Forum Replies Created
-
AuthorPosts
-
CA renter
Participant[quote=AN]I actually don’t see anything wrong with planning for extreme “what ifs”. As long as you also attribute the probability of it coming true in your planning as well You should also plan for “what ifs” at both end of the spectrum too. Not only should to plan for the Fed completely failing and you’ll get major deflation, but you should also plan for the Fed completely failing to control inflation and we’ll see a repeat of the 70s/80s. Obviously, either of those scenario are very unlikely to happen, but it’s not impossible. If you plan for it, then you won’t be blind sided and follow the heard off the cliff.[/quote]
Agree with this.
Also, it’s not at all extreme to consider the possibility that other investments might become more lucrative vs. real estate at some point in the future and to think about the ways this will change investor/speculator behavior.
ParticipantRooting for the underdog…I love it! 🙂
Participant[quote=flu][quote]
Yes, you’d be right to hold on to your real estate if CD rates are <1%, but what if rates were to skyrocket to 10%, or higher? How would you feel then? And what if housing prices were likely to decline at the same time that other investments were offering much higher returns (and the potential for much higher capital gains, too), particularly if rates rise significantly?[/quote]I think you need to step back and not think in terms of "doom" and "gloom". I think the Fed has proven it likes to intervene. The "powers" won't "let" rates "skyrocket" to 10% really very quickly. Afterall, they are really good at "fixing" things. And if they did let that happen, it would end up wreaking havoc on the financial markets, on businesses,etc, and then the majority of Americans would have a much bigger problem at hand than thinking about buying real estate. Just ask the Russians.
Any sort of rate move would mostly be a slow and steady trickle up, so that it causes a little discomfort, but manageable and tolerable for most people. Just like the how rates on mortgages have already risen 1% since the bottom, slow and steady.
Has that 1% rise thus far caused a real estate meltdown?Second, what happens with CD rates might be good for my own money (or maybe not), but it doesn't affect the money from fannie I borrowed for 30 years to finance the home purchases. What does matter is my tenant's ability to help me build equity and generate some cash flow. It's not like fannie would directly lend to me money to invest in dividend stocks or 10%CD. That's what I use my own money for.
Why would I want to sell my homes and "fire" borrowed money from Fannie that I currently "employ" to work generating income for me, when I wouldn't be able to "rehire" borrowed from Fannie (or any other source) to "work" in a 10% CD? (Not to mention, as part of "firing" Fannie money, I would also have to pay capital gains taxes, depreciation recapture,etc,etc)?[/quote]
Yes, the Fed can manipulate rates for a long, long time. But what if rates were to go up?
I’m also thinking in terms of speculators/investors who’ve paid cash, like so many have done over the past few years. You’re more of a “mom and pop” kind of guy who is probably looking for ways to produce cash flow in retirement. What about the investors who have no emotional or other ties to the homes or areas? I think they would dump quickly if they thought that housing prices were going to decline and other investments were paying much higher returns (plus more opportunities for cap gains).
Participant[quote=FlyerInHi][quote=svelte]
On the other hand, unless he marries whomever he’s buying this current place with, they will force him to sell and buy something else anyway.Brides who marry a man who already owns a home usually don’t want to make their nest in the place he spent his bachelor days in.[/quote]
That seems odd. Don’t women dream of marrying a prince and move into his castle?[/quote]
Not if his former princess was living and “nesting” there.
February 2, 2015 at 5:14 AM in reply to: ot. the life changing magic of tidying up: the Japanese art of decluttering #782527Participant[quote=scaredyclassic]i remember my mom being really uptight about everything being really neat and clean. i remember her getting upset sometimes.
now that we’re gone everything is really neat and clean all the time.
i think she’d prefer the chaos in retrospect.[/quote]
Definitely. My mom was like this, as am I. Over the years, I’ve tried really hard to mellow out a bit because there is no doubt in my mind that I will miss the mess, noise, and chaos terribly when it’s gone. Makes me very sad to even think about the house being all tidy and clean for more than a day or so. It’s great when they all go to a football or baseball game together with dad (including hours of tailgating) while I get to stay home and enjoy the clean, quiet paradise of our empty home. But I’m always ready for them to come home at the end of the day.
Quite frankly, as kids go, my kids are pretty awesome when it comes to helping out around the house. In return, I try to be less stressed about the odd mess.
Participant[quote=flu]strong hands won’t sell if they cash flow much better than that 1%CD that most people have been tucking their money into. Just saying.[/quote]
Right. That’s why I said this in my previous post: “Strong hands don’t have to wait for a rising market, and if returns on investments are far higher elsewhere, they will be quick to sell the least profitable investment (possibly houses) to free up cash for more lucrative ventures. For these owners, it’s just business…no emotions involved.”
[quote=flu]Also, there’s a fundamental reason why some of the latest foreigners from asia are different from what happened during the japan days..When the Japanese went on the real estate binge, it was about speculation. The latest real estate binge isn’t strictly about speculation. It’s about the 1% in those countries taking a hedge against political/economic instability in their homeland, in case the government decides to start going after them. Besides, foreign purchase, BTW still doesn’t make the majority of home purchases, despite the media the rhetoric- 25% i believe was the last number for all foreign purchases, most of them from canada. And most of them from asia are at the high end of real estate. So you folks worried about an “Red Dawn” like invasion can stop worrying.
Also, don’t discount how much homes are held by institutions. Remember that many of them got into the rental business as well and are just waiting to home prices to rise to sell and profit, as many other folks that bought at low prices will.[/quote]
Many of those institutional buyers are working on behalf of foreign buyers. And it’s not just the Chinese who feel that U.S. real estate is a more secure store of wealth than their own currencies and local investments, people from many different countries are buying U.S. real estate as a hedge against their currencies collapsing. Some Americans are doing this, too!
As you know, I’ve long been pointing to institutional buyers as being part of the problem, irrespective of the nationality of their clients.
I don’t think that people are worried about a “Red Dawn” invasion, just that all of these extra buyers are putting pressure on prices, forcing locals out of the market.
Americans have been doing this to people in other countries, too, like Mexico (decades ago, it was the big thing to buy land down there because it was so cheap to buy with US dollars) and other developing areas that have a much weaker currency/poorer local population than ours. The locals in those countries don’t like it when we do it, either, which is perfectly understandable, IMO.
[quote=flu]Personally, I’m in no hurry to sell. The only time I would is if/when home prices reach 2x of what I paid for, and then I might consider it of if San Diego turns into blight town (which is unlikely, and if that happened, you wouldn’t be interested in buying anyway). Why sell when it’s a steady source of rental income, that will most likely beat that CD for a long long time? And for more “affordable homes” that were bought at good times, that’s the problem that I see. There’s no hurry to sell.[/quote]
Yes, you’d be right to hold on to your real estate if CD rates are <1%, but what if rates were to skyrocket to 10%, or higher? How would you feel then? And what if housing prices were likely to decline at the same time that other investments were offering much higher returns (and the potential for much higher capital gains, too), particularly if rates rise significantly?
That's the issue. If rates go up significantly, or if some other investments suddenly look much better than real estate, speculators will start to shift away from real estate, and many of them will sell if they feel that housing prices will go down in the future and/or if they want to free up more cash in order to purchase these other assets.
As others have pointed out, low interest rates around the world are really fueling this speculation. Both because there is nowhere else to turn, but also because it causes concern among many investors/savers/speculators regarding the future value of the currency they hold -- pushing them into hard assets as opposed to cash or similar holdings.
January 31, 2015 at 3:56 AM in reply to: Great Summary of the American Dream – Top List (ZeroHedge) #782472ParticipantGood posts, spdrun.
Participant[quote=spdrun]
Lastly, what you’re saying is exactly what they were saying in the 1980s. Japan will buy the US up, etc, etc, etc. Didn’t happen so fast 🙂 Cash investors aren’t as strong hands as you think, either. If the market burps, they’re actually more likely to sell at (say) a 20% loss than mortgaged investors. Why? Because they can, unlike people with 3% down which have to wait for a short sale, deed in lieu, or foreclosure. There’s really no way to manage how many people run for the hills at once.[/quote]
Exactly. It’s like BG claiming that heirs to fully paid-off homes won’t sell until they get what they want. Hogwash. Those are the very sellers who CAN sell for whatever houses are going for at that moment in time. Strong hands don’t have to wait for a rising market, and if returns on investments are far higher elsewhere, they will be quick to sell the least profitable investment (possibly houses) to free up cash for more lucrative ventures. For these owners, it’s just business…no emotions involved.
ParticipantBummed to hear about your working conditions and hours, but glad that you seem to be doing well, nonetheless.
Keep up the good work, BP. Best wishes to you and your family!
January 29, 2015 at 10:09 PM in reply to: ot. the life changing magic of tidying up: the Japanese art of decluttering #782428ParticipantThanks for the kind words, Brian, but I just know that we all have our various strengths and weaknesses. I try not to judge others for things other than major character flaws — usually sociopathic or psychopathic tendencies.
You and I seem to have similar tastes in furnishings and style. Simple, minimalist, easy-to-clean, and tidy are awesome in my book. But I’ve known some pretty awful people who live like that, and some pretty wonderful people who live in cluttered, messy homes filled with loving people.
While I would certainly favor working or living with clean people, I wouldn’t go so far as to say that messy people are less civilized or otherwise inferior to those of us who can be a bit OCD-ish. Quite frankly, I can be a nightmare to live with because of my innumerable rules and requirements (no shoes in the house, wash hands constantly for at least 20-30 seconds, clean up immediately after making a mess, dish towels or sponges for dishes only, counter sponges or rags for counters only, hand towels for hands only, etc., etc., etc.). My poor husband and kids! 😉
Participant[quote=svelte][quote=joec]One thing that may throw a monkey wrench in your planning is when you and your significant other decide to get married/have kids, then there will be a massive nesting instinct and you will be “forced” to buy no matter what.
[/quote]True, true.
On the other hand, unless he marries whomever he’s buying this current place with, they will force him to sell and buy something else anyway.
Brides who marry a man who already owns a home usually don’t want to make their nest in the place he spent his bachelor days in.[/quote]
Agree with Svelte’s suggestion that many women would not like to “nest” in the home where their husband lived with another woman.
OTOH, it’s not always the woman who pushes to buy vs. rent. In my family’s case, I’m the one who pushed to sell the house that I bought before marriage so that we could rent and rent/bubble-sit for a few years. My husband desperately wanted to buy another house right away.
It’s not a man vs. woman thing, but more of an emotional thinker vs. rational thinker issue.
Participant[quote=spdrun]Foreclosures and short sales may have been a symptom of a return to normal pricing, not caused the return to normal pricing.[/quote]
Exactly. Foreclosures were not the problem; they were the solution to a housing bubble.
Participant[quote=livinincali][quote=AN]I don’t see why it’s not apple to apple comparison? PITI – tax deduction would be less than rent. You’re also paying ~$600/month toward principle, while rent, it’s all gone. I guess if you want to have a pure rent vs mortgage, then compare ITI – tax deduction vs rent. This particular house, ITI with 20% down is ~$1500/month. ITI with 10% down is ~$1600/month. That’s $500-600< than comparable rent. Depending on your tax bracket, you can add ~$200 to that number as well on the buying side for tax deduction. [/quote] Probably need to include transaction costs and maintenance if you're going to give yourself the benefit of realizing the principal part of the payment.[/quote] Agreed. It's also questionable to deduct the principal payment from the expenses (or add it to equity) because that doesn't determine how much equity one has in the property. The market determines that. You can pay $1,000 toward principal every month, yet still lose $500+ each month in equity. OTOH, you can have an interest-only mortgage and see your equity shoot up $2,000/month. With real estate, timing is everything.
ParticipantFWIW, SK knows what he’s talking about regarding taxes and fiscal policies.
-
AuthorPosts
