Seeking the opinion of the buyers out there.

[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=Rt.66]6 to 2? Holy crap, thats huge![/quote]

Welcome to Temecula Valley. To be fair, TG didn’t mean it is $200K. It just starts with 2. So the ratio is less dramatic than it looks, but 50%+ off is not hard to find in TV, 66% off is where I like to invest my money with but I don’t think I will ever be able to get it.

[carlsbadworker]

[quote=Rt.66]6 to 2? Holy crap, thats huge![/quote]

Welcome to Temecula Valley. To be fair, TG didn’t mean it is $200K. It just starts with 2. So the ratio is less dramatic than it looks, but 50%+ off is not hard to find in TV, 66% off is where I like to invest my money with but I don’t think I will ever be able to get it.

[carlsbadworker]

[quote=Rt.66]6 to 2? Holy crap, thats huge![/quote]

Welcome to Temecula Valley. To be fair, TG didn’t mean it is $200K. It just starts with 2. So the ratio is less dramatic than it looks, but 50%+ off is not hard to find in TV, 66% off is where I like to invest my money with but I don’t think I will ever be able to get it.

[carlsbadworker]

[quote=Rt.66]6 to 2? Holy crap, thats huge![/quote]

Welcome to Temecula Valley. To be fair, TG didn’t mean it is $200K. It just starts with 2. So the ratio is less dramatic than it looks, but 50%+ off is not hard to find in TV, 66% off is where I like to invest my money with but I don’t think I will ever be able to get it.

[carlsbadworker]

[quote=Rt.66]6 to 2? Holy crap, thats huge![/quote]

Welcome to Temecula Valley. To be fair, TG didn’t mean it is $200K. It just starts with 2. So the ratio is less dramatic than it looks, but 50%+ off is not hard to find in TV, 66% off is where I like to invest my money with but I don’t think I will ever be able to get it.

[Reality]

[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]

If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.

If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.

[Reality]

[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]

If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.

If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.

[Reality]

[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]

If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.

If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.

[Reality]

[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]

If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.

If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.

[Reality]

[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]

If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.

If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.

[UCGal]

[quote=Rt.66]So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?
[/quote]

I’m actually pretty bearish on the overall economy. I think it’s way to early to be talking about green shoots.

That said – if you are buying a house with a good financial plan – it pencils out as affordable compared to rent, you have financial reserves, you have plans for what happens if your income goes away… then why worry whether this is the eye of the storm or not.

If this is the GD2 – and we ALL lose our jobs, then what does it matter if you rent or own… you’ll still be in the soup line and living in a box when it’s all over. If you rent – your landlord might be in the next box over or behind you in the soup line.

[UCGal]

[quote=Rt.66]So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?
[/quote]

I’m actually pretty bearish on the overall economy. I think it’s way to early to be talking about green shoots.

That said – if you are buying a house with a good financial plan – it pencils out as affordable compared to rent, you have financial reserves, you have plans for what happens if your income goes away… then why worry whether this is the eye of the storm or not.

If this is the GD2 – and we ALL lose our jobs, then what does it matter if you rent or own… you’ll still be in the soup line and living in a box when it’s all over. If you rent – your landlord might be in the next box over or behind you in the soup line.

[UCGal]

[quote=Rt.66]So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?
[/quote]

I’m actually pretty bearish on the overall economy. I think it’s way to early to be talking about green shoots.

That said – if you are buying a house with a good financial plan – it pencils out as affordable compared to rent, you have financial reserves, you have plans for what happens if your income goes away… then why worry whether this is the eye of the storm or not.

If this is the GD2 – and we ALL lose our jobs, then what does it matter if you rent or own… you’ll still be in the soup line and living in a box when it’s all over. If you rent – your landlord might be in the next box over or behind you in the soup line.

[UCGal]

[quote=Rt.66]So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?
[/quote]

I’m actually pretty bearish on the overall economy. I think it’s way to early to be talking about green shoots.

That said – if you are buying a house with a good financial plan – it pencils out as affordable compared to rent, you have financial reserves, you have plans for what happens if your income goes away… then why worry whether this is the eye of the storm or not.

If this is the GD2 – and we ALL lose our jobs, then what does it matter if you rent or own… you’ll still be in the soup line and living in a box when it’s all over. If you rent – your landlord might be in the next box over or behind you in the soup line.

[Author]

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