[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=Rt.66]If I could find a common thread amongst buyers I would guess that they believe this is just another recession and NOT GD2 or a Japan style deflationary lost decades.

So let’s verify it with 2 more Questions:

1) Do you believe the “Green Shoots” PR and think we are at the end of a recession and NOT in the eye of a depression storm?

2) If so, then why do you believe this is just another run-of-the-mill recession and RE cycle?

Great responses, keep ’em coming.[/quote]

My opinion that this is indeed “green shoots” PR but I don’t think we are facing a deflationary period ahead. I think we are likely facing a mild inflationary period similar to the 1970s but less dramatically.

This recession is caused by debt and history tells us that such recession is generally slow at recovering rather than a recession caused by over-production. But the recessions in some part of the world this time are indeed caused by over-production not by inadequate saving: China is the most prominent one. Therefore, I firmly believe that EM will recover earlier than the developed country and when they do, it will drive up price inflation around the world. To make things worse, when the EM countries are standing firmer on their feet with domestic consumption growth, they have fewer reasons to rely on exports and there seems to be fewer reasons to hold down their exchange rates, which is the ultimate cause of their massive amount of the US treasury debt. So when the foreigners have less appetite for US debts, so up go our interest rate. This will hurt the recovering economy, whether it will cause an ultimate dollar collapse is hard to say but a rising interest will hurt businesses in US at all levels.

On the other hand, I think the next recession cycle (which will come pretty soon, probably as early as middle of 2010) will not be driven by a declining RE market. People may still be forced into foreclosure because of layoff, but those who can hold onto their properties in the coming economy storms will turn out fine. Don’t take excessive risks in the RE market but don’t avoid risks when the buying has already become a better financial decision over renting.

[carlsbadworker]

[quote=waiting for bottom]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

I don’t think “rational” and “timing the bottom” could come together in the same sentence, since it is the seed for great disappointment.
Let me illustrate what I meant. The price bottom is determined the aggregate demands from the buyers as a group and the aggregate supplies from the sellers as a group. A bottom seeker has a price target of what it should be…and he might be very well correct in his maths. But the trouble is that the buyers as a group is not rational, the very fact that they criticize “knife catchers are always with us”, allows the buyers as a group to bid up the price to be higher than what a rational person think where the exact bottom price lies.
A true rational bottom price will only exist when all buyers in the market are rational. Therefore, the bottom price hunter who think themselves as very rational, will unavoidably be outbid every single time, as they have been. This is especially true in this cycle when the banks are more rational in their selling pricing strategy than a normal seller would be.

[carlsbadworker]

[quote=waiting for bottom]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

I don’t think “rational” and “timing the bottom” could come together in the same sentence, since it is the seed for great disappointment.
Let me illustrate what I meant. The price bottom is determined the aggregate demands from the buyers as a group and the aggregate supplies from the sellers as a group. A bottom seeker has a price target of what it should be…and he might be very well correct in his maths. But the trouble is that the buyers as a group is not rational, the very fact that they criticize “knife catchers are always with us”, allows the buyers as a group to bid up the price to be higher than what a rational person think where the exact bottom price lies.
A true rational bottom price will only exist when all buyers in the market are rational. Therefore, the bottom price hunter who think themselves as very rational, will unavoidably be outbid every single time, as they have been. This is especially true in this cycle when the banks are more rational in their selling pricing strategy than a normal seller would be.

[carlsbadworker]

[quote=waiting for bottom]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

I don’t think “rational” and “timing the bottom” could come together in the same sentence, since it is the seed for great disappointment.
Let me illustrate what I meant. The price bottom is determined the aggregate demands from the buyers as a group and the aggregate supplies from the sellers as a group. A bottom seeker has a price target of what it should be…and he might be very well correct in his maths. But the trouble is that the buyers as a group is not rational, the very fact that they criticize “knife catchers are always with us”, allows the buyers as a group to bid up the price to be higher than what a rational person think where the exact bottom price lies.
A true rational bottom price will only exist when all buyers in the market are rational. Therefore, the bottom price hunter who think themselves as very rational, will unavoidably be outbid every single time, as they have been. This is especially true in this cycle when the banks are more rational in their selling pricing strategy than a normal seller would be.

[carlsbadworker]

[quote=waiting for bottom]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

I don’t think “rational” and “timing the bottom” could come together in the same sentence, since it is the seed for great disappointment.
Let me illustrate what I meant. The price bottom is determined the aggregate demands from the buyers as a group and the aggregate supplies from the sellers as a group. A bottom seeker has a price target of what it should be…and he might be very well correct in his maths. But the trouble is that the buyers as a group is not rational, the very fact that they criticize “knife catchers are always with us”, allows the buyers as a group to bid up the price to be higher than what a rational person think where the exact bottom price lies.
A true rational bottom price will only exist when all buyers in the market are rational. Therefore, the bottom price hunter who think themselves as very rational, will unavoidably be outbid every single time, as they have been. This is especially true in this cycle when the banks are more rational in their selling pricing strategy than a normal seller would be.

[carlsbadworker]

[quote=waiting for bottom]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.

Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.

Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]

I don’t think “rational” and “timing the bottom” could come together in the same sentence, since it is the seed for great disappointment.
Let me illustrate what I meant. The price bottom is determined the aggregate demands from the buyers as a group and the aggregate supplies from the sellers as a group. A bottom seeker has a price target of what it should be…and he might be very well correct in his maths. But the trouble is that the buyers as a group is not rational, the very fact that they criticize “knife catchers are always with us”, allows the buyers as a group to bid up the price to be higher than what a rational person think where the exact bottom price lies.
A true rational bottom price will only exist when all buyers in the market are rational. Therefore, the bottom price hunter who think themselves as very rational, will unavoidably be outbid every single time, as they have been. This is especially true in this cycle when the banks are more rational in their selling pricing strategy than a normal seller would be.

[carlsbadworker]

[quote=flu]
I’m still seeing if I can pick up cheap(er) property or a better primary….Just not holding my breath though, because I think i missed the boat (in the near term) for the more affordable stuff and the higher end stuff is still ways away. Oh well, guess that’s my message to focus on other things…

RE in China is getting interesting too…One thing…Folks have suggested buying property in Vietnam if can….Cheap labor is moving to Vietnam, coming soon to a theater near you, apparently

[/quote]

I’m too trying to figure out if I can pick up a better property one day. I’m fine with the higher end still far away because I need time to pay down my mortgage on the current one anyway.
But don’t even think about that you’d still have chance investing in RE in China. The rent to buy ratio is more outrageous there now comparing to the bubble years here. Even the price per square feet is also higher in big cities there comparing to low-cost areas here, say Temecula. But on the other hand, the carrying cost is almost zero (thanks to the cheap labors and no government property tax). People here still think that prop. 13 inflates the real estate bubble in California. Now image what 0% tax rate could do to the housing price. I heard Tata is working on low-cost housing (that has only room for a bed and with shared bathrooms, etc) in big cities in India now (besides the headline news on its cars), because apparently, since the price to income is so outrageous there, that’s all what people can afford.

[carlsbadworker]

[quote=flu]
I’m still seeing if I can pick up cheap(er) property or a better primary….Just not holding my breath though, because I think i missed the boat (in the near term) for the more affordable stuff and the higher end stuff is still ways away. Oh well, guess that’s my message to focus on other things…

RE in China is getting interesting too…One thing…Folks have suggested buying property in Vietnam if can….Cheap labor is moving to Vietnam, coming soon to a theater near you, apparently

[/quote]

I’m too trying to figure out if I can pick up a better property one day. I’m fine with the higher end still far away because I need time to pay down my mortgage on the current one anyway.
But don’t even think about that you’d still have chance investing in RE in China. The rent to buy ratio is more outrageous there now comparing to the bubble years here. Even the price per square feet is also higher in big cities there comparing to low-cost areas here, say Temecula. But on the other hand, the carrying cost is almost zero (thanks to the cheap labors and no government property tax). People here still think that prop. 13 inflates the real estate bubble in California. Now image what 0% tax rate could do to the housing price. I heard Tata is working on low-cost housing (that has only room for a bed and with shared bathrooms, etc) in big cities in India now (besides the headline news on its cars), because apparently, since the price to income is so outrageous there, that’s all what people can afford.

[carlsbadworker]

[quote=flu]
I’m still seeing if I can pick up cheap(er) property or a better primary….Just not holding my breath though, because I think i missed the boat (in the near term) for the more affordable stuff and the higher end stuff is still ways away. Oh well, guess that’s my message to focus on other things…

RE in China is getting interesting too…One thing…Folks have suggested buying property in Vietnam if can….Cheap labor is moving to Vietnam, coming soon to a theater near you, apparently

[/quote]

I’m too trying to figure out if I can pick up a better property one day. I’m fine with the higher end still far away because I need time to pay down my mortgage on the current one anyway.
But don’t even think about that you’d still have chance investing in RE in China. The rent to buy ratio is more outrageous there now comparing to the bubble years here. Even the price per square feet is also higher in big cities there comparing to low-cost areas here, say Temecula. But on the other hand, the carrying cost is almost zero (thanks to the cheap labors and no government property tax). People here still think that prop. 13 inflates the real estate bubble in California. Now image what 0% tax rate could do to the housing price. I heard Tata is working on low-cost housing (that has only room for a bed and with shared bathrooms, etc) in big cities in India now (besides the headline news on its cars), because apparently, since the price to income is so outrageous there, that’s all what people can afford.

[carlsbadworker]

[quote=flu]
I’m still seeing if I can pick up cheap(er) property or a better primary….Just not holding my breath though, because I think i missed the boat (in the near term) for the more affordable stuff and the higher end stuff is still ways away. Oh well, guess that’s my message to focus on other things…

RE in China is getting interesting too…One thing…Folks have suggested buying property in Vietnam if can….Cheap labor is moving to Vietnam, coming soon to a theater near you, apparently

[/quote]

I’m too trying to figure out if I can pick up a better property one day. I’m fine with the higher end still far away because I need time to pay down my mortgage on the current one anyway.
But don’t even think about that you’d still have chance investing in RE in China. The rent to buy ratio is more outrageous there now comparing to the bubble years here. Even the price per square feet is also higher in big cities there comparing to low-cost areas here, say Temecula. But on the other hand, the carrying cost is almost zero (thanks to the cheap labors and no government property tax). People here still think that prop. 13 inflates the real estate bubble in California. Now image what 0% tax rate could do to the housing price. I heard Tata is working on low-cost housing (that has only room for a bed and with shared bathrooms, etc) in big cities in India now (besides the headline news on its cars), because apparently, since the price to income is so outrageous there, that’s all what people can afford.

[carlsbadworker]

[quote=flu]
I’m still seeing if I can pick up cheap(er) property or a better primary….Just not holding my breath though, because I think i missed the boat (in the near term) for the more affordable stuff and the higher end stuff is still ways away. Oh well, guess that’s my message to focus on other things…

RE in China is getting interesting too…One thing…Folks have suggested buying property in Vietnam if can….Cheap labor is moving to Vietnam, coming soon to a theater near you, apparently

[/quote]

I’m too trying to figure out if I can pick up a better property one day. I’m fine with the higher end still far away because I need time to pay down my mortgage on the current one anyway.
But don’t even think about that you’d still have chance investing in RE in China. The rent to buy ratio is more outrageous there now comparing to the bubble years here. Even the price per square feet is also higher in big cities there comparing to low-cost areas here, say Temecula. But on the other hand, the carrying cost is almost zero (thanks to the cheap labors and no government property tax). People here still think that prop. 13 inflates the real estate bubble in California. Now image what 0% tax rate could do to the housing price. I heard Tata is working on low-cost housing (that has only room for a bed and with shared bathrooms, etc) in big cities in India now (besides the headline news on its cars), because apparently, since the price to income is so outrageous there, that’s all what people can afford.

[Author]

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