Talked to Thornberg

[DaCounselor]

Thanks FSD – I thought I had point in there somewhere. My current primary residence would likely have sold for about $400K in early ’04 and closer to $460K in late ’04. Quite a difference.

Oh, and thanks for the personal attack, Rustico. That was really nice.

[NotCranky]

You are welcome Counselor,
It’s not that serious. Also,what goes around comes around. You do not seem too adverse to laying it on now and then.

Your answer to FSD is “I thought I had a point there”. You should know wether or not you had a point. You can both agree that you did ,but relative to the thread I don’t see it. Your concerns were addressed before and after you got on the thread and you just kept going on and on.
Your point, whatever it is and you of course are wecome to express it, never was the topic of debate in my opinion. In fact no one debates it at all. Yes,there is no specific 2004 number exclusive of individual comparisions or maybe even inclusive of them.You win!Let me give you an example of how I percieve the comments related to “20XX” as defining a pricing point. My conjecture has it that there is a possibility I could sell my house today and wait a few years and then buy two at 2001-2002 prices. That’s relevant enough for conjecture. If I am off by 40k or 50k It doesn’t matter.We would be talking about 10% of the value on each replacement house. That 10% is miniscule compared to the past appreciation and probable depreciation scenarios.As your friend adn mine FSD would point out ,it is all speculation until it happens anyway. So why would one even bother to be exact at this time? My other point is, why does anyone else have to satisfy your needs to have a discussion arranged with the metrics done your way if nothing being proposed is actually factually corrupt?
2001 prices for everybody!
Best Wishes

[NotCranky]

You are welcome Counselor,
It’s not that serious. Also,what goes around comes around. You do not seem too adverse to laying it on now and then.

Your answer to FSD is “I thought I had a point there”. You should know wether or not you had a point. You can both agree that you did ,but relative to the thread I don’t see it. Your concerns were addressed before and after you got on the thread and you just kept going on and on.
Your point, whatever it is and you of course are wecome to express it, never was the topic of debate in my opinion. In fact no one debates it at all. Yes,there is no specific 2004 number exclusive of individual comparisions or maybe even inclusive of them.You win!Let me give you an example of how I percieve the comments related to “20XX” as defining a pricing point. My conjecture has it that there is a possibility I could sell my house today and wait a few years and then buy two at 2001-2002 prices. That’s relevant enough for conjecture. If I am off by 40k or 50k It doesn’t matter.We would be talking about 10% of the value on each replacement house. That 10% is miniscule compared to the past appreciation and probable depreciation scenarios.As your friend adn mine FSD would point out ,it is all speculation until it happens anyway. So why would one even bother to be exact at this time? My other point is, why does anyone else have to satisfy your needs to have a discussion arranged with the metrics done your way if nothing being proposed is actually factually corrupt?
2001 prices for everybody!
Best Wishes

[cyphire]

I hear you sdrealtor – my confusion comes in the big picture and I’m a big picture kind of guy. I always loved economics but was a little frustrated by the complexity of reality (why economics usually can’t get it right). That being said – most people aren’t as you describe. It would be great to think so, but I don’t think it works that way.

Most home buyers are calculating their earning power, seeing what they can afford, and buying a home. Warren Buffet has more money than God, he still lives in the same middle-class home that he always did. He isn’t a home buyer.

The typical US citizen and especially Californian’s buy a house for many reasons – good schools, good neighborhoods, good quality of life, but they don’t do it because they have great long term assets and can afford their lifestyle.

With the current price structure of homes here in SD the vast majority of people are spending a large amount of their disposable income on their home, and are working long hard hours to afford it. From the working guys to the execs they are all buying homes in the best neighborhoods they can with the best schools.

People are paying 1.5M for cruddy tiny houses in La Jolla or 1.2M for stucco boxes in Carmel Valley. They want to get their kids into schools which while still are mediocre, are way above the other California schools. They have no choice the prices are the prices and the rental market is for single professionals (by and large). Home ownership has been sold as the gold standard by realtors and by our society.

I would venture to say that 9 out of 10 buyers are buying what they can almost not afford. That doesn’t mean they are all stupid, that is the way it is. They aren’t all getting subprime or even alt-A mortgages. They have great credit. They live within their means (not many but some!!!). They put down 20-30 percent which is most of their savings outside of 401K’s and other investments, but they don’t have a million (or half a million) in the bank in excess of this.

After dipping into a little home equity to get some of the things they want (after all we are a credit society) as long as they have good jobs and no major problems in their lives they will be fine – just perpetually not increasing their wealth as the price they are paying for these homes has become more and more out of touch with fundamentals.

I love the idea that we should all have a deep investment pool and buy where we can afford – but that is the exception not the rule.

I’m 46 years old and have a wide group of friends and people I talk to. I see 2 groups of people generally… Those that bought at least 10 years ago which have great equity in their homes (but usually have tapped quite a bit of it for investments, vacations, second homes, etc.) and the other group which bought within the last 5 years and has about as much equity or less than what they put down on their homes. I’m an entrepreneur and don’t work for a company – but am amazed at how hard people work for others and how stressed their lives are all to afford (or not afford) the lifestyle they are living.

Even after mortgage deductions a person making 160K per year probably only nets around 120K. That doesn’t go far in SD and it is pretty hard to save. I’m of the opinion that we have become a more and more debt ridden society. Cheap money easy credit etc. have put their mark on this market more than anything else and it has to correct.

Just my opinion at looking at the typical buyer – I’m not a realtor so I could be wrong (by the way most home purchases are done for emotional reasons (actually all sales are somewhat emotional) rather than looking at cold hard logic. We have to keep our wives/children happy. And our society puts a premium on the bling bling (did i say that right?) lifestyle.

Keep up the dialog, I’m having fun!

[cyphire]

I hear you sdrealtor – my confusion comes in the big picture and I’m a big picture kind of guy. I always loved economics but was a little frustrated by the complexity of reality (why economics usually can’t get it right). That being said – most people aren’t as you describe. It would be great to think so, but I don’t think it works that way.

Most home buyers are calculating their earning power, seeing what they can afford, and buying a home. Warren Buffet has more money than God, he still lives in the same middle-class home that he always did. He isn’t a home buyer.

The typical US citizen and especially Californian’s buy a house for many reasons – good schools, good neighborhoods, good quality of life, but they don’t do it because they have great long term assets and can afford their lifestyle.

With the current price structure of homes here in SD the vast majority of people are spending a large amount of their disposable income on their home, and are working long hard hours to afford it. From the working guys to the execs they are all buying homes in the best neighborhoods they can with the best schools.

People are paying 1.5M for cruddy tiny houses in La Jolla or 1.2M for stucco boxes in Carmel Valley. They want to get their kids into schools which while still are mediocre, are way above the other California schools. They have no choice the prices are the prices and the rental market is for single professionals (by and large). Home ownership has been sold as the gold standard by realtors and by our society.

I would venture to say that 9 out of 10 buyers are buying what they can almost not afford. That doesn’t mean they are all stupid, that is the way it is. They aren’t all getting subprime or even alt-A mortgages. They have great credit. They live within their means (not many but some!!!). They put down 20-30 percent which is most of their savings outside of 401K’s and other investments, but they don’t have a million (or half a million) in the bank in excess of this.

After dipping into a little home equity to get some of the things they want (after all we are a credit society) as long as they have good jobs and no major problems in their lives they will be fine – just perpetually not increasing their wealth as the price they are paying for these homes has become more and more out of touch with fundamentals.

I love the idea that we should all have a deep investment pool and buy where we can afford – but that is the exception not the rule.

I’m 46 years old and have a wide group of friends and people I talk to. I see 2 groups of people generally… Those that bought at least 10 years ago which have great equity in their homes (but usually have tapped quite a bit of it for investments, vacations, second homes, etc.) and the other group which bought within the last 5 years and has about as much equity or less than what they put down on their homes. I’m an entrepreneur and don’t work for a company – but am amazed at how hard people work for others and how stressed their lives are all to afford (or not afford) the lifestyle they are living.

Even after mortgage deductions a person making 160K per year probably only nets around 120K. That doesn’t go far in SD and it is pretty hard to save. I’m of the opinion that we have become a more and more debt ridden society. Cheap money easy credit etc. have put their mark on this market more than anything else and it has to correct.

Just my opinion at looking at the typical buyer – I’m not a realtor so I could be wrong (by the way most home purchases are done for emotional reasons (actually all sales are somewhat emotional) rather than looking at cold hard logic. We have to keep our wives/children happy. And our society puts a premium on the bling bling (did i say that right?) lifestyle.

Keep up the dialog, I’m having fun!

[cyphire]

I will PerryChase. We built a home in NY about 12 years ago by taking a 2,200 foot house on 2 1/2 acres and adding 5K feet to it. (The original house was just to the left of the low black roof on the right). We had architects but I took their drawings and computerized them (found some flaws, etc) and our builder built the whole thing for about 380K). It was the most fun I had, only problem was that it definitely interferes with your actual day job!

For some reason whenever we remodel a home, we end up selling. I’m not the typical home buyer – I have some gypsy in me which makes owning a home an even bigger problem as the selling costs are dramatic.

As good a job as I can do, I probably will buy something that someone else has over upgraded as it is hard to justify giving up a year of your life to build a house. We also had to move out and rent for a period both times and that is a hassle. If I do build a custom house (and when I say me I mean the guys that actually can use power tools) I probably will keep renting and then do just what you suggest.

I hope the market comes to some level of normalcy, not to get a deal (although that would be nice) but to make me feel good about the long term economics. Again – if I was going to be there for 20-30 years it would be irrelevant, but I unusually don’t so I have to be a bit more economically prudent.

Hey this blogging stuff is fun!!! Even though I am a computer guy this is my first real experience actually commenting and not just reading!

[img_assist|nid=3552|title=House we built|desc=House|link=node|align=left|width=466|height=462]

[cyphire]

I will PerryChase. We built a home in NY about 12 years ago by taking a 2,200 foot house on 2 1/2 acres and adding 5K feet to it. (The original house was just to the left of the low black roof on the right). We had architects but I took their drawings and computerized them (found some flaws, etc) and our builder built the whole thing for about 380K). It was the most fun I had, only problem was that it definitely interferes with your actual day job!

For some reason whenever we remodel a home, we end up selling. I’m not the typical home buyer – I have some gypsy in me which makes owning a home an even bigger problem as the selling costs are dramatic.

As good a job as I can do, I probably will buy something that someone else has over upgraded as it is hard to justify giving up a year of your life to build a house. We also had to move out and rent for a period both times and that is a hassle. If I do build a custom house (and when I say me I mean the guys that actually can use power tools) I probably will keep renting and then do just what you suggest.

I hope the market comes to some level of normalcy, not to get a deal (although that would be nice) but to make me feel good about the long term economics. Again – if I was going to be there for 20-30 years it would be irrelevant, but I unusually don’t so I have to be a bit more economically prudent.

Hey this blogging stuff is fun!!! Even though I am a computer guy this is my first real experience actually commenting and not just reading!

[img_assist|nid=3552|title=House we built|desc=House|link=node|align=left|width=466|height=462]

[gn]

cyphire,

That’s a nice property. Where in NY (i.e. what city) is that ? The grassy area on the left, is that also part of the 2.5 acres ?

[gn]

cyphire,

That’s a nice property. Where in NY (i.e. what city) is that ? The grassy area on the left, is that also part of the 2.5 acres ?

[cyphire]

No the woods in front of the driveway to the bottom of the picture were mine. The field to the left belongs to the people that owned the whole area at one time. The house behind mine was like a small castle with a detached 12 car garage. They owned the water (unlike CA – they own the beach to the medium tide mark.

It is Old Field NY out on Long Island (just above Stony Brook)

It was about 60 miles from Manhattan…

[cyphire]

No the woods in front of the driveway to the bottom of the picture were mine. The field to the left belongs to the people that owned the whole area at one time. The house behind mine was like a small castle with a detached 12 car garage. They owned the water (unlike CA – they own the beach to the medium tide mark.

It is Old Field NY out on Long Island (just above Stony Brook)

It was about 60 miles from Manhattan…

[SD Realtor]

Really good post cyphire. Specially the last part about keeping the wives/children happy. I do think that the few buyers who are still left in the pool, are much more responsible fiscally. Still I do know of a few who in no way shape or form should be shopping to buy. Yet that number is much smaller then it used to be so perhaps there is hope. As long as the government keeps their hands off the market, then it will do what it needs to do (which is continue to depreciate) and filter out those who should not be in it nor should have ever been in it. (10 year treasury is gonna bust through 5 in a heartbeat)

Pretty much agreed with all of your points.

SD Realtor (not sdr…who was here first)

[SD Realtor]

Really good post cyphire. Specially the last part about keeping the wives/children happy. I do think that the few buyers who are still left in the pool, are much more responsible fiscally. Still I do know of a few who in no way shape or form should be shopping to buy. Yet that number is much smaller then it used to be so perhaps there is hope. As long as the government keeps their hands off the market, then it will do what it needs to do (which is continue to depreciate) and filter out those who should not be in it nor should have ever been in it. (10 year treasury is gonna bust through 5 in a heartbeat)

Pretty much agreed with all of your points.

SD Realtor (not sdr…who was here first)

[cyphire]

Well I’ve scared mine into waiting (we will rent for a year with a year option)… So I’ve done my job! If you need me to scare anyone elses wife, just have them contact me. I may start doing it as a business!

Anyone have any good rentals in La Jolla?

[cyphire]

Well I’ve scared mine into waiting (we will rent for a year with a year option)… So I’ve done my job! If you need me to scare anyone elses wife, just have them contact me. I may start doing it as a business!

Anyone have any good rentals in La Jolla?

[Author]

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