Shall we buy or never in San Diego or wait for more depreciation?

[an]

[quote=joestool]
Buying a house as a hedge against inflation incorrectly correlates money supply inflation with house price inflation. They are not the same.

It also assumes, if you take on mortgage debt to buy said house, you benefit by paying back the debt in devalued dollars. This is only true insofar as your ability to pay the debt remains constant in real terms.

In other words, if your salary, or pool of perspective buyer’s salaries don’t go up commensurately when it takes $30 FRN’s to buy a cheeseburger — and gas, food, electricity, water, etc. all costing more FRN’s — there’s even less FRN’s left over to pay that “devalued” mortgage.

Good luck with that plan.

Yeah, first thing I’m going to do when the value of all salary and savings are wiped out is go out and buy me a big-ass house.

If you actually believe your ill-liquid, non-portable, non-fungible, stucco crapbox with a high cost of carry (maintenance, insurance, mortgage, taxes, fees, etc.) with a big tax target bullseye painted on its side is a store of real value inversely to a currency devaluation — you really need to get over yourself and your delusional “home value”.[/quote]
Lets see, how much was an engineer getting paid in 1970? How much was gas, food, electricity, water, etc. in 1970? How much was a house in 1970? Now please tell, after 40 years of inflation, can a person living on welfare pay for house if it was priced at 1970 price?

Example, http://www.sdlookup.com/Property-3E22B7B0-474_Santa_Dominga_Solana_Beach_CA_92075
They’re paying $929 in property tax a year. It was built in 1971, so I assume they bought it new. Their assessed value is about $85k. Given 2% increase in assessed value due to prop 13, they probably bought it for ~40k. Even a McDonald employee today making minimum wage can afford a mortgage payment of $40k house.

[temeculaguy]

Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.

[temeculaguy]

Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.

[temeculaguy]

Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.

[temeculaguy]

Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.

[temeculaguy]

Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.

[patb]

[quote=temeculaguy]Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.[/quote]

F’ing A Well Told Bubba.

That was why I told the Poster to Send me $1000/Month and I’d send them a beautiful portrait
of Hawaii to look at.

[patb]

[quote=temeculaguy]Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.[/quote]

F’ing A Well Told Bubba.

That was why I told the Poster to Send me $1000/Month and I’d send them a beautiful portrait
of Hawaii to look at.

[patb]

[quote=temeculaguy]Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.[/quote]

F’ing A Well Told Bubba.

That was why I told the Poster to Send me $1000/Month and I’d send them a beautiful portrait
of Hawaii to look at.

[patb]

[quote=temeculaguy]Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.[/quote]

F’ing A Well Told Bubba.

That was why I told the Poster to Send me $1000/Month and I’d send them a beautiful portrait
of Hawaii to look at.

[patb]

[quote=temeculaguy]Ignoring all debate about inflation/deflation and the out of state landlord issue, the basic fundamental of a 500k house that draws 2k in rent makes it not pencil out, no matter where it is or where the owner is. 250x rent multipliers should be avoided when 100-150x rent multipliers are abundant. If the OP mentioned a place that costs 200k-300k and pulled 2k rent, then we would have a real discussion on our hands.

I got a phone call this weekend from a friend asking my opinion if he should buy his $1500 a month rental from his landlord for 160k, I told him “absolutely, do it yesterday.” I didn’t ask if he was going to rent it out in the future, what he thought about hyperinflation, unemployment, or any other marcoeconomic issues. Simple questions is all that is needed, will it cost the same or less than rent?

It’s simple, ignore the taxes and insurance, ignore the maintenance and vacancy, also ignore the income tax deduction and the downpayment. Just use the purchase price with todays rates for a 30 yr fixed on a basic loan calculator to see where it pencils out, you can get into the details later.

500k=2700 mo -700 mo =bad
160k=850 mo +650 mo =good

Don’t pay 500k for a place you can rent for 2k, simple.[/quote]

F’ing A Well Told Bubba.

That was why I told the Poster to Send me $1000/Month and I’d send them a beautiful portrait
of Hawaii to look at.

[patb]

[quote=AN][quote=Arraya]If this was a movie it would be titled “desperately seeking inflation” I don’t think inflation can easily be metered out when fighting the strongest deflationary pressures in history. If your paying attention they are trying like hell to inflate.[/quote]
I tend to side with the rule maker in the long run. If they want inflation, they can create inflation. They seem to be trying to create inflation at a manageable rate. But if they want, they can start printing quadrillion of $ and give out tax credit like there’s no tomorrow. That would be more than enough to create hyperinflation. In another word, they’re not trying very hard to create inflation. They could do much much much more to create inflation.[/quote]

If they want Inflation, Interest rates will also
rise in nominal terms.

So lets say we have 100% annual inflation, High but
not Psycho high. What happens, all those Option ARMS and IO loans in California that are still good?
DO they stay good?

Who wants to buy a house with a 140% mortgage?

And don’t think we won’t see rates rise, we are a creditor nation, the chinese don’t want to see their Trillion wiped out.

We are far more likely to end up in Stagflation then
Hyper INflation.

[patb]

[quote=AN][quote=Arraya]If this was a movie it would be titled “desperately seeking inflation” I don’t think inflation can easily be metered out when fighting the strongest deflationary pressures in history. If your paying attention they are trying like hell to inflate.[/quote]
I tend to side with the rule maker in the long run. If they want inflation, they can create inflation. They seem to be trying to create inflation at a manageable rate. But if they want, they can start printing quadrillion of $ and give out tax credit like there’s no tomorrow. That would be more than enough to create hyperinflation. In another word, they’re not trying very hard to create inflation. They could do much much much more to create inflation.[/quote]

If they want Inflation, Interest rates will also
rise in nominal terms.

So lets say we have 100% annual inflation, High but
not Psycho high. What happens, all those Option ARMS and IO loans in California that are still good?
DO they stay good?

Who wants to buy a house with a 140% mortgage?

And don’t think we won’t see rates rise, we are a creditor nation, the chinese don’t want to see their Trillion wiped out.

We are far more likely to end up in Stagflation then
Hyper INflation.

[patb]

[quote=AN][quote=Arraya]If this was a movie it would be titled “desperately seeking inflation” I don’t think inflation can easily be metered out when fighting the strongest deflationary pressures in history. If your paying attention they are trying like hell to inflate.[/quote]
I tend to side with the rule maker in the long run. If they want inflation, they can create inflation. They seem to be trying to create inflation at a manageable rate. But if they want, they can start printing quadrillion of $ and give out tax credit like there’s no tomorrow. That would be more than enough to create hyperinflation. In another word, they’re not trying very hard to create inflation. They could do much much much more to create inflation.[/quote]

If they want Inflation, Interest rates will also
rise in nominal terms.

So lets say we have 100% annual inflation, High but
not Psycho high. What happens, all those Option ARMS and IO loans in California that are still good?
DO they stay good?

Who wants to buy a house with a 140% mortgage?

And don’t think we won’t see rates rise, we are a creditor nation, the chinese don’t want to see their Trillion wiped out.

We are far more likely to end up in Stagflation then
Hyper INflation.

[patb]

[quote=AN][quote=Arraya]If this was a movie it would be titled “desperately seeking inflation” I don’t think inflation can easily be metered out when fighting the strongest deflationary pressures in history. If your paying attention they are trying like hell to inflate.[/quote]
I tend to side with the rule maker in the long run. If they want inflation, they can create inflation. They seem to be trying to create inflation at a manageable rate. But if they want, they can start printing quadrillion of $ and give out tax credit like there’s no tomorrow. That would be more than enough to create hyperinflation. In another word, they’re not trying very hard to create inflation. They could do much much much more to create inflation.[/quote]

If they want Inflation, Interest rates will also
rise in nominal terms.

So lets say we have 100% annual inflation, High but
not Psycho high. What happens, all those Option ARMS and IO loans in California that are still good?
DO they stay good?

Who wants to buy a house with a 140% mortgage?

And don’t think we won’t see rates rise, we are a creditor nation, the chinese don’t want to see their Trillion wiped out.

We are far more likely to end up in Stagflation then
Hyper INflation.

[Author]

Posts