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Coronita.
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March 7, 2022 at 10:33 AM #824109March 7, 2022 at 10:57 AM #824110
flyer
ParticipantI think just about all of us who are in a position to take advantage of a correction, as we have before, would, but I still would not wish or need for that to happen.
There are lots of deep pockets here and around the world, so, if it does happen, it will be ultra competitive among many investors, especially now that San Diego seems to be on the map even more so than in past years.
March 7, 2022 at 12:57 PM #824114sdrealtor
Participant[quote=deadzone][quote=sdrealtor]Ok you just keep talking yourself out of doing things while I talk myself into buying more fermented grape juice than I could ever drink in a lifetime[/quote]
Not talking myself out of doing anything. You have a one track mind, the entire world doesn’t revolve around investing in real estate. My investments in precious metals are on fire. My baseball cards are up big too. But they will definitely crash hard soon. Don’t care, not giving up my vintage cards.[/quote]
Who said anything about RE, Im talking about everything. Ive got “liquid” assets that are up 20X in 5 years too. Good luck selling those cards, the posted prices are very different than what they sell for and unless graded 9 or above you most likely have nice things to look at. Ive got my share as well. But getting back to RE it is the most important hedge one can have in life. No matter what happens costs are fixed, tax treatment is favorable and ya gotta live somewhere. I would counter that anyone w/o at least an 8 figure net worth has not planned well if they arent hedged with RE. It clears the way to focus on everything else with minimal worry
March 7, 2022 at 1:24 PM #824115(former)FormerSanDiegan
Participant[quote=deadzone]
And I’m just being pragmatic too. If signs point to a major correction/crash, it is good to accept that and plan for it. Seems like we agree that inflation is out of control and that is not a good thing for the general populace. The only way this inflation is going to get under control is a crash of the current asset bubble. Looks fairly certain that the Fed is going to engineer this crash of the bubble they created.[/quote]
One should consider what happened in the past when inflation was high and observe the impacts on real estate. Consider the decade from ~1972 -1984 which was one of the most significant periods of higher than post-WW2 average inflation.
What happened to home prices during that period ?Inflation was ultImately tamed through fiscal and monetary policy changes (and perhaps demographic changes) and this period included three recessionary periods.
But what about home prices? Did the asset bubble burst in the correction or was real estate an effective way to survive that inflationary era ?
Median US home price January 1972 = 26,900
Median US home price January 1984 = 65,341These are nominal dollars. In inflation adjusted terms home prices pretty much tracked inflation.
Source
[img_assist|nid=27532|title=Home price during inflationary period|desc=|link=none|align=left|width=533|height=400]
March 7, 2022 at 1:55 PM #824116Anonymous
GuestYou can’t compare the 70s to today. The current asset bubble and subsequent inflation were caused directly by the Federal Reserve QE policy which has only existed since 2009. This was an experimental policy intended to recover from the 2008 financial crisis (and with real purpose to bail out the bankers and wealthy elite). But they clearly took this QE too far and the entire economy has been addicted to the Fed like a crack whore ever since. Then the Fed went into hyperdrive during Covid when the Fed nearly doubled their balance sheet in less than 2 years
So how is this all going to end? Nobody can say for sure, but comparing this to past historical cycles is impossible because there is no precedent in US history to compare it with since QE didn’t exist during previous bubbles. But we all know full well how speculative bubbles end. There is a rich history in this, and the 2000 .com bubble and 2008 RE bubble are very recent examples.
March 7, 2022 at 2:05 PM #824119ParticipantWhat you keep passing over is the majority of homeowners sitting on fixed rate mortgages of 3% or lower. Most people would just stay put or rent out their home even if that meant having to rent elsewhere. Even if rents came down (unlikely to any large degree) we have inflated so much homes will cash flow very nicely. Whos gonna give up a 2.5% fixed rate mortgage when rates are 5% or higher? I’ll wait
March 7, 2022 at 2:08 PM #824120Guest[quote=sdrealtor]
Who said anything about RE, Im talking about everything. Ive got “liquid” assets that are up 20X in 5 years too. Good luck selling those cards, the posted prices are very different than what they sell for and unless graded 9 or above you most likely have nice things to look at. Ive got my share as well. But getting back to RE it is the most important hedge one can have in life. No matter what happens costs are fixed, tax treatment is favorable and ya gotta live somewhere. I would counter that anyone w/o at least an 8 figure net worth has not planned well if they arent hedged with RE. It clears the way to focus on everything else with minimal worry[/quote]
I definitely agree with you regarding RE as a good hedge. But you continue to throw out the tired opportunity of a lifetime line. As if someone’s life is incomplete if they don’t own a tract home in suburban NC San Diego. Sorry, not feeling bad about that. Feeling very good about my gold though.
Disagree to an extent on baseball cards. Absolutely you can sell ungraded cards for a lot of money on ebay. Or if the cards get into the 4+ figure range pay the $50 and get them slabbed. But you apparently didn’t get to the end of my post, I said I’m not going to sell my cards even if they are at great risk of dropping value from here on out.
It is the investors that are ruining the vintage baseball card market just like they’ve ruined the RE market, thanks Fed!
March 7, 2022 at 2:12 PM #824121Guest[quote=sdrealtor]What you keep passing over is the majority of homeowners sitting on fixed rate mortgages of 3% or lower. Most people would just stay put or rent out their home even if that meant having to rent elsewhere. Even if rents came down (unlikely to any large degree) we have inflated so much homes will cash flow very nicely. Whos gonna give up a 2.5% fixed rate mortgage when rates are 5% or higher? I’ll wait[/quote]
Absolutely! The majority of homeowners “should” be fine and be able to weather a major economic downturn. If, and this is a big If, they didn’t over extend themselves by pulling out equity to purchase investment properties and Landrovers. But it sure smells like a lot of folks have been doing this. If not, then there is no reason to fear a market crash/correction/recession. Bring it on!
March 7, 2022 at 2:53 PM #824125Participant[quote=deadzone][quote=sdrealtor]
Who said anything about RE, Im talking about everything. Ive got “liquid” assets that are up 20X in 5 years too. Good luck selling those cards, the posted prices are very different than what they sell for and unless graded 9 or above you most likely have nice things to look at. Ive got my share as well. But getting back to RE it is the most important hedge one can have in life. No matter what happens costs are fixed, tax treatment is favorable and ya gotta live somewhere. I would counter that anyone w/o at least an 8 figure net worth has not planned well if they arent hedged with RE. It clears the way to focus on everything else with minimal worry[/quote]
I definitely agree with you regarding RE as a good hedge. But you continue to throw out the tired opportunity of a lifetime line. As if someone’s life is incomplete if they don’t own a tract home in suburban NC San Diego. Sorry, not feeling bad about that. Feeling very good about my gold though.
[/quote]
Just over 10 years ago you could buy a house in my hood for $750,000 putting $150,000 down. You would have enjoyed 10 years of stability in a wonderful place. Your PITI would now be about 50% of the current rent. Your principal would now be about $460,000 after paying a monthly amount lower than rent for the home. Your home would be roughly $2M so your equity would have gone from $150K to over $1.5M in about 10 years so thats 10X. You are locked into affordability and have created a good amount of generational wealth for you family. If that isnt the opportunity of a lifetime I dont know what is.
Or 10 years ago you could have bought Gold. It was about $1650. Now its around $2,000. How could you possibly feel good about that?
March 7, 2022 at 3:09 PM #824127Guest[quote=sdrealtor]
Just over 10 years ago you could buy a house in my hood for $750,000 putting $150,000 down. You would have enjoyed 10 years of stability in a wonderful place. Your PITI would now be about 50% of the current rent. Your principal would now be about $460,000 after paying a monthly amount lower than rent for the home. Your home would be roughly $2M so your equity would have gone from $150K to over $1.5M in about 10 years so thats 10X. You are locked into affordability and have created a good amount of generational wealth for you family. If that isnt the opportunity of a lifetime I dont know what is.
Or 10 years ago you could have bought Gold. It was about $1650. Now its around $2,000. How could you possibly feel good about that?[/quote]
Sure, I don’t disagree that purchasing RE in 2012 would have been a great investment. Opportunity of a lifetime? A little over-dramatic. I think it is time for you to retire that line.
But for the record, I loaded up on gold in 2009-10 when it was under $1000 an ounce. And more recently I loaded up on Energy stocks when oil was under $70. Opportunity of a lifetime? Nah, but feeling good about it.March 7, 2022 at 3:43 PM #824129ParticipantGold was not under $1000 in 2010 and that is more than 10 years and at best 2X not close to the 10X opportunity of a lifetime. Here you go this one up here closed almost exactly 10 years ago to the day on a 1/4 acre lot. In 2011 and 2012 over 50 homes in this neighborhood sold under $800K. Opportunity was everywhere. Zillow is probably about $200K low on the current value and it would easily rent for $6500 now. This one is closer to 13X
https://www.zillow.com/homes/2903-Camino-Serbal-Carlsbad,-CA-92009_rb/16712446_zpid/?
March 7, 2022 at 3:52 PM #824130ParticipantAnd if you have a better one Im all ears
March 7, 2022 at 3:56 PM #824131GuestGold was under $1000 in 2009. And it was a good investment. In hindsight sure RE would have been better investment. But hindsight is 20/20. And frankly I am not and never was interested in being a landlord so it is a moot point and under no circumstances would I have been interested in living in a suburban NC housing tract.
Anyway, the point now is to address the current situation and possible bubble popping. My personal investment decisions 10+ years ago are completely irrelevant to the current situation. Not sure why you insist on bringing that up other than to deflect from your fear of the prospect of a market crash? I really don’t understand why the idea of it bothers you so much.
March 7, 2022 at 4:32 PM #824132an
ParticipantI wonder what housing did between 2002-2012 after the .com crash in 2001-2002.
Someone seems to be married to one potential outcome. I personally think we’re more likely to see a repeat of the 70s than 2008. But I’m ready for both.
I agree with sdr that RE was an opportunity of a life time if you had the gut to buy between 2009-2019.
March 7, 2022 at 4:36 PM #824133Participant[quote=deadzone]You can’t compare the 70s to today. The current asset bubble and subsequent inflation were caused directly by the Federal Reserve QE policy which has only existed since 2009. This was an experimental policy intended to recover from the 2008 financial crisis (and with real purpose to bail out the bankers and wealthy elite). But they clearly took this QE too far and the entire economy has been addicted to the Fed like a crack whore ever since. Then the Fed went into hyperdrive during Covid when the Fed nearly doubled their balance sheet in less than 2 years
[/quote]I can indeed compare the 1970s to today. (In fact that’s exactly what I did above) In fact some of the monetary levers pulled were much more drastic than QE, such as end of Bretton Woods, effectively eliminating any ties to gold, etc. History doesn’t repeat itself exactly but often it rhymes. Those who ignore it do so at their own peril
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