[4plexowner]

The only reason I can think of for an intelligent person (I’ll assume that you are one) to buy a home right now is because their Great Aunt Tildy left them a gazillion dollar inheritance on the stipulation that they get married and buy a house.

Does that describe you, housingbear?

~

By the way, please change your handle – you are giving the real bears a bad name!

[4plexowner]

Greenspan was a confirmed “gold bug” until he sold out to the elitists.

Greenspan wrote a paper in 1967 saying:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.”

http://www.usagold.com/gildedopinion/Greenspan.html

[4plexowner]

I know what I would say to a potential tenant if they started asking financial questions: “Next!!!!!”

Several years ago I had two law students asking financial questions about me and my property when we got together to sign the lease – then they saw the lease and suddenly changed their minds – I suspect that they saw they would be leasing from an LLC and not an individual so they moved on (harder to sue an LLC for a faked trip-and-fall accident)

OK, so I’m paranoid, I admit that freely – but suggesting that potential tenants ask financial questions of the landlord does not seem like good advice to me – it does however seem like a great way to ensure that you WON’T get to rent the place you are asking questions about

[4plexowner]

Wages rising? – only in inflated dollars

Inflation adjusted wages are only going in one direction – down, down, down – our government is on a money printing path that is only going to get worse as more and more entitlement spending comes online (boomer retirement)

The continuing exportation of US jobs will also cause real wages to decline (more US workers looking for fewer available jobs – supply and demand says that employers will have to pay less to get qualified workers)

My point: don’t expect rising income to have an effect on the real estate market – in fact, as wages continue to decline in real terms, more and more people will be forced to double-up in housing (or move back in with the folks) which will reduce the demand for housing and exacerbate the decline in housing prices

[4plexowner]

cow_tipping brings up a good point

the baby boomers are relying on the equity in their homes for retirement (average 401K account has less than $50K in it) – that means selling, refinancing or doing a reverse mortgage

2008 is the leading edge of the 78 million baby boomers heading into retirement

by the time the excesses from the real estate bubble have been worked through it may be time for massive selling by the baby boomers

[4plexowner]

What I’ve seen of most franchises and small businesses is that the owner has essentially bought themselves a job

Instead of working 40 hours a week for someone else, they invest their money to establish or buy a business and then work 80+ hours a week for themselves

They are unable to vacation because the business isn’t profitable unless they are there every day or there isn’t enough income to pay for any help

It seems to me that in most cases, people think they own a business but the reality is that the business owns them

And if the time aspect of owning a business isn’t enough of a deterrent, there are the odds of success to consider – a quick Google search tells me that only 66% of small businesses are still open after two years and only 44% after 4 years

~

One of my friends owns and operates a large physical therapy clinic – he jokes about being able to set his own schedule – he says he can pick any 100 hours per week he wants

[4plexowner]

When you are calculating tax savings don’t forget that you will be giving up your standard deduction of $5000 as a single or $10,000 as a couple

So instead of gaining tax benefits as a homedebtor you are actually LOSING your standard deduction!!!

That’s $416/mo and $833/mo LOSS, LOSS, LOSS!!!!

~

Sorry, but many people seem to ignore this lost tax benefit when they are trying to justify buying an overpriced property in a declining market

[4plexowner]

I can’t stand to drive in traffic

Before I could even think about buying in Escondido KNOWING that I was going to commute downtown everday I would have to see what the drive on I-15 was going to be like

Buying an “affordable house” does not make sense to me if it means I will then be spending 3-4 hours of my life EVERYDAY sitting in traffic on the freeway

If you aren’t familiar with the traffic on I-15 perhaps you could stay in a motel in Escondido for a week and see how the commute is

[4plexowner]

I am expecting a trend towards higher household occupancy.

This will be part of America’s lower standard of living as globalization takes the global wage to less than $10/hour.

Both house prices and rents will decline as household occupancy increases and the supply of ‘excess’ housing grows.

[4plexowner]

Currently on the market:

3/1, 1014 SQFT, Mount street in 92111 zip, $433K, backs onto canyon, fresh carpet and paint

This is your basic shit-box in Clairemont but it is on a decent street

Spend the bucks to add a 2nd bathroom and some square-footage, then do the landscaping and this house becomes a MUCH nicer place to live than any condo on Clairemont Drive

~

Of course, this assumes that it makes sense to buy anything right now or that $500K for entry-level housing somehow makes sense …

[4plexowner]

Single family houses in Clairemont are now being priced in the $430K range

$430K for house and $70K on a remodel

Result: nice 3/2 SFR on its own lot for same price or less than these condos are being sold for – no HOA fees and no HOA rules – no shared walls

Which one would you buy?

[4plexowner]

I have insight into one of the fall listings – this is Jim’s story:

Jim had his house on the market in Sep, Oct and Nov – there was little activity and no offers although he was priced in the lower end of his market. Jim took his house off the market in December so he could come back on in 2007 as a ‘new’ listing.

Now, a house down the street has listed for $50K less than the lower end of Jim’s listing price from the fall.

Since Jim doesn’t have to sell he is now thinking about his options in light of another $50K drop in prices.

Jim still thinks his house is worth its peak 2005 price and now a neighbor is on the market for a full $100K less than that peak price – ouch!

~

I think this may be happening for some of San Diego’s would-be-sellers – they have a number in their head for what their house is worth but the market (reality) no longer supports that number. In Jim’s case, there is a full $100K difference between the current market and the number in his head – if he sells at today’s price he will be ‘losing’ that $100K. Jim hasn’t decided whether to re-list his house or not – he may remodel instead of selling and buying a move-up home.

[4plexowner]

Thank you for sharing, Real Buyer.

I believe one of the challenges that Americans face is that they trust their government too much. The idea that the government would intentionally debase the currency or kill a few Americans to start a war (USS Liberty, Gulf of Tonkin, Pearl Harbor, 9/11) is inconceivable to them.

They assume that their government is a benevolent force that will take care of them and would never do anything to intentionally screw them over.

I believe that most Americans will be very surprised when they realize that the American economy has become a farce and that their paper assets denominated in the US dollar have become worthless.

Got silver and gold???

[4plexowner]

It’s all about timing.

If I bought gold on Jan 3, 1980 I would have paid about $560/oz.

Two weeks later I could have sold for $875/oz.

That’s $315/oz which is more than 50% gain in two weeks.

Gold purchased later in the year presents a whole different picture.

As far as San Diego real estate in 1980 – ask some apartment owners how much fun they had with their apartments during the 1980s – many of them were cashflow negative and had to provide incentives to attract tenants.

~

The trick with investments is to get on the right side of large secular trends and then wait for them to express themselves fully.

1982 – 2000 was a secular bull market in equities while commodities sucked wind

in 2000 those trends reversed, IMO – we now have equities in a secular downtrend while commodities are in a secular uptrend

during 1995 – 2005 San Diego real estate was in a secular (?) uptrend and is now in a secular downtrend

I believe that gold bugs (and silver bugs even more!) will be swapping out of the precious metals when that secular trend fully expresses itself in the 2012-2016 timeframe. These ‘bugs’ will be buying equities and San Diego real estate at the bottom of their secular trends.

[4plexowner]

Straight from a female’s mouth:

“I deserve a better house.”

This particular woman can barely afford the current payment on her ARM loan (that is about to reset) but somehow she “deserves” a better house.

Is it a female thing or an American entitlement thing – perhaps some of both?

~

In the world where I live we have this little thing called “economic reality” …

[Author]

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