[quote=kev374][quote=flu]
people want to believe what they want to believe, especially if they are sitting on the sideline in the opposite direction of the trend…imho…[/quote]
funny, I heard the same comments prior to the last crash! Some of the comments by users and economists here are very reminiscent of 2006 where contrarians were mocked and we know what happened shortly thereafter.
Her style may be unusual and there may be some conjecture but I do agree with the overall sentiment that things are getting very frothy in many markets. Then there are many upcoming wildcards – rising interest rates, a possible recession and incomes that are falling in real terms.[/quote]
I’m still waiting for all those people who recently took out a stated income ARM jumbo loans start defaulting on their $1+million mortgages….Oh wait, they don’t really exist in mass quantities do they, because for practical purposes, lending standards are still pretty tight such that you can’t easily take a stated income $1+million loan when your salary is $100k or less, unlike what happened before….
The nice thing about the equity markets and the economy of the past few years is that generally it has been good, and those windfalls allowed people to eat away at debt…That’s one of the reason why I don’t carry any mortgages on anything anymore except 1…..Again, minimizing risk for a rainy day by taking unexpected windfalls to reduce outstanding debt, “just in case”. And for those folks that are locked in a historical low 3%ish 30 year fixed or <3% 15 year fixed, it would probably cost them more to move and rent than to stay. Deal of a lifetime for those folks.
Those primary homes make excellent rental properties and assets to pass on to heirs with extremely favorable tax benefits....Especially with CA property tax rules and with federal rules regarding "step-up" cost basis upon death...
essentially wiping out depreciation recapture and resetting capital gains cost basis of those properties for your kids, i believe....
No worries. Even if home prices were to correct 20%, it probably still wouldn't be a good time to buy, since home prices could probably still fall an additional 40+%, just like last time... 🙂
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