[cashman]

It is my observation that incomes are indeed up, substantially, and not just mortgage bankers or loan AEs. Just look at the starting salaries of police officers, school teachers and the likes. I remember when they were pretty lowly paying jobs, but no more. I know a couple of highway patrol guys that make over $100K a year. And many teachers make over $60K for nine months of work. And don’t forget the hordes of mom and pop self employed. Much of their reported incomes are very conservative. Someone has been buying all these overpriced properties, and they’re not all subprime. Just something to ponder.

[cashman]

Brother, I hope you are right, but I’m not seeing it here in the Diamond Bar area. There are new townhomes here for sale that are selling from $550 to $750K, and sales are brisk. They are total pieces of crap, and I just don’t understand it. I am currently renting a home that the owner listed for $1.1M. Every other day it has a showing. Driving me nuts! There are definitely buyers out there, fools as they may be. Prices here have not eroded hardly at all since the so called peak in late ’05. It frustrates the hell out of me. It doesn’t seem to be an isolated phenomenon here. I’m seeing the same stickiness of prices in Irvine, North O.C., and most of the San Gabriel Valley. I think money is still too easy to get. Despite what we’re reading about the sub-prime mess, I still hear ads on the radio for loans for people with bad credit. I checked out Craigslist and there are several houses listed with no money down, no credit needed offers, just in my area alone. And the prices are still sky high. I don’t see a significant drop on the horizon unless the traffic of potential buyers dries up. And that’s just not happening now.

[cashman]

Sell as fast as you can. Take advantage of the temporary dead cat bounce in the market. Take the money and run! Rent, park your money in a CD or high yield money market, put a portion, say 10 percent, in gold. Rent until the end of 2008, then assess the market at that time. There is no reason to buy any sooner. You might be surprised that you can afford a home where you really want to buy.

[cashman]

Borat,
Don’t buy a little GLD, buy ALOT of GLD! Did you see gold touch upon $700 an ounce last week? Look at the charts, it’s making it’s move. Any world crisis would only accelerate that move. I’m not a doom and gloomer, but I think it makes sense for everyone to have a portion of their portfolio in gold. About 10 percent or so.

[cashman]

Diego Mamani, that’s what I mean. Is it possible that we have moved into a new era of permanently low interest rates? I remember when I bought my first house in 1980, I got a 10.75% fixed loan. I thought, wow what a good deal, as the rates were typically around 12% then. I remember my friend and I saying that “yeah, we’ll never see rates again under 10 percent”. It just shows you that just when you think you have figured out the game, they change the rules. Now, many people think that we have very low rates and they couldn’t possibly get lower. Well, guess what? Maybe, just maybe these are now the new normal, and the range could be anywhere from 4-7 percent. Maybe we’re living in yesteryear, and it’s time to shift our thinking with the changing times and world economies.

[cashman]

Like I’ve said before, what scares me to death is the possibility that the Fed will lower rates back to the level of a couple of years ago, which started this mania in the first place, which could lead the banks to lower mortgage rates to under 5 percent, perhaps 4 percent. That would spark a new round of buying, and we’re off the the races again! I really hope that doesn’t happen, as I’m renting on the sidelines, and waiting, patiently.

[cashman]

If Helicopter Ben does what he promised, then we might see interest rates drop to under 5 percent. Remember, they did touch upon 4.875 a couple of years ago. What if the economy really does slip into recession, like Roubini predicts, and it gets uglier than anyone expects, and interest rates get closer to 4 percent? As crazy as this may sound, I think you would have a small window of opportunity before houses doubled in price again to make your move. Perhaps I’m talking out of my butt, but did anyone think we would see the craziness of the past five years in year 2000? I certainly didn’t, as I regretably sold four of my investment properties in 2000-2002, barely recouping my losses of the nineties. In hindsight, we all know the market was just taking off, and I made a serious timing blunder. All because of perception. I was duped into thinking it couldn’t go much higher. We may all be fooled again this time around if rates dip under 5 percent…and stay there!

[cashman]

Somehow I got on these guys lists and they call me almost every other day. Good thing I have caller ID, so I know when “Fischer Investments” comes up I just don’t answer. I think they run a boiler room.

[cashman]

At your age, I was facing a similar situation. I had enough saved up from my business to pay cash for a custom home I had built in Diamond Bar. This was in 1988, and it cost me $435K. I was debating whether or not to pay all cash, which was mostly all my savings, or to finance a part of it. I decided to pay all cash, and I never looked back. The feeling of having no house payments at 30 years old was indescribable. I felt free. Really free. Six years later, the average holding period as SD Realtor says, I bought another home, again for cash, this time $1.275M. In late 2005, I sold that house for $2.0M and put the cash in the bank, as fast as I could! I am now renting. Get the point? I believe I was able to do this primarily due to all the interest I saved by not having a mortgage. I believe in cash. In God We Trust, all others should pay CASH!

[cashman]

BigRig, thanks for the prescription. I’m sure that will make me feel better. Let’s be honest, no matter what anybody says, when you’re a renter, you just don’t feel secure. For example, a few months ago, my landlord put this place up for sale. Obviously, no takers, yet. And I know I can always move to another rental, but that’s not the point. At age 50+, I just want to settle down and relax. I’ve even entertained thoughts of moving out of state to a more “normal” area, but I still have a good business to run here, which nix’s that idea. What’s killing me is how slowly this market is deteriorating. I’m not trying to time the bottom perfectly, I just don’t want to feel stupid by buying again near the top, which is where we still are. If this cycle plays out anything like the last, and I suspect it will, then we still have about five more years to go. I’m going to try to hang tough, keep in touch with this board regularly, and keep looking at those bank statements!

[cashman]

nsr, I guess my main concern is that if we have a prolonged slow bleeding in the housing market, will the cost of my rent equal the depreciation of any potential house that I may buy now. In that case, wouldn’t it be better pschologically to live in your own home vs. a rental during the “bleeding” years. I think that might apply to anyone in this situation. It seems like the wild card is how much will housing drop. Obviously if we’re going down greater than 30 percent, then no one should be owning. But if it’s a slow bleed, like it’s been the past year or so, then maybe a lower priced home with a lower dollar downside might equal the loss of renting.

[cashman]

Blackbox, I know there’s some humor in your comments, but let me set the record straight. My parents didn’t leave me a spec home. I am 52 years old and I had that home built for me in 1994. Since I paid it off a few years ago, practically my entire nest egg was represented by that house. That made me uncomfortable, as they say not to put all your eggs in one basket. As my kids grew up and moved out, I didn’t need such a large home anymore, so I sold. Yes, I feel fortunate to have gotten out when I did. But now I feel a little strange renting, since I haven’t rented anything since I was in my early twenties. I am not bragging about anything, just posting numbers so any of you can make informed comments. What I like about this website is how you guys (and gals) don’t hesitate to speak openly. Thanks for letting me be a part of it.

[Author]

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