Quote:
Originally posted by Wayne at Pelican Parts
My biggest concern at this point would be buying a home, and then losing hundreds of thousands of dollars in equity as the market corrects. I'm not sure about you guys, but hundreds of thousands of dollars is a LOT of money to me...
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When I do my annual 'Personal Financial Statement', I've always put my house equity on a separate line item from what I consider my 'net worth' since at my age (35) with a young family I look at housing from a cash flow position, rather than an equity/net worth position. Your calculations would not provide for the same clear buy/rent decision here in Chicago. That being said, paying $900k for a townhouse and then having its value drop to $550 would make me want to vomit... even if I moved it to a different tab on my excel sheet.
One minor thing to note that while prices may be inflated, if the house is truly a long term situation... locking in a historically low fixed rate may offset
some of the inflated price. I just can't imagine that your market is anywhere near that point yet. My gut feeling is that we're going to need to see a rise in the unemployment levels before we see the big dropoff in price. But again, these downward slides take five years or so.
Unless of course, its a 'new paradigm' in which case you're going to be priced out forever and will end up living in a tent city or a Honda.
