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September 6, 2007 at 7:06 AM in reply to: San Diego Inventories flat year over year . . . other southwest/Calif. markets all higher. Why? Is SD near a bottom? #83535
Fearful
ParticipantI think there is a great deal of noise in the inventory numbers. Look, for example at how much inventories fluctuate week to week on the main page. With those figures, one would conclude that the Florida real estate market is in fine shape.
Why there is so much noise in those figures is a question I leave to the more experienced among us.
ParticipantWhat is this obsession with bottoms?
Because it is rude to stare at tops.
Participant“Why ANYONE who can read and has an I.Q. over 80 would buy a home for investment or as a principal residence before late 2009 (at the earliest) simply escapes my comprehension.”
Ditto, but people are slow to learn. Thus the down slope accelerates. People buy, thinking that prices couldn’t possibly go down further, then they complain bitterly to everyone they meet when they find out they were wrong. The malaise spreads until the last bull is silenced. That is the bottom.
Participant“Change the rules of foreclosure. Instead of banks beginning the foreclosure process, owners should have the option to rent their house, at a fair-market rate determined by an independent appraiser. And they can stay indefinitely. The bank will own the house. This isn’t a windfall for the homeowner. But they’re not on the street. Whoever buys the house would have to deal with the renters, letting them stay.”
I see this as accelerating the price declines and double punishing the banks. One, they are forced to write off the loan, and two, they are forced to try to sell the REO with unhappy renters – worse, folks who probably feel some sense of entitlement to the house – attached. Furthermore, these houses would only sell to investors, not for owner occupied. Hard to quantify but I bet the discount would be substantial.
Man this whole thing is gonna get ugly. Thank god I am a renter; my only fear is that our government hyperinflates itself out of this situation … on top of how sour the public sentiment will become.
ParticipantConsidering the antagonism some women have toward men, I’m surprised that those women are married to men. It seems like they would be happier as homosexuals, mated with their own kind.
ParticipantConsidering the antagonism some women have toward men, I’m surprised that those women are married to men. It seems like they would be happier as homosexuals, mated with their own kind.
ParticipantConsidering the antagonism some women have toward men, I’m surprised that those women are married to men. It seems like they would be happier as homosexuals, mated with their own kind.
ParticipantNew Guy, partly right.
It is all quite confusing, because there are three separate dynamics. One is the performance of the underlying asset. Second is the after-tax cost of ownership versus renting the same asset. Third is the leverage.
You generally have addressed the three factors correctly, except for this: Leverage does not increase the inherent returns of an investment, but rather increases the risk of those returns. Your example was of the underlying asset increasing in value 4% year over year, but what about in the situations in which prices decrease? You easily lose your entire down payment, your credit is screwed, you maybe have to declare bankruptcy … plus, to add insult to injury, the IRS comes after you for the implied income of the debt forgiveness. Leverage is wonderful when it works in your favor, and downright awful when not.
Plus, the huge negative to housing is the transaction cost. You don’t pay 5-7% to sell a stock, no matter how leveraged you are.
ParticipantNew Guy, partly right.
It is all quite confusing, because there are three separate dynamics. One is the performance of the underlying asset. Second is the after-tax cost of ownership versus renting the same asset. Third is the leverage.
You generally have addressed the three factors correctly, except for this: Leverage does not increase the inherent returns of an investment, but rather increases the risk of those returns. Your example was of the underlying asset increasing in value 4% year over year, but what about in the situations in which prices decrease? You easily lose your entire down payment, your credit is screwed, you maybe have to declare bankruptcy … plus, to add insult to injury, the IRS comes after you for the implied income of the debt forgiveness. Leverage is wonderful when it works in your favor, and downright awful when not.
Plus, the huge negative to housing is the transaction cost. You don’t pay 5-7% to sell a stock, no matter how leveraged you are.
ParticipantNew Guy, partly right.
It is all quite confusing, because there are three separate dynamics. One is the performance of the underlying asset. Second is the after-tax cost of ownership versus renting the same asset. Third is the leverage.
You generally have addressed the three factors correctly, except for this: Leverage does not increase the inherent returns of an investment, but rather increases the risk of those returns. Your example was of the underlying asset increasing in value 4% year over year, but what about in the situations in which prices decrease? You easily lose your entire down payment, your credit is screwed, you maybe have to declare bankruptcy … plus, to add insult to injury, the IRS comes after you for the implied income of the debt forgiveness. Leverage is wonderful when it works in your favor, and downright awful when not.
Plus, the huge negative to housing is the transaction cost. You don’t pay 5-7% to sell a stock, no matter how leveraged you are.
ParticipantThere are no silly questions. There are only silly people asking questions.
Okay, that was uncalled for. Sorry.
ParticipantThere are no silly questions. There are only silly people asking questions.
Okay, that was uncalled for. Sorry.
ParticipantThere are no silly questions. There are only silly people asking questions.
Okay, that was uncalled for. Sorry.
ParticipantLike many of us, I was contemplating buying foreclosures, but then I realized I would be taking on substantial inventory risk. Buying foreclosures on the downward slope is a nice way to make a small fortune out of a big one. Successful foreclosure investors buy near the bottom, which is not until everyone has given up on real estate as an investment.
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