Prices

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Submitted by Misheloff on October 10, 2008 - 8:06pm

OK,

So, any idiot can see that based on ratios (especially P/I), homes in San Diego are still slightly overvalued. Around 20% or so by my estimations, though it depends on what area you're looking in.

HOWEVER, that doesn't mean it's not time to buy.

Paulson and Bernanke have, over the last 30 days, cranked the printing presses on "high." $2 trillion or so has been thrown at this problem already depending on whom you ask, and it will likely be several times that when all is said and done.

Let's take a look at what's going on

(1) Treasury buying up crap mortgages
(2) Treasury buying up banks that own crap mortgages
(3) Treasury loaning money to companies that insure crap mortgages

Hmmm... if I owned a bunch of crap assets, AND had a printing press at the ready what would I do??

So, if you buy a home with a FIXED rate mortgage, the value of a home may not rise in real terms, but as the value of the dollar is being destroyed with rampant inflation, in nominal terms, equity magically appears.

Thoughts?

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