A conundrum
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I tried and here are some places I have looked where the average home is $810,000 come to find out.
Pinedale, Wyoming, USA
Ennis, Montana, USAThese are in the mountains about 1 hour from the nearest big city of Jackson, Wyoming and Bozeman, Montana. I guess I need to look in the deep sticks.
Are you really confused why those properties are expensive? Those are both desirable locations in regions with quickly growing populations. How about Livingston, or Butte?
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if residential properties are cheaper per square foot than storage units, then absolutely
Yep, that was a litmus test to determine if you're worth my effort. You failed.
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Hmm. What if we abolish private property?
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I meant that intentionally defaulting on a mortgage when the property loses value and not paying the debt is not a thing. That's what we were talking about.
Who is more likely to default, a borrower with $100k equity, or a borrower with negative $100k equity?
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Who is more likely to default, a borrower with $100k equity, or a borrower with negative $100k equity?
Read my other comments. I answered this already.
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Read my other comments. I answered this already.
Read my other comments, explaining why people with negative equity often default on their mortgage.
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Read my other comments, explaining why people with negative equity often default on their mortgage.
Not in Europe.
(this is fun. let's keep doing this forever!)
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I've never paid a mortgage, but £500 seems pretty low. Do mortgage payments tend to be that much cheaper than rent prices?
£100,000 over 30 years at 4.5% would be £506 a month. That plus the stipulated £25,000 deposit will get you a bungalow or terraced house near me as of about 18 months ago. Rent in my area starts at around £700 for a house outside of town or a single room in town.
So yes, £500 mortgage is possible. Rent being twice the cost of a mortgage for a similar property is fairly common. Banks and landlords being shitheads is guaranteed.
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I think the point is that properties on market are, as a rule, not very recently purchased with a 30-year mortgage. So the monthly cost now required to cover the owners costs may be based on financial conditions from 6 years ago. If the rental market has a lot of properties that have been held a while but house values have rocketed, then you have a critical mass of owners willing and ready to out-compete brand new mortgage rates even if they ignore their equity advantage.
In my area, that's what we see, real estate prices are dramatically up as are interest rates, so mortgage cost to acquire is a fair amount above the going rate to rent comparable properties. Someone getting a 30 year mortgage to rent out a property would be underwater for very many years in the current market conditions around my area, as they have to compete with more aggressive owners that have had their properties for many years.
Ah yes, I could see that situation arising, although frankly I'm as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I'm doubting your honesty--it's just not been my personal experience.
I've heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a "good deal" at lower rates. Maybe there are rational markets out there, but I don't personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.
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Are you really confused why those properties are expensive? Those are both desirable locations in regions with quickly growing populations. How about Livingston, or Butte?
I am as there isn’t anything here. Cows and mountains. I am staying here passing three and it’s just nothing. Normally you would get water front and community features to set the price but none of that is here. I guess the confusing part is what is attracting people here. It can’t just be the mountains.
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Ah yes, I could see that situation arising, although frankly I'm as surprised to hear of landlords competing for tenants as I would be to hear of them selling their properties for under market value. Not that I'm doubting your honesty--it's just not been my personal experience.
I've heard too many personal anecdotes of landlords trying to hike up rates by seeking spurious evictions, or refusing to install climate control, for tenants who are getting a "good deal" at lower rates. Maybe there are rational markets out there, but I don't personally hold out much hope for landlords to be reasonable in the face of the dual pressures of fear and greed.
So back when I rented, it was only two landlords and only three years and it was fine, so I was spared the slumlord experience. In fact, my second landlords were a very nice couple, and when I got laid off they actually waived that months rent to help me get sorted.
However those slumlords do exist, trying to evict in face of rent controls, being stingy with maintenance. They however still may be cheaper than a 30 year mortgage, especially if they have no tenant. A tenant might face an aggressive rate hike with the landlord betting they don't want to move out, losing the price advantage relatively quickly. Ultimately if a residence is empty, the owner is aware the tenants are likely cross shopping properties they could mortgage instead, so they have to be somewhat competitive then. So they are very happy when the real estate market holes prices because they can extract higher rents from the property they aren't having to buy in current market conditions. They aren't saints and may treat their tenants like crap, but they are subject to price competition, depending on the market they are in.
