Goodbye Piggys

[eccen in esc]

eccen in esc
Goodbye RO, and could you take Marion and her Mice with you.

Happy Piggy

ps, don’t eat pork – it’s cannibalism

[patientrenter]

Raybyrnes, I wasn’t clear in explaining why most first-time buyers now have to consider their home as a major investment as well as a home, and need to time the purchase. Let me give it another shot.

Let’s say you are 30, and are settling into your career, planning to save, settle down, etc. You feel the need to start planning for the rest of your life. Let’s suppose you plan to work until you are 60, and save enough to live on until you are 90. What are your housing options?

Let’s make up some numbers for earnings and spending. S’pose you expect to average $250K annual h’hold earnings over your working lifetime. Call that $150K after tax etc. Let’s suppose you want to spend $70K on average over the rest of your life, excluding mortgage payments.

Then your planned lifetime future non-mortgage spending comes to (90-30) x $70K = $4.2 million. Your planned lifetime future net earnings comes to (60-30) x $150K = $4.5 million. That leaves $300K for lifetime house purchases and any other unexpected little things that come up. If you have to plan on spending more than 50% of that residual number for a home, whatever it is for you, then you probably are relying on getting back a lot of it, so it has become an investment for you.

My guess is that at current So Ca prices, almost every first-time buyer is, by this measure, primarily a (hopeful) investor more than someone looking for shelter. Rentals already provide for the shelter need.

I hinted at all this, and more, in my other posts, but I hope this explains it better. If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money. Why bother waiting to save that last $100K in purchase price when you’re sitting on cumulative lifetime gains of many times that?

It’s just not the same for people who don’t have those massive gains, and have much poorer prospects for repeating your success. Or do you subscribe to the theory that home prices can, after blips here and there, exceed wage growth forever, as they have recently?

Patient renter in OC

[patientrenter]

Raybyrnes, I wasn’t clear in explaining why most first-time buyers now have to consider their home as a major investment as well as a home, and need to time the purchase. Let me give it another shot.

Let’s say you are 30, and are settling into your career, planning to save, settle down, etc. You feel the need to start planning for the rest of your life. Let’s suppose you plan to work until you are 60, and save enough to live on until you are 90. What are your housing options?

Let’s make up some numbers for earnings and spending. S’pose you expect to average $250K annual h’hold earnings over your working lifetime. Call that $150K after tax etc. Let’s suppose you want to spend $70K on average over the rest of your life, excluding mortgage payments.

Then your planned lifetime future non-mortgage spending comes to (90-30) x $70K = $4.2 million. Your planned lifetime future net earnings comes to (60-30) x $150K = $4.5 million. That leaves $300K for lifetime house purchases and any other unexpected little things that come up. If you have to plan on spending more than 50% of that residual number for a home, whatever it is for you, then you probably are relying on getting back a lot of it, so it has become an investment for you.

My guess is that at current So Ca prices, almost every first-time buyer is, by this measure, primarily a (hopeful) investor more than someone looking for shelter. Rentals already provide for the shelter need.

I hinted at all this, and more, in my other posts, but I hope this explains it better. If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money. Why bother waiting to save that last $100K in purchase price when you’re sitting on cumulative lifetime gains of many times that?

It’s just not the same for people who don’t have those massive gains, and have much poorer prospects for repeating your success. Or do you subscribe to the theory that home prices can, after blips here and there, exceed wage growth forever, as they have recently?

Patient renter in OC

[patientrenter]

Raybyrnes, I wasn’t clear in explaining why most first-time buyers now have to consider their home as a major investment as well as a home, and need to time the purchase. Let me give it another shot.

Let’s say you are 30, and are settling into your career, planning to save, settle down, etc. You feel the need to start planning for the rest of your life. Let’s suppose you plan to work until you are 60, and save enough to live on until you are 90. What are your housing options?

Let’s make up some numbers for earnings and spending. S’pose you expect to average $250K annual h’hold earnings over your working lifetime. Call that $150K after tax etc. Let’s suppose you want to spend $70K on average over the rest of your life, excluding mortgage payments.

Then your planned lifetime future non-mortgage spending comes to (90-30) x $70K = $4.2 million. Your planned lifetime future net earnings comes to (60-30) x $150K = $4.5 million. That leaves $300K for lifetime house purchases and any other unexpected little things that come up. If you have to plan on spending more than 50% of that residual number for a home, whatever it is for you, then you probably are relying on getting back a lot of it, so it has become an investment for you.

My guess is that at current So Ca prices, almost every first-time buyer is, by this measure, primarily a (hopeful) investor more than someone looking for shelter. Rentals already provide for the shelter need.

I hinted at all this, and more, in my other posts, but I hope this explains it better. If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money. Why bother waiting to save that last $100K in purchase price when you’re sitting on cumulative lifetime gains of many times that?

It’s just not the same for people who don’t have those massive gains, and have much poorer prospects for repeating your success. Or do you subscribe to the theory that home prices can, after blips here and there, exceed wage growth forever, as they have recently?

Patient renter in OC

[patientrenter]

Raybyrnes, I wasn’t clear in explaining why most first-time buyers now have to consider their home as a major investment as well as a home, and need to time the purchase. Let me give it another shot.

Let’s say you are 30, and are settling into your career, planning to save, settle down, etc. You feel the need to start planning for the rest of your life. Let’s suppose you plan to work until you are 60, and save enough to live on until you are 90. What are your housing options?

Let’s make up some numbers for earnings and spending. S’pose you expect to average $250K annual h’hold earnings over your working lifetime. Call that $150K after tax etc. Let’s suppose you want to spend $70K on average over the rest of your life, excluding mortgage payments.

Then your planned lifetime future non-mortgage spending comes to (90-30) x $70K = $4.2 million. Your planned lifetime future net earnings comes to (60-30) x $150K = $4.5 million. That leaves $300K for lifetime house purchases and any other unexpected little things that come up. If you have to plan on spending more than 50% of that residual number for a home, whatever it is for you, then you probably are relying on getting back a lot of it, so it has become an investment for you.

My guess is that at current So Ca prices, almost every first-time buyer is, by this measure, primarily a (hopeful) investor more than someone looking for shelter. Rentals already provide for the shelter need.

I hinted at all this, and more, in my other posts, but I hope this explains it better. If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money. Why bother waiting to save that last $100K in purchase price when you’re sitting on cumulative lifetime gains of many times that?

It’s just not the same for people who don’t have those massive gains, and have much poorer prospects for repeating your success. Or do you subscribe to the theory that home prices can, after blips here and there, exceed wage growth forever, as they have recently?

Patient renter in OC

[patientrenter]

Raybyrnes, I wasn’t clear in explaining why most first-time buyers now have to consider their home as a major investment as well as a home, and need to time the purchase. Let me give it another shot.

Let’s say you are 30, and are settling into your career, planning to save, settle down, etc. You feel the need to start planning for the rest of your life. Let’s suppose you plan to work until you are 60, and save enough to live on until you are 90. What are your housing options?

Let’s make up some numbers for earnings and spending. S’pose you expect to average $250K annual h’hold earnings over your working lifetime. Call that $150K after tax etc. Let’s suppose you want to spend $70K on average over the rest of your life, excluding mortgage payments.

Then your planned lifetime future non-mortgage spending comes to (90-30) x $70K = $4.2 million. Your planned lifetime future net earnings comes to (60-30) x $150K = $4.5 million. That leaves $300K for lifetime house purchases and any other unexpected little things that come up. If you have to plan on spending more than 50% of that residual number for a home, whatever it is for you, then you probably are relying on getting back a lot of it, so it has become an investment for you.

My guess is that at current So Ca prices, almost every first-time buyer is, by this measure, primarily a (hopeful) investor more than someone looking for shelter. Rentals already provide for the shelter need.

I hinted at all this, and more, in my other posts, but I hope this explains it better. If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money. Why bother waiting to save that last $100K in purchase price when you’re sitting on cumulative lifetime gains of many times that?

It’s just not the same for people who don’t have those massive gains, and have much poorer prospects for repeating your success. Or do you subscribe to the theory that home prices can, after blips here and there, exceed wage growth forever, as they have recently?

Patient renter in OC

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[Raybyrnes]

“If I had to guess, you fall into the group of people I described in my other post who have huge gains from prior purchases, so buying at today’s prices for you feels like paying with Monopoly money.”

That’s not my situation and i can understand what you are saying. But I do not believe believe that the average Joe is looking at his home the same way and investor studies CAP rate and NOI.

I too would be a first time homeowner and I sort of look at it like an elevator ride. What floor you get in on is extremely important.

But I also look at the housing situation from a historical perspective. Historically ciotes like NY, San Francisco, Los Angeles, and even San Diego have long outperformed other parts of the country.

Now the counter argument is that ther could be a long term regression to the mean but I don’t buy that argument.

Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.

San Diego has some negatives. This is not a corporate town. The colleges in the area as a whole are average.

But there are certainly some positive. Climate is great. San Diego has Mexico to the South. Water to the west so land is limited. This is a destination city. San Diego is still attractively priced realative to Orange County.

This isn’t a pitch to go run out and buy now but it is to say that if I had a 250 K household income I probably would be in the market for a 500K place that I planned on holding for a perpituity. Why do I say this. Because I have parents in the east. So I could buy something and rather than having folks move in with me I could simply move up into a second home and let them have the first. They could pay rent to me and we keep money in the family. They have enough assets if needed that buying up wouldn’t be a problem. To me this is a fairly stable wealth building strategy.

I also think people are fooling themselves if they think interest rates are going to stay this low forever so loan notes and cash flow will impact overall long term costs.

[VoZangre]

Subtext…

“Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.”

I s’pose yer thinkin o USC, and Florida?

You leave out Michigan ( and State) Ohio State, Notre Dame ( til fat-man Weis), Texas…

Kids wanna play where elite programs are…

you heard of NC, Kentucky, UCONN? The kids aint there cos o the weather…

better off to hi-lite and alt-x that section.

Voz

[VoZangre]

Subtext…

“Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.”

I s’pose yer thinkin o USC, and Florida?

You leave out Michigan ( and State) Ohio State, Notre Dame ( til fat-man Weis), Texas…

Kids wanna play where elite programs are…

you heard of NC, Kentucky, UCONN? The kids aint there cos o the weather…

better off to hi-lite and alt-x that section.

Voz

[VoZangre]

Subtext…

“Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.”

I s’pose yer thinkin o USC, and Florida?

You leave out Michigan ( and State) Ohio State, Notre Dame ( til fat-man Weis), Texas…

Kids wanna play where elite programs are…

you heard of NC, Kentucky, UCONN? The kids aint there cos o the weather…

better off to hi-lite and alt-x that section.

Voz

[VoZangre]

Subtext…

“Here’s a weird detail to look at. Where are elite college sports teams. Typically in the warmer climates. Why? Becasue kids want to play in nicer climates.”

I s’pose yer thinkin o USC, and Florida?

You leave out Michigan ( and State) Ohio State, Notre Dame ( til fat-man Weis), Texas…

Kids wanna play where elite programs are…

you heard of NC, Kentucky, UCONN? The kids aint there cos o the weather…

better off to hi-lite and alt-x that section.

Voz

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