"Housing for working people"

Discussion in 'General Parenting' started by DDD, Jun 3, 2007.

  1. DDD

    DDD Well-Known Member

    Someone posted today about the middle class and how the dream of
    owning your own home is fading. I am fortunate as I have been a
    homeowner most of my adult life. I am also a retired Realtor.

    I don't understand, however, housing in our community. Two or
    three developers have built or are building "housing for the working people in our area". The starting price is over 100 G's.
    :smile: The newspaper article refers to how housing has gotten beyond the reach of "working people" and how necessary it
    is to have people working in our restaurants etc. etc. etc.

    Last week a former employee told me "X and his wife are getting
    a house!" Obviously, I was happy for them and asked the usual
    questions. Where? When? How? This is what I was told. "X and
    his wife have 1 child and another on the way. He has been on the
    job as a correctional officer for about 1.5 years and he is 21 or
    22. They are getting a BRAND NEW house that costs $185,900! He
    makes about $29,000 give or take. They will have NO downpayment
    and their monthly payments will be based on his salary. So they
    will pay less than $500 per month for the house!"

    I am a business woman. I am a retired Realtor. I am not naive.
    WTH!!!!!!! I don't get it! Another developer built a row of houses in a poor neighborhood and had a sign out "Only $110,000."
    The houses were filled before the sod was laid.

    I think our Government has gone nuts. Who else but government
    could lay out that kind of money for low income people to live like what used to be upper class living.

    :grrr: Is this why our taxes are so high?? DDD
  2. DammitJanet

    DammitJanet Well-Known Member Staff Member

    WTH is right DDD! Jamie cant even get that kind of loan with the VA!

    I do think the housing market is weird right now. I am simply amazed at the prices but then maybe I still think a house over 100K should be a mansion. I simply cannot imagine it. Maybe Im cheap or something. Guess I will stay in my trailer...lol.
  3. meowbunny

    meowbunny New Member

    Creative financing is ultimately killing housing. Fifty-year loans. Balloon payments for the full loan amount in five years. Principal only for X amount of years, then full loan amount balloon payment. They sound great and they get people who couldn't otherwise afford it into homes. However, when it comes time to make the balloon payment, these people don't qualify to refinance and, with property values now dropping, their homes are taken by the lending institutes. In my neighborhood, four people have lost their homes because of this. Two moved out in the middle of the night. One sold to one of those companies that will buy your home immediately for slightly less than their mortgage. One is attempting to sell the house before foreclosure occurs.
  4. timer lady

    timer lady Queen of Hearts

    The value of real estate is way overstated - it's only on paper & what you can buy or sell a home for. I have young people (college graduates who think they can just leave mom's house & buy their own) through my home on a regular basis & they frequently ask me about these loans.

    I encourage these young women to only buy a home that one income can support; to put a down payment down - zero down payment is asking for trouble. And to never ever borrow against your equity to pay off credit cards. I'm amazed at the number of people who have lost their homes by refinancing over & over again to buy a new car or pay off credit cards; only to run them up again.

    The cost of housing is obscene. Our house has "tripled" in value in 10 years - there's no way I believe that. I know I'm paying property taxes on it though.
  5. JJJ

    JJJ Active Member

    You'd hate our county. The "cheap" houses in our town are going up at the low, low price of $300K for the basic 3-bedroom model. husband and I bought a house 8 years ago in the very last affordable neighborhood (the town changed the building codes and all new houses must be larger, higher quality and bigger lots). The good thing is our house has increased 60% in value in those years; the bad thing is so have our taxes. Our kids constantly complain that we don't 'keep up with the Jones'' cause we live in the poor neighborhood. Course the schools are outstanding cause of all the rich neighborhoods, so I'm not complaining too loudly.
  6. crazymama30

    crazymama30 Active Member

    JJJ-- our area is much like yours. We bought our home about 7 yrs ago, and then everything went sky high. We have a small manufactured home on .3 acre (we own the land) and homes similiar to mine are now going for 175K to 200K. Stick built homes are much more. We may have to sell our home when I get into a RN program at the college, as I will not be able to work as much. If I do this, we would move in with my mom, who has a 3 bedroom 2 bath home with a den, and use some of our profit to build on to the end so we could have our own living room. What scares me is if we do that, we may never own our own home again. I just do not see any other option.
  7. donna723

    donna723 Well-Known Member

    Not only have housing prices gone crazy, the whole concept of housing has changed. Like the young man DDD mentioned who is buying a brand new $185,900 house, so many of the younger ones seem to think that they should start out with the same lifestyle, possessions and all the goodies that it took their parents decades to attain! They EXPECT this, even if they have to use "creative financing" and could end up losing the house a few years down the road! When I got married (the first time) I was 22. We didn't have much money and lived in a series of little apartments with hand-me-down furniture and worked our way up. That's the way everybody did it. It was five years before we bought our first home, and then it was a small "fixer-upper". Nobody I knew owned a home when they were just 22 years old! I know that owning a home is financially advantageous to renting, but not if you get in over your head because of risky financing and end up in foreclosure! I couldn't even pay the taxes on a place like that!

    A woman I work with, who lives in a small, modest, older home herself, just co-signed for her son to buy a $350,000 house with all the "bells & whistles"! He was newly married, a college graduate, but unemployed at the time! But they just had to start right out at the very top! I honestly don't see how anybody can afford to buy some of the homes they're building today! The housing developments just get bigger and fancier and more expensive - nobody I know could afford to live in most of those places. Where do the "regular people" live?

    Prices in our small rural area are nowhere near what they are in more urban areas, and it's always a shock to see what they are in other parts of the country! I love to watch those shows like "Flip This House" ... they find some little garbage-filled rat-infested three-room former crack house in a run down area, pay a quarter million for it, fix it up, then sell it for a HALF MILLION! Good grief!

    As for me, I'll be in my little rental house till I retire, then I'll be a bag lady living under a bridge! I have a feeling that pretty soon, that's where the "regular people" will be living!
  8. skeeter

    skeeter New Member

    Ohio has one of the highest foreclosure rates now. There are LOADS of what we call "McMansions" here going for $500,000 or more! On what was farmland when I was growing up - but the houses are stuck on 1/4 acre lots. I'd really love to see if any of these actually have any furniture in them!!!

    The last time I refinanced, the bank told me I was "qualified" for 1/3 my GROSS salary. I said, no, I want 1/4 my NET salary - they acted like I was nuts!

    When I bought my first house in 1982, the interest rates were 13.5%, and you had to have 20% down. What would these people do with those restrictions???
  9. DDD

    DDD Well-Known Member

    The downpayment, I understand, is available through a government
    program that is called SHIP (or something very close to that name
    I am sure). To get over ten grand up front from the government
    for nothing when you are still a kid?????? Holey Moley!

    If ten grand was available for difficult child treatment, we could change
    the future of our Nation! DDD
  10. flutterbee

    flutterbee Guest

    Here's the kicker: Not only does the government "grant" you those funds for the downpayment, you get a 1098 at the end of the year and get to write it off on your taxes as if you paid it yourself.

    7 houses on my street alone (of about 25 houses) have foreclosed since I moved in 5 years ago. I have no idea how many have foreclosed in this neighborhood of 400 homes. I would guess more than 30%. Mine will be number 8 on this street(for different reasons, though, than most around me) because the other foreclosures have lowered my property value so much that I can't sell my house for the balance on my mortgage, let alone what I paid for it. For example, the house 2 doors down from me was built for $178,000 in 2001, but sold in foreclosure last year for $135,000. Most people in this subdivision moved in with the government grant down payment and the buydown on the interest rates. Once the real interest rate kicked in and the real property taxes hit (as opposed to the property tax on unimproved land), they could no longer afford their home. People trying to sell their houses in our neighborhood are not having any luck. The houses just sit. Yet, the builder is still building in our subdivision and the houses start at $185,000 ($30,000 more than I paid for mine 5 years ago - and my house is only 1300 square feet - the smallest they built in here). They get the buyers on the no money down and buydown on the interest rate.

    It's so frustrating.
  11. DDD

    DDD Well-Known Member

    Good Grief! DDD