115k loss in Scripps Ranch

[SD Realtor]

11294 is a short sale so the sellers will get hammered. They purchased for 750k at the top of the market.

11224 purchased for 305k in 1999.

SD Realtor

[an]

Imagine if they would have opted to buy into and ride the tech stock craze instead…
Hmm, lets see, if they bought into the tech stock craze instead, if they bought QCOM with their $28k in 1999 @ a price around $3.75/share, that’s about 7466 shares. If they sold at the peak in 2000, it’ll yield a profit of $578k pretax. With a 15% long term tax, you’re looking at around $491k. Take that $491k and buy MTH in 2000 @ $2.75, sell it in 2005 for $92 will give you an after tax profit of (drum roll please)$14.1M. Man, lucky they’re not stupid enough to put it in the tech stock craze instead.

[an]

Imagine if they would have opted to buy into and ride the tech stock craze instead…
Hmm, lets see, if they bought into the tech stock craze instead, if they bought QCOM with their $28k in 1999 @ a price around $3.75/share, that’s about 7466 shares. If they sold at the peak in 2000, it’ll yield a profit of $578k pretax. With a 15% long term tax, you’re looking at around $491k. Take that $491k and buy MTH in 2000 @ $2.75, sell it in 2005 for $92 will give you an after tax profit of (drum roll please)$14.1M. Man, lucky they’re not stupid enough to put it in the tech stock craze instead.

[what_a_disasta]

don’t worry, w-a-d, we will eventually find a property in this neighborhood that sells for less than the previous purchase price.

11294 is the one this thread was about if you read the first post. It’s the one that is going to net the owners the 115k loss. No further searching required. I had no idea there were half a dozen identikit homes for sale on the same street.

[what_a_disasta]

don’t worry, w-a-d, we will eventually find a property in this neighborhood that sells for less than the previous purchase price.

11294 is the one this thread was about if you read the first post. It’s the one that is going to net the owners the 115k loss. No further searching required. I had no idea there were half a dozen identikit homes for sale on the same street.

[DaCounselor]

an – Nice Devil’s Advocate scenario! Like I said earlier, the coulda woulda shoulda what iffa game can be played all day long. I usually just stick to what I think are the most realistic scenarios. In my opinion, your example of someone first identifying and then pouring $28K into QCOM, holding every share, then calling the top and bailing before the catastrophic plunge, then identifying and pouring every dime of the QCOM profit into MTH, holding every share and selling it 5 years later for a $14.1 mil profit….well, it just sounds awfully far-fetched to me. I doubt many (if any) folks pulled that one off, or anything even remotely similar. On the other hand, virtually anyone who bought a home in ’99 has made a huge profit. I think the homeowner who made a killing on his ’99 purchase scenario is more realistic than your scenario. No offense, just my opinion on what I think is reality.

w-a-d – sure does seem like 11294 is going for a loss. We’ll see what the final numbers are soon and whether it’s minus $115K or some other amount. As to the reference in your original post regarding the poor delusional folks down the street, I think we have seen from the prior two sales discussed that things have actually worked out quite well for them. We also await the final tally on 11224 to see how they did.

[DaCounselor]

an – Nice Devil’s Advocate scenario! Like I said earlier, the coulda woulda shoulda what iffa game can be played all day long. I usually just stick to what I think are the most realistic scenarios. In my opinion, your example of someone first identifying and then pouring $28K into QCOM, holding every share, then calling the top and bailing before the catastrophic plunge, then identifying and pouring every dime of the QCOM profit into MTH, holding every share and selling it 5 years later for a $14.1 mil profit….well, it just sounds awfully far-fetched to me. I doubt many (if any) folks pulled that one off, or anything even remotely similar. On the other hand, virtually anyone who bought a home in ’99 has made a huge profit. I think the homeowner who made a killing on his ’99 purchase scenario is more realistic than your scenario. No offense, just my opinion on what I think is reality.

w-a-d – sure does seem like 11294 is going for a loss. We’ll see what the final numbers are soon and whether it’s minus $115K or some other amount. As to the reference in your original post regarding the poor delusional folks down the street, I think we have seen from the prior two sales discussed that things have actually worked out quite well for them. We also await the final tally on 11224 to see how they did.

[an]

DaCounselor, but your scenario is very similar to the scenario I described as well. How many people you know bought in 99 and sell now without rolling it into another house? If you don’t have the profit in cash, then it’s just paper gain. Your example is picking buyers at the bottoms selling at the top. So was my example, pure and simple. It’s all theoretically. I know several people personally who got a tone of stock options, cashed out at the top and retire. Those are just as real as your buyer in this case. Except the people I know took that money, bought a house for cash and take the rest of their profit to live off until they die. So the next time you take this gravy example of home ownership to show how much it’s better than the stock market, don’t forget that we’re at the peak of one of the largest RE bubble in the last century. Lets see who will fair better in 10 years when this bubble play itself out. Paper gain doesn’t count.

[an]

DaCounselor, but your scenario is very similar to the scenario I described as well. How many people you know bought in 99 and sell now without rolling it into another house? If you don’t have the profit in cash, then it’s just paper gain. Your example is picking buyers at the bottoms selling at the top. So was my example, pure and simple. It’s all theoretically. I know several people personally who got a tone of stock options, cashed out at the top and retire. Those are just as real as your buyer in this case. Except the people I know took that money, bought a house for cash and take the rest of their profit to live off until they die. So the next time you take this gravy example of home ownership to show how much it’s better than the stock market, don’t forget that we’re at the peak of one of the largest RE bubble in the last century. Lets see who will fair better in 10 years when this bubble play itself out. Paper gain doesn’t count.

[what_a_disasta]

ffs. Nobody was saying 500k loss in Scripps Ranch. You are obviously being deliberately obtuse.

[what_a_disasta]

ffs. Nobody was saying 500k loss in Scripps Ranch. You are obviously being deliberately obtuse.

[DaCounselor]

an – I think are scenarios are vastly different. I didn’t pick the buyer/seller or create my scenario and I didn’t choose the parameters – the facts just are what they are, and the homeowner cashed in what they cashed in. I’m talking facts, not theoretics. I too could come up with countless possible stock market moves where a hypothetical investor could turn dollars into millions if they bought and sold the right stock at the right time, but that doesn’t mean everyone (or anyone) is pulling off such moves. I think the example of the people who you know that cashed out and retired is by far the exception, not the rule. I would guess that the guy who bought the house in 92131 and just sat there has made more “paper” money than the guy who tried to navigate the terrain of tech stock investing. And the real point being that virtually everyone who bought a house back then is way up, and I just don’t think you can say the same thing for most tech stock investors over that span. Sorry, I just have to maintain that your scenario is far-fetched and mine is – well, it’s not really “mine” – it’s just the facts. It is what it is.

And I don’t think real estate investments are better than stocks, despite of real estate’s tremendous performance this century. I like both investments. As far as which will fare better in 10 years, or 15 years, or 20 years – I suppose we’ll see.

[DaCounselor]

an – I think are scenarios are vastly different. I didn’t pick the buyer/seller or create my scenario and I didn’t choose the parameters – the facts just are what they are, and the homeowner cashed in what they cashed in. I’m talking facts, not theoretics. I too could come up with countless possible stock market moves where a hypothetical investor could turn dollars into millions if they bought and sold the right stock at the right time, but that doesn’t mean everyone (or anyone) is pulling off such moves. I think the example of the people who you know that cashed out and retired is by far the exception, not the rule. I would guess that the guy who bought the house in 92131 and just sat there has made more “paper” money than the guy who tried to navigate the terrain of tech stock investing. And the real point being that virtually everyone who bought a house back then is way up, and I just don’t think you can say the same thing for most tech stock investors over that span. Sorry, I just have to maintain that your scenario is far-fetched and mine is – well, it’s not really “mine” – it’s just the facts. It is what it is.

And I don’t think real estate investments are better than stocks, despite of real estate’s tremendous performance this century. I like both investments. As far as which will fare better in 10 years, or 15 years, or 20 years – I suppose we’ll see.

[SD Realtor]

So I kind of lost sight of where this post started. My two cents would be as follows. The two homeowners here who bought in 1999 obviously have done well. The facts seem obvious right? They purchased the home before the big runup, the median price to median income was reasonable, and to summarize they bought the homes to live in. So while there was a real estate depreciation cycle in their rear view mirror, the risk of another one at the time they bought was remote. I doubt that in their wildest dreams they anticipated the appreciation they got. Thus I don’t believe they purchased the homes as investment vehicles. They purchased them to raise a family in, and live in. Everything else was gravy.

Now the person who bought in 05 is the antithesis. He purchased at the top of the market. In short, he could not have bought at a worse time if he tried to. He MAY indeed have purchased for the same reasons that the other two homeowners did, but that doesn’t matter. It is clear he bought something he could not afford and is now suffering because of that.

I guess my point is that I really do not believe that the argument about investing instead of buying is noteworthy. You buy a home to live in it. You buy a home ONLY if you could afford it because if you cannot, eventually you will lose it. The most successful people I know didn’t forego buying a home because they felt they needed to invest in the stock market. They have their home, and they have their investment money and they are seperate.

While many people inadvertently made hundreds of thousands in housing because of the timing of when they bought and sold, I believe the vast majority of them simply caught the tide at the right time. This post is not advocating buying a home now. It is advocating that you should only buy a home you can afford, and you should buy a home because you love the home. Finally the timing of when you buy the home WILL have tremendous impact on the performance of the home as an investment.

SD Realtor

[SD Realtor]

So I kind of lost sight of where this post started. My two cents would be as follows. The two homeowners here who bought in 1999 obviously have done well. The facts seem obvious right? They purchased the home before the big runup, the median price to median income was reasonable, and to summarize they bought the homes to live in. So while there was a real estate depreciation cycle in their rear view mirror, the risk of another one at the time they bought was remote. I doubt that in their wildest dreams they anticipated the appreciation they got. Thus I don’t believe they purchased the homes as investment vehicles. They purchased them to raise a family in, and live in. Everything else was gravy.

Now the person who bought in 05 is the antithesis. He purchased at the top of the market. In short, he could not have bought at a worse time if he tried to. He MAY indeed have purchased for the same reasons that the other two homeowners did, but that doesn’t matter. It is clear he bought something he could not afford and is now suffering because of that.

I guess my point is that I really do not believe that the argument about investing instead of buying is noteworthy. You buy a home to live in it. You buy a home ONLY if you could afford it because if you cannot, eventually you will lose it. The most successful people I know didn’t forego buying a home because they felt they needed to invest in the stock market. They have their home, and they have their investment money and they are seperate.

While many people inadvertently made hundreds of thousands in housing because of the timing of when they bought and sold, I believe the vast majority of them simply caught the tide at the right time. This post is not advocating buying a home now. It is advocating that you should only buy a home you can afford, and you should buy a home because you love the home. Finally the timing of when you buy the home WILL have tremendous impact on the performance of the home as an investment.

SD Realtor

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