Property Value/Appraisals RANT

[300UGUY]

Mossflower purchased his property in 2010, well after the housing bubble collapse in 2007. A number of posts were those who were on the bad side of the bubble and are suffering because of it. I'm sure some ont this board could give examples of profitting from the rapid increase in property value.

In Mossflower's case the problem was caused by a bad appraisal, either the first or the second. It is a local problem and the bottom line is, what advice or possibilities can we offer? His is not a housing bubble problem. Many have been caught in a similar situation for other external reasons (major corporation leaves area or military base closes, etc.)

Sometimes there is an advantage in the long run when something causes a delay in aquiring more debt. He has been offered many options and will make his choices. As I pointed out earlier I would probably do a small project on my own and make do with the space I have.

Loren

A coworker of mine bought 4 houses in 2009 and 2010. He thought he had got great deals. Then the local market dropped another 20 to 30%. I think it is still dropping in some areas. Location and time matter. As for Mossflower, I think he has a lot of debt. Real estate folks always advocate buying big. A realtor will tell you that a 150K income will support a 400K house, easily. I've seen my income go up an down too much, I think you need at least 200k income to support a 400K property. 250K would be better. When you have a big house, horses and lots of stuff, your costs go up. I know several guys that are going broke, slowly. The big house is bleeding them to death.

 

[MotorSeven]

Allow me to make everyone feel a little better about their home owning situation. I bought my house 7 years ago for just over $900,000. If I could get $500,000 now, I would be very lucky. But that's not the worst part. My taxes, when I bought the house were $12,000, they are now almost double, at $22,000 and I am am told will be over $25,000 by the years end. Oh, did I mention that I owe just about what it's worth right now. Worst investment I ever made. Can't sell it, because who in their right mind wants to pay these insane taxes.

Is everyone feeling somewhat better about their situation?

Carl...OMG that's terrible. Our place is worth about a half a mil now that the house is finished. Taxes are going to be $900. They went from $450 to $900 after the house was added to the tax roles.

 

[Deere Dude]

Carl...OMG that's terrible. Our place is worth about a half a mil now that the house is finished. Taxes are going to be $900. They went from $450 to $900 after the house was added to the tax roles.

That is cheap for taxes. I am just beginning to try to find a place south of Knoxville and north of Alabama somewhere. Hopefully taxes will be that cheap there?:confused3:

 

[deezler]

A realtor will tell you that a 150K income will support a 400K house, easily. I've seen my income go up an down too much, I think you need at least 200k income to support a 400K property. 250K would be better. When you have a big house, horses and lots of stuff, your costs go up. I know several guys that are going broke, slowly. The big house is bleeding them to death.

See, I just really don't understand this. If you make $200k per year, and say you pay an effective tax rate of ~25%, you're still making over $12k a month, after taxes. A 30 year loan on a $400,00 mortgage (note, that means zero down) is under $2000 per month. Where the heck is that extra $10k of monthly income going if you can barely keep your home?!?!? How much do horses really cost, and if they are more expensive than owning a mansion, do you really need them? Not making judgement, just trying to fathom this.

Even if you make 150k per year and stretch into a $500k home, you should still have close to $7k per month available to use on all your other expenses. Of course, those expenses would include property taxes and insurance. And this is assuming a 30 year mortgage, which we all know Dave Ramsey would frown upon.

Ah, the first world problems of the 1%.

 

[murphy1244]

Carl...OMG that's terrible. Our place is worth about a half a mil now that the house is finished. Taxes are going to be $900. They went from $450 to $900 after the house was added to the tax roles.

Your telling me your tax on vacant land was 450$ and with a house worth 500,000$ your taxes are 900$?

 

[KTurner]

See, I just really don't understand this. If you make $200k per year, and say you pay an effective tax rate of ~25%, you're still making over $12k a month, after taxes. A 30 year loan on a $400,00 mortgage (note, that means zero down) is under $2000 per month. Where the heck is that extra $10k of monthly income going if you can barely keep your home?!?!?

Your 25% effective tax rate doesn't include the 4% for medicare, the 6% for soc sec, the 8% or so for state income, the property taxes, and so on. so now you're at >45%

Start adding on insurance - homeowners, health insurance (for me, that's another ~7%), dental/vision/life, auto insurance. Now you're over 55%

Oh, what's that, you want to retire? ok, there's another double digit percentage. You want to donate to charity? You're pushing 70% now.

Oh, yea, you have a mortgage, 2k*12months = 24kannual, out of 200k is 12.5%. This is really adding up quick isn't it? >82%

Now, did you want to eat and be able to turn on the lights?

A family member that needs assistance?

How about an emergency fund for when the roof needs replaced or the furnace breaks...

It adds up quick. And we haven't even mentioned a tractor...

Edit: I'm not suggesting I make $200k. I'm assuming most 'above govt assistance and below wealthy' people have roughly the same percentages in their budget pie.

Keith

 

[ultrarunner]

Many seasoned citizens I know certainly pushed the envelope when they bought.

A Navy Commander was routinely turned down for a mortgage on the home of his dreams in the 1950's

They wouldn't count his flight pay so he didn't earn enough.

Getting fed up, he scheduled a meeting with the President of the Bank... not the branch, the Bank.

He was told his wife needed a job... just about any job and they would qualify and then she could quit.

I guess some would say all of them were dishonest?

The point is they knew what they could afford and the Bank had rules that said they couldn't... together, the pushed the envelope or got creative and their loan was approved.

I took a different path... I simply could not get a loan because my employment consisted of several steady part time jobs working my way through school...

Finally getting really fed up... I took my savings for a down payment and bought a dump of a cottage in East Oakland for cash.

Best thing I ever did even though I caught **** for it... barely out of my teens, I owned my own home in the SF Bay Area free and clear.

I kind of wonder right now where this is all heading... HUD has a program called path to home ownership that lets Section 8 money go towards a mortgage...

I do think the real problem traces back to the many programs affecting the Real Estate Market... no down, first time home buyer, etc... how can the market be anything but skewed when so much of it is artificial or manipulated

 

[kenmac]

That is cheap for taxes. I am just beginning to try to find a place south of Knoxville and north of Alabama somewhere. Hopefully taxes will be that cheap there?:confused3:

Don't know what the taxes are where motorseven is. Here's the tax rate for AL

Taxes by State: Alabama to Iowa

 

[newbury]

Let's just blame it all on parents.

If parents brought up children with ethics, values, and the common sense to not borrow what they can't pay back all those loans would either not have been made or would be getting paid off.

I believe it was an honest effort on politicians on both sides of the aisle to get home loans in the hands of the less well off. There exists the somewhat naive concept that if one owns and has a vested interest in the property one will take better care of the property.

But I can remember watching the news and talk shows and seeing dozens of people interviewed who bragged how they had gotten into expensive homes, couldn't afford it, and just stayed there not paying anything. They were "sticking it to" the banks. And consequently a lot of tax dollars have gone to bail them out.

I also know many people, especially soldiers I worked with, who had a limited income and with the "no money down", "first time buyer", "zero interest" type loans were able to get their families in a moderate house. And then thru hard work they improved the property and paid off the house early.

Mossflower seems to be in the latter category but just because of his job he's got two strikes against him. He probably commutes about three hours a day (on a good day) 3 or 4 days a week and the price of gas has risen as much as a $1 /gallon since he moved. That time effectively means he's working a 50 or 60 hour work week and getting paid for 40 hours.

Not as high as in 2008, but still high.

(I personally can't understand commutes like that. Since 1984 I lived 1 mile from work, from 1975 to 1984 it was about 3 miles.)

I hope he can hang in there and solve his space problem. But as he is a former submariner I'm sure he's used to tight orderly places.

 

[300UGUY]

See, I just really don't understand this. If you make $200k per year, and say you pay an effective tax rate of ~25%, you're still making over $12k a month, after taxes. A 30 year loan on a $400,00 mortgage (note, that means zero down) is under $2000 per month. Where the heck is that extra $10k of monthly income going if you can barely keep your home?!?!? How much do horses really cost, and if they are more expensive than owning a mansion, do you really need them? Not making judgement, just trying to fathom this.

Even if you make 150k per year and stretch into a $500k home, you should still have close to $7k per month available to use on all your other expenses. Of course, those expenses would include property taxes and insurance. And this is assuming a 30 year mortgage, which we all know Dave Ramsey would frown upon.

Ah, the first world problems of the 1%.

Ok, add in Michigan income tax at 4%, SS on the 1st 100K+ @ 7.5%, 4% on medicare, property taxes would be at least 1K, insurance $500. If you have to pay for healthcare, that is a bunch, some folks I know are paying $1500 per month. When I was commuting 100+ miles, I was spending almost 1K per month on gas, oil, tires. Then you gotta eat, your wife will NEED nice furniture for that big place, and maintenance will be higher on the big place. It adds up fast. Even things like utilities - you will need more to heat and cool it, and if you hire anything done, the hired help will charge top dollar, after all, you can afford it. Most of these places are maintained by pros, the homeowner is too busy working to support the lifestyle. I used to work with a lot of younger engineers, usually husband and wife both working. Some of these folks had 600K, 700K homes, and big mortgages, car payments. Incomes of 150K+, but always trying to get some OT. Lots of stress. I guess it's what you are comfortable with. I think of it as a comparison between a little Piper Cub airplane and a F15. The cub doesn't go too fast, but it has a glide ratio of 15:1. The F15 has a glide ratio of 1:1, or less. If it runs out of fuel, the cub can land somewhere. The F15 without fuel is a brick.

 

[300UGUY]

Let's just blame it all on parents.

If parents brought up children with ethics, values, and the common sense to not borrow what they can't pay back all those loans would either not have been made or would be getting paid off.

I believe it was an honest effort on politicians on both sides of the aisle to get home loans in the hands of the less well off. There exists the somewhat naive concept that if one owns and has a vested interest in the property one will take better care of the property.

But I can remember watching the news and talk shows and seeing dozens of people interviewed who bragged how they had gotten into expensive homes, couldn't afford it, and just stayed there not paying anything. They were "sticking it to" the banks. And consequently a lot of tax dollars have gone to bail them out.

I also know many people, especially soldiers I worked with, who had a limited income and with the "no money down", "first time buyer", "zero interest" type loans were able to get their families in a moderate house. And then thru hard work they improved the property and paid off the house early.

Mossflower seems to be in the latter category but just because of his job he's got two strikes against him. He probably commutes about three hours a day (on a good day) 3 or 4 days a week and the price of gas has risen as much as a $1 /gallon since he moved. That time effectively means he's working a 50 or 60 hour work week and getting paid for 40 hours.

Not as high as in 2008, but still high.

(I personally can't understand commutes like that. Since 1984 I lived 1 mile from work, from 1975 to 1984 it was about 3 miles.)

I hope he can hang in there and solve his space problem. But as he is a former submariner I'm sure he's used to tight orderly places.

Before I retired, my wife and I were both commuting a total of over 150 miles per day. We were spending over 1K per month just on gas. Just our gas bill equaled a decent mortgage payment.

 

[sdkubota]

Purchased regular gas (no ethanol) for $ 2.92/gal at Sam's Club today.

 

[300UGUY]

Purchased regular gas (no ethanol) for $ 2.92/gal at Sam's Club today.

I figure we were using at least 250 gallons per month. That would be a $750 per month at current prices. I really think that the price of gas, propane, and the cost of well, septic, permits is restricting development in our rural area.

 

[deezler]

Ok, add in Michigan income tax at 4%, SS on the 1st 100K+ @ 7.5%, 4% on medicare, property taxes would be at least 1K, insurance $500. If you have to pay for healthcare, that is a bunch, some folks I know are paying $1500 per month. When I was commuting 100+ miles, I was spending almost 1K per month on gas, oil, tires. Then you gotta eat, your wife will NEED nice furniture for that big place, and maintenance will be higher on the big place. It adds up fast. Even things like utilities - you will need more to heat and cool it, and if you hire anything done, the hired help will charge top dollar, after all, you can afford it. Most of these places are maintained by pros, the homeowner is too busy working to support the lifestyle. I used to work with a lot of younger engineers, usually husband and wife both working. Some of these folks had 600K, 700K homes, and big mortgages, car payments. Incomes of 150K+, but always trying to get some OT. Lots of stress. I guess it's what you are comfortable with. I think of it as a comparison between a little Piper Cub airplane and a F15. The cub doesn't go too fast, but it has a glide ratio of 15:1. The F15 has a glide ratio of 1:1, or less. If it runs out of fuel, the cub can land somewhere. The F15 without fuel is a brick.

Ok, duly noted, you and KTurner make good points. However, that really only illustrates how ridiculous the over-leveraged, and over-worked American family often is these days. If a "spare" $7k/mo isn't enough to provide for you family and pay the utility bills, then, Fark! you gotta downsize and get realistic.

Wife and I are building a house this year, but we're trying to stay at ~1500 sq ft and employ a number of cost saving design features. Kind of tricky when you want to get close to net-zero energy usage (or at least free heat using wood), but, not impossible.

Good airplane analogy!

 

[dave1949]

Ok, duly noted, you and KTurner make good points. However, that really only illustrates how ridiculous the over-leveraged, and over-worked American family often is these days. If a "spare" $7k/mo isn't enough to provide for you family and pay the utility bills, then, Fark! you gotta downsize and get realistic.

Wife and I are building a house this year, but we're trying to stay at ~1500 sq ft and employ a number of cost saving design features. Kind of tricky when you want to get close to net-zero energy usage (or at least free heat using wood), but, not impossible.

Good airplane analogy!

Those can be hard choices in some careers. If you want to work near the top of your profession, you have to go where the action is. That is often to a high cost of living, high tax area with a demanding work commitment. Nobody is forcing you into this, but once you get in the hamster wheel, exiting gracefully takes planning.

 

[300UGUY]

Ok, duly noted, you and KTurner make good points. However, that really only illustrates how ridiculous the over-leveraged, and over-worked American family often is these days. If a "spare" $7k/mo isn't enough to provide for you family and pay the utility bills, then, Fark! you gotta downsize and get realistic.

Wife and I are building a house this year, but we're trying to stay at ~1500 sq ft and employ a number of cost saving design features. Kind of tricky when you want to get close to net-zero energy usage (or at least free heat using wood), but, not impossible.

Good airplane analogy!

What I see with younger folks ( I'm 58 ), is that they have a tolerance for debt that is much higher than mine. I don't think this is a right / wrong, black / white issue. I personally think that people coming out of school recently are conditioned to be in debt. My first car loan was 11.5%. My 1st mortgage was 10.5%. I didn't have a credit card until age 26. College grads now have student loan debt higher than what I paid for my house. They accept debt as normal. I think of it as a burden. Just different thinking, I guess.

 

[MotorSeven]

Your telling me your tax on vacant land was 450$ and with a house worth 500,000$ your taxes are 900$?

No not vacant, it was $450 on 100 ac, a 30x50 steel building/shop/apartment, a barn & 2 sheds. Now it's $900 with a 1080 sqft main, 196sqft loft over a full basement house on the same property. I love my County:thumbsup:

There is a 500+ac tract of land in Hawkins County next to us listed for 577,500. I have walked part of it, looks like a state park. Land is really reasonable here now, it is back down to 2000-2001 prices.

 

[vtsnowedin]

Wife and I are building a house this year, but we're trying to stay at ~1500 sq ft and employ a number of cost saving design features. Kind of tricky when you want to get close to net-zero energy usage (or at least free heat using wood), but, not impossible.

Good airplane analogy!

You might find the passivehause projects in Europe worth looking into. They have taken it to the extreme and are hitting the limits of needed ventilation. But you can steal heat out of stale air being vented and transfer it to fresh cold air being drawn in. Also you can supply fresh cold air to the stove or stoves and not have them sucking and eight inch pipe worth under the doors etc.
Passivhaus Institut
Note: I have no interest with them, they are just something to consider with a grain of salt.

 

[riptides]

..........(I personally can't understand commutes like that. Since 1984 I lived 1 mile from work, from 1975 to 1984 it was about 3 miles.)

Most people I know in this area, of which Mossflower lives in do what I call extreme commutes. Extreme either being time or distance.

Property values as you move closer into the Federal City of Washington, DC. skyrocket as do taxes. There is a lucrative job market in this area of Maryland, Virginia and DC. People elect to move to the outer fringes of suburbs to escape the high cost of property around DC.
One can find rural living at the fringes to offer more compelling reasons for being out there, inspite of the job.

When I relocated to the fringes, it was because I was driving in "rush hour" one hour to get to a job that was only 15 minutes away. I asked myself, if I spend two hours driving to a job, why not make it worth my while and live in the fringes?

We made that happen and the commute is just what you do to get what you want.

 

[two_bit_score]

It's a sad fact of life sometimes.