[bearishgurl]

[quote=FormerSanDiegan][quote=SK in CV]

I think you’re asking the wrong question. The right question is what would have happened to home prices if not but for the changes in interest rates.[/quote]

“…what would have happened to home prices if not but for the changes in interest rates ?”

One cannot answer that question without generating assumptions that would generate even more questions.[/quote]

Since the value of all RE is based upon “local” factors, each submarket in the nation and even the sold prices of the micromarkets within those submarkets behaved differently during interest rate changes.

In markets where there is ALWAYS a “captive audience” of buyers from all over the world (such as in coastal CA cities), fluctuations in mortgage interest-rates have much less correlation to home values and home sales volume than in lesser-desirable national markets. Why is this so? Because many CA coastal buyers are willing (and able) to pay cash for a property affording them a “lifestyle” they can’t get anywhere else in the country.

It is what it is.

[bearishgurl]

[quote=SK in CV]It did both. Prices were mostly flat through the mid 70’s. As were rates. There was a bit of a real estate bubble at the end of the ’70’s, though prices did not rise as much as the CPI, as mortgage interest rates had already risen from the 4 to 7% range, to over 9% by mid ’74. RE prices peaked around 1980, then fell sharply through most of the next decade….[/quote]

SK, jog your memory a little. Home prices in SD rose over 30% between January 1988 and the end of 1989. If you will recall, this was during dtn SD’s “urban renewal.” Simultaneously, many parts of its adjacent zip codes of 92103 and 92104 were severely upzoned during that era. SFR’s were being knocked down in record speed in these communities and replaced with multifamily units. The City of SD Planning Dept looked the other way on parking and setback reqs and was lax in other building code reqs as well. Hence we now have these tacky, aging, boxy multifamily disasters with 4 token substandard parking spaces in front interspersed with SFR’s on many streets and double parking off their adjacent alleys.

Beginning late 1983, RE values SOARED in SD until 1993, when defense contractors left the county en masse, including two very large ones.

[bearishgurl]

[quote=Jazzman]All things being equal, you’d expect price to rise with low rates (and that seems to be happening now), but prices are affected by supply among other things, and I’d guess the supply (expansion) of credit as well. With so many distorting factors, it doesn’t follow that declining interest rates over the last forty years, hasn’t had some affect on prices, or that somehow the reverse is made true, and therefore we should all buy now. With no savings, no equity, still over-priced homes, and a dependence on low cost mortgage debt is it any wonder we’re still scratching our heads over conventional wisdom?

The other baffling notion is that price is no longer relevant, since the net income (aka affordability) is what counts. So why the fixation with price at all, since it no longer sits to the right of the ‘equal’ sign? After all, your job’s salary isn’t advertised as a lump sum. On the other hand, if memory serves me correctly a home is a manufactured product, has a shelf life, and the parts that go into its making depreciate. I think it is a mistake to ignore this. If this is all about wealth building, you’d be better off investing in a good education in the long term, than an inflatable home.[/quote]

I disagree with some of these assertions:

Price is ALWAYS relevant. And prices are better now in SD County than they have been in eight years (ten years in some areas).

Your job’s salary IS advertised as a “lump sum” in the form of gross annual pay.

PART of the value of a home (if not a condo/PUD) is manufactured. The other part of the value lies in the value of the RE is sits on. In CA coastal communities, this “land value” can constitute 90%+ of the value of the “home” which sits on it. Without the “fog-a-mirror-get-a-mtg millenium boom” we now have in our rear view mirror, homes WOULD HAVE appreciated slower and steadier EVERYWHERE in the country. Instead, in most areas, they went up in “value” drastically and then summarily crashed when the “loose lending” party was over.

If one has to “invest” in a “good education” in the form of taking out a typical 6-8% (nondischargeable) student loan, then they are destroying their future “wealth building” activities and also, if young, destroying their ability to support a family while still young enough to have one. If they invest in RE and can’t make the payments anymore, they can give their lender a deed in lieu or allow their home to go into foreclosure. After three to seven years, they may be able to qualify for another residential mortgage.

The only way to “recover” from an unpaid student loan is to pay it off (incl ALL deferred interest) or die. And dying is only successful in this regard if the borrower had a gov’t-backed student loan. Those with “private” student loans (the majority of SL borrowers) will have claims upon their estate entered by their SL lenders and Sallie Mae.

I understand you were frustrated because you couldn’t find what you wanted for <=$1M in coastal CA, Jazzman, so decided to "retire" elsewhere. But because YOU thought the RE you looked at (and made offers on?) was overpriced (and likely sold to someone else) doesn't make it so. RE is worth only what a buyer will pay for it. Not EVERYONE who is a RE buyer today has "no equity" and "no savings." That's why you were in such "good company" out in your coastal CA trenches-of-choice as an "all-cash buyer." If the $800-$1M listings in coastal CA were listed in a climate of 7.5% + fixed MIR's, you, as an all-cash shopper, would be running up against the same problem (except you and your "competitors" would likely have MORE cash to shop with, due to higher interest rates paid to savers). In a higher interest-rate RE shopping climate, a buyer who needs a mtg is simply bumped down to shopping the next lower "tier" of properties (size and/or area). It doesn't mean they won't buy. It means they will buy what they can afford. If they don't like what's on offer in their price range, they will rent in SD County or move to a lower-cost county or state and attempt to buy a home there. The homes in the choice areas you were shopping in were never meant to be a "mass-consumer product." They are purchased by buyers who fully appreciate their uniqueness and exactly where they are located. If you don’t appreciate these factors enough to pay the price to own them, then they are not for you.

That’s the way it’s always been and it will never change.

[bearishgurl]

desmond, I just listened to Frank’s “prophetic” soundbyte from the day of his accident and was amazed that he was discussing this so matter-of-factly.

This is very sad and I’m so sorry for your loss. And I can identify with the “soul searching” you’re now revisiting. Life can be so very fragile.

[bearishgurl]

AV, as far as “interest rates” correlating to “prevailing rents” in Coastal CA . . . move on, there is no connection here. In Coastal CA, rents are based purely upon desirability of the unit (supply and demand) and whether there is “rent control” in place in the jurisdiction of the rental property.

Many on this board have lamented that the “free and clear” owner who is collecting rent and has low property taxes is “gouging” their tenant(s). These “complainers” fail to take into account that this same owner very likely WAS at one time paying at least a 4% mortgage on the same property over the course of 20+ years whilst collecting $65 to $250 monthly rent for each unit (which was their “rental market” at the time). Do you think they all had a “positive cash flow” back then in light of repairs and vacancies? The truth is, these landlords who paid their properties off long ago are deserving of a “retirement income” today, provided they properly manage their unit(s) or hire someone else to do so.

RE in CA coastal counties isn’t “set up” to be a positive cash flow until the mortgage is retired.

That’s the way it’s always been. If you will be buying an SFR with a mortgage and want positive cash flow NOW, go to FL, TX or possibly still AZ, for starters.

[bearishgurl]

[quote=anxvariety] … I am not on a lease. The question isn’t particular to Coastal CA. How one can argue that change in interest rates will not affect prices? Assume I am not a renter, or buyer.[/quote]

Higher mtg interest rates in Coastal CA will only cause buyers to buy less house for the same money.

Due to the extremely “loose lending” rampant during the millenium boom (2003 thru 2007), 1st and 2nd time buyers became “conditioned” to expect a mid-level or even “luxury” home, area or both for the resources they had (DP, income and credit rating). After that period, this “conditioning” continued due to (artificially-induced by the GOV) historically-low mtg interest rates. Half of Gen X and all of Gen Y never even realized they had to “pay their dues” before acquiring their “dream home” that took previous generations 25 years and 3-6 previous home sales to achieve!

In a higher interest-rate environment (over 7.5% fixed), RE will still sell to buyers who need mortgages but each “tier” of it will sell to buyers with higher DP’s and/or higher income/credit qualifications.

The above paragraph does not apply to cash buyers or properties over about $1.5M.

After fixed mtg rates hit 12.5%, prices will still not go down but may stay stagnant for awhile. During this time, many more sellers who really want to sell will carry some of all of the paper on their property to effect a sale.

That’s the way its always been.

[bearishgurl]

[quote=anxvariety]I think rent must be defined materially in order for the argument to be substantive. One can cherry pick purchase prices as well as rents and make a compelling argument. From an economic perspective though can one argue that home prices have found bottom/climbed from/climbing from etc, without considering where interest rates must head? I agree that rent and purchase are disconnected at the moment, but many find serenity in a 1 year lease.[/quote]

AV, I take it you are renting on a one-year lease? If that is the case, hopefully, you will be able to buy something before or when it expires. If you want to “own,” the sooner you buy, the better, IMHO.

Forget your “fixation” on “interest rates.” They go up and they go down. As a buyer, you are looking for price and built-in sweat equity. You don’t give a rat’s a$$ about interest rates. If you bought in a higher-interest-rate climate, when they get lower, you will refi. End of story.

If you think “interest rates” are going to affect sales volume and prices in coastal CA counties, I’m here to tell you that they won’t. Buyers who need mortgages will simply buy less house for the same amount of money, as they always did. The buyers who don’t need a mortgage will pay cash (for a discount), as they always did.

If you are trying to make a “connection” between “interest rates” and home prices here, put away your spreadsheet … you are wasting your time. As you are coming upon your seven-year Pigg anniversary, the horse left the barn 2-3 yrs ago and the door is closing but has not yet slammed shut. My advice is to get moving NOW on your home search (remaining mos of lease be damned) and keep the Piggs posted on your progress 🙂

[bearishgurl]

anxvariety, I would suggest if you want to buy a property (for occupancy or rental), you should get out there in the trenches and start making offers.

The holidays are an EXCELLENT TIME to make a deal. However, unless you have all cash, you should steer clear of the plain-vanilla flipper-type properties that don’t cost much to rehab and put back on the market or enter into rental service or you will find yourself competing with the investors’ offers.

“Flipper/investor types” tend to gravitate towards SFR listings with all or most of these features:

-incorporated area (w/i city limits – to have steet lights/storm drains etc). This is especially important if the property will be a rental;

-single story;

-$175K to $400K;

-no Mello Roos (if property is to be a rental);

-mostly flat lot of 4500 to 7500 sf;

-no extensive concrete repair or structural repairs needed;

-currently “hot” rental zip code within 3 miles of professional white-collar jobs;

-fairly open floor plan with at least 1-3/4 baths;

-and, attached garage (2-car preferred).

Age is unimportant. Pretty decent flipping jobs are rampant in the mid-century and sixties houses here in Chula Vista. Teams of investors are rehabbing the longtime-rental eyesores street by street and closing their sales within 45-75 days of purchase, lifting ALL surrounding homeowners’ boats.

Maybe Pigg SDR has more insight on what they gravitate to so you can streamline your search and not waste valuable time while prices are inching up with each closed sale.

If you want to buy a personal residence for a song, my advice is to get yourself out into East County and find yourself an unusual property with land and even views, move into part of it and fix it up little by little. Perhaps there are similar deals available in inland North County. I just don’t see how a buyer can go wrong here, unless they (inadvertently) purchase something with very expensive structural problems or terrible neighbors.

It doesn’t get any better than this, anxvariety!

[bearishgurl]

[quote=CA renter] . . . As for dishwashers, we have this Kitchen Aid:

http://www.kitchenaid.com/flash.cmd?/#/product/KUDS30IXSS/

I was looking for a dishwasher with:

-a hard food disposer
-high-temp (sanitary) wash
-heated dry
-direct-feed upper wash arm (though in this link, it doesn’t mention it; we have an earlier model…if interested, ask them specifically about it)
-quiet

We use it often — twice a day is not uncommon — and have not had any problems. We even plan to get a second one in the near future as our kitchen is plumbed for two dishwashers.[/quote]

I second CAR on the Kitchenaid DW. I have the 2006 model of this one:

http://www.kitchenaid.com/flash.cmd?/#/product/KUDE60FXSS/

Of course, I only wash twice a week, not twice a day :), but it has been great, is very quiet and also has a SS interior.

This is my third Kitchenaid, all “Superba” models. My mom used Kitchenaid DW’s as well . . . that is, after we finally GOT a DW and my sister and I were finally relieved from our “daily duties” 🙂

It’s not uncommon for them to last 25 yrs or more. They’re very “heavy-duty.” I’ve owned three only because we sold the house 🙂

[bearishgurl]

[quote=flu]No….

No offense. But, Lexus and “track car” are not two words that I would put in the same sentence…

As far as Toyota, couldn’t find a Supra or MR2, nor are they the cars I have in mind.[/quote]

flu, I didn’t notice you were looking for a track car. I understand now :-]

[bearishgurl]

[quote=flu][quote=creechrr]What year car? OBDII?

Beginning January 1st, MY 2000 and newer will not have to spin the rollers for smog anymore. They going to start just checking the ECU for codes at a “STAR” station.

I think this could be beneficial to some with modified cars.

An O2 sensor spacer could be of benefit.

I can’t find the specific reference at the moment but, there was speculation that a verification of the code will be performed on ’06 and newer vehicles. I assumption was that the check would be done by comparing the checksum data supplied by the OEM against what the ECU is reporting at the time of inspection. That could make reflahsing more challenging.

Yes, I’m also starting to hate this great state.[/quote]

it’s a 94… And yes, I’m aware of the new tests through the OBD port only…BUT, it’s not happening yet. Trust me… I looked into it…That’s another stupid rule…

If your car has OBD2, rather than sampling emissions out of the tailpipe, they’ll just read it from OBD2 data….Meanwhile, people with money with resources to fudge the ECU will pass just fine…Lol….

Totally backassward.

Also, I was talking to some smog guys and a lot of people are getting out of the business…

It seems like if the smog test place reports cars that fail, it counts against them (even if they are a test only facility…)…I was like huh?

Also, they are now subject to random inspection…So CA inspectors will bring a stock car in, maybe loosen one plug/o2 sensor just a bit…And even if the car passes smog, but the smogger didn’t catch the slightly loosened sensor, they’ll get flagged/dinged….
Pretty stupid…[/quote]

flu, is the vehicle you are eyeing a Toy/Lexus product?

Most Toyotas and all Lexuses began using OBDII in 1994, but they are the exception.

[bearishgurl]

[quote=creechrr]What year car? OBDII?

Beginning January 1st, MY 2000 and newer will not have to spin the rollers for smog anymore. They going to start just checking the ECU for codes at a “STAR” station.

I think this could be beneficial to some with modified cars.

An O2 sensor spacer could be of benefit.

I can’t find the specific reference at the moment but, there was speculation that a verification of the code will be performed on ’06 and newer vehicles. I assumption was that the check would be done by comparing the checksum data supplied by the OEM against what the ECU is reporting at the time of inspection. That could make reflahsing more challenging.

Yes, I’m also starting to hate this great state.[/quote]

OBDII started in 1996. creech, do you mean those vehicles 2000 and newer or those vehicles utilizing OBDII will no longer have to undergo a smog inspection?

A typical “oxygen sensor” replacement (or the like) is about $168 (MUCH less than a typical smog repair).

[bearishgurl]

[quote=flu][quote=bearishgurl]flu, I know LOTS of people who have applied for and qualified for assistance in the last few years to get older vehicles smogged. The assistance is good to use at any CA Test and Repair stations.

It’s totally worth it to do this application. If you have to register your vehicle non-op while you wait for approval, then so be it. Don’t pay a penny until its fixed.

Wait to load:

http://www.smogcheck.ca.gov/80_BARResources/ftp/pdfforms/cap_app.pdf

However, I AM pissed at Arnold for raising the “baseline” DMV registration fee from $39 to $64 to (now) $87.

This is highway robbery for an annual registration sticker for a 20+ year-old vehicle.[/quote]

first of all, I wouldn’t qualify for the financial hardship assistance. second, when one sells the car in CA, the burden of getting it smoged and passed is usually for the seller.

The seller didn’t want to deal with getting it smogged since the car wasn’t used often, so they offered me a very low selling price..I agreed on condition that it passed smog…Didn’t think it would fail. But it did…

It really wouldn’t matter if I was going to use the car for “track purposes only” because in that case I could keep the car as non-operating and not need to register it…BUT, then I wouldn’t be able to park the car in public roads…which sucks…So……too much hassle…

At any case, it’s not really my issue. The person that ends up suffering is this person who needs to sell the car. The person doesn’t want to keep the car, but wants to sell it because they say they need the money…But since it failed smog, they aren’t going to be able to sell it to normal buyers without getting it fixed first..And no way a normal buyer, upon seeing it has emissions issues, is gonna want to deal with it unless cat is replaced. Person is screwed…[/quote]

I understand this assistance won’t help a buyer. But it helps an owner whose vehicle can’t pass a biennial smog inspection. If your seller wants assistance and can qualify for it, they will have to wait to sell it until AFTER it’s next biennial smog inspection is due. They COULD get it inspected a few months ahead of when their registration expires (but after they receive the renewal in the mail requiring a smog check). Then, when it fails, put in the application. Hopefully they would be able to get it approved and fixed BEFORE the current sticker expires.

But yes, your seller is “stuck” with not being able to sell the vehicle right now without paying themselves for the smog repair.

[bearishgurl]

flu, I know LOTS of people who have applied for and qualified for assistance in the last few years to get older vehicles smogged. The assistance is good to use at any CA Test and Repair stations.

It’s totally worth it to do this application. If you have to register your vehicle non-op while you wait for approval, then so be it. Don’t pay a penny until its fixed.

Wait to load:

http://www.smogcheck.ca.gov/80_BARResources/ftp/pdfforms/cap_app.pdf

However, I AM pissed at Arnold for raising the “baseline” DMV registration fee from $39 to $64 to (now) $87.

This is highway robbery for an annual registration sticker for a 20+ year-old vehicle.

[bearishgurl]

As an aside, a Federal Employee has a GREAT benefit at their disposal called the “Thrift Savings Plan” or “TSP.”

Pre-Tax Dollars At Work

A Thrift Savings Plan is essentially a contribution plan for federal employees. Federal workers can contribute pre-taxed money into a number of savings accounts that can be matched by their employers if they meet specific qualifications. If employees are eligible for matching funds, their employer will be able to match up to 5 percent of their contributions. Members of the Civil Service Retirement System are not eligible for matching contributions. Withdrawal without penalty begins at age 70 1/2.

(emphasis added)

http://www.ehow.com/how-does_4681354_federal-thrift-savings-plan-work.html

The TSP plan is open only to FERS members (members of the Federal Employee’s Retirement System). Active Federal employee-members of CSRS (an annuity plan, NOT a pension) are dwindling fast. In order to have been a Federal employee under the CSRS Retirement System, an employee would have had to have began their Federal “career” prior to 1983, worked continuously since then, and never elected to convert to FERS.

http://en.wikipedia.org/wiki/CSRS

State and local governments typically don’t have funds-matching retirement plans. However, they are very popular with non-profits.

The TSP Plan is a GREAT supplement to FERS and is intended solely for income in old age.

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