Housing won’t hit bottom ’til 2012

[jstoesz]

[quote=AN][quote=jstoesz]AN I tend to agree.

I think the link is not so much causative as correlative.

Lower stock prices harm the economy, and when the economy is harmed home prices drop.

So stock prices do have a causative effect on the economy, there link is not DIRECTLY causative to home values. Sometimes, some other asset class is waiting in the wings (a la 2001).

One other note regarding rent vs. buy. Even in markets outside of california, a favorable rent vs. buy is not enough to buoy the market.

In MN (probably in NV too, but I have no anecdotal evidence there) homes can easily cash flow. My friends who have bought in the last 2 years are still underwater even though they can cash flow their home. Psychologically it helps them stay current, but it is still interesting to note.[/quote]
Like sdr, I agree with you that high end homes tend to fare poorly when comparing against rent. Has it ever fare well against rent?

As you move down the desirability scale, the rent vs buy equation gets better. I never suggest that the lowest the price will drop is parity with rent. But if you’re buying your primary resident, comparing rent vs buy is very different than comparing it for a rental property. Although this might be a cliche, but we all have to live somewhere. Every month that you’re paying more for rent than buy that same property, you’re pay more than you need to, to put a roof over your head. Yes, you can wait a few years and price might bottom then, but how much will you save in nominal price vs how much you’ve thrown away in rent (the $ difference between rent vs buy)?[/quote]

Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…

[jstoesz]

As if I have not posted enough this evening, I have one other note.

If your property does not cash flow (really cash flow meaning paying for maintenance and taxes) you are not an smart investor, you are a bubble rider/speculator. I guess the third option is you are willing to lose you shirt, because well dammit, you would rather be damned than ever rent again.

Remember, rent is just as bad as interest, except for all the strings!

[jstoesz]

As if I have not posted enough this evening, I have one other note.

If your property does not cash flow (really cash flow meaning paying for maintenance and taxes) you are not an smart investor, you are a bubble rider/speculator. I guess the third option is you are willing to lose you shirt, because well dammit, you would rather be damned than ever rent again.

Remember, rent is just as bad as interest, except for all the strings!

[jstoesz]

As if I have not posted enough this evening, I have one other note.

If your property does not cash flow (really cash flow meaning paying for maintenance and taxes) you are not an smart investor, you are a bubble rider/speculator. I guess the third option is you are willing to lose you shirt, because well dammit, you would rather be damned than ever rent again.

Remember, rent is just as bad as interest, except for all the strings!

[jstoesz]

As if I have not posted enough this evening, I have one other note.

If your property does not cash flow (really cash flow meaning paying for maintenance and taxes) you are not an smart investor, you are a bubble rider/speculator. I guess the third option is you are willing to lose you shirt, because well dammit, you would rather be damned than ever rent again.

Remember, rent is just as bad as interest, except for all the strings!

[jstoesz]

As if I have not posted enough this evening, I have one other note.

If your property does not cash flow (really cash flow meaning paying for maintenance and taxes) you are not an smart investor, you are a bubble rider/speculator. I guess the third option is you are willing to lose you shirt, because well dammit, you would rather be damned than ever rent again.

Remember, rent is just as bad as interest, except for all the strings!

[an]

[quote=jstoesz]
Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…[/quote]
Yes, it’s an opportunity cost thing, I totally agree. I never discredit that a house is also a home, but a house is also a roof over your head.

That’s what I was telling you. This wasn’t some what if scenario. This is my numbers comparing the house I bought at the interest rate I got w/ the $ I put down. Over the last 2 years, w/out even counting appreciation, just the amount difference between how much I pay a year for this house (PITI – tax deduction) vs how much I would have to pay to rent the place. Add in how much I paid down the principle, that’s the number I came up with. It turns out to be ~20% return on my capital. Not too shabby when interest rate for saving account is next to nothing.

I think this: “But RE looks like a losing bet to me, at least in the neighborhoods of SD I like…” is the key point right here. You mentioned Point Loma, so I assume you’re looking at the high end areas. Those areas are much hard to have rent vs buy make sense. Haven’t they always been that way?

[an]

[quote=jstoesz]
Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…[/quote]
Yes, it’s an opportunity cost thing, I totally agree. I never discredit that a house is also a home, but a house is also a roof over your head.

That’s what I was telling you. This wasn’t some what if scenario. This is my numbers comparing the house I bought at the interest rate I got w/ the $ I put down. Over the last 2 years, w/out even counting appreciation, just the amount difference between how much I pay a year for this house (PITI – tax deduction) vs how much I would have to pay to rent the place. Add in how much I paid down the principle, that’s the number I came up with. It turns out to be ~20% return on my capital. Not too shabby when interest rate for saving account is next to nothing.

I think this: “But RE looks like a losing bet to me, at least in the neighborhoods of SD I like…” is the key point right here. You mentioned Point Loma, so I assume you’re looking at the high end areas. Those areas are much hard to have rent vs buy make sense. Haven’t they always been that way?

[an]

[quote=jstoesz]
Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…[/quote]
Yes, it’s an opportunity cost thing, I totally agree. I never discredit that a house is also a home, but a house is also a roof over your head.

That’s what I was telling you. This wasn’t some what if scenario. This is my numbers comparing the house I bought at the interest rate I got w/ the $ I put down. Over the last 2 years, w/out even counting appreciation, just the amount difference between how much I pay a year for this house (PITI – tax deduction) vs how much I would have to pay to rent the place. Add in how much I paid down the principle, that’s the number I came up with. It turns out to be ~20% return on my capital. Not too shabby when interest rate for saving account is next to nothing.

I think this: “But RE looks like a losing bet to me, at least in the neighborhoods of SD I like…” is the key point right here. You mentioned Point Loma, so I assume you’re looking at the high end areas. Those areas are much hard to have rent vs buy make sense. Haven’t they always been that way?

[an]

[quote=jstoesz]
Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…[/quote]
Yes, it’s an opportunity cost thing, I totally agree. I never discredit that a house is also a home, but a house is also a roof over your head.

That’s what I was telling you. This wasn’t some what if scenario. This is my numbers comparing the house I bought at the interest rate I got w/ the $ I put down. Over the last 2 years, w/out even counting appreciation, just the amount difference between how much I pay a year for this house (PITI – tax deduction) vs how much I would have to pay to rent the place. Add in how much I paid down the principle, that’s the number I came up with. It turns out to be ~20% return on my capital. Not too shabby when interest rate for saving account is next to nothing.

I think this: “But RE looks like a losing bet to me, at least in the neighborhoods of SD I like…” is the key point right here. You mentioned Point Loma, so I assume you’re looking at the high end areas. Those areas are much hard to have rent vs buy make sense. Haven’t they always been that way?

[an]

[quote=jstoesz]
Its an opportunity cost thing. If a home is a roof over your head (which it is not, it is a home with an ethereal awesomeness) then the question is could you get a better, safer return with all of your equity elsewhere. In today’s market of low yields, maybe not. I would have to do a detailed analysis, if I were in the position of having gobs of equity (which I don’t). But RE looks like a losing bet to me, at least in the neighborhoods of SD I like and in the near term.

That ethereal stuff is tricky…[/quote]
Yes, it’s an opportunity cost thing, I totally agree. I never discredit that a house is also a home, but a house is also a roof over your head.

That’s what I was telling you. This wasn’t some what if scenario. This is my numbers comparing the house I bought at the interest rate I got w/ the $ I put down. Over the last 2 years, w/out even counting appreciation, just the amount difference between how much I pay a year for this house (PITI – tax deduction) vs how much I would have to pay to rent the place. Add in how much I paid down the principle, that’s the number I came up with. It turns out to be ~20% return on my capital. Not too shabby when interest rate for saving account is next to nothing.

I think this: “But RE looks like a losing bet to me, at least in the neighborhoods of SD I like…” is the key point right here. You mentioned Point Loma, so I assume you’re looking at the high end areas. Those areas are much hard to have rent vs buy make sense. Haven’t they always been that way?

[jstoesz]

Probably…hence my leaving I suppose.

Its not that I love the beach, although surfing is fun. Its just that most inland neighborhoods in S. California suck. There are no neighborhoods, as defined by side walks and walkable commerce, inland except for a select few and those have crime issues (la mesa comes to mind). Most areas of SD were built as lame tracks of the 70s up until today. They are devoid of character.

So historically I desire the impossible. Reasonable and affordable prices as compared to…not s. california. So I chose to leave, as many have suggested to me, sdr included (Is it cool to laugh at ones own joke?) MM and the like is not a neighborhood, it is a decrepit version of irvine.

[jstoesz]

Probably…hence my leaving I suppose.

Its not that I love the beach, although surfing is fun. Its just that most inland neighborhoods in S. California suck. There are no neighborhoods, as defined by side walks and walkable commerce, inland except for a select few and those have crime issues (la mesa comes to mind). Most areas of SD were built as lame tracks of the 70s up until today. They are devoid of character.

So historically I desire the impossible. Reasonable and affordable prices as compared to…not s. california. So I chose to leave, as many have suggested to me, sdr included (Is it cool to laugh at ones own joke?) MM and the like is not a neighborhood, it is a decrepit version of irvine.

[jstoesz]

Probably…hence my leaving I suppose.

Its not that I love the beach, although surfing is fun. Its just that most inland neighborhoods in S. California suck. There are no neighborhoods, as defined by side walks and walkable commerce, inland except for a select few and those have crime issues (la mesa comes to mind). Most areas of SD were built as lame tracks of the 70s up until today. They are devoid of character.

So historically I desire the impossible. Reasonable and affordable prices as compared to…not s. california. So I chose to leave, as many have suggested to me, sdr included (Is it cool to laugh at ones own joke?) MM and the like is not a neighborhood, it is a decrepit version of irvine.

[jstoesz]

Probably…hence my leaving I suppose.

Its not that I love the beach, although surfing is fun. Its just that most inland neighborhoods in S. California suck. There are no neighborhoods, as defined by side walks and walkable commerce, inland except for a select few and those have crime issues (la mesa comes to mind). Most areas of SD were built as lame tracks of the 70s up until today. They are devoid of character.

So historically I desire the impossible. Reasonable and affordable prices as compared to…not s. california. So I chose to leave, as many have suggested to me, sdr included (Is it cool to laugh at ones own joke?) MM and the like is not a neighborhood, it is a decrepit version of irvine.

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