For all you prudent renters

[cooperthedog]

From an investment perspective, speculative bubbles (and the resulting declines) are excellent trading opportunities.

Since real-estate is relatively illiquid and has high carrying costs, timing that market can be hazardous. Of course, with the advantage of hindsight the entry & exit points seem “obvious” now, but to enter the housing market at that time (2002-03) without such knowledge carried a substantial amount of risk.

If you already owned a house at that time, then selling when prices were “overvalued” on a fundamental level reduces your potential profits. No one knows when the bubble will pop, or how high it will go, but history shows that the mania around the peak is extreme. Generally, its best to ride the price wave to the top, and then sell when it starts to break down. This way you don’t miss out on all those irrational profits, even though you don’t catch the exact top. Of course with RE the exit isn’t a mouse click away, but it also doesn’t crash overnight, so during the bubble one would develop a plan to sell when things start to breakdown (e.g. house is prepped for market, relation with realtor already established, willing to accept pricing sligtly under market to move quickly, etc.). Thus, I think someone who sold too early might have a little regret (though they still made out very well), I don’t think it is reasonable for a renter at the time to feel bitter about “missing out” since the risk/reward ratio was also high at the time, with the threat of prices breaking down at anytime. Also, contrast the potential lost opportunity of prudent renters (with zero cost), with the very real loss of those that bought at the peak.

On the flip side, those who knew about the bubble and waited patiently whilst developing trading strategies for the inevitable crash, thus getting in at the optimal time for shorting the new losers of the mania (mortgage lenders, builders, etc.), made out like bandits with little risk.

The good news is that many readers who didn’t participate either way are much more aware of these opportunities in the future, and can plan accordingly and profit greatly. Such a lesson itself might be more rewarding to the prudent renter then picking up a deal on a house when the market bottoms.

[patientrenter]

MultipleProp, I am pissed with myself (is that called bitter?) for not having bought in 1996, when I could. I made a decision not to buy each year from 1996 through 2007 based on the idea that I couldn’t really afford to pay for the homes I wanted to live in. I could always afford to buy them if I assumed someone else would later pay a lot more. To me, that didn’t seem like a prudent basis for judging affordability.

To figure out how much I could afford, I worked out how much I earned, how much needed to be set aside for current expenses, future retirement and health care and other reasonable contingencies. What was left, added up over the length of the future earning career to which I was prepared to commit, was how much I decided I could afford for a home. This seems like a prudent basis for deciding how much I can afford.

Clearly, those who took on more risk did much better. I am disappointed with the results of my decision, but just as I can’t question the gains reaped by those who made riskier decisions, neither do they have any right to help from me or other taxpayers when their bets start to lose. Efforts to support prices are therefore offensive to me. It makes the whole game unfair, taking from those who choose less risk and giving to those who choose more risk.

Patient renter in OC

[patientrenter]

MultipleProp, I am pissed with myself (is that called bitter?) for not having bought in 1996, when I could. I made a decision not to buy each year from 1996 through 2007 based on the idea that I couldn’t really afford to pay for the homes I wanted to live in. I could always afford to buy them if I assumed someone else would later pay a lot more. To me, that didn’t seem like a prudent basis for judging affordability.

To figure out how much I could afford, I worked out how much I earned, how much needed to be set aside for current expenses, future retirement and health care and other reasonable contingencies. What was left, added up over the length of the future earning career to which I was prepared to commit, was how much I decided I could afford for a home. This seems like a prudent basis for deciding how much I can afford.

Clearly, those who took on more risk did much better. I am disappointed with the results of my decision, but just as I can’t question the gains reaped by those who made riskier decisions, neither do they have any right to help from me or other taxpayers when their bets start to lose. Efforts to support prices are therefore offensive to me. It makes the whole game unfair, taking from those who choose less risk and giving to those who choose more risk.

Patient renter in OC

[patientrenter]

MultipleProp, I am pissed with myself (is that called bitter?) for not having bought in 1996, when I could. I made a decision not to buy each year from 1996 through 2007 based on the idea that I couldn’t really afford to pay for the homes I wanted to live in. I could always afford to buy them if I assumed someone else would later pay a lot more. To me, that didn’t seem like a prudent basis for judging affordability.

To figure out how much I could afford, I worked out how much I earned, how much needed to be set aside for current expenses, future retirement and health care and other reasonable contingencies. What was left, added up over the length of the future earning career to which I was prepared to commit, was how much I decided I could afford for a home. This seems like a prudent basis for deciding how much I can afford.

Clearly, those who took on more risk did much better. I am disappointed with the results of my decision, but just as I can’t question the gains reaped by those who made riskier decisions, neither do they have any right to help from me or other taxpayers when their bets start to lose. Efforts to support prices are therefore offensive to me. It makes the whole game unfair, taking from those who choose less risk and giving to those who choose more risk.

Patient renter in OC

[patientrenter]

MultipleProp, I am pissed with myself (is that called bitter?) for not having bought in 1996, when I could. I made a decision not to buy each year from 1996 through 2007 based on the idea that I couldn’t really afford to pay for the homes I wanted to live in. I could always afford to buy them if I assumed someone else would later pay a lot more. To me, that didn’t seem like a prudent basis for judging affordability.

To figure out how much I could afford, I worked out how much I earned, how much needed to be set aside for current expenses, future retirement and health care and other reasonable contingencies. What was left, added up over the length of the future earning career to which I was prepared to commit, was how much I decided I could afford for a home. This seems like a prudent basis for deciding how much I can afford.

Clearly, those who took on more risk did much better. I am disappointed with the results of my decision, but just as I can’t question the gains reaped by those who made riskier decisions, neither do they have any right to help from me or other taxpayers when their bets start to lose. Efforts to support prices are therefore offensive to me. It makes the whole game unfair, taking from those who choose less risk and giving to those who choose more risk.

Patient renter in OC

[patientrenter]

MultipleProp, I am pissed with myself (is that called bitter?) for not having bought in 1996, when I could. I made a decision not to buy each year from 1996 through 2007 based on the idea that I couldn’t really afford to pay for the homes I wanted to live in. I could always afford to buy them if I assumed someone else would later pay a lot more. To me, that didn’t seem like a prudent basis for judging affordability.

To figure out how much I could afford, I worked out how much I earned, how much needed to be set aside for current expenses, future retirement and health care and other reasonable contingencies. What was left, added up over the length of the future earning career to which I was prepared to commit, was how much I decided I could afford for a home. This seems like a prudent basis for deciding how much I can afford.

Clearly, those who took on more risk did much better. I am disappointed with the results of my decision, but just as I can’t question the gains reaped by those who made riskier decisions, neither do they have any right to help from me or other taxpayers when their bets start to lose. Efforts to support prices are therefore offensive to me. It makes the whole game unfair, taking from those who choose less risk and giving to those who choose more risk.

Patient renter in OC

[JWM in SD]

Multiple Props,

Other than being antagonistic, what is your reason for even posting here?? If you feel that the majority of the posters here are jealous bitter renters, then why are you wasting time posting here? If your perspective on the housing market is obviously superior, then why are you wasting your time? What is your fascination and issue with your perceived notion of the bitterness that emanates on this site supposedly???

Why are you posting here?

I’ll tell you why….because you know damn well we are right and you can’t stand it can you?

[JWM in SD]

Multiple Props,

Other than being antagonistic, what is your reason for even posting here?? If you feel that the majority of the posters here are jealous bitter renters, then why are you wasting time posting here? If your perspective on the housing market is obviously superior, then why are you wasting your time? What is your fascination and issue with your perceived notion of the bitterness that emanates on this site supposedly???

Why are you posting here?

I’ll tell you why….because you know damn well we are right and you can’t stand it can you?

[JWM in SD]

Multiple Props,

Other than being antagonistic, what is your reason for even posting here?? If you feel that the majority of the posters here are jealous bitter renters, then why are you wasting time posting here? If your perspective on the housing market is obviously superior, then why are you wasting your time? What is your fascination and issue with your perceived notion of the bitterness that emanates on this site supposedly???

Why are you posting here?

I’ll tell you why….because you know damn well we are right and you can’t stand it can you?

[JWM in SD]

Multiple Props,

Other than being antagonistic, what is your reason for even posting here?? If you feel that the majority of the posters here are jealous bitter renters, then why are you wasting time posting here? If your perspective on the housing market is obviously superior, then why are you wasting your time? What is your fascination and issue with your perceived notion of the bitterness that emanates on this site supposedly???

Why are you posting here?

I’ll tell you why….because you know damn well we are right and you can’t stand it can you?

[JWM in SD]

Multiple Props,

Other than being antagonistic, what is your reason for even posting here?? If you feel that the majority of the posters here are jealous bitter renters, then why are you wasting time posting here? If your perspective on the housing market is obviously superior, then why are you wasting your time? What is your fascination and issue with your perceived notion of the bitterness that emanates on this site supposedly???

Why are you posting here?

I’ll tell you why….because you know damn well we are right and you can’t stand it can you?

[lendingbubblecontinues]

dude-

The reason I feel “smug” is because I hung my nuts out there back in 2003 and told people that the housing market was a house of cards and would decline in value significantly. I have been consistent with my message through the present day.

Everyone who told me I was wrong is now being forced to eat crow. So be it!

MPO–if you are one of those people, be prepared for an extra special helping of the black chicken over the next 18-24 months.

[lendingbubblecontinues]

dude-

The reason I feel “smug” is because I hung my nuts out there back in 2003 and told people that the housing market was a house of cards and would decline in value significantly. I have been consistent with my message through the present day.

Everyone who told me I was wrong is now being forced to eat crow. So be it!

MPO–if you are one of those people, be prepared for an extra special helping of the black chicken over the next 18-24 months.

[lendingbubblecontinues]

dude-

The reason I feel “smug” is because I hung my nuts out there back in 2003 and told people that the housing market was a house of cards and would decline in value significantly. I have been consistent with my message through the present day.

Everyone who told me I was wrong is now being forced to eat crow. So be it!

MPO–if you are one of those people, be prepared for an extra special helping of the black chicken over the next 18-24 months.

[lendingbubblecontinues]

dude-

The reason I feel “smug” is because I hung my nuts out there back in 2003 and told people that the housing market was a house of cards and would decline in value significantly. I have been consistent with my message through the present day.

Everyone who told me I was wrong is now being forced to eat crow. So be it!

MPO–if you are one of those people, be prepared for an extra special helping of the black chicken over the next 18-24 months.

[Author]

Posts