[an]

My point is that GM, Ford, & Chrysler are doing horrible. They’re the reason why auto sales are down. Since they have the majority share, 1% decline from them have to be compensated by 2% (estimated) by the foreign auto maker. If you look at most of the Japanese cars now, they’re made in the US. Especially the high volume ones. So my point is, auto sales down could be due to miss management as much as reduce consumer spending.

She also say the past real estate down turn always lead of a recession except for when there’s a war. This time, there’s the Iraq war. It’s not always black and white. Every ware in history is great for the economy. She stated that every RE decline caused recession except for period where there’s a war. So which take precedent?

[an]

I agree that decline in consumer spending will drive down the economy. However, I don’t see a direct correlation between decline in auto sales recession. Last I check, foreign automakers are break sales record, not experiencing declining sales, so I don’t know where you’re getting your info from. Like I said, since US big 3 are decline at a much faster pace, that’s why you’re seeing a total decline.
What does living your life in preparation for a recession have anything to do with it? If you’re saying you truly live your life in preparation for a recession, then wouldn’t you be clipping coupons and shopping at Vons and such instead of those organic supermarkets?
Why is the burden of proof is on me? No one can tell the future, regardless of how much proof they have. Only time will tell. We can go back to this thread in 5 years and see who’s right. At least we have another thread where you’re predicting the crash in the S&P from a while back. We can follow that now and bring this thread back in a year or 2 for updates.
Since this is a global economy, if the rest of the world decouple from the US recession, wouldn’t companies that sell to other countries would still do OK, like tech stocks since they don’t have any borders? Also, I don’t see a major decline if at all in health care, since people get sick regardless of recession or boom time.

[an]

sdcellar, I know you can’t get 6% at 100% financing, but I’m just picking a rough estimate. +/- 1% will change the number about $100-200/month. My point is it’s getting close and deals are finally popping up. Up until now, those same houses were selling for above 500k. That’s all I’m trying to say. Next year, I’m sure you’ll be seeing a lot more in the same situation, which mean we’ll have more choices.

NSR, I understand what you’re saying. I know that there’s still a way to go before we hit true affordability. However, if you must buy now for what ever reasons, you can keep an eye out for deals like the one I mentioned. I actually put in an offer @ $375k, which is $25k less than $400k, which is their low end. But 2 other buyers right now think it’s worth $440-450k. I those 2 buyers are not there and seller is desperate, it might be possible to get it under $400k which is very favorable, # wise.

[an]

What you’re calculating is P+I. So it’s not really fair since you’re paying down your loan. It’s better to just compare rent to I since I is the part where you’re throwing your $ away to the bank. Also, you’re counting property tax. If you count property tax, then you should also count tax deduction too. Which will amount to $750/month. So $2519 – $750 = $1769/month. So, lets remove the P from the equation and the down payment. Assuming you’re doing 100% financing.

@$450k @ 6% interest (since you think 5.5% is too low), your interest a month is $2250 + $100 in HOA + $375 in property tax = $2725/month. But let say you’re in the 28% tax bracket and 9% state tax, then your tax deduction would be = $971/month which make a grand total of $1754/month after taxes and tax deduction.

In regards to renting a 4 bedrooms in Mira Mesa, the price changes quite a bit comparing older places w/ newer places this the one in our example. I was looking for rent around that complex too back in May. That’s the rent I see.

[an]

There are deals starting to creep up. Here’s one example: MLS# 066087578. It’s already in escrow. It’s a 1700sq-ft house w/ small lot in Mira Mesa. That size house can probably be around $2000-$2100/month in rent depending on the time of year the lease is signed. It was listing @ $400-$475k. They got 2 offers, one for $440k and one for $450k. They countered w/ $475k. I don’t know what’s the final price is. But let assume that it’s $475k. If you take out a 30 year fixed @ 5.5% (assuming great credit), you’re looking at monthly interest of around $2200 + $100 in HOA. That’s $2300/month. That’s getting pretty close to the cost in rent. I’m sure next year, we’ll be seeing more and more deals like these pop up.

[an]

You’re not getting my point. Up until now, American automakers have majority of the market share in the US, so when they’re hurt, the auto industry is hurt too. But now, the foreign automakers are getting almost 50% of the US market share and last I heard, Toyota, Honda, and Nissan have breaking their sale records left and right. Seems like they’re limited by production. While American auto makers are struggling and closing plants, Nissan has already stated that they’ll buy those plants from GM or Ford when it’s available. So this decline in sales might be the American automakers losing market share fast while the foreign automakers can’t produce cars fast enough to offset the major decline from the big 3. The auto industry is in a very different landscape than it was in the past, so this decline in sales might just be temporary. Also, GM seems to finally be turning the corner too.

[an]

I highly doubt the government would buy military equipment from any company outside the US or even US company w/out clearance. So I think the buying from China doesn’t make any sense. the Iraq war might be draining our economy as a whole but the government contractors such as GD, Northrup, etc, are doing very well since the war started.

I agree that inverted yield curve is a sign of recession. But never before have they had inverted yield curve at such a low interest rate, so that might be a sign of how bad a recession it would/could be. Auto sales is an argument I’m not agreeing to. Up to now, the US auto sale = the health of American top 3 auto maker which employ many Americans. However, this time is a little different. Toyota has just over taken Ford as #2, Honda, Nissan, Huyndai are growing very well. So the top 3 might be struggling a lot, I can see the foreign auto maker ramping up to help offset that. It takes time but foreign auto makers have many factories here compare to before and they’re looking to expand more.

[an]

Great news, desperate sellers are on the rise and unmotivated seller are leaving the market until the spring. I wonder what the number will be this time next year.

[an]

mixxalot, if that’s your argument against buying a new car, then why did you buy a $15k used BMW when you can buy a $3k civic and invest the other $12k? That $3k civic will be much cheaper to maintain and last a lot longer than your BMW will too.

So if you’re saying Lexus is overpriced Toyota, then you’re saying everyone should buy a Yaris since a Camry or Avalon is just an oversized overpriced Yaris. I wonder why anyone would buy anything else than a used Civic.

[an]

“Cars aren’t just past the peak of a speculative bubble of epic proportions, either.”

I think he’s trying to prove a point that he’s a prudent spender. Even though we just past the peak of a speculative bubble of epic proportions, if he can find a place that = rent, why not buy?

[an]

So if you’re saying 2 out of the last 10 down turn in housing market didn’t turn into recession because of the wars, then what make the Iraq war any different? Sure, you show signed that European economy is slowing, but hasn’t the European economy been pretty stagnate for a while now? Can you look up the Asian economy? Last I check, the Asian economy is booming, from India, to China, to Vietnam, they’re all exploding. Bottom line, I still don’t buy the “recession is in the bag” prediction.

Regards to your into about economic bias from forecaster, of course they’re biased, everyone is biased. Bear will more often than not miss the major upswing, while bulls will miss the turning point and caught holding the bag.

[an]

At any point in time, there’s always some stock from every sector that gets short recommendation. So your first statement doesn’t mean much.

When you say every housing decline of more than 20% led to a recession, how many time is that? Why is Vietnam and Korean War period any difference? Why was it different that cause it to to crash as well? One major difference I can see now compare to the last recession following real estate crash is global economy. The economic landscape now is very different that it was in the past. Sure housing price decline will cause people in US to spend less. In the past, that would/could cause a recession. However, American companies are no longer selling only to American. They’re selling to people around the world. The question is, how much decline in American consumer spending will occur this time and how much increase in consumer spending will other countries experience? Will it be enough to offset the decline in the US? Only time will tell but as I see it, nothing is a sure thing and there are plenty of factors that’s different now compare to the past crash.

Oh, and if I remember correctly, the last recession was during the .com crash. Although that recession was short lived due to the major drop in interest rate. tech stocks were hammered but other sectors thrived.

[an]

movielover, sounds like you have your bases covered. So, no, you’re not crazy. I’m in the exact same boat as you actually. I want to buy, and am working w/ an agent to find that one “steal” where rent of a similar place would be the same as mortgage before and tax deduction. Until I get the price I want, I won’t be buying. It doesn’t hurt to keep an eye out now. A steal comes and go very quickly, so keep your eyes peeled.

[an]

Best time to buy is at the end of the year on the end model year. So, since you’re looking at hot cars that just got released, of course they won’t deal w/ you on the price.

[an]

PS, no industry is recession proof. Some are more resilient than others, such as health care vs. retail. However, they are all affected to certain extent. I think SD realtor is saying he doesn’t believe there will be a recession since other part of the economy is still going strong. I believe that as well.

[Author]

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