Real Estate and the Single Guy
There is a lot of talk in the news about the end of the real estate bubble and what it means for the economy, interest rates, stocks, bonds, and the political climate.
Here in Da Burgh, we seemed to have missed out on the whole thing, because our region created fewer jobs than average in the last few years, plus folks tend to stay awhile in their homes. Nonetheless, I've seen a lot of cases where people who once never would have qualified for a mortgage are getting them 1-2-3.
There are more women than men buying real estate as singles, according to USA Today.
I see several things emerging from this trend:
1) Many of these women are purchasing luxury condominiums, townhouses, etc. that are the most vulnerable to any downturn in real estate, plus, they tend not to appreciate as much as single-family or duplex homes.
2) They have made these purchases with highly risky mortgages, e.g. no-money down, adjustable rate, interest-only, 80/20, negative amortization, etc. Interest rates are on the way up and that means that the payments for ARMs can double or even triple.
3) They fail to take the long-term view of interest rates, markets, income, and job changes, and always think real estate goes up, and goes up a lot very fast. Past performance is no indicator of future behavior.
4) For those who already own, they take out lots of home-equity loans to pay off their credit cards so they can begin bagging even more shoes and handbags.
5) Finally, the debt-to-income ratio of these buyers means that they're one paycheck away from disaster.
All of this points to some real foreclosure bargains coming down the pipeline in a few years.
Sooooo, given the situation discussed above, which I won't belabor, what are some smart real estate options for single guys? I know that McMansions are obviously out, condos can be risky, a duplex might be a good bet, but does anyone have some other ideas here?
Maybe all those single guys still living at home are far smarter than we give then credit for, 'cause they're sitting this whole circus out.
Here in Da Burgh, we seemed to have missed out on the whole thing, because our region created fewer jobs than average in the last few years, plus folks tend to stay awhile in their homes. Nonetheless, I've seen a lot of cases where people who once never would have qualified for a mortgage are getting them 1-2-3.
There are more women than men buying real estate as singles, according to USA Today.
I see several things emerging from this trend:
1) Many of these women are purchasing luxury condominiums, townhouses, etc. that are the most vulnerable to any downturn in real estate, plus, they tend not to appreciate as much as single-family or duplex homes.
2) They have made these purchases with highly risky mortgages, e.g. no-money down, adjustable rate, interest-only, 80/20, negative amortization, etc. Interest rates are on the way up and that means that the payments for ARMs can double or even triple.
3) They fail to take the long-term view of interest rates, markets, income, and job changes, and always think real estate goes up, and goes up a lot very fast. Past performance is no indicator of future behavior.
4) For those who already own, they take out lots of home-equity loans to pay off their credit cards so they can begin bagging even more shoes and handbags.
5) Finally, the debt-to-income ratio of these buyers means that they're one paycheck away from disaster.
All of this points to some real foreclosure bargains coming down the pipeline in a few years.
Sooooo, given the situation discussed above, which I won't belabor, what are some smart real estate options for single guys? I know that McMansions are obviously out, condos can be risky, a duplex might be a good bet, but does anyone have some other ideas here?
Maybe all those single guys still living at home are far smarter than we give then credit for, 'cause they're sitting this whole circus out.
posted by Bryce at 5:29 PM
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