couple of things to worry about for renters

[JWM in SD]

“By the time this is over, if it takes 3 years for houses to hit bottom, hyperinflation could potentially bring the fundamentals up considerably. I’m trying to make the point that a loan denominated in dolars might be good to have. ”

OMFG, you really don’t get it do you??? One more time for the slow-witted ones here. THE HYPERINFLATION IN ASSETS HAS ALREADY HAPPENED!!!!!Go find a graph of M3 and SoCal median house prices over the past five years and look at the correlation.

INFLATION WILL NOT SAVE YOUR OVERPRICED SAN DIEGO HOUSE OR CONDO.

[NotCranky]

I agree JWM with regards to asset inflation, epecially housing, but why can’t the question and answer be more nuanced? Most people I meet don’t look at it in “black and white”. Inflation could mitigate a bad but survivable purchase of an overpriced house.Ask anyone who had to ride out the last trough. I am not talking about extreme stupid and over-leveraged purchases. In fact it is to be expected that inflation will mitigate debt sooner or later,not guaranteed. I just don’t see why the possibility has to be completely off the table. It become a more important factor as prices come down. Especially for those who are taking heat from a spouse to buy yesterday.If I were going to somehow rationalize buying before some absolute bottom I think the inflation argument is valid. Same for moderately encumbering already held properties, at todays rates of interest, and investing as Surveyor is doing.

[NotCranky]

I agree JWM with regards to asset inflation, epecially housing, but why can’t the question and answer be more nuanced? Most people I meet don’t look at it in “black and white”. Inflation could mitigate a bad but survivable purchase of an overpriced house.Ask anyone who had to ride out the last trough. I am not talking about extreme stupid and over-leveraged purchases. In fact it is to be expected that inflation will mitigate debt sooner or later,not guaranteed. I just don’t see why the possibility has to be completely off the table. It become a more important factor as prices come down. Especially for those who are taking heat from a spouse to buy yesterday.If I were going to somehow rationalize buying before some absolute bottom I think the inflation argument is valid. Same for moderately encumbering already held properties, at todays rates of interest, and investing as Surveyor is doing.

[NotCranky]

I agree JWM with regards to asset inflation, epecially housing, but why can’t the question and answer be more nuanced? Most people I meet don’t look at it in “black and white”. Inflation could mitigate a bad but survivable purchase of an overpriced house.Ask anyone who had to ride out the last trough. I am not talking about extreme stupid and over-leveraged purchases. In fact it is to be expected that inflation will mitigate debt sooner or later,not guaranteed. I just don’t see why the possibility has to be completely off the table. It become a more important factor as prices come down. Especially for those who are taking heat from a spouse to buy yesterday.If I were going to somehow rationalize buying before some absolute bottom I think the inflation argument is valid. Same for moderately encumbering already held properties, at todays rates of interest, and investing as Surveyor is doing.

[NotCranky]

I agree JWM with regards to asset inflation, epecially housing, but why can’t the question and answer be more nuanced? Most people I meet don’t look at it in “black and white”. Inflation could mitigate a bad but survivable purchase of an overpriced house.Ask anyone who had to ride out the last trough. I am not talking about extreme stupid and over-leveraged purchases. In fact it is to be expected that inflation will mitigate debt sooner or later,not guaranteed. I just don’t see why the possibility has to be completely off the table. It become a more important factor as prices come down. Especially for those who are taking heat from a spouse to buy yesterday.If I were going to somehow rationalize buying before some absolute bottom I think the inflation argument is valid. Same for moderately encumbering already held properties, at todays rates of interest, and investing as Surveyor is doing.

[NotCranky]

I agree JWM with regards to asset inflation, epecially housing, but why can’t the question and answer be more nuanced? Most people I meet don’t look at it in “black and white”. Inflation could mitigate a bad but survivable purchase of an overpriced house.Ask anyone who had to ride out the last trough. I am not talking about extreme stupid and over-leveraged purchases. In fact it is to be expected that inflation will mitigate debt sooner or later,not guaranteed. I just don’t see why the possibility has to be completely off the table. It become a more important factor as prices come down. Especially for those who are taking heat from a spouse to buy yesterday.If I were going to somehow rationalize buying before some absolute bottom I think the inflation argument is valid. Same for moderately encumbering already held properties, at todays rates of interest, and investing as Surveyor is doing.

[JWM in SD]

JWM in SD

Simple Rustico, because the disparity between the house price growth and income growth is too severe in the bubble regions. Second, history has shown what happens in credit driven asset bubbles: Deflation. That is what happened in the Great Depression. We will not have a Weimer style hyperinflation here with the use of printing presses. Once asset values get beyond the ablility of the borrowers to service the related debt, then the assets value comes into question and becomes impaired. The assets pledged are no longer worth what they once were and the loans backing them become suspect. Credit tightens severely and lending institions don’t trust each other because they don’t know who is insolvent and who isn’t. The Fed can loosen rates all it wants, but liquidity will not help and insolvency problem at either the homedebtor level or the institutional level.

Hence, pushing on a string.

[JWM in SD]

JWM in SD

Simple Rustico, because the disparity between the house price growth and income growth is too severe in the bubble regions. Second, history has shown what happens in credit driven asset bubbles: Deflation. That is what happened in the Great Depression. We will not have a Weimer style hyperinflation here with the use of printing presses. Once asset values get beyond the ablility of the borrowers to service the related debt, then the assets value comes into question and becomes impaired. The assets pledged are no longer worth what they once were and the loans backing them become suspect. Credit tightens severely and lending institions don’t trust each other because they don’t know who is insolvent and who isn’t. The Fed can loosen rates all it wants, but liquidity will not help and insolvency problem at either the homedebtor level or the institutional level.

Hence, pushing on a string.

[JWM in SD]

JWM in SD

Simple Rustico, because the disparity between the house price growth and income growth is too severe in the bubble regions. Second, history has shown what happens in credit driven asset bubbles: Deflation. That is what happened in the Great Depression. We will not have a Weimer style hyperinflation here with the use of printing presses. Once asset values get beyond the ablility of the borrowers to service the related debt, then the assets value comes into question and becomes impaired. The assets pledged are no longer worth what they once were and the loans backing them become suspect. Credit tightens severely and lending institions don’t trust each other because they don’t know who is insolvent and who isn’t. The Fed can loosen rates all it wants, but liquidity will not help and insolvency problem at either the homedebtor level or the institutional level.

Hence, pushing on a string.

[JWM in SD]

JWM in SD

Simple Rustico, because the disparity between the house price growth and income growth is too severe in the bubble regions. Second, history has shown what happens in credit driven asset bubbles: Deflation. That is what happened in the Great Depression. We will not have a Weimer style hyperinflation here with the use of printing presses. Once asset values get beyond the ablility of the borrowers to service the related debt, then the assets value comes into question and becomes impaired. The assets pledged are no longer worth what they once were and the loans backing them become suspect. Credit tightens severely and lending institions don’t trust each other because they don’t know who is insolvent and who isn’t. The Fed can loosen rates all it wants, but liquidity will not help and insolvency problem at either the homedebtor level or the institutional level.

Hence, pushing on a string.

[JWM in SD]

JWM in SD

Simple Rustico, because the disparity between the house price growth and income growth is too severe in the bubble regions. Second, history has shown what happens in credit driven asset bubbles: Deflation. That is what happened in the Great Depression. We will not have a Weimer style hyperinflation here with the use of printing presses. Once asset values get beyond the ablility of the borrowers to service the related debt, then the assets value comes into question and becomes impaired. The assets pledged are no longer worth what they once were and the loans backing them become suspect. Credit tightens severely and lending institions don’t trust each other because they don’t know who is insolvent and who isn’t. The Fed can loosen rates all it wants, but liquidity will not help and insolvency problem at either the homedebtor level or the institutional level.

Hence, pushing on a string.

[Navydoc]

“It seems like 90% of the people who post here are renters waiting for prices to fall”

This may certainly be true, but don’t forget, there are many other reasons why people rent besides the pure economics of it. Sometimes I like to delude myself on what a genius I am for not buying in 2006 when we were transferred here. This was in fact an economic decision at the time as I knew I couldn’t stay more than 3 years. To be fair, I would have to admit that if I was sent to San Diego in 2006 I probably WOULD have bought, and would be crying, $100,000 in equity gone. Sometimes it’s just not the right time.

Interestingly, because of this blog and others like it, if I were transferred to San Diego now I absolutely would not buy. I just don’t think we’re going to see enough inflation in the next few years to justify anything close to these prices. I definitely wont see anything like the necessary pay increase to be able to justify them.

[Navydoc]

“It seems like 90% of the people who post here are renters waiting for prices to fall”

This may certainly be true, but don’t forget, there are many other reasons why people rent besides the pure economics of it. Sometimes I like to delude myself on what a genius I am for not buying in 2006 when we were transferred here. This was in fact an economic decision at the time as I knew I couldn’t stay more than 3 years. To be fair, I would have to admit that if I was sent to San Diego in 2006 I probably WOULD have bought, and would be crying, $100,000 in equity gone. Sometimes it’s just not the right time.

Interestingly, because of this blog and others like it, if I were transferred to San Diego now I absolutely would not buy. I just don’t think we’re going to see enough inflation in the next few years to justify anything close to these prices. I definitely wont see anything like the necessary pay increase to be able to justify them.

[Navydoc]

“It seems like 90% of the people who post here are renters waiting for prices to fall”

This may certainly be true, but don’t forget, there are many other reasons why people rent besides the pure economics of it. Sometimes I like to delude myself on what a genius I am for not buying in 2006 when we were transferred here. This was in fact an economic decision at the time as I knew I couldn’t stay more than 3 years. To be fair, I would have to admit that if I was sent to San Diego in 2006 I probably WOULD have bought, and would be crying, $100,000 in equity gone. Sometimes it’s just not the right time.

Interestingly, because of this blog and others like it, if I were transferred to San Diego now I absolutely would not buy. I just don’t think we’re going to see enough inflation in the next few years to justify anything close to these prices. I definitely wont see anything like the necessary pay increase to be able to justify them.

[Navydoc]

“It seems like 90% of the people who post here are renters waiting for prices to fall”

This may certainly be true, but don’t forget, there are many other reasons why people rent besides the pure economics of it. Sometimes I like to delude myself on what a genius I am for not buying in 2006 when we were transferred here. This was in fact an economic decision at the time as I knew I couldn’t stay more than 3 years. To be fair, I would have to admit that if I was sent to San Diego in 2006 I probably WOULD have bought, and would be crying, $100,000 in equity gone. Sometimes it’s just not the right time.

Interestingly, because of this blog and others like it, if I were transferred to San Diego now I absolutely would not buy. I just don’t think we’re going to see enough inflation in the next few years to justify anything close to these prices. I definitely wont see anything like the necessary pay increase to be able to justify them.

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