Housing & economy doing great…shut down this site!

[Allan from Fallbrook]

JWM points out that the bigger picture here has less to do with real estate and more to do with the Fed’s monetary policy.

After the NASDAQ bust in 2000, the Fed engaged in a frenzy of rate cuts, so designed to stave off recession and cushion the larger economy from the impact of the bust (which eliminated $4 trillion worth of wealth in a 2.5 year period).

The problem was that, similar to the Dollar Bust in 1997, which sent Asian countries into a tailspin, the money had to go somewhere. Add in the Chinese central banks buying dollar denominated assets to shore up the yuan, and you have a helluva lot of cheap money seeking assets to buy.

The real estate industry, the banking/mortgage industry and the Fed all have a vested interest in selling the notion of a “soft landing” for real estate. The Fed is terrified of hiking rates, to the extent that they are virtually ignoring rising costs of everything from fuel to food and claiming that inflation is “contained”. They will be forced to raise rates again and then it will get uglier still.

[Allan from Fallbrook]

JWM points out that the bigger picture here has less to do with real estate and more to do with the Fed’s monetary policy.

After the NASDAQ bust in 2000, the Fed engaged in a frenzy of rate cuts, so designed to stave off recession and cushion the larger economy from the impact of the bust (which eliminated $4 trillion worth of wealth in a 2.5 year period).

The problem was that, similar to the Dollar Bust in 1997, which sent Asian countries into a tailspin, the money had to go somewhere. Add in the Chinese central banks buying dollar denominated assets to shore up the yuan, and you have a helluva lot of cheap money seeking assets to buy.

The real estate industry, the banking/mortgage industry and the Fed all have a vested interest in selling the notion of a “soft landing” for real estate. The Fed is terrified of hiking rates, to the extent that they are virtually ignoring rising costs of everything from fuel to food and claiming that inflation is “contained”. They will be forced to raise rates again and then it will get uglier still.

[Anonymous]

Dr. MM/FSD, how’s life in Westside for a good Catholic family? Acceptable public schools in area?

Just curious.

[Anonymous]

Dr. MM/FSD, how’s life in Westside for a good Catholic family? Acceptable public schools in area?

Just curious.

[Anonymous]

Request for ruling from the bench — PD, is this an ‘acceptable’ question?

[Anonymous]

Request for ruling from the bench — PD, is this an ‘acceptable’ question?

[bob2007]

JWM,

“I have no debt, cash and time. What do the FBs have besides a stucco box and a mountain of debt ???”

Play that scenario over the last 10 years and see where it gets you. I wouldn’t put it all in a house either. With diversified investments and houses it’s worked out well for most people. With you attitude I think you will need a lot more time than you think. You may have some good points, but they may not be considered because your so angry all the time.

If you truly believe your own posts, then you should forget about housing for the next 2-3 years and focus on better things. Why hang around and bash everyone who writes something you don’t agree with?

[bob2007]

JWM,

“I have no debt, cash and time. What do the FBs have besides a stucco box and a mountain of debt ???”

Play that scenario over the last 10 years and see where it gets you. I wouldn’t put it all in a house either. With diversified investments and houses it’s worked out well for most people. With you attitude I think you will need a lot more time than you think. You may have some good points, but they may not be considered because your so angry all the time.

If you truly believe your own posts, then you should forget about housing for the next 2-3 years and focus on better things. Why hang around and bash everyone who writes something you don’t agree with?

[rb_engineer]

JWM, I understand your situation. I have co-workers who are in similar situation. They have waited for the last 10 years and are frustrated as you are. They want to buy in the nicest chick area (CV in their case) but don’t want to pay the hefty price.

My advice to them is that since they have waited this long, they might as well wait a little more to see their idea play out. It looks though, as they look at more and more houses, they are more inclined to pull the trigger. After all, having your own house is quite enjoyable even with all the work and cost involved.

[rb_engineer]

JWM, I understand your situation. I have co-workers who are in similar situation. They have waited for the last 10 years and are frustrated as you are. They want to buy in the nicest chick area (CV in their case) but don’t want to pay the hefty price.

My advice to them is that since they have waited this long, they might as well wait a little more to see their idea play out. It looks though, as they look at more and more houses, they are more inclined to pull the trigger. After all, having your own house is quite enjoyable even with all the work and cost involved.

[JWM in SD]

Hmm, I don’t know, I enjoy the rental home I’m in and I don’t have to pay through the nose for it. My bank account is even happier right now.

[JWM in SD]

Hmm, I don’t know, I enjoy the rental home I’m in and I don’t have to pay through the nose for it. My bank account is even happier right now.

[Anonymous]

I agree with you rb-; we don’t go looking at houses. I have no desire to be tempted, frustrated, and irritated by touring nice homes for sale.

[Anonymous]

I agree with you rb-; we don’t go looking at houses. I have no desire to be tempted, frustrated, and irritated by touring nice homes for sale.

[Allan from Fallbrook]

Why buy now? We bought in Fallbrook in 2003 for $425k. During the subsequent run-up, price on our house went all the way to $810k (based on neighborhood comps). Several houses in the neighborhood sold at that point and most of them are either back on the market (and not moving) or in some stage of foreclosure.

Our house has settled back into the mid- to low- $600k range. The five houses in our immediate neighborhood that have been for sale since the beginning of the year are all back off of the market. In talking to the neighbors, only one had a decent offer and the offeror had to back out because they couldn’t qualify for the mortgage. Four of the five houses were for sale for the better part of four to five months with little foot traffic and no serious offers.

While I realize this is anecdotal and not hard data, it does point to the fact that the pool of buyers is getting rapidly smaller due to new lending guidelines (and the higher cost of funds) and the intrasigence of sellers in accepting that this isn’t 2005 (or even 2006).

Once you add in the inventory overhang (with builders slashing prices and offering significant incentives), it would seem that while a crash might not be in the offing, a sizeable “correction” is.

I would definitely wait before taking the plunge, and wait for at least a year, if not 18 months.

[Author]

Posts