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an
Participant[quote=flu]On a side note. I’ve have found out the painful hard way…Being contrarian. More times I am wrong than right, when it comes out to lining my pocketbooks. I can be the most logical person, and reason out why something shouldn’t be that way…But it ends up being that way… Classic point. No way in hell do I think QCOM is worth $68/share….And yet the damn thing keeps rising. Conclusion, I’m not smarter than most people. In fact, I’m probably dumber for thinking I might be smarter. Resistance is futile.[/quote]
Yep, I learn to stop being the contrarian after getting burned a few times. I’ve been more wrong than right when I try to be the contrarian.You’ve been saying that about QCOM and I’ve been saying that about AAPL for the longest time. I finally cave in a few weeks back and got in at $520/share.
ParticipantI’m in the same boat. If the whole system goes down in flame, then there’s really no point is protecting yourself against it. Just enjoy everyday like it’s your last and die with a smile on your face.
Participant[quote=briansd1]I’m just saying the government prevented a deeper price collapse, opting instead to ease the pain over many years. The reckoning will be in inflation adjusted real prices.
I believe that most Americans would prefer this scenario.[/quote]I agree, most Americans would prefer this. Most Americans also spend every penny they make and save little to none. Most American would prefer price to start shooting past bubble price sooner rather than later.
Participant[quote=briansd1]The two quotes above seem to be self contradictory.
Your remark “and yet, prices collapse anyways” implies that you don’t give much credence to government intervention. Then you go on to say: “I say, the intervention will cause price to increase”.[/quote]
It’s not that I don’t think the government intervention work. It works, at what cost is a whole different debate. I just don’t think they can time the market. I.E. they dump the money at the problem, but it didn’t stop the crash. On the other side, by the time they decide to take away the intervention, it’s already too late and another bubble will form. I’m questioning their ability to time things, not the ability of inflating bubbles.
[quote=briansd1]My observations are regarding prices today. I say that government support has stabilized prices; but underwater homeowners will not start to “willingly” move until they are “made whole.” We are not yet at a point where mobility is encouraged by increasing prices.[/quote][quote=briansd1]As I said before, we will not see it reflected in nominal prices (because of inflation and government intervention) but after 10 years, real, inflation adjusted, prices will reflect reversion to the mean. [/quote]
Aren’t you contradicting yourself here? If I read it correctly, you say we’ll see an increase in nominal prices due to inflation and government intervention. Then wouldn’t the home owners will be “made whole” nominally, which mean the government intervention was intended to get people to move, not to say? BTW, I was specifically debating your last quote I just pasted. Home owner don’t care about real prices. They care about nominal prices.
Participant[quote=flu]As long as people’s stock options/RSU’s are in the money, they don’t care… You have one very large employer on an 52 week high rampage almost weekly… So yes, even all those 1-2 year new employees have 50% vesting and ESPP shares totally in the money probably could come up with a decent downpayment on a decent condo…Yeah, it’s going to be interesting in the next few months… Welcome to multiple counter offer world….[/quote]
Not only is that large employer hitting 52 week high almost weekly, they’re also hiring constantly as well. With that said, I think that large employer RSU is on a 3 year vesting period with 33% each year. So, it might not be a big of an influx of cash as if it was 2 years vesting at 50% each year. You nailed it on ESSP though. Now, if only gas price can go to $10 gallon so people will want to live with 5 miles of work :-D.Participant[quote=briansd1]Intervention is designed to stop prices from collapsing further than they already have, encouraging people to stay put.
Remember, because of loss aversion, homeowners will willingly sell only after prices return being above mortgage balances (above water) + cash sunk (downpayment, remodel).
Theoretically, as prices firm up and become organically sustainable, government intervention will be withdrawn, thereby creating a drag on the market, but not enough of a drag to reverse previous gains.
We may question Federal intervention being withdrawn; but Federal Reserve intervention will eventually be reversed.
There are different forces at play. There is pent-up demand, but there is also pent-up supply.
I believe that interests also affect affordability.[/quote]
And yet, prices collapsed anyways. How much more would it collapse w/out government intervention, no one really knows. But you’re giving government too much credit for knowing exactly when to pull out, so only to stop the prices from collapsing instead of aiding the price increase as well. I say, the intervention will cause price to increase. Which will encourage people to move.Participant[quote=briansd1][quote=AN] if price rises in nominal term but decrease in real term, why should home owners care? If anything, in that scenario, it would be a no brainer to stay in the place. Especially if you’re locked in for 30 years years.[/quote]
They do care because they want to move, but they are “locked in.” They are less likely to sell because, as you explained, the cost of ownership gets easier over time.
Government intervention works because of that effect. By putting a floor on housing, government intervention encourages people to stay put. The “clearing” of the market is lengthened over a period of years, perhaps decades.
Here’s the link to the full paper on mobility.
http://www.nber.org/papers/w14310As sdrealtor mentioned before, low interest rates make it attractive to buy now… but negative equity makes it less desirable to sell. So we have opposing effects on the market right now.
Behavioral economists rely on prospect theory’s claim that reference points are important,
and that individuals will react differently to a housing bust based on their degree of loss aversion. In this framework, a household without any financial constraint can become less mobile if nominal loss aversion leads it not to sell the home after its price has fallen.I think that loss aversion is still high because peak prices are still fairly fresh in people’s minds. After a decade, things will look different.[/quote]
No, they don’t care. If nominal price goes up, then they’ll be able to sell at a higher price than what they paid for nominally, even if in real term, it’s not. So, they’re not “locked in”. The only time they’re locked in is if the nominal price is below what they paid for it.Government intervention doesn’t encourage people to stay put. It encourage people to move. If price keep on going up nominally, then people can sell, make a nominal profit (not needing to save for additional down payment) and buy the next house.
I understand what sdr said, but if nominal price goes up, then you would have less people with negative equity. Equity is in term of nominal price, not real price.
Participant[quote=briansd1]I agree that the vagaries of life affect the selling decisions. There will always be people selling and buying.
The extremely low inventories, as compared to a normal organic market, do indicate that people are not selling because they don’t want to “give it away.” Why? because sellers still want bubble prices.
Stats indicate lower mobility due to housing bust.
http://www.nber.org/digest/oct08/w14310.htmlThe data indicate that homeowners are hunkering down because of loss aversion. They will pay for it in terms of time value of money.
We are 1/2 way into a lost decade for housing… give it a decade and people will more likely give up. As I said before, we will not see it reflected in nominal prices (because of inflation and government intervention) but after 10 years, real, inflation adjusted, prices will reflect reversion to the mean.
To those who don’t take care of oral hygiene, dentists like to say “pay me now or pay me later, but eventually, you’ll pay me.” I think the same thing will play out for homeowners (50%?) who bought, or refinanced at the peak. [/quote]
I don’t get it, if price rises in nominal term but decrease in real term, why should home owners care? If anything, in that scenario, it would be a no brainer to stay in the place. Especially if you’re locked in for 30 years years. Rent tracks nominal price, not inflation adjusted price. So, if nominal price keep on rising, then the rent vs buy equation keeps on getting better for those who are staying put.Participant[quote=flu]
You know, I’m not particularly a big fan of the volt. But it could be worse. You could be in florida, where Toyota dealers are marking up the Prius C by $7000 ABOVE msrp… That’s on top of an already bend over on dealer installed options that you probably don’t want… Um, hmm $30,000 for a Prius C out the door (including tax…)… Um…. Pass….[/quote]
Fools and their money are soon parted. For that price, you can get a Fit. The money you saved will be more than enough to pay for the gas difference for the life of your car. Not to mention it’ll be a lot cheaper to maintain a simple I4 engine compare to the hybrid power train when your pass the life of the battery (100k miles)?ParticipantSince this thread is all about cars, I’d like to actually thank president Obama for increasing the fuel standard. Unlike what most think, my gratitude has nothing to do with saving the earth or increasing MPG. The side effect of this drive for higher CAFE standard is lighter cars and A LOT more usage of turbo. Cars have gotten heavier and heavier over the last 20-30 years and this standard is finally reversing that trend. Also, to improve MPG, auto maker will have to start using smaller and smaller engines. Automakers knows that people won’t accept loss of performance, just because of CAFE standard. So, more and more are employing smaller engines pare up with turbo(s).
This is great news for car enthusiast like myself. We all know it’s very hard to lighten up a car, so having it lighter straight out of the factory is a better base to start from. Then there’s the turbo variable. We all also know that it’s much easier to get more power from turbo cars than NA cars. We all also know it’s a freaking PITA to deal with CARB in Cali, so adding an aftermarket turbo kit is a big no-no, since very few cars have CARB legal turbo kits. So, having more cars coming with turbo from the factory is fantastic for us who like to get more power and not deal with CARB. When it’s time to smog, just put back the stock map and you’re good to go. Then after you got your car smogged, then you just put back the tuned map. Also, your standard I/E mods gains you much more power in a turbo cars than N/A cars.
I’m going to be getting a different car in a few years and the cars I’m keeping my eyes on are: 335i, M3 4 door, M5, G30t sedan.
So, once again, thank you Mr. President.
Participant[quote=flu]Trust me. The seat 7 is a gimmick… Find anyone that owns an acura mdx or similar that has a third row, and ask them how often they use the third row and I’d be surprised if anyone uses them in a meaningful way. If your wife wants 7 seats, you’ll be better served with a minivan or with a real, full size SUV….
Here’s the issue. If you have a kid with a kid car seat. You would probably end up putting the car seat in the second row. Because putting it in the 3rd row would limit your trunk space. The moment you put the car seat in the second row, you would probably then make the decision to put the car seat as far away from the side curtain airbags as much as possible. That would mean putting the car seat in the middle.
And finally, the moment you put the car seat in the middle, you can’t fold down the second row seat to get into the third row, making it a real PITA to get into the third row..And anyone who is asked to sit in the third row is already not going to be thrilled about it…
So most likely, the third row will always stay stored away (with the extra added weight you carry)…
I refuse to put anyone in the third row…Because if anyone rear ended me, you’re pretty much sentencing the person/people sitting in the third row to paralysis or worse… The point of an bigger car is safer crumple zone. Anyone sitting in a third row won’t have any room should you get rear ended.[/quote]
I totally agree. I have a MDX and the only time I use the 3rd row is when we wanted to go out with a couple of people and they don’t want to drive (take 2 cars). Most of the time, the 3rd row stay stowed away. The leg room in the 3rd row is so horrible anyways, that only people shorter than 5′ can fit in there comfortably. The thing about those SUV that have 3rd row though, is that their “trunk” tend to be larger than the ones with only 2 rows. The Honda Pilot 3rd row is much better than the MDX 3rd row though.WRT car seat and access to 3rd row, that’s just poor design on Acura part. The new Infiniti JX will let you slide one seat forward even with a car seat in it, to access the 3rd row. If you have 2 kids, then you don’t really have a choice in putting them in the middle. So they both will be on the side.
To truly seat 7 comfortable, like you, I’d say minivan or a true full size SUV like the Armada/QX/etc.
Participant[quote=flu]Big mistake. Huge![/quote]
Are you pretty woman? 😀March 23, 2012 at 10:15 AM in reply to: Looks like “pigglords” will have competition from Bank of America….Since they are getting into the renting business… #740422Participant[quote=paramount]If your underwater on the rental, now more than ever it makes even more sense to just walk.[/quote]
But is that underwater rental cash flowing? If it is, then why walk?Participant[quote=SD Realtor]many new pigglords… why?
cash
flow
If you are not cash flowing on a rental then you are simply speculating.[/quote]
I’ll second this. It’s all about cash flow.Also, like flu said, I am more likely to lose 20% in my stock investment than in a cash flow property. Right now, after a good run up in stocks, would be a good time to cash out and move some of the gain I made into something else (RE) that have been beaten up pretty badly.
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