Timing the Bottom

[mixxalot]

Wait 3 years

At least thats my strategy to save up big down payment and buy a nice 2-3 bedroom condo or townhome. I dont want the headache of a McMansion to deal with cleaning. I use the simple formula that when it is cheaper or same to buy and own as to rent then that is the right time in socal and sandy eggo.

For now I have zero debt and plenty of savings. Job stability is the magic quadrant for me right now.

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

[mixxalot]

Wait 3 years

At least thats my strategy to save up big down payment and buy a nice 2-3 bedroom condo or townhome. I dont want the headache of a McMansion to deal with cleaning. I use the simple formula that when it is cheaper or same to buy and own as to rent then that is the right time in socal and sandy eggo.

For now I have zero debt and plenty of savings. Job stability is the magic quadrant for me right now.

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

It’s going to take a long, long, long time for things to settle down. Imagine this situation:

* Couple buys nice home for $500K in 2000.
* Property appreciates to $900K+
* Couple divorces and wife gets the house OR husband retires.

The wife (divorce case) or husband (retirement case) can’t really afford the payments on their reduced income but has got a lot of equity, or so they think. So they use the HELOC a couple of times a year to make up the difference.

These folks will not sell until there is no more HELOC money, all possible rooms have been rented out, all of the stuff has been sold, the 401K is empty, the credit cards are drained etc… Although they have no business being in the house they will slowly consume all of their resources to remain there.

I believe that there are lots and lots of people in this situation, slowly digging themselves further and further into the hole in order to keep up appearances and continue living as they have been for the last 8 years.

Once these people start losing their homes en masse we will be near the bottom. I think that is still a good 3-5 years out.

Of course I could be wrong and prices will never come down in NC, La Jolla, Mission Hills, etc…

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[blahblahblah]

At worst case, if I save half a million, I can always retire on the beaches of Ipanema with a mojito and pretty Brazilian babe.

Better make that at least a cool mil, it ain’t 2001 anymore. Have you seen the USD/Real exchange rate lately? The days of cheap Brazilian real estate have come and gone for yankees unless you want to live in Cidade de Deus.

[cooperthedog]

I think we are in the solidly in the “fear” section of the curve for most owners (with speculators and a few owner-occupied’s in the desperation phase). This is evidenced by the gov’t bail out (to preempt any panic in housing/credit markets, and subsequent fallout to the economy).

The probability that the housing market has actually bottomed is very low. With the bailout, I think the rate of decline will lessen, and a more contracted erosion of values will occur. Bubbles either pop and crash or deflate slowly. Financial markets that crash can rebound relatively quickly, if there are no structural problems (1987), or they can decline for years (2000), or crash and then decline (Great Depression), from major structural problems.

I would say that there are major structural problems with housing in the US, and that the housing market does not correct anywhere near as fast as the financial markets, plus RE is more than just an asset class for most, so a “crash” in housing could take several years to unfold. The gov’t intervention may avoid a crash and the sprialing problems from an evaporation of credt, but the slower decline & stagnation could be stretched out over 5-7 years.

From a renters perspective a crash would allow buying to occur sooner (assuming credit is available at good terms, and you don’t lose your job to a recession), with the bailout I think you are seeing a conviction from policymakers that the housing market will definitely head lower, the slope of descent is the real issue. Even if prices hit bottom today, I think you would see years and years of stagnation. Why pay for that?

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