patrick.net

well, it will be paid and it could be broken down monthy to answer the question honestly ... I think that was the point. Even if you hold your own taxes and pay them when due you still are paying $loan + $taxes + $insurance X 12 = $house payment per year. So, $house payment per year / 12 = $loan + $taxes + $insurance per month (give or take a few bucks earned in interest if you hold your own taxes).

I know you guys like slamming Ray, but his point about the total being the relevant number is a good one. I passed on a home that had MelloRoos and a service district ass. tied to it that only equaled about $200 per month. So, that FHA change will make a difference to some people, like me, that notice $200 changes in a month. I would imagine there are people that do not even notice $2,000 changes in a month, just like there are some that notice $20 changes in a month.

On a related note, do you find it odd when a wife gets cought stealing hundreds of thousands of dollars from work over a few years and the husband says he didn't notice anything? I would notice if my wife came across an extra grand in a month.

Bap33 says

I know you guys like slamming Ray

Do I get slammed? I never noticed. LOL

RayAmerica says

PITI is your mortgage payment. Stop paying your property taxes and see what happens.

No, your mortgage payment is PI. Taxes and insurance are taxes and insurance.

tatupu70 says

No, your mortgage payment is PI. Taxes and insurance are taxes and insurance.

LOL !!!

My dad was physically and emotionally abusive to me, my brothers and my mom. I've been out of that hellhole since I turned 18 and went to college.

kris ... you seem to be very well adjusted now. These experiences always leave scars, but fortunately, as time goes on they tend to heal more and more. Hopefully, you can help others (if you're not already) that have been through, or are now experiencing the same.

Nomograph says

I think he meant to say “basement”.
Like most day-traders, he’s just following the herd. Currency speculation is all the rage right now. What he doesn’t realize is that the institutional investors are in the process of bending him over. Fool. Money. Part.

I've been profitable for many years now. The first couple of years were very rough, however. I am not in the 85% or so of traders who lose and then quit. Sorry to disappoint you, but I am exceptional. Since it's early in the AM, and testosterone levels are at their daily peak, I think Nomo is letting his fantasies (see the "bending him over" reference above) sneak into his posts.

Nomo, one other thing: LEARN the rules for when punctuation is to be placed inside or outside of quotation marks. Here's a HINT - MOST of the time it's supposed to be INSIDE. I'll just assume English is not your native language.

RayAmerica says

kris … you seem to be very well adjusted now. These experiences always leave scars, but fortunately, as time goes on they tend to heal more and more. Hopefully, you can help others (if you’re not already) that have been through, or are now experiencing the same.

I know it's hard to believe, but my rough childhood was actually a blessing. It forced me to become very responsible at a young age, and, ever since I turned 18 and became an independent adult, I APPRECIATE life so much more than other people. Simple things, like being able to sleep through the night without being disturbed/awakened by screaming and physical fights (my dad used to get up EARLY in the AM for work) are STILL appreciated to this day, and I am 33. The alcohol-induced antics and physical fights in the dorms were A JOKE compared to what I was used to at home, and then, after I graduated college and began life on my own, I thought it was PURE ECSTASY to have my own place with peace and quiet. That continues to this day.

Evil has purpose.

Bap33 says

On a related note, do you find it odd when a wife gets cought stealing hundreds of thousands of dollars from work over a few years and the husband says he didn’t notice anything? I would notice if my wife came across an extra grand in a month.

That's a load of crap if I ever heard one. Of course he'd notice, but he'd have to plead stupid or plead guilty.

The mortgage payment including taxes & insurance is pure semantics. Many mortgages have impounds for t&i. Many don't. Some include impounds for extras like melloroos & hoa, others don't. I've seen it both ways.

phew! It won't effect me...

Seriously though, I just got an FHA loan, the bone heads all recommended that I ONLY put down 3.5%, I had enough to put a higher DP. It wasn't until after the loan approval process got rolling, that I was told I would have to pay MIP.

FHA Loans are a new Vehicle racket for banksters to rob and defraud people. The process was tedious and arduous, it's set up perfect for people making less than 50K a year, on a W2. Those that actually make money, but are self employed, and file 1099's that make the kind of money that can afford to pay the loan. Are pretty much SOL, if not for one of my clients that pay me with a W2, I would have never been able to buy my house.

It's a loan that in theory "On paper" is an easy loan to qualify and get, by putting up a measly "3.5%" down. But then in reality, when all the figures are tallied, you'll damn well need 3.5% interest rate, because every swinging pen wants a chunk of your monthly mortgage.

These are Jumbo Loans just on a smaller scale, especially when the Night clerk at Mc Donnald's starts qualifying for these loans. Sure they will qualify, but 1500 a month is still not normal for a Mortgage that is supposed to be "AFFORDABLE".

Tenouncetrout says

but 1500 a month is still not normal for a Mortgage that is supposed to be “AFFORDABLE”

Housing can never be "affordable". Even without the idle wealthy looking for more property to buy up, since it is sold on the auction basis housing will always be bid up to the point of unaffordability.

You're probably better off paying the 3.5% down and keeping the rest of your down payment money somewhere else.

The 0.5% is tax deductible so it's really 0.3%. On a $150,000 purchase the 0.5% MIP is $40/mo, after-tax.

The $25,000 you're not putting down can earn $20/mo @ 1.1% at HSBC, or $60/mo if you put it in a 10 year treasury bond @ 2.8%.

IOW, $150,000 30yr @ 4.5% with 3.5% down has a nominal cost of $850/mo and 20% down lowers this to $800/mo.

This is with an opportunity cost of 2.8%. If you could get 5%, the two approaches would have an equal monthly cost.

Troy in my area, what I'm saving on interest and mortgage, I'm paying $890 a mo on 160K btw, which is doable. But then Insurance and Taxes here in SoFl is 300 each, that's almost as much as my mortgage payment. It seems like for every penny the Gubbmint looks to shave off the cost of Home Ownership there's two Sons of Bitches waiting wanting a dime, throwing their claim into the hat.

It's insane, I'm just glad I bought now, while I still could, money, job and otherwise.

With in a year a loan will be a White Elephant, it damn near is already instinct. In the last three years I've been looking, almost every house I watched get signed contracts on and taken off the market, financing fell through. The Girl at my title company when I was closing told me I was lucky FHA loans are hard to get.

They talk a lot about how easy it is to get, but the forces that make up what an FHA loan is, actually works against the favor of those that are supposed to get them.

Considering that for recent sales, split between Freddie, Sallie, and FHA 95% of the financing for recent sales have been backed by the government. And the FHA %% is increasing monthly. This will cause a slow down and/or price decrease in the coming months. Not sure if it will push the market into crash mode, but it'll definitely help prolong the slowdown. People who had their cap at $200k now will drop it to $175k.

elliemae says

The mortgage payment including taxes & insurance is pure semantics. Many mortgages have impounds for t&i. Many don’t. Some include impounds for extras like melloroos & hoa, others don’t. I’ve seen it both ways.

Taxes and Insurance are an integral part of the mortgage payment. For those that live in la la land, what that means is that you cannot arbitrarily pay, or not pay, your taxes & insurance without violating your mortgage contract (yep, it is a legal contract between the mortgager and mortgagee). They MUST be paid and if they are not, the lender (and county) has the right to foreclose. Why? Because property taxes are legally the FIRST lien on the property. Insurance is mandatory because it protects the lender's (and to a lesser extent the borrower's) equity position. Read the conditions in any mortgage loan and you'll see paying taxes and carrying adequate insurance is an integral part of the mortgage contract between lender and borrower. Ask any loan originator what constitutes the “mortgage payment,” and they will ALWAYS tell you it is PITI. In fact, legally, the written Good Faith Estimate will quote (by law) the mortgage payment as PITI.

RayAmerica says

In fact, legally, the written Good Faith Estimate will quote (by law) the mortgage payment as PITI.

http://www.frisco-tx-homes.com/default.asp_Q_f_E_cpg_A_pg_E_MortgageNewGFEEffectiveJanuary12010

According to this article, legally the written GFE quotes (by law) the mortgage payment as principal, interest, & pmi if applicable. It doesn't contain info about taxes, home insurance, hoa fees, or the actual loan product such as VA, FHA, Conventional.

We're talking semantics, here. Generally speaking, people accept that their payment will be PITI plus HOA, PMI, and melloroos or any other assessments. You are correct in your statement that (eventually) if the taxes aren't paid, the home will be sold. If you don't have insurance, your contract may be null & void because it's normally a condition of the loan.

But not legally. Rayray, when you assert that this is a legal requirement, you're challenging people to prove you wrong. Acccording to the search I performed, it took 1.18 seconds to get 39,600 search results that prove you wrong. It's the word "legally" that gets you, here.

Even tho it's pure semantics, don't challenge us unless you're sure.

elliemae says

But not legally. Rayray, when you assert that this is a legal requirement, you’re challenging people to prove you wrong. Acccording to the search I performed, it took 1.18 seconds to get 39,600 search results that prove you wrong. It’s the word “legally” that gets you, here.

Here's the challenge: don't pay your taxes and insurance on your "mortgage loan" and see what happens.

But that wasn't the question, rayray. I agreed with your principle that mortgage payments, generally speaking, does include impounds of all sorts.

But not legally. You specifically challenged us with your statement that it's a legal requirement. According to the laws that took effect January 2010, they're not legally required to base the payment on PITI. Just PI, & PMI.

RayAmerica says

Here’s the challenge: don’t pay your taxes and insurance on your “mortgage loan” and see what happens.

No one is disputing that Ray. You can try to change the subject now, but the fact remains that Ellie proved you wrong. I suggest you start another thread about Obama and the evil Libs--that's something you can handle...

20% downpayments in the Bay Area is a lot of cash to most people, especially if they call some non-Bay Area place home (like, Arizona for instance). That is why I think it is that both you and those who argue with you are right.

But the ones that are not from the Bay Area have a different frame of reference, their logic does not apply here.

Even though on the other hand, I noticed that you are not telling them why they are wrong about their area.

There is a lot of anti-California-ism in flyover land, a lot of it is particularly directed at the Bay Area + LA.

(AFAIK) The system is letting specuvestors buy up properties with 20% down @3.5% rates right now.

For the cashflow buyer with additional capital to handle the accelerated amortization, the nominal TCO on a $300,000 property is $1400/mo.

Purchase Price 300000.00
Down Payment 8700.00
Loan Principal 289500.00

Points 4342.50
Points Net Tax 2813.94

IO 844.38
PMI 361.88
Prop Tax 308.50

Tax Credit (533.19)

Subtotal 981.56

HO Ins 100.00
HOA/Utils 200.00
Maintenance 137.50
Opportunity 0.00

Total Other 437.50

Nominal Cost 1419.06

With Amortization 2744.27

So a $1900 rent is $500/mo profit to the LL. On the $12,000 or so it cost to acquire the property, that's a 50% annual cash-on-cash return.

These are just the FHA numbers going into effect now. I doubt real investors would be excited by these numbers but people doubting that the specuvestors are making killings skimming middle class rentslaves are severely disattached from reality.

Cvoc13 says

What reasons do you see as price drivers?

Only one thing: wage inflation. Something that has arrived in the 1970s, 80s, 90s, and 00s.

http://research.stlouisfed.org/fred2/series/AHETPI?cid=11

Is the party over now? Or is it just beginning?

That was during the BOOM CYCLE (baby boomers are aging out and down sizing) do you think we will have wage inflation during 9.5% unemployment. But ok, lets say wage inflation, wow... seems like a reach to me... I guess they will be able to buy food and gas for their job.. (at least 9 of 10 that are working, oh wait that is more like a real rate of 17% so make that 8 of the 10) and why pay more and more when each person looking for a job will be willing to take the job for less and less, ... yea wage inflation indeed.

That site is chock full of data, neat, what do you make of this?

http://research.stlouisfed.org/fred2/series/MBS10Y

I bought my house in december for $550k. I pay $2850 a month,everything included. About $550 is taxes, insurance, and hoa dues. I also save about $700 a month in federal income taxes.

There is absolutely no way that I could find a comparable house to rent around here for $2100 a month.

I'm not saying that the house is going up in value or that there aren't places where id earn more onthe $110k I put down, but I'm positive that buying when I did was a net positive financial move.

If I was renting still, id be putting up about $3000 for this place. Id be lucky to earn $300 a month from the 110k.

So, yeah, I generally agree with the duck about housing. Not everywhere is as ridiculous as san francisco.

Kevin says

I bought my house in december for $550k. I pay $2850 a month,everything included. About $550 is taxes, insurance, and hoa dues. I also save about $700 a month in federal income taxes.
There is absolutely no way that I could find a comparable house to rent around here for $2100 a month.
I’m not saying that the house is going up in value or that there aren’t places where id earn more onthe $110k I put down, but I’m positive that buying when I did was a net positive financial move.
If I was renting still, id be putting up about $3000 for this place. Id be lucky to earn $300 a month from the 110k.
So, yeah, I generally agree with the duck about housing. Not everywhere is as ridiculous as san francisco.

In the Chicago area there are a slew of half million dollar houses that will rent for $2100/mth.

I don't know enough about the foreclosure market here, but perhaps if one of these half million dollar houses went to auction and you could pick it up for the $950/Month mortgage the duck's math works.

Now I know asking prices around here are way out of line and with all the government intervention it is almost impossible to price a house. So maybe there are some real bargains on the auction block.

StillLooking says

In the Chicago area there are a slew of half million dollar houses that will rent for $2100/mth.

Where? I'm from the Chicago area too and that surprises me.

tatupu70 says

StillLooking says

In the Chicago area there are a slew of half million dollar houses that will rent for $2100/mth.

Where? I’m from the Chicago area too and that surprises me.

What do you think a house asking half a million in the Chicago area would rent for?

StillLooking says

What do you think a house asking half a million in the Chicago area would rent for?

I don't know--that's why I asked. I'm just curious where the slew of properties are located.

tatupu70 says

StillLooking says

What do you think a house asking half a million in the Chicago area would rent for?

I don’t know–that’s why I asked. I’m just curious where the slew of properties are located.

A house that asked 425 at the height of the bubble would now rent for $16-1800, and there are a slew of these around. At least there was 6 months ago when I was checking it all out. It seems that the rental market has only softened since then.

Kevin says

I bought my house in december for $550k. I pay $2850 a month,everything included. About $550 is taxes, insurance, and hoa dues. I also save about $700 a month in federal income taxes.

Here's what my spreadsheet outputs with your numbers. . .

Purchase Price $550,000.00
Down Payment 106,700.00 20.00%
Loan Principal 440,000.00

Points 6,600.00 1.50%
Points Net Tax 4,276.80

IO 1650.00 4.50%
Prop Tax 565.58 1.23%
Tax Credit (779.89) 35.20%

Subtotal 1435.70

HO Ins 141.67
HOA/Utils 200.00
Maintenance 168.75 0.15%
Opportunity 258.95 2.80%

Total Other 769.36

Nominal Cost 2205.06

Actual Expense 2926.14

So according to my GIGO spreadsheet the TCO is $2200/mo and the amortizing outgo is $2900.

In 2020 principal will be $350,000 so if you refi into (say) a 20yr 4% loan your TCO will fall to ~$1700/mo.

I'll be surprised if rents are higher then than now, a little, but I have no clue what's going to happen next.

tarkin says

I can not afford to buy. I don’t have the cash and even though I budget to save $400.00

If you can only save $400/mo with only a $600/mo housing cost then a $250,000 house is way too much of a stretch.

You're not in a Bay Area frame of mind. . .

I can’t afford to care how much I could save over a 30yr time frame.)

Yes you can. The system is structured to encourage you to do so.

For one, don't worry about 20% down. Go with 3.5%.

But on your tight finances I only see you able to buy a $75,000 house ($820/mo total outgo, $663 actual cost not counting principal repayment).

If you could get a second income going -- say, $1000/mo after taxes and extra expenses -- then a $225,000 house would be within reach ($1650/mo total outgo, $1300/mo actual cost not counting principal).

But this is of course the "two-income trap" that we as a nation fell into starting in the 1970s.

http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826

Interestingly, the author of this book may be nominated for consumer chief:

http://www.politico.com/news/stories/0910/41981.html

Troy says

tarkin says

I can not afford to buy. I don’t have the cash and even though I budget to save $400.00

If you can only save $400/mo with only a $600/mo housing cost then a $250,000 house is way too much of a stretch.
You’re not in a Bay Area frame of mind. . .
I can’t afford to care how much I could save over a 30yr time frame.)
Yes you can. The system is structured to encourage you to do so.
For one, don’t worry about 20% down. Go with 3.5%.
But on your tight finances I only see you able to buy a $75,000 house ($820/mo total outgo, $663 actual cost not counting principal repayment).
If you could get a second income going — say, $1000/mo after taxes and extra expenses — then a $225,000 house would be within reach ($1650/mo total outgo, $1300/mo actual cost not counting principal).
But this is of course the “two-income trap” that we as a nation fell into starting in the 1970s.
http://www.amazon.com/Two-Income-Trap-Middle-Class-Mothers/dp/0465090826
Interestingly, the author of this book may be nominated for consumer chief:
http://www.politico.com/news/stories/0910/41981.html

I find it interesting that you say I am not in a Bay Area frame of mind as the realtors in Centre County, PA have basically told me that I am not in a Happy Valley frame of mind. State College, PA is different. I guess I am really just in an unjustifiable price of housing frame of mind and I am the one that has to suffer for it.

I don’t have the cash to cover the 3.5% either considering all the other costs and need to have a family emergency fund left. Every time I get close, something comes up and I have to touch savings at this rate I am guessing in about 2-3yrs before I have what I need for 3.5%

The medium house cost in my area is about $200,000. There are no houses below $90,000 (usually 1 bed room houses) in my area. Seriously, I can not remember ever seeing one other than foreclosure listings which is out of reach for me. Since we are one car family buying any further out than 30 miles may not be feasible. We want to stay within 10-15 miles out.

We looked at houses in the $125,000 to $180,000 as I can get approved for $200,000 the last I checked. Most of those houses where worse or smaller than my current apartment which I pointed out to realtors. They would counter with the 4 unit town house property I live in would sale for at least $1,000,000 in our central PA market. The bank should have never approved me for a $200,000 loan and both I and the lending agent I was working with knew it. She was strongly suggesting that I not try to buy something at the upper limit of my approval.

My wife may go to work if she can find a job in this area once our son is in school next year. She would be lucky to bring home $1000 per month and with local daycare costing up to $700 per month we decided for her not to work. We could live without the extra $300 for a few more years. The month she graduated from college we found out she was pregnant.

In the summer of 2008 when I first started looking at buying a house there where no forecloses listed anywhere around hear. Now I am seeing areas where up to 30% of the listed houses are pre-foreclosure or foreclosure. We are officially a non-bubble area, but for some reason I truly believed for years that there was no way in hell most the people from central PA could afford the local housing prices and I still believe that.

Most of the households in our area seem to be 3 income or more. They both tend to have fulltime jobs and at least one part-time job. Our knack for making ends meet involves an understanding of work life balance and if working multiple jobs to pay more to buy a house than what it costs to rent a better a 2 bed room place is what we are calling affordable housing then I think we are wrong.

For the record my wife and I have never had a real fight over our finances. Recently we keep fighting over other people’s finances though. I keep saying there is no way people in this area can afford to keep buying and she keeps saying they can because they have 3-4 jobs per household and tons of debt and they are struggling to make ends meet. That is not affording to buy, that is suffering to buy. We are in agreement we “want” to buy a house, but we will not suffer for it.

We can not afford a house because it makes no financial sense for us to buy. Lower interest rates don’t change that fact unless they get to 1% or housing prices drop in our area.

I am done with my pity party. As far as I am concern I am better off, but when I keep hearing about how lower interest rates make housing affordable it just sets me off. This is same type of trap that got us here in first place.

tarkin says

That is not affording to buy, that is suffering to buy. We are in agreement we “want” to buy a house, but we will not suffer for it.

Welcome to the American Dream. It only hit me in the last decade that Real Estate was a lot different from everything else -- since it is such a limited good with unbounded demand, it is truly the source and sink of all wealth. The Chinese are finding this out the hard way as all their free cash is going into chasing land values.

The general layout of State College PA reminds me of Salinas CA, a very small town bounded by no-growth farms. This really bottles up the supply/demand imbalance and keeps prices at the community's point of pain.

What with all the "investors" looking to buy up places to rent out, and all the people willing to impoverish themselves to stay in the place they have, there's precious little sanity left in the system. Plus of course there are the buyers who get help from the Bank of Parents to knock the starting principal down to size for them.

Take this place:

http://www.zillow.com/homedetails/146-State-College-PA-16801/93574055_zpid/

$125,000. Chickenfeed for a specuvestor. Costs around $500/mo cash expense, should rent for more than that.

Everybody's been counting on that 8% per year compounding appreciation to bail them out of their gamble in 5-10 years. It's always come in the past, in the 70s, 80s, 90s, and last decade.

It'll probably come again. Don't know how, but the System manages to bring it on.

Here's a place in Altoona:

http://www.zillow.com/homedetails/421-S-Dartmouth-Ln-Altoona-PA-16602/2139257218_zpid/

Instead of paying $200,000 for a place in town wouldn't spending the $5,000 to become a 2-car household make sense?

and if working multiple jobs to pay more to buy a house than what it costs to rent a better a 2 bed room place is what we are calling affordable housing then I think we are wrong

The problem with this strategy is that you are utterly unprotected from wage inflation should it come again. You will be a rentslave for the rest of your life.

Homedebtors welcome wage inflation as it inflates away their debt. Also, don't compare the amortizing monthly outgo to rent. The main reason why houses are so unaffordable is that they are the only way you can get off the rent rat trap, unless you like living out in the forest or a boat or something.

It is of course a difficult question.

If you think you are so poor, start a side business, or borrow money from family and friends.

...or be a good American and just take.

Don't despair, Tarkin -- that 400 a month you're socking away is a fine start. Too many people remain content to merely enjoy the effects of affluence. If you let their ether fumes sway you away from your common sense approach, I think you'll regret it.

I started saving and living beneath my means in utilitarian mode a few years ago in order to reach a seemingly modest goal: a place where I could listen to rock 'n' roll at shockingly high volume levels in the relative peace of my own domicile. Then the goal posts started moving in a serious way around 2003. What to do? Grouse and keep saving. Now it's 2010 and the more I watch my decimal stuff grow, the less inclined I feel to put any percentage of it toward a mortgage -- even with some of the gas finally coming out of the whoopee cushion. I've invested in a few other select items of interest with my savings in the meantime, but the more time that goes by, the less interested I am in a mortgage. Let's face it: it's an investment designed for people who are terrified of growing old and dying alone, poor & dispossessed. Oh, and you can paint the walls whatever insane colors you want. Huzzah!

I do still feel that buying a house is a good idea, but only in a few very select instances, particularly if it's a truly significant structure or in a very unique area/landscape. Otherwise, if you're itching to invest, you'd be better off saving for/investing in an antique car or motorcycle, high art, vintage wristwatches, collectible stamps, antique books, Steinway pianos, etc. If you were wise enough to trade your spleen for a Stradivarius back in 1950, the returns would have been a helluva lot richer today than some shitty stucco covered millstone or loveless rental property you might have bought instead -- and there's no HOA!

Even if you have a pack of kids and need a good school district -- I say rent the benefits and save the cash for as many more years as you can stifle that nesting instinct. Working four jobs to afford a big fat mortgage is just sheer jackassery. Houses aren't going anywhere, no matter what tunes the boy wonder landlords on here might be singing you. Like someone else observed on here recently -- you'll know when housing is less of a risk when you no longer hear about it every single day in the press.

My .2, YMMV, etc.

http://research.stlouisfed.org/fred2/series/PAUR

http://research.stlouisfed.org/fred2/series/PAHVAC

http://research.stlouisfed.org/fred2/series/PASTHPI

http://research.stlouisfed.org/fred2/series/PAHOWN

http://research.stlouisfed.org/fred2/series/PARVAC

http://research.stlouisfed.org/fred2/series/PAGOVT

http://research.stlouisfed.org/fred2/series/STAT342LFN

http://research.stlouisfed.org/fred2/series/STAT342GOVTN

ah, bingo:

http://research.stlouisfed.org/fred2/series/STAT342PCPI

StillLooking says

A house that asked 425 at the height of the bubble would now rent for $16-1800, and there are a slew of these around. At least there was 6 months ago when I was checking it all out. It seems that the rental market has only softened since then.

I was just wondering if you could tell me where they are... The $500K houses that rent for $2100, that is.

tatupu70 says

StillLooking says

A house that asked 425 at the height of the bubble would now rent for $16-1800, and there are a slew of these around. At least there was 6 months ago when I was checking it all out. It seems that the rental market has only softened since then.

I was just wondering if you could tell me where they are… The $500K houses that rent for $2100, that is.

In the Chicago area, I am not sure what a 500K house is anymore. There are a bunch of houses asking 500K, but does that make them 500K houses? I do know the houses which asked 425K before the bubble burst now rent for $1600-$1800. I understand that the houses asking one million and up before the bubble burst rent out for something a good deal south of $5000.00 but I have not researched this area as well as the houses asking 400 grand in the pre bubble era.

So just be extrapolation a 500 grand house, whatever that is should be somewhere around $2100-$2600 a month.

StillLooking says

In the Chicago area, I am not sure what a 500K house is anymore. There are a bunch of houses asking 500K, but does that make them 500K houses? I do know the houses which asked 425K before the bubble burst now rent for $1600-$1800. I understand that the houses asking one million and up before the bubble burst rent out for something a good deal south of $5000.00 but I have not researched this area as well as the houses asking 400 grand in the pre bubble era.
So just be extrapolation a 500 grand house, whatever that is should be somewhere around $2100-$2600 a month.

OK--it sounds like you're comparing apples to oranges. I think the original post your responded to was comparing current sales value to current rent. You're comparing bubble sales value to current rent, right?

I was just curious what area you were looking at--city, N. suburbs, NW suburbs, etc.

Tarkin, Troy suggests that you move further away and become a two-car household. I'm giong to take the opposite position -- what happens when oil goes sky-high again? (And it will.)

Are you dead set on having a detached house as opposed to a condo? I say you become a zero-car household and get a big apartment in the middle of town, within walking/biking distance of your job, supermarkets, etc. Particularly with a kid; do you really want to be ferrying him/her around in a car all the time in a few years (and with possibly $6 gas)? All those car repair costs you've complained about will disappear, and you'll be paying off your condo even sooner.

Live as close to the center of town as you can; if it costs too much, compromise on space!