We are richer when house prices go down

[ltokuda]

“I feel I have been able to get a great price on a 2nd home recently. It was the one I wanted in the neighborhood I wanted.”

“I was surprised to able to rent it for more than I could get by putting my money in other fixed income instruments. I was expecting only $3400/mo but got $3800/mo.. I’m sure others will be able to do the same as more and more people are being forced into the rental market.”

Hi Felix, if you were able to buy a house, rent it out, and get a better return than you would on a fixed income instrument, then you did very well. If you don’t mind sharing, I think a lot of people would be interested in learning more details about your purchase.

The basic questions are: How much did the house cost? How much is insurance? Mello-roos? If you took out a loan, was it a HELOC (where you could deduct the interest payments)? Is this house in California?

With this information, people here can work out the numbers for themselves. If it does work out favorably, I’m sure it will generate a lot of interest. Thanks!

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[ltokuda]

“There’s nothing troubling about a gradual correction of home prices.”

The key word here is “gradual”. If wages are stagnant, then this could mean a slow drop in home prices. Or if house prices are stagnant, then wage inflation could slowly makes the houses more affordable. This is a good thing.

If you’re a renter, then of course lower house prices are good for you. If you already bought a house, then price declines help you as well. It will lower your property tax, insurance, and probably lower the cost of remodeling as well.

Owners who are in a “must sell” situation would be hurt in the near term. But the good news is that they will become renters again. So in the long run, they will also benefit from lower house prices (assuming they decide to buy again).

[felix]

Itokuda, you want me to go into info I consider private. I don’t think it should be too surprisingly that’s something I’m not going to do.

However, I will tell you I purchased with cash, that I purchased where I’d have minimal HOAs and no Mello-Roos.
Insurance is about $1500/yr and the home is in the San Diego area with ocean views.

May I ask you something?

What kind of return do you think is good to get on a financial instrument at this time?

And what other assets besides RE do you think would offer me both a good return and good potential for appreciation?

[felix]

Itokuda, you want me to go into info I consider private. I don’t think it should be too surprisingly that’s something I’m not going to do.

However, I will tell you I purchased with cash, that I purchased where I’d have minimal HOAs and no Mello-Roos.
Insurance is about $1500/yr and the home is in the San Diego area with ocean views.

May I ask you something?

What kind of return do you think is good to get on a financial instrument at this time?

And what other assets besides RE do you think would offer me both a good return and good potential for appreciation?

[felix]

Itokuda, you want me to go into info I consider private. I don’t think it should be too surprisingly that’s something I’m not going to do.

However, I will tell you I purchased with cash, that I purchased where I’d have minimal HOAs and no Mello-Roos.
Insurance is about $1500/yr and the home is in the San Diego area with ocean views.

May I ask you something?

What kind of return do you think is good to get on a financial instrument at this time?

And what other assets besides RE do you think would offer me both a good return and good potential for appreciation?

[felix]

Itokuda, you want me to go into info I consider private. I don’t think it should be too surprisingly that’s something I’m not going to do.

However, I will tell you I purchased with cash, that I purchased where I’d have minimal HOAs and no Mello-Roos.
Insurance is about $1500/yr and the home is in the San Diego area with ocean views.

May I ask you something?

What kind of return do you think is good to get on a financial instrument at this time?

And what other assets besides RE do you think would offer me both a good return and good potential for appreciation?

[felix]

Itokuda, you want me to go into info I consider private. I don’t think it should be too surprisingly that’s something I’m not going to do.

However, I will tell you I purchased with cash, that I purchased where I’d have minimal HOAs and no Mello-Roos.
Insurance is about $1500/yr and the home is in the San Diego area with ocean views.

May I ask you something?

What kind of return do you think is good to get on a financial instrument at this time?

And what other assets besides RE do you think would offer me both a good return and good potential for appreciation?

[drunkle]

felix:

when you say you already have, are you talking about the house you purchased and currently rent?

if so, i’m sure you’re aware that a sample size of one is insignificant.

with the generalizations you’ve made, i was hoping you might have more to speak of. frankly, i’m seeing prices coming back from the dream of unending and unlimited appreciation. well, everyone is… but i’m feeling ready to bite and the autumn lull might be the time. but if the market, the banks, the economy implodes before then, then of course i’ll put off.

i’m certainly not afraid of a rocket shot between now and then. but if you did have significant examples of good deals, it would be worth looking into. otherwise, your generalizations and platitudes are meaningless.

[drunkle]

felix:

when you say you already have, are you talking about the house you purchased and currently rent?

if so, i’m sure you’re aware that a sample size of one is insignificant.

with the generalizations you’ve made, i was hoping you might have more to speak of. frankly, i’m seeing prices coming back from the dream of unending and unlimited appreciation. well, everyone is… but i’m feeling ready to bite and the autumn lull might be the time. but if the market, the banks, the economy implodes before then, then of course i’ll put off.

i’m certainly not afraid of a rocket shot between now and then. but if you did have significant examples of good deals, it would be worth looking into. otherwise, your generalizations and platitudes are meaningless.

[drunkle]

felix:

when you say you already have, are you talking about the house you purchased and currently rent?

if so, i’m sure you’re aware that a sample size of one is insignificant.

with the generalizations you’ve made, i was hoping you might have more to speak of. frankly, i’m seeing prices coming back from the dream of unending and unlimited appreciation. well, everyone is… but i’m feeling ready to bite and the autumn lull might be the time. but if the market, the banks, the economy implodes before then, then of course i’ll put off.

i’m certainly not afraid of a rocket shot between now and then. but if you did have significant examples of good deals, it would be worth looking into. otherwise, your generalizations and platitudes are meaningless.

[drunkle]

felix:

when you say you already have, are you talking about the house you purchased and currently rent?

if so, i’m sure you’re aware that a sample size of one is insignificant.

with the generalizations you’ve made, i was hoping you might have more to speak of. frankly, i’m seeing prices coming back from the dream of unending and unlimited appreciation. well, everyone is… but i’m feeling ready to bite and the autumn lull might be the time. but if the market, the banks, the economy implodes before then, then of course i’ll put off.

i’m certainly not afraid of a rocket shot between now and then. but if you did have significant examples of good deals, it would be worth looking into. otherwise, your generalizations and platitudes are meaningless.

[Author]

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