2016, 8:11 am

I've been planning to buy a house this spring, but have gotten really nervous about the market. In the urban neighborhoods I'm looking in, it seems prices are really close to where they were at the peak of the market. In Northeast, I keep seeing houses that sold for about $170K in 2012 that are listed for $220K. Maybe some of those had significant improvements in the meantime, but still- I'm very wary about overpaying in this market.

The low inventory of starter homes this spring has been discussed widely. I'm really not motivated to join the frenzy and try to outbid others within days of a listing.

The way I see it, either prices are going to ease a bit (or even fall if the economy wobbles), or prices are going to keep rising and then that has to be another bubble.

And then of course there's the threat of rising interest rates. While I see some logic in locking in a mortgage at today's low rates- it's hard to see rates going up significantly in the next couple of years. They've been talking about raising interest rates for about 10 years and so far all they've dared to do is 25 basis points hike last December. With China's growth slowing, Europe stagnating, and the US growing at a meager 2% annually, it's' hard to see they could raise rates much without a corresponding decline in home prices.

Anyway, I'm interested to hear analysis and predictions from the rest of you.

twincitizen
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Re: Renting vs. Owning | Apartments vs. Condos

Postby twincitizen » April 28th, 2016, 8:37 am

^I'm in the exact same position. I would really like to buy this spring/summer/fall, and take advantage of the very low interest rates. BUT, the market is just scary right now. Prices are up ~20% over a couple years ago (i.e. $175k house in 2013 is $210k today), and yeah in many places, prices are now reaching/exceeding the peak of the bubble a decade ago. I don't think we're on the verge of a bubble or anything; like there's probably not another looming financial crisis / housing sector crisis any time soon...but I'd obviously not want to buy and then see a 20% drop in value in another couple years!

The available inventory right now is just astoundingly low. Even if you consider "starter" range to go up to $240-250k (and you kinda have to nowadays), there is still next to nothing on the market. Like you almost have to know if someone is selling their house before it hits the open market.

Will the market ease up naturally, like if I waited until late summer or fall? Is it possible that some of the current rush of demand will be satiated by then (particularly the most motivated buyers), and also the high selling prices will draw more sellers to put their houses up for sale?

*And no, I'm not only looking in "hot" neighborhoods or whatever. My search area includes pretty much everything between ~35th Street and 70th Street on the southside. I'm casting a pretty wide net geographically, over a dense area with a lot of homes (relative to the rest of the metro). I should be able to find something I like, within my budget. My advantage over other buyers, I guess, is that I don't need to buy a house right now for any particular reason, other than that I would like to eventually (like in the next year+)

kirby96
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Re: Renting vs. Owning | Apartments vs. Condos

Postby kirby96 » April 28th, 2016, 8:48 am

Let's assume you are correct and the market has overheated. The hard part is that it doesn't necessarily follow that there will be a correction that manifests itself in lower prices. Prices could just flatline for awhile, or start to just go up at much slower rates until the world 'catches up'.

acs
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Re: Renting vs. Owning | Apartments vs. Condos

Postby acs » April 28th, 2016, 8:54 am

I think you guys are making a smart bet that interest rates won't rise, at least not appreciably. As someone said upthread the US is looking forward to at least a mild recession sometime in the next 2 years. No earth-shattering crisis or anything, just a result of a global slowdown and weak demand. Nobody expects the feds to raise interest rates in that situation, but then again they can't really lower them any further either so one scenario is a very prolonged recession. Not good for jobs or inflation, but as a homebuyer it should give you plenty of time to shop around.

David Greene
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Re: Renting vs. Owning | Apartments vs. Condos

Postby David Greene » April 28th, 2016, 9:14 am

As someone who basically bought right at the last peak, I can say that while it sucks to go underwater, it wasn't a huge worry for me because I planned to stay in the house long-term. Thus I specifically did not look for a starter home. The mistake I made was not listening to that voice and taking a balloon mortgage. On retrospect the agent was kind of slimy and said things like, "you don't think it now, but you'll sell before seven years." Well, I didn't and don't anticipate doing so any time soon.

It all worked out because I had a good financial situation that allowed me to refinance to *very* good terms but if I hadn't had that I'd be in pretty big trouble right now.

So maybe don't worry so much about the value of the home but pay lots of attention to the financing. It helps that I have a very different take on home ownership than, say, my father. To him everything is an investment. That drives his remodeling decisions, for example. Me, I just wanted a nice place to live and enjoy. If I don't like something I'll remodel without worry about the ROI. That attitude definitely helped weather the drop in value. I really didn't stress about it.

I suppose some would say that's poor financial planning. I dunno, tomorrow isn't promised to any of us and I'd rather have a nicer/more lovable place to live now (within reason) than stress over exactly how to squeeze every last penny out 30 years later.

gpete
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Re: Renting vs. Owning | Apartments vs. Condos

Postby gpete » April 28th, 2016, 9:42 am

I bought a house last year, and I noticed the inflated housing prices, too. I was left to conclude that the low interest rates was pushing up prices. The low rates boosted everyone's buying power, and more people were looking to buy due to the low rates, which led to more bidding wars. That's my theory.

Viktor Vaughn
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Re: Renting vs. Owning | Apartments vs. Condos

Postby Viktor Vaughn » April 28th, 2016, 9:56 am

It's not so much that I fear going underwater, although that is a consideration after watching so many family members and friends get trapped in their homes, more it's an issue of affordability. I could qualify for a $250K mortgage, but I just don't want one that large. I'd rather get a much smaller mortgage that I can pay off way ahead of schedule and have money for other things, than be stretched financially and be chained to my desk by huge monthly payment.

On the other hand, I don't want to buy a crappy house just to own one. Houses on the market for less than $200K seem to have some serious shortcomings.

Thinking about a home as an investment is way down on the list for me. Really it's a value proposition for a living situation. I feel like the price is too high for what you get.

I guess it's all relative. Which is one reason my current plan is to try and earn my Twin Cities salary, but buy a house in Duluth. I'm skittish about a 150 mile commute though, even if I won't have to drive it most days.

mattaudio
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Re: Renting vs. Owning | Apartments vs. Condos

Postby mattaudio » April 28th, 2016, 10:28 am

I've looked at that scenario too... Especially since those of us who had the fortune to buy distressed properties in 2009 have quite a bit of equity now at the top of the wave, which could buy quite a bit of house outside of the metro. Especially since many tech jobs are remote these days, there's a bright future for cities from Duluth to Red Wing to return to their urban fabric and attract people who would otherwise be living in urban neighborhoods in the metro. Duluth seems to do a good job of marketing itself that way, but cities in the 15-50k size range don't seem to know what they have in their old urban bones.

winterfan
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Re: Renting vs. Owning | Apartments vs. Condos

Postby winterfan » April 28th, 2016, 10:34 am

We bought our house at the peak too. I think SW Mpls was more affordable in the early aughts, compared to now. Things were still totally overpriced though IMO. At the time we were DINKs so we had a large down payment saved. We bought a complete dump of a house for around 240K. We've slowly fixed it up over the years ourselves. We also aggressively paid off the mortgage (basically paid what was left from my salary after my retirement contributions).

That was the best thing we could have done. Our income now is quite different. If you ignored any assets we had, I think we would qualify for reduced lunches at school. But we have a pretty good life since there's no mortgage payment.

Honestly, I think it's a lot harder to buy a SFH as a single person unless you aggressively save and don't have a lot of debt. I have some friends and their single 20-something son is looking to buy a place in Mpls or St. Paul. They are going to help with the down payment though. They view it as giving him his inheritance a little early.

winterfan
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Re: Renting vs. Owning | Apartments vs. Condos

Postby winterfan » April 28th, 2016, 12:06 pm

Viktor Vaughn wrote:I've been planning to buy a house this spring, but have gotten really nervous about the market. In the urban neighborhoods I'm looking in, it seems prices are really close to where they were at the peak of the market. In Northeast, I keep seeing houses that sold for about $170K in 2012 that are listed for $220K. Maybe some of those had significant improvements in the meantime, but still- I'm very wary about overpaying in this market.
My feeling is that the ship has sailed in NE Mpls. I don't think you will see 170K houses again, unless they need a lot of work. There has been too much investment going on up there. I feel the same way about Seward and Longfellow too.

Now the million dollar question is are those houses that are now 220K going to be 250K in a few years? I dunno. Maybe. I thought prices were high in SW more than a decade ago. They are higher now it seems like. I wouldn't want to be sitting out of the market for a decade. But, you don't want to be house poor either.

David Greene
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Re: Renting vs. Owning | Apartments vs. Condos

Postby David Greene » April 28th, 2016, 12:42 pm

There are super-cheap houses very close to Victory Memorial. I spent my first five years of life up there, though on the Robbinsdale side. I would definitely look there if I were in the market. Ditto all down Theo Wirth. I'd also look at Harrison. Right across the street from Bryn Mawr at half the price plus two LRT lines coming.

EOst
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Re: Renting vs. Owning | Apartments vs. Condos

Postby EOst » April 28th, 2016, 1:14 pm

David Greene wrote:There are super-cheap houses very close to Victory Memorial. I spent my first five years of life up there, though on the Robbinsdale side. I would definitely look there if I were in the market. Ditto all down Theo Wirth. I'd also look at Harrison. Right across the street from Bryn Mawr at half the price plus two LRT lines coming.
Yeah, there are some real bargains up north if you're willing to make the move. This one, for example, is great for its price and maybe two minutes' walk from the future Penn/Olson stop (though it's also two minutes' walk from Olson...) I've seen some amazing houses priced to sell in Old Highland too, though that location is perhaps a little dicier.

I'd hesitate at moving North, though, simply because it's the least walkable and bikeable sector of the city. Broadway needs a sidewalk-widening road diet so damn badly.

David Greene
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Re: Renting vs. Owning | Apartments vs. Condos

Postby David Greene » April 28th, 2016, 2:09 pm

EOst wrote:I'd hesitate at moving North, though, simply because it's the least walkable and bikeable sector of the city.
That's why I specifically called out Victory Memorial. But honestly, is it really that much worse (or worse at all) than walking or biking most places in the city?

I'm not sure Old Highland is "dicey." There are some absolutely incredible homes there. It's always been a stop on our annual Home Tour, er, tour.

EOst
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Re: Renting vs. Owning | Apartments vs. Condos

Postby EOst » April 28th, 2016, 2:43 pm

Honestly, aside from biking through the area to look at houses, I can't speak to it much personally. People don't speak of it in the same way they talk about "the Highs," but I've still heard some people speaking pretty negatively. YMMV of course.

As for walkability, I guess it depends somewhat on what you're comparing it to. Obviously the commercial density of the area is much lower than anywhere in South north of 38th or so. And the only bike route downtown is via N 7th, which can be pretty terrifying, 2nd St, which is well out of the way, or Bassett Creek, which is pretty disconnected.

alleycat
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Re: Renting vs. Owning | Apartments vs. Condos

Postby alleycat » April 28th, 2016, 8:41 pm

East-west we have Glenwood, Plymouth (partially a protected bike lane, more to come), 26th Avenue (under construction with protected off-street trail), Lowry, Dowling, 42nd, Victory/Webber Parkways, Shingle Creek/45th Ave N and 49th (off-street). There are less options going north south, but there are still Victory/Wirth, Fremont/Emerson and 2nd St. That's all in a space that's roughly 5 miles long and 2 miles wide. The Northside Greenway (Irving) is a very real possibility with the backing of Johnson and Yang (to a lesser extent) and we're likely getting bike boulevards on Queen and Thomas much sooner. It's pretty damn bikeable.

The lack of dense commercial corridors definitely makes it less walkable, but I do still have a burger bar, diner, hardware store, Aldi and a liquor store within a short walk. Still, we do need more commerce. If you're not willing to ride (bike/bus) to the rest of the city then it's not a great option at this point. Having said that, I would not suggest you move here if you've never lived in a Stevens Square or Phillips.
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EOst
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Re: Renting vs. Owning | Apartments vs. Condos

Postby EOst » April 28th, 2016, 11:01 pm

Thanks for the local knowledge!

amiller92
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Re: Renting vs. Owning | Apartments vs. Condos

Postby amiller92 » April 29th, 2016, 9:48 am

Viktor Vaughn wrote:In the urban neighborhoods I'm looking in, it seems prices are really close to where they were at the peak of the market.
My brother and his wife are looking now too and I'm getting concerned for them as well. I get uncomfortable in a housing market in which things are listed mid-week and sold by (or before) Sunday for above ask. I worry that means we're reaching a top.

But on the other hand, if you're going to live there for awhile (5+ years, maybe), does it matter much? Rents are high and going up to, so all you're really talking about is how soon can you sell the house without taking a loss?

Also, if houses are just now reaching the values they saw in 2007, well, it is 9 years later. Getting back to the trend from that long ago doesn't sound so scary.
And then of course there's the threat of rising interest rates. While I see some logic in locking in a mortgage at today's low rates- it's hard to see rates going up significantly in the next couple of years. They've been talking about raising interest rates for about 10 years and so far all they've dared to do is 25 basis points hike last December. With China's growth slowing, Europe stagnating, and the US growing at a meager 2% annually, it's' hard to see they could raise rates much without a corresponding decline in home prices.
I think that's right.


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