Housing won’t hit bottom ’til 2012

[scaredyclassic]

I gulp agree w the realtor on this; taking your cash and putting it in a house definitely is a hedge against inflation. I believe it’s coming maybe not soon but we are on a suicide path therewith. So you should probably hedge one way or the other; gold ; ETF resouce shares; a house; but sitting around w cash waiting for the crash? I think you could get crushed; not safe; personally I think vanguard energy vipers or gdx gold mining index fund or slw silver mines is a much better hedge than my abode and if I were single I’d be w shares. But if you are sitting on cash waiting for the moment shen blood is running in the streets I think you’ll die a death of a thousand band aids.,…

[CA renter]

[quote=flu][quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.

Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]

I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.

[quote]
Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
[/quote]

Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.

Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.[/quote]

Agree with flu on this. Back during the bubble years, people on the blogs would complain that the bubble was taking too long to deflate. I told them to watch the stock market, because when it started to crash, housing would do so as well.

Look back on the stock market and the moves in housing, and you will see a very strong correlation, especially this past decade (and I believe this correlation is pretty strong going back much longer than that).

I don’t hang out with a bunch of C-Suite types, but do know a number of people who’ve made quite a bit of money from stocks/options; and like flu said, many/most of them used this money to buy real estate.

Also, interest rates/currency moves play a part in this as well. If interest rates rise significantly, I expect the stock market to drop…and housing will follow (maybe lead by a bit). It’s all about cheap money vs. dear money. When it’s cheap, people will tend to buy up assets (stocks, houses, commodities, bonds, etc.), when it’s dear, they will hold on to cash, and asset prices will most likely fall.

Just MHO.

[CA renter]

[quote=flu][quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.

Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]

I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.

[quote]
Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
[/quote]

Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.

Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.[/quote]

Agree with flu on this. Back during the bubble years, people on the blogs would complain that the bubble was taking too long to deflate. I told them to watch the stock market, because when it started to crash, housing would do so as well.

Look back on the stock market and the moves in housing, and you will see a very strong correlation, especially this past decade (and I believe this correlation is pretty strong going back much longer than that).

I don’t hang out with a bunch of C-Suite types, but do know a number of people who’ve made quite a bit of money from stocks/options; and like flu said, many/most of them used this money to buy real estate.

Also, interest rates/currency moves play a part in this as well. If interest rates rise significantly, I expect the stock market to drop…and housing will follow (maybe lead by a bit). It’s all about cheap money vs. dear money. When it’s cheap, people will tend to buy up assets (stocks, houses, commodities, bonds, etc.), when it’s dear, they will hold on to cash, and asset prices will most likely fall.

Just MHO.

[CA renter]

[quote=flu][quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.

Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]

I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.

[quote]
Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
[/quote]

Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.

Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.[/quote]

Agree with flu on this. Back during the bubble years, people on the blogs would complain that the bubble was taking too long to deflate. I told them to watch the stock market, because when it started to crash, housing would do so as well.

Look back on the stock market and the moves in housing, and you will see a very strong correlation, especially this past decade (and I believe this correlation is pretty strong going back much longer than that).

I don’t hang out with a bunch of C-Suite types, but do know a number of people who’ve made quite a bit of money from stocks/options; and like flu said, many/most of them used this money to buy real estate.

Also, interest rates/currency moves play a part in this as well. If interest rates rise significantly, I expect the stock market to drop…and housing will follow (maybe lead by a bit). It’s all about cheap money vs. dear money. When it’s cheap, people will tend to buy up assets (stocks, houses, commodities, bonds, etc.), when it’s dear, they will hold on to cash, and asset prices will most likely fall.

Just MHO.

[CA renter]

[quote=flu][quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.

Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]

I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.

[quote]
Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
[/quote]

Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.

Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.[/quote]

Agree with flu on this. Back during the bubble years, people on the blogs would complain that the bubble was taking too long to deflate. I told them to watch the stock market, because when it started to crash, housing would do so as well.

Look back on the stock market and the moves in housing, and you will see a very strong correlation, especially this past decade (and I believe this correlation is pretty strong going back much longer than that).

I don’t hang out with a bunch of C-Suite types, but do know a number of people who’ve made quite a bit of money from stocks/options; and like flu said, many/most of them used this money to buy real estate.

Also, interest rates/currency moves play a part in this as well. If interest rates rise significantly, I expect the stock market to drop…and housing will follow (maybe lead by a bit). It’s all about cheap money vs. dear money. When it’s cheap, people will tend to buy up assets (stocks, houses, commodities, bonds, etc.), when it’s dear, they will hold on to cash, and asset prices will most likely fall.

Just MHO.

[CA renter]

[quote=flu][quote=deadzone]FLU, I don’t disagree that such houselholds exist that you describe. But I disagree that it is a major factor. Furthermore, you are talking about discretionary income. Purchasing a house is not a discretionary purchase. A downpayment is necessary as well as the ability to pay a substantial montly mortage payment. These require two things: 1. cash in hand 2. good salary. Rising stock market isn’t going to help most people with these two things.

Your theory appears to be that if the stock market doesn’t crash the housing market will hold up. I think that is absolutely ridiculous because there simply isn’t very much correlation. Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?[/quote]

I don’t think I’m saying if the stock markets hold up that the housing market isn’t going to come down. But in certain submarkets (the ones that said households are actively looking), I don’t see a swift crash coming in the absence if a roaring equity market continue.

[quote]
Do you honestly know people who recently bought a house and the main reason was because their stock or 401K portfolios went up?
[/quote]

Yes I know several people who put 30-40% down on a primary home from their stock option/RSU sales. Some use it toward buying property outright.

Just recently, several of my former colleagues (on the order of 15+) who had a boatload of then worthless Intuit stock options have sold this year and capitalized on 100% appreciation…What did these folks do with the money? They bought a bunch of break even or slightly+ cash flow positive condos and homes in Escondido, sdsu area,etc. One lady bought 6 condos this year along…Fully paid off. I asked her if she was crazy. Her response? “At least these homes are tangible assets with utility… What’s to say my options don’t become $0 next year?” Again, most of these people I know aren’t C-level execs.. Just normal enginerd workerbees that’s been doing the same thing over quite some time at the same company.[/quote]

Agree with flu on this. Back during the bubble years, people on the blogs would complain that the bubble was taking too long to deflate. I told them to watch the stock market, because when it started to crash, housing would do so as well.

Look back on the stock market and the moves in housing, and you will see a very strong correlation, especially this past decade (and I believe this correlation is pretty strong going back much longer than that).

I don’t hang out with a bunch of C-Suite types, but do know a number of people who’ve made quite a bit of money from stocks/options; and like flu said, many/most of them used this money to buy real estate.

Also, interest rates/currency moves play a part in this as well. If interest rates rise significantly, I expect the stock market to drop…and housing will follow (maybe lead by a bit). It’s all about cheap money vs. dear money. When it’s cheap, people will tend to buy up assets (stocks, houses, commodities, bonds, etc.), when it’s dear, they will hold on to cash, and asset prices will most likely fall.

Just MHO.

[jstoesz]

sdr, I generally agree with your statements when the caveated sweeteners were added…

But to prove my point about the bubble I had studied before leaving. I will break out the research to flush out what I am talking about.

In most markets in SD. Buying is always worse than renting, no matter how long you own the property.

For example. Here is a SFH in Pt. Loma renting for 2200 a month (probably a dump).

http://sandiego.craigslist.org/csd/apa/2105672413.html

I bring up pt. loma because that is one of my favorite neighborhoods. It would probably sell for a smoking deal of 500k. By that math you would have to own for 20 years before it was better financially speaking to buy. That is assuming of course your rent goes up 3% annually and home appreciation goes up 1%. But if you think home prices are going down and going down for a while then it is even worse. I haven’t even mentioned maintenance. In todays market it may make sense to buy in a select few markets especially in a select few markets that have gotten killed. But in an area like pt. loma it makes no sense at all.

Let me say this another way. If it is cheaper to rent the home than rent the money (interest) to buy the home, you will ALWAYS loose by buying. Unless of course you think the boom years are back and homes are zooming up.

Or how about this one…

http://www.postlets.com/rts/4227120

Surely a house like that would go for at least 1.3 mil…But that would put your buy is better period at never even assuming 3% appreciation.

So maybe in temecula (actually probably in temecula) it is better to buy. But in the coastal established neighborhoods, I don’t see how this is possible. Rent is just so cheap compared to home prices. Renting the home is cheaper and without all the terms that renting money to buy a home holds.

One other note. If you have tons of equity there are probably safer better producing asset classes than coastal real estate. In which case it is still cheaper to rent than pay the opportunity cost of tying up that money in a risky non-performing asset. Again this is just my opinion and that is from the perspective of today. Tomorrow is a whole other day.

BTW I would love to see some counter examples from NCC. Especially Pt. Loma to Luecadia (oceanside mine as well be on the moon) if you got em I would love to see em.

note: here is the calculator you have all seen that I used.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[jstoesz]

sdr, I generally agree with your statements when the caveated sweeteners were added…

But to prove my point about the bubble I had studied before leaving. I will break out the research to flush out what I am talking about.

In most markets in SD. Buying is always worse than renting, no matter how long you own the property.

For example. Here is a SFH in Pt. Loma renting for 2200 a month (probably a dump).

http://sandiego.craigslist.org/csd/apa/2105672413.html

I bring up pt. loma because that is one of my favorite neighborhoods. It would probably sell for a smoking deal of 500k. By that math you would have to own for 20 years before it was better financially speaking to buy. That is assuming of course your rent goes up 3% annually and home appreciation goes up 1%. But if you think home prices are going down and going down for a while then it is even worse. I haven’t even mentioned maintenance. In todays market it may make sense to buy in a select few markets especially in a select few markets that have gotten killed. But in an area like pt. loma it makes no sense at all.

Let me say this another way. If it is cheaper to rent the home than rent the money (interest) to buy the home, you will ALWAYS loose by buying. Unless of course you think the boom years are back and homes are zooming up.

Or how about this one…

http://www.postlets.com/rts/4227120

Surely a house like that would go for at least 1.3 mil…But that would put your buy is better period at never even assuming 3% appreciation.

So maybe in temecula (actually probably in temecula) it is better to buy. But in the coastal established neighborhoods, I don’t see how this is possible. Rent is just so cheap compared to home prices. Renting the home is cheaper and without all the terms that renting money to buy a home holds.

One other note. If you have tons of equity there are probably safer better producing asset classes than coastal real estate. In which case it is still cheaper to rent than pay the opportunity cost of tying up that money in a risky non-performing asset. Again this is just my opinion and that is from the perspective of today. Tomorrow is a whole other day.

BTW I would love to see some counter examples from NCC. Especially Pt. Loma to Luecadia (oceanside mine as well be on the moon) if you got em I would love to see em.

note: here is the calculator you have all seen that I used.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[jstoesz]

sdr, I generally agree with your statements when the caveated sweeteners were added…

But to prove my point about the bubble I had studied before leaving. I will break out the research to flush out what I am talking about.

In most markets in SD. Buying is always worse than renting, no matter how long you own the property.

For example. Here is a SFH in Pt. Loma renting for 2200 a month (probably a dump).

http://sandiego.craigslist.org/csd/apa/2105672413.html

I bring up pt. loma because that is one of my favorite neighborhoods. It would probably sell for a smoking deal of 500k. By that math you would have to own for 20 years before it was better financially speaking to buy. That is assuming of course your rent goes up 3% annually and home appreciation goes up 1%. But if you think home prices are going down and going down for a while then it is even worse. I haven’t even mentioned maintenance. In todays market it may make sense to buy in a select few markets especially in a select few markets that have gotten killed. But in an area like pt. loma it makes no sense at all.

Let me say this another way. If it is cheaper to rent the home than rent the money (interest) to buy the home, you will ALWAYS loose by buying. Unless of course you think the boom years are back and homes are zooming up.

Or how about this one…

http://www.postlets.com/rts/4227120

Surely a house like that would go for at least 1.3 mil…But that would put your buy is better period at never even assuming 3% appreciation.

So maybe in temecula (actually probably in temecula) it is better to buy. But in the coastal established neighborhoods, I don’t see how this is possible. Rent is just so cheap compared to home prices. Renting the home is cheaper and without all the terms that renting money to buy a home holds.

One other note. If you have tons of equity there are probably safer better producing asset classes than coastal real estate. In which case it is still cheaper to rent than pay the opportunity cost of tying up that money in a risky non-performing asset. Again this is just my opinion and that is from the perspective of today. Tomorrow is a whole other day.

BTW I would love to see some counter examples from NCC. Especially Pt. Loma to Luecadia (oceanside mine as well be on the moon) if you got em I would love to see em.

note: here is the calculator you have all seen that I used.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[jstoesz]

sdr, I generally agree with your statements when the caveated sweeteners were added…

But to prove my point about the bubble I had studied before leaving. I will break out the research to flush out what I am talking about.

In most markets in SD. Buying is always worse than renting, no matter how long you own the property.

For example. Here is a SFH in Pt. Loma renting for 2200 a month (probably a dump).

http://sandiego.craigslist.org/csd/apa/2105672413.html

I bring up pt. loma because that is one of my favorite neighborhoods. It would probably sell for a smoking deal of 500k. By that math you would have to own for 20 years before it was better financially speaking to buy. That is assuming of course your rent goes up 3% annually and home appreciation goes up 1%. But if you think home prices are going down and going down for a while then it is even worse. I haven’t even mentioned maintenance. In todays market it may make sense to buy in a select few markets especially in a select few markets that have gotten killed. But in an area like pt. loma it makes no sense at all.

Let me say this another way. If it is cheaper to rent the home than rent the money (interest) to buy the home, you will ALWAYS loose by buying. Unless of course you think the boom years are back and homes are zooming up.

Or how about this one…

http://www.postlets.com/rts/4227120

Surely a house like that would go for at least 1.3 mil…But that would put your buy is better period at never even assuming 3% appreciation.

So maybe in temecula (actually probably in temecula) it is better to buy. But in the coastal established neighborhoods, I don’t see how this is possible. Rent is just so cheap compared to home prices. Renting the home is cheaper and without all the terms that renting money to buy a home holds.

One other note. If you have tons of equity there are probably safer better producing asset classes than coastal real estate. In which case it is still cheaper to rent than pay the opportunity cost of tying up that money in a risky non-performing asset. Again this is just my opinion and that is from the perspective of today. Tomorrow is a whole other day.

BTW I would love to see some counter examples from NCC. Especially Pt. Loma to Luecadia (oceanside mine as well be on the moon) if you got em I would love to see em.

note: here is the calculator you have all seen that I used.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[jstoesz]

sdr, I generally agree with your statements when the caveated sweeteners were added…

But to prove my point about the bubble I had studied before leaving. I will break out the research to flush out what I am talking about.

In most markets in SD. Buying is always worse than renting, no matter how long you own the property.

For example. Here is a SFH in Pt. Loma renting for 2200 a month (probably a dump).

http://sandiego.craigslist.org/csd/apa/2105672413.html

I bring up pt. loma because that is one of my favorite neighborhoods. It would probably sell for a smoking deal of 500k. By that math you would have to own for 20 years before it was better financially speaking to buy. That is assuming of course your rent goes up 3% annually and home appreciation goes up 1%. But if you think home prices are going down and going down for a while then it is even worse. I haven’t even mentioned maintenance. In todays market it may make sense to buy in a select few markets especially in a select few markets that have gotten killed. But in an area like pt. loma it makes no sense at all.

Let me say this another way. If it is cheaper to rent the home than rent the money (interest) to buy the home, you will ALWAYS loose by buying. Unless of course you think the boom years are back and homes are zooming up.

Or how about this one…

http://www.postlets.com/rts/4227120

Surely a house like that would go for at least 1.3 mil…But that would put your buy is better period at never even assuming 3% appreciation.

So maybe in temecula (actually probably in temecula) it is better to buy. But in the coastal established neighborhoods, I don’t see how this is possible. Rent is just so cheap compared to home prices. Renting the home is cheaper and without all the terms that renting money to buy a home holds.

One other note. If you have tons of equity there are probably safer better producing asset classes than coastal real estate. In which case it is still cheaper to rent than pay the opportunity cost of tying up that money in a risky non-performing asset. Again this is just my opinion and that is from the perspective of today. Tomorrow is a whole other day.

BTW I would love to see some counter examples from NCC. Especially Pt. Loma to Luecadia (oceanside mine as well be on the moon) if you got em I would love to see em.

note: here is the calculator you have all seen that I used.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

[Anonymous]

You guys are smoking crack on the stock market to real estate correlation. The greatest stock market bubble in history crashed spectacularly in 2000 and most incices have never re-gained their highs from that time. Yet the greatest housing bubble in history was just getting started.

Sorry, the correlation is not significant.

[Anonymous]

You guys are smoking crack on the stock market to real estate correlation. The greatest stock market bubble in history crashed spectacularly in 2000 and most incices have never re-gained their highs from that time. Yet the greatest housing bubble in history was just getting started.

Sorry, the correlation is not significant.

[Anonymous]

You guys are smoking crack on the stock market to real estate correlation. The greatest stock market bubble in history crashed spectacularly in 2000 and most incices have never re-gained their highs from that time. Yet the greatest housing bubble in history was just getting started.

Sorry, the correlation is not significant.

[Anonymous]

You guys are smoking crack on the stock market to real estate correlation. The greatest stock market bubble in history crashed spectacularly in 2000 and most incices have never re-gained their highs from that time. Yet the greatest housing bubble in history was just getting started.

Sorry, the correlation is not significant.

[Author]

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