For a minute there I thought I had to get off my couch, when all the while the fact is we don't have to do anything much but keep things afloat for just a few decades more! In fact, we'd best shut up about PO, because if our offspring finds out we knew about it all along, they'll turn and wring our necks come 2036!
Posted: Sat Jun 14, 2008 4:09 am Post subject: Houses, Mortgages and Peak Oil
Dear Peak Oilers:
Renting a house has become expensive in my area, so I'm considering to "buy" a house with a mortgage. But now that PO is underway I'm not sure anymore what to do.
What will PO do to the housing/mortgage market in the long term?
Joined: Sep 03, 2007 Posts: 598 Location: Sunny Virginia, USA
Posted: Sat Jun 14, 2008 6:16 am Post subject: Re: Houses, Mortgages and Peak Oil
thor wrote:
Dear Peak Oilers:
Renting a house has become expensive in my area, so I'm considering to "buy" a house with a mortgage. But now that PO is underway I'm not sure anymore what to do.
What will PO do to the housing/mortgage market in the long term?
To rent or not to rent in a post peak world?
Depends on several factors however my first guideline to anyone is:
Don't go into debt.
Being in debt right now can be a really bad thing. Imagine sinking a bunch of money into a property you do not own and suddenly having the economy go completely south. You WILL lose the property.
If I was young and had a few brains, I would do exactly like my nephew did. He bought a couple of acres and a used mobile home. He and his wife lived there and saved every penny they could. After about 10 years, they were able to afford a modest home on a better piece of property for cash. They are debt free, they own their own home, they have some money, a decent retirement set up if the world does not end and investments that are still worth something and he is only 35. He can't be considered wealthy by any means, but he is in a much better place (financially) for PO than about 90 percent of the country. _________________ When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Sat Jun 14, 2008 9:52 am Post subject: Re: Houses, Mortgages and Peak Oil
Don't live in an expensive area. IMO, expensive areas will continue to depreciate faster than areas where appreciation didn't have as much of an impact. For example, I live in Allentown, PA. Allentown is the third largest city in PA and has the third worst school district after Pittsburgh and Philly (funny how it follows city size.) I live in the nice part of town, lots of single family houses on relatively small lots; less than a 1/4 acre. I bought my house in 2000 for about $143K. Last year, the house across the street from me, which is similar, but not as big, sold for $275K. Similar houses in the suburbs were going for $350K+. Based on my calculations, it's a wash between higher prices and private school. Private schools are better than ANY public school IMO, so I think that they are worth the cost. The bad school district makes this area appreciate very slowly, but steadily. Last week, a house down the street, which again is smaller, sold for $190K. Houses continue to go on the market and sell within a reasonable period of time around here. That isn't the case in a lot of expensive areas.
Buy a house in an area which is nice, but which largely avoided the real estate bubble. A house's true value is based on the income of the person who would most likely buy it. The stepping stone theory of selling your inflated house to buy a larger, also inflated house which you would never be able to buy if you didn't have your old one to trade in is collapsing because it's all based on inflated value. Like I said, avoid "bubble areas," they are going down and down and down as peak oil takes hold. _________________ "That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money
Posted: Sun Jun 15, 2008 7:11 am Post subject: Re: Houses, Mortgages and Peak Oil
Kingcoal wrote:
Buy a house in an area which is nice, but which largely avoided the real estate bubble. A house's true value is based on the income of the person who would most likely buy it. The stepping stone theory of selling your inflated house to buy a larger, also inflated house which you would never be able to buy if you didn't have your old one to trade in is collapsing because it's all based on inflated value. Like I said, avoid "bubble areas," they are going down and down and down as peak oil takes hold.
Sounds like a valid argument. Cheap areas are probably going to become popular when the economy show signs of contraction, making the high-end market unaffordable for those who would have bought it in a growing economy.
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