I learned how to handle my money from my grandmother Big Mama.
She was extremely frugal. I like to joke that she was so tight with money that if she held a penny, Lincoln would scream.
My grandmother is the reason I became a homeowner in my early 20s. I only rented for one year before buying a two-bedroom, one-bath condominium in Baltimore.
During the time I rented an apartment, every phone call with Big Mama started with this question: “You still giving your money to the White man?”
I don’t know. I still think she’d do better with an S&P500 index fund over the past 25 years and renting an apartment. You can take advantage of white people who are bad at arithmetic.
The black community has access to better money management, but there is still something that prevents them for taking advantage of it. I recall reading an article where they were talking to folks and one respondent said “the stock market is where white folks keep their money”. I don’t recall now if they just didn’t trust it, or didn’t understand it due to lack of education, or what. But that quote has stuck with me ever since I read it.
And, of course, g-ma had a different experience than the grandchild. Jim Crow was still in effect, most likely. Limited access, white folks excluding and/or exploiting, etc. It would be a miracle if she didn’t distrust anything she associated with white people (e.g. landlords).
From a money standpoint, it may be true that renting an apartment is better. But I would rather not ever share a wall again. I like having enough space from my neighbors that I don’t have to hear them fight, or their music, or their sexual activities. Having our own house on a lot of more than 1/2 acre means I don’t have to listen to my neighbors at all, except when they are using power tools (someone has a table saw…not sure who, but every now and then I hear it several houses away).
From a money standpoint, it may be true that renting an apartment is better. But I would rather not ever share a wall again. I like having enough space from my neighbors that I don’t have to hear them fight, or their music, or their sexual activities. Having our own house on a lot of more than 1/2 acre means I don’t have to listen to my neighbors at all, except when they are using power tools (someone has a table saw…not sure who, but every now and then I hear it several houses away).
That’s fine. I’m not saying that people should have a single family homes vs. an apartment/condo. Just that it makes sense to do a rent vs. buy calculation to see which financial arrangement offers the better deal at a given time.
The new trend of private equity buying up single family homes in the Sun Belt and renting them out may be bringing the same dynamics to that market that overbuilt rental apartments in Houston. That created two decades of Houston housing bargains for those that understood the arithmetic. Investors tend to keep throwing money into a fashionable investment trend long after its peak.
INTERCST:“The new trend of private equity buying up single family homes in the Sun Belt and renting them out may be bringing the same dynamics to that market that overbuilt rental apartments in Houston. That created two decades of Houston housing bargains for those that understood the arithmetic. Investors tend to keep throwing money into a fashionable investment trend long after its peak.”
I see ads now on my Facebook page for ‘invest in private homes’ type funds… get 30% returns…yeah…when they get down to ‘little guys’ you know it has gone too far.
At some point, all the houses will be sucked up by corporate buyers. they are buying more than 20% of all house sales now in the DFW area and driving up prices. Prices up 18% each the past two years. It can’t keep going up - it’s tulip mania. At some point, the music stops and we’ll see what happens next.
Rents can only go too far before people double and triple up to pay the expenses reducing the demand for apartments and house leases.
If a recession comes along, folks lose jobs left and right…well…
In 1990 , my company transferred me from Arlington VA to TX. Full paid move including purchasing house for ‘average highest two estimates out of three’ for my 3 story townhouse. I took their deal rather than put house on market. House needed a few replacement windows as had condensation inside a couple windows. Turns out house didn’t sell…market dropped in DC area. Then, the government mandated that the crappy plywood used for roof had to be replaced. Seems some Chinese plywood had mold problems. Hmmm…not my problem. I took their deal, got my $230,000, moved to TX and built nice house. The firm that my employer used sold the townhouse 10 months after $20,000 for new roofing, $15,000 to replace all the windows with new ones. Figured they had to make 10 mortgage type payments …sold it for $180,000 after the expenses. Took a bath on that one. (now it’s probably a $750,000 or more townhouse. Right near the Ballston Metro).
I’ve seen housing plummet in Denver - same as in Houston -
who knows? Folks like houses. With 1 and 2% mortgage rates - many can afford big $$$ homes. Now that mortgage rates are tickling 5%, we’ll see…that’s going to hurt along with bigger utility bills, bigger gas transportation bills, higher food prices.
At some point, all the houses will be sucked up by corporate buyers. they are buying more than 20% of all house sales now in the DFW area and driving up prices. - tele
A year or two ago, there was a new development near here (in Conroe TX) where the developer/builder put the entire development, including something like 100 newly constructed and unoccupied homes, up for sale as a package deal.
At some point, all the houses will be sucked up by corporate buyers. they are buying more than 20% of all house sales now in the DFW area and driving up prices. - tele
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A year or two ago, there was a new development near here (in Conroe TX) where the developer/builder put the entire development, including something like 100 newly constructed and unoccupied homes, up for sale as a package deal.
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In January, D.R. Horton Inc. purchased an entire subdivision in Conroe, Texas, built 124 houses, and then put the entire neighborhood on the block. The winning bid for $32 million dollars came from Fundrise LLC, an online real estate investing platform that lets you invest in commercial real estate through real estate investment trusts. A combination of investors swooping up single-family houses to rent out or flip, some of the lowest interest rates in history, and a housing shortage has caused home prices to surge, pricing normal people out of being able to purchase a home.
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… more at link
A year or two ago, there was a new development near here (in Conroe TX) where the developer/builder put the entire development, including something like 100 newly constructed and unoccupied homes, up for sale as a package deal.
I went to a foreclosure auction in Houston in 1985 after the oil price bust where about 500 condos in various parts of the city were being sold.
At the end of the auction about 30 condos hadn’t received any bids. The auctioneer put them up for bid with no reserve as a lot. The winning bidder paid $5,000 for the lot. Of course, many Houston condo developments failed when homeowners defaulted and eventually go bulldozed over. No doubt there was a few of those in the lot.
I wouldn’t have wanted a lot of 30. What would be the property taxes on that? And with no assurance I could flip them (i.e. they already weren’t sold in the main auction). Even if $1000/yr, that’s thirty grand just for taxes. Plus HOA dues.
Seems cheap when you say “$5000”, but without doing anything you’re already incurring tens of thousands per annum in obligations.
I wouldn’t have wanted a lot of 30. What would be the property taxes on that? And with no assurance I could flip them (i.e. they already weren’t sold in the main auction). Even if $1000/yr, that’s thirty grand just for taxes. Plus HOA dues.
Seems cheap when you say “$5000”, but without doing anything you’re already incurring tens of thousands per annum in obligations.
I suspect the winning bidder kept the few of the 30 properties that were worth anything and let the rest go back into default. The legal system wasn’t large enough to go after everyone who wasn’t paying their taxes or HOA dues, so the only recourse was to sieze the property.
Houston was also rife with “jingle mail” at the time. A lender would send out a letter to a homeowner in arrears threatening foreclosure. Homeowner would reply by sending the lender the keys.
if no one bid anything on them…probably were real problems. Trashed by tenants or stripped clean by tenants or when occupied by thieves. Flooded out. Fire damaged…
Maybe some would be rescue units…
Or could be units with $18,000 in unpaid dues to the HOA/Condo association and the new owner would have to fork up that money.
When houses/condos stay on the market a long time - usually because it is a problem - cracked foundations - walls - shoddy construction - leaky roof…leaky basement…
You buy a 40-50 year old house around here - and if you didn’t look carefully - cracked slabs - water leaks under foundations ($20,000 problems) - termite damage - aluminum house wiring - rodents in wall, ceilings, etc.
Or could be units with $18,000 in unpaid dues to the HOA/Condo association and the new owner would have to fork up that money.
That’s not how it works. The auctioneer is selling condos with clear titles (i.e., free of any mortgages or liens.) You are of course responsible for current taxes and HOA dues once the sale is closed.
And that’s the reason many HOAs failed and the property got bulldozed over. The HOA’s only recourse is to find the homeowner who didn’t pay 6 month’s worth of HOA dues and left the state. Good luck with that.
intercst: "I went to a foreclosure auction in Houston in 1985 after the oil price bust where about 500 condos in various parts of the city were being sold.
At the end of the auction about 30 condos hadn’t received any bids."
If a mortgage lender is foreclosing the lender usually bids on the property, credit on the loan. I have never seen a no bid mortgage foreclosure.
The auctioneer put them up for bid with no reserve as a lot."
If there was a professional auctioneer then it was probably a sale by the developer(s).
“The winning bidder paid $5,000 for the lot. Of course, many Houston condo developments failed when homeowners defaulted and eventually go bulldozed over. No doubt there was a few of those in the lot.”
Buying property at foreclosure is not for the faint of heart - usually you have not seen a title commitment, you probably have not been able to inspect the property if it is occupied, and it is very unlikely that you have seen a Phases I environmental site assessment (though in 1985 those were not that prevalent and may be subject to higher priority liens, back taxes, and past due condo or HOA fees).
Regards, JAFO
(who has sold property at foreclosure but never bought real property at foreclosure)
Buying property at foreclosure is not for the faint of heart - usually you have not seen a title commitment, you probably have not been able to inspect the property if it is occupied, and it is very unlikely that you have seen a Phases I environmental site assessment (though in 1985 those were not that prevalent and may be subject to higher priority liens, back taxes, and past due condo or HOA fees).
Regards, JAFO (who has sold property at foreclosure but never bought real property at foreclosure)
I bought my current home as a Fannie Mae forclosure in 2012. The title passed through 4 or 5 hands over the space of a few years before Fannie Mae ended it. As I remember lots of properties in the area were being held up in limbo because no one wanted to do a short sale. So they waited until everything cratered and Fannie Mae was holding a lot of it.
intercst:“The auctioneer is selling condos with clear titles (i.e., free of any mortgages or liens.) You are of course responsible for current taxes and HOA dues once the sale is closed.”
If the HOA had a lien against the house, wouldn’t that have to be paid for from the proceeds of the sale?
the mortgage holder also has rights to the sale price of the house/condo…and is often the one holding the sale or through an agent.
If the HOA had a lien against the house, wouldn’t that have to be paid for from the proceeds of the sale?
the mortgage holder also has rights to the sale price of the house/condo…and is often the one holding the sale or through an agent.
The mortgage holder is the first lien, lien for HOA dues is secondary.
In a big real estate bust, the home value is less than the outstanding mortgage and the mortgage lender is in possession of the property. It’s certain that there’s nothing left for the HOA, so the HOA won’t even bother to file a lien.