[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

pepsi, sorry I wasn’t clear. I included property taxes as part of the mortgage payment since the they’re both tax deductible. So, when I say “mortgage payment” I really mean “mortgage and property taxes combined.” My mistake.

[davelj]

WTE, I just used an interest-only, zero down payment loan to make an apples-to-apples comparison with rent. Otherwise, you have to take into account paying down principal each month and the opportunity cost of lost interest on the down payment. I just wanted to simplify the math and thought process. But, yeah, the “renting with benefits” captures the same idea.

Patientlywaiting, yeah the break-even holding period expands if you have to sell. No doubt about it. I didn’t include that in the analysis because that’s always the case if you buy, regardless of what you pay. Selling expenses are part of every sale transaction. But, yeah, I’m assuming that the buyers have a long term orientation.

My real objective here was merely to point out that if you think you’re going to live in a place for a long time, then timing the ultimate bottom along with its corresponding trough price is probably not as important financially as merely getting within 10%-15% or so because the advantage to renting declines with each passing year as housing price declines move toward that lower asymptote with a negative second derivative, in calculus terms. That is, as prices decline at a decreasing rate, the marginal benefit to renting declines as well.

Anyone who wants to live long-term in Chula Vista or Murietta, to use two examples, and can buy a house or condo for (a) less than it would cost them to rent the same place, and (b) 50% off peak pricing, probably won’t have many regrets five years down the road, despite the fact that there may be some modest declines still ahead and that prices may not actually turn up for many years.

For most of SD, however, this doesn’t apply (yet). Most SFRs are still too expensive, albeit less so with each passing month. But we already know that.

[davelj]

WTE, I just used an interest-only, zero down payment loan to make an apples-to-apples comparison with rent. Otherwise, you have to take into account paying down principal each month and the opportunity cost of lost interest on the down payment. I just wanted to simplify the math and thought process. But, yeah, the “renting with benefits” captures the same idea.

Patientlywaiting, yeah the break-even holding period expands if you have to sell. No doubt about it. I didn’t include that in the analysis because that’s always the case if you buy, regardless of what you pay. Selling expenses are part of every sale transaction. But, yeah, I’m assuming that the buyers have a long term orientation.

My real objective here was merely to point out that if you think you’re going to live in a place for a long time, then timing the ultimate bottom along with its corresponding trough price is probably not as important financially as merely getting within 10%-15% or so because the advantage to renting declines with each passing year as housing price declines move toward that lower asymptote with a negative second derivative, in calculus terms. That is, as prices decline at a decreasing rate, the marginal benefit to renting declines as well.

Anyone who wants to live long-term in Chula Vista or Murietta, to use two examples, and can buy a house or condo for (a) less than it would cost them to rent the same place, and (b) 50% off peak pricing, probably won’t have many regrets five years down the road, despite the fact that there may be some modest declines still ahead and that prices may not actually turn up for many years.

For most of SD, however, this doesn’t apply (yet). Most SFRs are still too expensive, albeit less so with each passing month. But we already know that.

[davelj]

WTE, I just used an interest-only, zero down payment loan to make an apples-to-apples comparison with rent. Otherwise, you have to take into account paying down principal each month and the opportunity cost of lost interest on the down payment. I just wanted to simplify the math and thought process. But, yeah, the “renting with benefits” captures the same idea.

Patientlywaiting, yeah the break-even holding period expands if you have to sell. No doubt about it. I didn’t include that in the analysis because that’s always the case if you buy, regardless of what you pay. Selling expenses are part of every sale transaction. But, yeah, I’m assuming that the buyers have a long term orientation.

My real objective here was merely to point out that if you think you’re going to live in a place for a long time, then timing the ultimate bottom along with its corresponding trough price is probably not as important financially as merely getting within 10%-15% or so because the advantage to renting declines with each passing year as housing price declines move toward that lower asymptote with a negative second derivative, in calculus terms. That is, as prices decline at a decreasing rate, the marginal benefit to renting declines as well.

Anyone who wants to live long-term in Chula Vista or Murietta, to use two examples, and can buy a house or condo for (a) less than it would cost them to rent the same place, and (b) 50% off peak pricing, probably won’t have many regrets five years down the road, despite the fact that there may be some modest declines still ahead and that prices may not actually turn up for many years.

For most of SD, however, this doesn’t apply (yet). Most SFRs are still too expensive, albeit less so with each passing month. But we already know that.

[davelj]

WTE, I just used an interest-only, zero down payment loan to make an apples-to-apples comparison with rent. Otherwise, you have to take into account paying down principal each month and the opportunity cost of lost interest on the down payment. I just wanted to simplify the math and thought process. But, yeah, the “renting with benefits” captures the same idea.

Patientlywaiting, yeah the break-even holding period expands if you have to sell. No doubt about it. I didn’t include that in the analysis because that’s always the case if you buy, regardless of what you pay. Selling expenses are part of every sale transaction. But, yeah, I’m assuming that the buyers have a long term orientation.

My real objective here was merely to point out that if you think you’re going to live in a place for a long time, then timing the ultimate bottom along with its corresponding trough price is probably not as important financially as merely getting within 10%-15% or so because the advantage to renting declines with each passing year as housing price declines move toward that lower asymptote with a negative second derivative, in calculus terms. That is, as prices decline at a decreasing rate, the marginal benefit to renting declines as well.

Anyone who wants to live long-term in Chula Vista or Murietta, to use two examples, and can buy a house or condo for (a) less than it would cost them to rent the same place, and (b) 50% off peak pricing, probably won’t have many regrets five years down the road, despite the fact that there may be some modest declines still ahead and that prices may not actually turn up for many years.

For most of SD, however, this doesn’t apply (yet). Most SFRs are still too expensive, albeit less so with each passing month. But we already know that.

[davelj]

WTE, I just used an interest-only, zero down payment loan to make an apples-to-apples comparison with rent. Otherwise, you have to take into account paying down principal each month and the opportunity cost of lost interest on the down payment. I just wanted to simplify the math and thought process. But, yeah, the “renting with benefits” captures the same idea.

Patientlywaiting, yeah the break-even holding period expands if you have to sell. No doubt about it. I didn’t include that in the analysis because that’s always the case if you buy, regardless of what you pay. Selling expenses are part of every sale transaction. But, yeah, I’m assuming that the buyers have a long term orientation.

My real objective here was merely to point out that if you think you’re going to live in a place for a long time, then timing the ultimate bottom along with its corresponding trough price is probably not as important financially as merely getting within 10%-15% or so because the advantage to renting declines with each passing year as housing price declines move toward that lower asymptote with a negative second derivative, in calculus terms. That is, as prices decline at a decreasing rate, the marginal benefit to renting declines as well.

Anyone who wants to live long-term in Chula Vista or Murietta, to use two examples, and can buy a house or condo for (a) less than it would cost them to rent the same place, and (b) 50% off peak pricing, probably won’t have many regrets five years down the road, despite the fact that there may be some modest declines still ahead and that prices may not actually turn up for many years.

For most of SD, however, this doesn’t apply (yet). Most SFRs are still too expensive, albeit less so with each passing month. But we already know that.

[davelj]

This bank’s been in trouble for many months now. It’s been a high-risk-to-fail institution for almost a year. There’s a greater than 50% likelihood that it will fail in the next 6 months. It might get recapitalized… but I doubt it. And if it does get recapped, it’ll happen below $2/share. VNBC is another one that’s likely to fail.

[davelj]

This bank’s been in trouble for many months now. It’s been a high-risk-to-fail institution for almost a year. There’s a greater than 50% likelihood that it will fail in the next 6 months. It might get recapitalized… but I doubt it. And if it does get recapped, it’ll happen below $2/share. VNBC is another one that’s likely to fail.

[davelj]

This bank’s been in trouble for many months now. It’s been a high-risk-to-fail institution for almost a year. There’s a greater than 50% likelihood that it will fail in the next 6 months. It might get recapitalized… but I doubt it. And if it does get recapped, it’ll happen below $2/share. VNBC is another one that’s likely to fail.

[davelj]

This bank’s been in trouble for many months now. It’s been a high-risk-to-fail institution for almost a year. There’s a greater than 50% likelihood that it will fail in the next 6 months. It might get recapitalized… but I doubt it. And if it does get recapped, it’ll happen below $2/share. VNBC is another one that’s likely to fail.

[davelj]

This bank’s been in trouble for many months now. It’s been a high-risk-to-fail institution for almost a year. There’s a greater than 50% likelihood that it will fail in the next 6 months. It might get recapitalized… but I doubt it. And if it does get recapped, it’ll happen below $2/share. VNBC is another one that’s likely to fail.

[davelj]

In a metropolitan area as large and diverse as San Diego’s, the human eye is not going to pick up a recession looking at parking lots and restaurant crowds. Remember that in a recession unemployment might increase by 2-4 percentage points. You’re not going to “see” that. The economy might decline by a couple of percentage points per year. You’re not going to “see” that. But a business that has a 5% net profit margin and sees sales decline by 5% is going to “feel” that big time because their costs probably increased despite the decline in sales. As I often like to repeat here, “Everything important in economics happens ‘at the margin’.” The “margin” is not typically visible to the naked eye in terms of crowds, etc. But it shows up in the reported numbers, whether tax rolls, profits, etc.

One area that the naked eye does “see” the recession is in housing. The foreclosure signs, closed up mortgage/real estate offices, etc. are visible. That’s unusual. And it shows you just how bad things are eventually going to be.

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