How can I compete???

[sobmaz]

DIEGO MAMANI

You said it so so well.

The Fed is acting like they are in control because what is the alternative? If they were to say the truth all hell would break lose.

Again well said.

I would like to counter that it is not too late to buy Gold. Gold will rise far faster than the impending inflation. If you are timid of Gold any commodity for the most part will suffice. The only thing is you need a very very strong stomach. Traders control the commodity markets day to day so volatility is huge. Traders do not control long term. Silver and Palladium or both possibilities.

Real Estate will also be a great hiding place for your wealth, eventually. That said, I still wouldn’t touch S.D. real estate at these bubble prices.

I am in the top 5% of income and assets yet I can responsibly only own a shack (relative) in S.D.. By responsible I mean buying outright.

Of course I could sell my soul to the bank and get that dream home but I am not that kinda guy.

[jficquette]

[quote=Diego Mamani][quote=jficquette]Be patient. Prices are going a lot lower.[/quote]

In real (inflation-adjusted) terms, I agree. But dollar (nominal) prices? I’m not so sure. The Fed and the Treasury have pumped unheard of amounts of liquidity into the system to save the skins of all those responsible for the mess we are in. True, other jobs were saved too (unemployment would have been far worse without the many bailouts), but I think we’ll pay a very high price for it.

The price? High inflation! Those of us who were responsible with our finances, who didn’t drink the kool aid, who lived within our means, who sold our real estate in 2005-2006, and who have savings, will be screwed. Our savings will erode and depreciate as inflation takes off. Talking heads on TV, including Prof. Alan Blinder say that inflation is not a problem b/c the Fed will reverse the liquidity injection once the economy recovers.

I think Blinder is naive. If it were so easy to control inflation, why did it get so out of hand in the 70s? Young people often buy the fallacious argument that our elders were stupid and that we are smart. That the 1970s Fed was inept, but the Fed of 2010-2015 will be accurate and infallible. That is a pollyanish assessment! And that’s why gold is so expensive: the market expects dollars to have less purchasing power in the medium and long term. Too late to buy gold now… but maybe I should start considering re-entering the real estate market. Once inflation takes off, as it did in the 70s, you’ll wish you had your savings in either stock (provided the issuing corporation doesn’t go bankrupt), or real estate. Holding on to cash will be (or already is) suicidal.
[/quote]

I believe that the loan Fannie Mae guidelines that they use now want your payment to gross income ratio to be 30% or under or so.

At 6.5% interest that means for every $100k in loan amount you need income of about $30k.

Median income in San Diego is around $60k or so which equates to $200k loan.

Real Estate in SoCal has been just one big Ponzi Scheme that the lasted for about 30 years. Finally it’s reached the point where the threshold to play the game is too high for the entry level people.

Another problem is interest rates. They have been too low too long and will eventually swing the other way and even go to far. Housing prices will fall as the rates rise.

The other problem is the state government. The state is going to go BK unless the Feds bail us out. No telling how much more in taxes we are going to have to pay.

Another problem with the state is it is so anti business. What big company in their right mind would move here now? Taxes, fees, permits etc etc.

I just dont’ see the income level, job generation needed to keep the prices inflated here. Inflated relative to what the average wage here is.

John

[jficquette]

[quote=Diego Mamani][quote=jficquette]Be patient. Prices are going a lot lower.[/quote]

In real (inflation-adjusted) terms, I agree. But dollar (nominal) prices? I’m not so sure. The Fed and the Treasury have pumped unheard of amounts of liquidity into the system to save the skins of all those responsible for the mess we are in. True, other jobs were saved too (unemployment would have been far worse without the many bailouts), but I think we’ll pay a very high price for it.

The price? High inflation! Those of us who were responsible with our finances, who didn’t drink the kool aid, who lived within our means, who sold our real estate in 2005-2006, and who have savings, will be screwed. Our savings will erode and depreciate as inflation takes off. Talking heads on TV, including Prof. Alan Blinder say that inflation is not a problem b/c the Fed will reverse the liquidity injection once the economy recovers.

I think Blinder is naive. If it were so easy to control inflation, why did it get so out of hand in the 70s? Young people often buy the fallacious argument that our elders were stupid and that we are smart. That the 1970s Fed was inept, but the Fed of 2010-2015 will be accurate and infallible. That is a pollyanish assessment! And that’s why gold is so expensive: the market expects dollars to have less purchasing power in the medium and long term. Too late to buy gold now… but maybe I should start considering re-entering the real estate market. Once inflation takes off, as it did in the 70s, you’ll wish you had your savings in either stock (provided the issuing corporation doesn’t go bankrupt), or real estate. Holding on to cash will be (or already is) suicidal.
[/quote]

I believe that the loan Fannie Mae guidelines that they use now want your payment to gross income ratio to be 30% or under or so.

At 6.5% interest that means for every $100k in loan amount you need income of about $30k.

Median income in San Diego is around $60k or so which equates to $200k loan.

Real Estate in SoCal has been just one big Ponzi Scheme that the lasted for about 30 years. Finally it’s reached the point where the threshold to play the game is too high for the entry level people.

Another problem is interest rates. They have been too low too long and will eventually swing the other way and even go to far. Housing prices will fall as the rates rise.

The other problem is the state government. The state is going to go BK unless the Feds bail us out. No telling how much more in taxes we are going to have to pay.

Another problem with the state is it is so anti business. What big company in their right mind would move here now? Taxes, fees, permits etc etc.

I just dont’ see the income level, job generation needed to keep the prices inflated here. Inflated relative to what the average wage here is.

John

[jficquette]

[quote=Diego Mamani][quote=jficquette]Be patient. Prices are going a lot lower.[/quote]

In real (inflation-adjusted) terms, I agree. But dollar (nominal) prices? I’m not so sure. The Fed and the Treasury have pumped unheard of amounts of liquidity into the system to save the skins of all those responsible for the mess we are in. True, other jobs were saved too (unemployment would have been far worse without the many bailouts), but I think we’ll pay a very high price for it.

The price? High inflation! Those of us who were responsible with our finances, who didn’t drink the kool aid, who lived within our means, who sold our real estate in 2005-2006, and who have savings, will be screwed. Our savings will erode and depreciate as inflation takes off. Talking heads on TV, including Prof. Alan Blinder say that inflation is not a problem b/c the Fed will reverse the liquidity injection once the economy recovers.

I think Blinder is naive. If it were so easy to control inflation, why did it get so out of hand in the 70s? Young people often buy the fallacious argument that our elders were stupid and that we are smart. That the 1970s Fed was inept, but the Fed of 2010-2015 will be accurate and infallible. That is a pollyanish assessment! And that’s why gold is so expensive: the market expects dollars to have less purchasing power in the medium and long term. Too late to buy gold now… but maybe I should start considering re-entering the real estate market. Once inflation takes off, as it did in the 70s, you’ll wish you had your savings in either stock (provided the issuing corporation doesn’t go bankrupt), or real estate. Holding on to cash will be (or already is) suicidal.
[/quote]

I believe that the loan Fannie Mae guidelines that they use now want your payment to gross income ratio to be 30% or under or so.

At 6.5% interest that means for every $100k in loan amount you need income of about $30k.

Median income in San Diego is around $60k or so which equates to $200k loan.

Real Estate in SoCal has been just one big Ponzi Scheme that the lasted for about 30 years. Finally it’s reached the point where the threshold to play the game is too high for the entry level people.

Another problem is interest rates. They have been too low too long and will eventually swing the other way and even go to far. Housing prices will fall as the rates rise.

The other problem is the state government. The state is going to go BK unless the Feds bail us out. No telling how much more in taxes we are going to have to pay.

Another problem with the state is it is so anti business. What big company in their right mind would move here now? Taxes, fees, permits etc etc.

I just dont’ see the income level, job generation needed to keep the prices inflated here. Inflated relative to what the average wage here is.

John

[jficquette]

[quote=Diego Mamani][quote=jficquette]Be patient. Prices are going a lot lower.[/quote]

In real (inflation-adjusted) terms, I agree. But dollar (nominal) prices? I’m not so sure. The Fed and the Treasury have pumped unheard of amounts of liquidity into the system to save the skins of all those responsible for the mess we are in. True, other jobs were saved too (unemployment would have been far worse without the many bailouts), but I think we’ll pay a very high price for it.

The price? High inflation! Those of us who were responsible with our finances, who didn’t drink the kool aid, who lived within our means, who sold our real estate in 2005-2006, and who have savings, will be screwed. Our savings will erode and depreciate as inflation takes off. Talking heads on TV, including Prof. Alan Blinder say that inflation is not a problem b/c the Fed will reverse the liquidity injection once the economy recovers.

I think Blinder is naive. If it were so easy to control inflation, why did it get so out of hand in the 70s? Young people often buy the fallacious argument that our elders were stupid and that we are smart. That the 1970s Fed was inept, but the Fed of 2010-2015 will be accurate and infallible. That is a pollyanish assessment! And that’s why gold is so expensive: the market expects dollars to have less purchasing power in the medium and long term. Too late to buy gold now… but maybe I should start considering re-entering the real estate market. Once inflation takes off, as it did in the 70s, you’ll wish you had your savings in either stock (provided the issuing corporation doesn’t go bankrupt), or real estate. Holding on to cash will be (or already is) suicidal.
[/quote]

I believe that the loan Fannie Mae guidelines that they use now want your payment to gross income ratio to be 30% or under or so.

At 6.5% interest that means for every $100k in loan amount you need income of about $30k.

Median income in San Diego is around $60k or so which equates to $200k loan.

Real Estate in SoCal has been just one big Ponzi Scheme that the lasted for about 30 years. Finally it’s reached the point where the threshold to play the game is too high for the entry level people.

Another problem is interest rates. They have been too low too long and will eventually swing the other way and even go to far. Housing prices will fall as the rates rise.

The other problem is the state government. The state is going to go BK unless the Feds bail us out. No telling how much more in taxes we are going to have to pay.

Another problem with the state is it is so anti business. What big company in their right mind would move here now? Taxes, fees, permits etc etc.

I just dont’ see the income level, job generation needed to keep the prices inflated here. Inflated relative to what the average wage here is.

John

[jficquette]

[quote=Diego Mamani][quote=jficquette]Be patient. Prices are going a lot lower.[/quote]

In real (inflation-adjusted) terms, I agree. But dollar (nominal) prices? I’m not so sure. The Fed and the Treasury have pumped unheard of amounts of liquidity into the system to save the skins of all those responsible for the mess we are in. True, other jobs were saved too (unemployment would have been far worse without the many bailouts), but I think we’ll pay a very high price for it.

The price? High inflation! Those of us who were responsible with our finances, who didn’t drink the kool aid, who lived within our means, who sold our real estate in 2005-2006, and who have savings, will be screwed. Our savings will erode and depreciate as inflation takes off. Talking heads on TV, including Prof. Alan Blinder say that inflation is not a problem b/c the Fed will reverse the liquidity injection once the economy recovers.

I think Blinder is naive. If it were so easy to control inflation, why did it get so out of hand in the 70s? Young people often buy the fallacious argument that our elders were stupid and that we are smart. That the 1970s Fed was inept, but the Fed of 2010-2015 will be accurate and infallible. That is a pollyanish assessment! And that’s why gold is so expensive: the market expects dollars to have less purchasing power in the medium and long term. Too late to buy gold now… but maybe I should start considering re-entering the real estate market. Once inflation takes off, as it did in the 70s, you’ll wish you had your savings in either stock (provided the issuing corporation doesn’t go bankrupt), or real estate. Holding on to cash will be (or already is) suicidal.
[/quote]

I believe that the loan Fannie Mae guidelines that they use now want your payment to gross income ratio to be 30% or under or so.

At 6.5% interest that means for every $100k in loan amount you need income of about $30k.

Median income in San Diego is around $60k or so which equates to $200k loan.

Real Estate in SoCal has been just one big Ponzi Scheme that the lasted for about 30 years. Finally it’s reached the point where the threshold to play the game is too high for the entry level people.

Another problem is interest rates. They have been too low too long and will eventually swing the other way and even go to far. Housing prices will fall as the rates rise.

The other problem is the state government. The state is going to go BK unless the Feds bail us out. No telling how much more in taxes we are going to have to pay.

Another problem with the state is it is so anti business. What big company in their right mind would move here now? Taxes, fees, permits etc etc.

I just dont’ see the income level, job generation needed to keep the prices inflated here. Inflated relative to what the average wage here is.

John

[Nor-LA-SD-guy]

[quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[Nor-LA-SD-guy]

[quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[Nor-LA-SD-guy]

[quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[Nor-LA-SD-guy]

[quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[Nor-LA-SD-guy]

[quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[jficquette]

[quote=Nor-LA-SD-guy][quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[/quote]

The median income thing has been affected by people getting money from parents for down payments from their paid for houses or from rolling their profits from the last home into the next one.

Now the entry level is out of reach so no more roll up of profits into the next house . I guess gifts from parents are still a factor. More so here then other areas since people with 70 year old parents probably bought their house in the low 70’s.

Sooner or later things have to even out with affordability.

Biggest problem is the state government and lost of job creation.

Statistically, $120k is probably two standard Deviations or about 5% so out of those 100 only 5 make more then $120k

John

[jficquette]

[quote=Nor-LA-SD-guy][quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[/quote]

The median income thing has been affected by people getting money from parents for down payments from their paid for houses or from rolling their profits from the last home into the next one.

Now the entry level is out of reach so no more roll up of profits into the next house . I guess gifts from parents are still a factor. More so here then other areas since people with 70 year old parents probably bought their house in the low 70’s.

Sooner or later things have to even out with affordability.

Biggest problem is the state government and lost of job creation.

Statistically, $120k is probably two standard Deviations or about 5% so out of those 100 only 5 make more then $120k

John

[jficquette]

[quote=Nor-LA-SD-guy][quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[/quote]

The median income thing has been affected by people getting money from parents for down payments from their paid for houses or from rolling their profits from the last home into the next one.

Now the entry level is out of reach so no more roll up of profits into the next house . I guess gifts from parents are still a factor. More so here then other areas since people with 70 year old parents probably bought their house in the low 70’s.

Sooner or later things have to even out with affordability.

Biggest problem is the state government and lost of job creation.

Statistically, $120k is probably two standard Deviations or about 5% so out of those 100 only 5 make more then $120k

John

[jficquette]

[quote=Nor-LA-SD-guy][quote=jficquette]
Median income in San Diego is around $60k or so which equates to $200k loan.

[/quote]

I think some have already beat the Median income thing around enough, What that means (and this is just a guess) is you take 100 people 10 to 15 make around 100K a year, 7 make around 150K a year, 5 make over 200K a year and most the rest making minimum wage or a little better.

Had to edit my guess a little.

I think you also need to add into the calculation that 20 or more percent bought their homes in the mid 90’s or earlier (or inherited them) and they aren’t going anywhere.

[/quote]

The median income thing has been affected by people getting money from parents for down payments from their paid for houses or from rolling their profits from the last home into the next one.

Now the entry level is out of reach so no more roll up of profits into the next house . I guess gifts from parents are still a factor. More so here then other areas since people with 70 year old parents probably bought their house in the low 70’s.

Sooner or later things have to even out with affordability.

Biggest problem is the state government and lost of job creation.

Statistically, $120k is probably two standard Deviations or about 5% so out of those 100 only 5 make more then $120k

John

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