Forum Replies Created
-
AuthorPosts
-
CoronitaParticipant[quote=spdrun]Skelldumps have happened at least 4 times in the lifetimes of anyone over 30. 1987, 1991, 2001, and 2008. A dump where skells get burnt and the smart profit isn’t a once in a lifetime thing, more of a once in a decade thing.[/quote]
1985-1991 was know as the Savings and Loan crisis… Again, loose lending standards, and loans available to less than credit worthy entities.
2001 was hardly a real estate “correction”…. That was when the .dot com bursted AND a 9/11 terrorist attack….The bulks of any sort of RE “correction” was in the Bay Area tech heavy location, and even there it wasn’t anywhere close to the 40-50% off some of you think happened…. I was there, and homes weren’t selling at 40-50% off except maybe east palo alto…. It’s was more like this:
Again, my guess is that steep discount across the board seems to happen when banks get crazy with their loans and offers it to the most unqualified people that have no business of borrowing/buying…..I don’t think we’re there yet in the current cycle…. Trump/GOP might change that if they deregulate banks… But, it doesn’t appear to have happened yet… Loan standards still look pretty strict. And if that were to happen, I’m thinking we’ll get crazy people with no concept of moral hazard doing the exact same thing again…overpaying even MORE for homes they really can’t afford….
The question is whether you (and kev’s) strategy of trying to time the markets every 10 years or so and put all your eggs into those precisely timed entry points you and kev think is so obvious will benefit you more than doing the long slow trickle thing that most other people do to build wealth, essentially missing out on any sort of opportunity that happens in between, which tends to be longer periods of time I think. You and kev might be one of the exceptions that do better…Or you might be like most others that tried market timing and did considerably worse. Only time will tell. Your life and your nest egg….
CoronitaParticipant[quote=moneymaker]Good banter. The average 401k is the same as the average home equity for the average person. So what would hurt more a stock drop or a real estate plunge? Before 2008 i would have said that a real estate plunge would take longer and give people time to exit, but no longer. The real question in my mind is if things are as rosy as the markets and employment numbers say they are then why isn’t gold down around $1000? Luck has been on my side so far but I recognize that it was just luck. We have an interesting situation now economically where the markets are hot and yet people like Carl Icahn and Bill Ackman are losing money,weird. I’ve increased my 401k contribution to lower my taxes but beyond that I have no investment advice. P.S.- Herbal life, clearly an investment pyramid, is up for the year as is McDonalds. Who would have believed that people would still be paying $5 for coffee that they could make at home for pennies on the dollar.[/quote]
Neither, if you aren’t planning to touch it for some time..And if your close to retirement, your 401k probably should be mostly in stock, but instead in cash or fixed income…just for the reason stated…in case it drops for a few years while you need it.
CoronitaParticipant[quote=kev374][quote=flu]Because from all your historical posts, the only time it appears you would be comfortable to buy is an ideal situation in which there is a huge economic demise such that everyone else gets wiped out and housing is 50+% off, [/quote]
you make that statement like it hasn’t happened ever in the past…it’s happened in the very recent past, prices crashed 40% in 2008. Memories are short. It’s happened in the past and there are indicators we are heading in the same direction.
The lady in the video is selling gold but that wasn’t in context to what she was presenting. In addition she just presented some facts and said time will tell what happens. If her data is wrong then it would be make for a better response to refute it specifically than just calling her names..
You debate vehemently against a downturn yet do not provide any facts whatsoever. Please provide hard data as to why you think prices will NOT fall?
Yes, it’s true that I don’t have a crystal ball, but you don’t either. The bottom could fall out tomorrow and real estate could crash 40% again just like in ’08, the truth is nobody can know for sure. But you guys act like the downside can NEVER happen but of course the UPSIDE can because you are all vested in that area… this is not rational thinking, rather it is you who are looking at the situation with rose colored glasses just the the huge number of fools that did so in 2008.[/quote]
I’m only making 3 statements….
1. The real estate crash of 2007 and the one during the S&L crisis in the 80ies all had the recipe of loose lending standards given a lot of people who otherwise aren’t credit worthy the ability to buy homes they have no real ability to pay for.
Home prices might trickle down, but it’s all about staying power…People who weren’t very credit worthy had no way to weather any sort of blip in the economy. Most people are putting at least 20% down, some even more, especially in SoCal. For every one of your peers that is stretched thing, I can point at many equivalent peers who have no problem managing their debt load or have no debt on any of their homes they own. NorCal and SoCal are quite different from rust belt/blighted regions of the US which has no chance of recovering.2. Home prices didn’t crash 40-50% across the board all over SoCal and NorCal. IT wasn’t a “widespread thing”. It was a widespread thing in particular demographics where again sketchy financing, sketchy buyers with sketchy income was more prevalent. Did home prices crash 40-50% in Newport Beach on average? What about La Jolla?
3. I really don’t understand the fascination of trying to predict a catostrophic crash that *might* happen god knows when maybe in your lifetime, and then basing a majority of one’s financial decisions on that one time event… (Deja vu…)….As I said before, it’s a parodox that I don’t think folks that subscribe to these extreme viewpoints understand….IF that were to happen, you would be just as affected as anyone else that depends on a W2/1099 paycheck. You’re in IT… I think during the real estate bust, you went unemployed for some time. The same reasons why you didn’t buy during the last bust would be exactly the same reason why you aren’t going to buy in the next bust cycle if it happens.
Before you go off an assume I’m bullish. I’m not… I don’t care which way the home prices are going to go. I don’t plan on selling. I plan on milking as much rental income as possible and passing my portfolio to my heirs so they can enjoy an easier life. The exception would be if I can get 3-4x of what I paid for those properties, then I might sell…… I don’t deny a “correction” can happen… I just don’t plan all my financial decisions based on that it will happen. Seems like a losing proposition….
CoronitaParticipant[quote=kev374][quote=flu]FThat still doesn’t explain the 2/3 to 3/4 people who aren’t foreign investors that are still buying. Institutional buying at these levels? no way…[/quote]
People with good credit and good high income jobs, particularly dual high income earners. In a recession they are laid off the first. Even very responsible people are willing to highly leverage themselves with real estate based on their current financials with the mindset that it is the responsible thing to do because home ownership is a responsible activity – that is the common wisdom.
I know plenty of very responsible people who lost or almost lost their homes due to job loss during the last crash.
The key thing is that we are overdue for a recession and the political climate is also very tenuous. Is this pessimism on my part, I would just call it being guarded – history tells us the good times don’t last forever. Recessions happen and the fallout from the next one could be serious.[/quote]
If you say so…Like i said, trying to predict a future, you’re better off throwing darts……
Frankly, I don’t think you will ever be ready for home ownership. Because from all your historical posts, the only time it appears you would be comfortable to buy is an ideal situation in which there is a huge economic demise such that everyone else gets wiped out and housing is 50+% off, but magically you survive from layoffs, and emerge from it better than others and also be in position to buy…. That’s despite your financial dependency being the same as everyone else that will be losing their job… If you really believe that we are headed for a huge recession, then being you are an IT worker, you will be laidoff just like everyone else you think will be (probably even earlier, because IT projects get cut early and shipped abroad at the slightly misses of a a company’s wall street profit goals…it’s an expense)…..That is, unless you no longer count on your job to pay the bills.
It’s the classic paradox we see time and time again by folks posting here, over and over and over again…Magically, despite most of us being not that much different from everyone else, that gets affected the same way by the say economic conditions, magically some of us feel we will be immune versus others…As you say, being financially responsible doesn’t mean you won’t get laidoff, or lose your job, or make you any more prepared in a large economic shitstorm, anymore so than last time when the shitstorm hit, and you were having a hard time finding an IT job…..So it appears, you’re just looking for reasons not to buy…ever….which is really fine… Home ownership isn’t really needed… it depends on each and every one of us, and what each and every one of us wants to get out of it.or not…
Sorry. I’m just calling it as I see it…Just saying….
CoronitaParticipantForeign investors we already covered this. They at most make up of 1/4-1/3 of purchases at the high end…That still doesn’t explain the 2/3 to 3/4 people who aren’t foreign investors that are still buying. Institutional buying at these levels? no way…
.And the foreign investors you are probably referring to, ie China investors, aren’t just “investors”. We’ve already covered this over and over again… Unlike Japan, China investors aren’t just parking their money here in the U.S…They are buying as plan B in case of political instability that will throw the wealthy class into jail.
I know for people in this country it’s a concept really hard to understand. But look at those activists who are investigating Ivana Trump’s sweetshops in China… One has been arrested and the other two just “disappeared”….This sort of arbitrary thing is what keeps the wealthy there concerned, because any sort of regime change, you can easily be the next target.
Unless the government significantly changes in in China (which it won’t for a long time), that sort of instability will always be concern for the 0.1% wealthy there…unlike taiwan, japan, korea…And with a billion people, 0.1% is still a lot of people….
Just look at what’s going on….MiraMesa slowly turning into something that is reminiscent of what happened in places like Diamond Bar.[img_assist|nid=26340|title=yumyum|desc=|link=node|align=left|width=400]
Just happening lately, a bunch of targeted businesses specifically for the asian community, in SD which historically been small…this is happening because there is a demand for it. demographics is changing significantly.Probably because the rest of SoCal is saturated and now San Diego is getting the spillover effect..And it isn’t going to let up, especially that Trump crew now just greenlighted encouraging investment immigration (invest $500k+, get a greencard)…Looks like Emerald, Jasmine, Ding Ta Fung in UTC now has even more competition…..
CoronitaParticipant[quote=kev374]just because lending standards are tight does not mean speculators do not exist. The speculators this time around have been private equity and foreign investors, this is a widely known fact. It’s a repeat of the past but just the actors are different.
It’s not a matter of IF but when the next recession occurs and rents start softening. Oh yes, all the experts here proclaim that rents never fall – that is utter BS. I know during the last crash my rent fell by 30% in south OC, rents were crashing as well. What happens to all the rental investments, the rental backed securities held by private equity? Will they start bailing?
I am not saying that I know what is going to happen, but completely dismissing the possibility that prices are over inflated is completely short sighted.[/quote]
If it floats your boat….If you say so…Meanwhile life goes on…
CoronitaParticipantHere’s food for thought. If loan standards are still strict, what is allowing people to purchase expensive RE here in SoCal….
Or are we now assuming lending standards aren’t so strict….
CoronitaParticipant[quote=kev374][quote=flu]
people want to believe what they want to believe, especially if they are sitting on the sideline in the opposite direction of the trend…imho…[/quote]funny, I heard the same comments prior to the last crash! Some of the comments by users and economists here are very reminiscent of 2006 where contrarians were mocked and we know what happened shortly thereafter.
Her style may be unusual and there may be some conjecture but I do agree with the overall sentiment that things are getting very frothy in many markets. Then there are many upcoming wildcards – rising interest rates, a possible recession and incomes that are falling in real terms.[/quote]
I’m still waiting for all those people who recently took out a stated income ARM jumbo loans start defaulting on their $1+million mortgages….Oh wait, they don’t really exist in mass quantities do they, because for practical purposes, lending standards are still pretty tight such that you can’t easily take a stated income $1+million loan when your salary is $100k or less, unlike what happened before….
The nice thing about the equity markets and the economy of the past few years is that generally it has been good, and those windfalls allowed people to eat away at debt…That’s one of the reason why I don’t carry any mortgages on anything anymore except 1…..Again, minimizing risk for a rainy day by taking unexpected windfalls to reduce outstanding debt, “just in case”. And for those folks that are locked in a historical low 3%ish 30 year fixed or <3% 15 year fixed, it would probably cost them more to move and rent than to stay. Deal of a lifetime for those folks.
Those primary homes make excellent rental properties and assets to pass on to heirs with extremely favorable tax benefits....Especially with CA property tax rules and with federal rules regarding "step-up" cost basis upon death...
essentially wiping out depreciation recapture and resetting capital gains cost basis of those properties for your kids, i believe....No worries. Even if home prices were to correct 20%, it probably still wouldn't be a good time to buy, since home prices could probably still fall an additional 40+%, just like last time... 🙂
.CoronitaParticipant[quote=harvey]What’s up with the video quality?
I stopped about 30 seconds in after she held up a piece of paper with a graph, made no mention of any numbers, and then concluded “real estate is clearly back in bubble territory.”[/quote]
people want to believe what they want to believe, especially if they are sitting on the sideline in the opposite direction of the trend…imho…
May 29, 2017 at 8:20 PM in reply to: San Diego real estate is very undervalued compared to rent #806750CoronitaParticipantCouple sounds to be inexperienced jackazzes. Gonna come back and bite them in the azz, if they find a professional renter like this lady…
It would be too funny.
But in reality, it’s probably a joke.
May 29, 2017 at 8:19 PM in reply to: San Diego real estate is very undervalued compared to rent #806752CoronitaParticipantWell, anyone can say they attend a particular school…Question is if the guy will pass the bar…
The LOL will be if a professional renter moves in….
Professional renter + Owner’s pitbull + Fake Dogbite => Owner wishing he had umbrella insurance and went to Harvard law school …..
That said, this has got to be a joke making fun of the housing situation….
CoronitaParticipant[quote=FlyerInHi]America doesn’t like turtoise that plugs along slowly over a lifeltime. There is no good hero story to tell. Except at the end when he lives his whole estate to charity.
America likes rabbits who run races that can be quantified with a score. Winning races is even better. A holistic approach to life that emphasize the totality is boring.[/quote]
The problem is that most people think they are all going to end up winning first place….Then reality hits….No plan B.
CoronitaParticipant[quote=spdrun]That’s money you can’t touch tax-free till you’re 65. Whereas property gives tax-advantaged income virtually immediately. (Barring drastic tax changes.)[/quote]
Wrongo… Actually, if you wanted to you could touch it and borrow against it, and pay yourself 4%, up to some of the plan’s conditions. I did just that to bridge all cash property purchase before I could cash out refinance. Now, some financial planners say thats a bad idea because if you borrow all against it, you’re not really putting your money to work for you, so most plans try to limit want can be borrowed. The thing about tax deferred (and in the case of Roth tax exempt), gains compound without taking a tax hit… So if you really wanted to go in and out of a funds, there would be no tax consequences.
Even if you didn’t contribute to a 401k, but tucked $18k into normal index fund account, it would have almost the same results..There is a slight tax hit from capital gains/dividends…But index funds don’t usually churn that much each year wrto cap gains and dividends, so there’s not as much of a tax hit each year (as opposed to actively managed funds).
I’m not disagreeing with the tax advantages of real estate investments, when that option is there. But waiting indefinitely for that one shot hit, well like I said, you are giving (gave?) up a huge opportunity, simply because it seems you just wanted to be right while you wanted the majority of others to be wrong…whether you want to admit it or not.
You aren’t going to really do that much better banking on a one shot hit relative to others who’s been doing the old slow drip/invest/planning thing all along…Rabbits that take power naps in between work always lose to tortoises that’s been working slowly, and more consistently for a lot longer. Everyone knows that.
CoronitaParticipanthttp://www.pensionrights.org/publications/fact-sheet/retirement-plan-contribution-and-benefit-limits
2017 401k Contribution limits are $18k.
For those of you with the option to contribute to either a traditional 401k or a Roth 401k or split contribution between the two, that’s a no brainer, especially if your employer also does a $5-10k+ match on top of that.
$18k contributions each year with 4% annual return is about $828k after 25 years
$18k contributions each year with 5% annual return is about $963k after 25 years
$18k + 5k employer match each year with 4% annual return is about $1.06m after 25 years
$18k + 5k employer match each year with 5% annual return is about $1.23m after 25 yearsWhy gamble your entire retirement on a one hit epic guess being correct on the direction of the stock market…when that one hit epic guess could end up turning out to be an epic failure for your retirement?
Let time do it’s work…
-
AuthorPosts
