Forum Replies Created
-
AuthorPosts
-
JES
ParticipantThey really have done a good job convincing us that cash is bad, to the point that I have an adverse reaction just considering it! I do see the wisdom in eventually putting money into index funds, and almost convinced myself to go for some large cap growth stocks since they have seen little gains the past decade and pay good dividends. But I am convinced that those investments will be cheaper a year from now so I am not buying.
Powayseller, have you read the book called ‘The Only Guide to a Winning Investment Strategy You’ll Ever Need’ by Larry Swedroe? I just started reading it this week and since you have studied everything I’m think you might have seen this. I’m not trying to plug the book, but a buddy of mine works at an asset management firm and sent it to me. He used to work for a brokerage like Merrill Lynch, but he is now convinced that the strategy in this book is solid and that his previous job was a joke.
ParticipantThe stock market has been doing well for some time, the economy has been on steroids for a number of years and as we all know, housing has gone crazy since around 2001. There are very good analyticaly based arguments that all three are headed down, and common sense tells me that in these matters, when things have been humming for a long time they will eventually correct. All three are primed for a correction IMO.
When the economic news just can’t get any worse, home prices have crashed and people are still not buying homes, that will be the time to buy again. For money making trends, follow the initial adopters early and ride the wave up as the masses adopt. But the key is that you should hang tight through the final phase of overzealous buying, but immediatley turn contrarian before the herd decides to do the same. EG: I sold my home early this year at a time when most people still had faith that prices would slowely rise or level. In only a few months, the herd has now changed its psychology and it is too late to sell!
OK…so I am patting myself on the back. My point is that common sense alone tells us alot.
ParticipantBut then Schwab could never recommend moving 100% into cash could they? 5% is nice conservative number, similar to the NAR forecasts that say prices will go down a little bit only to rise again. I suppose I am truly a skeptic, but how can we trust their advice when they have a vested interest in maintaining our faith in stocks?
ParticipantSometimes I wonder if analogy and common sense aren’t better ways to gauge this market than analytical, number based study! Or maybe I am just biased since I am horrible at math!
Either way, it is clear that we have a major yeast infection here in San Diego, to continue the bread analogy:)
ParticipantTo continue that analogy, let’s say that those same 40% are buyers who used to buy your bread and resell it at a premium at the beach. They never actually had the money to pay for the bread, so they paid with credit cards, carried balances every month and used their profits to buy more bread from you. Business was so good that you raised prices every month in ‘phases’, and so did these resellers. By the end of 2005, bread stands could be seen on every street corner and prices were up a staggering 25% YOY. Some people were even buying bread and selling it on Craigslist for a profit!
Unfortunately, only 5% of the public could actually afford a loaf of bread by the summer of 2006, and many people began to go hungry. 50,000 people fled the city to go to states where bread costs were 75% cheaper. Massive numbers of loaves were placed for sale, only to sit and grow mold as the summer humidity kicked in. Some sellers discounted their loaves and sold, but most were too arrogant and greedy to even consider lowering their prices. Loaves rotted and beachfront stands were forced out of business. Bakeries provided the media with free loaves in exchange for positive stories about a ‘leveling’ in prices and a quick return to rising prices, to no avail.
By the end of 2007 bread prices were down 30%, millions of jobs were lost and many lives ruined at the hands of one of the greatest ponzi schemes ever witnessed. As he signed the foreclosure papers, the bakery owner cried, wondering why he was never able to get back those loyal 40% of his customers. Suddenly, he realized the answer. Those were never cusotmers to begin with – just bread flippers! Even those nice families never bought to eat the bread, but just to hold on to it and sell it for a profit!
ParticipantIt was intentionally released IMO, in the same fashion that the government and military selectively choose to release items of interest while downplaying others, thus creating a media story. The NAR are engaged in a classic game of information operations and their goal is to influence the mass psychology of the American populace into maintaining their confidence in the housing market. They now have no choice but to admit that the data is bad, so the new strategy is to present that data and in the process build trust. They then ignore most of that data and find a way to craft a prediction that involves a mere soft landing, or slight downward trend with an eventual return to appreciation. Not the rapid appreciation that we have come to expect, but we can all sleep well at night knowing it will only fall 2.8% and then rise again in a few years. Consider what would result if the NAR approached this from an unbiased perspective. The mere prediction of a large decline would drive the market down further, cause people to lose faith in housing and pose a huge risk to the economist if he were wrong. This is why they always stick with the soft landing scenario! HP considered putting spies in newsrooms…what has the NAR been up to?
ParticipantYes, have her explain it on financial grounds. It sounds like she is stretching anyway, so it shouldn’t be hard to show how the numbers just don’t add up for her. I’m sure they will let her out.
ParticipantMydogsarelazy:
Did you notice what kinds of cars these parents drive? My guess is that the parking lot was filled with at least a few BMWs, Mercedes and maybe a Jag. So long as mom can pull into Panera with a hot car and high fashion clothes, who cares what the kids eat or who watches them during the day? The fact that they spend more on hand car washes and massages every week than they do on day care should not be our concern, right? All that really matters is that these parents get to take at least one vacation to Sun Valley to ski this year while their kids wander aimlessely through life learning that the only thing that matters is the pursuit of material goods and maintaining a wealthy outward image regardless of your true financial situation.
I love Southern California, and especially Carlsbad and Encinitas. Maybe I’ll do a stated income loan for 900k tomorrow so I can start living the dream too!
Participant19 examples and the only issue you can identify is divorce? Keep up the good work Perry!
ParticipantI looked at a home online last night in Santa Fe Hills in San Marcos that sold for 650k last July. The same model is now for sale for 559k up the street and not selling. 14% less than the comp, and unsold. I bet the people who paid 650k thought that they were sitting on alot of equity too. To really get this crash going we need the depreciation to go deeper, well into the people who think they are now safe. It’s easy to wrap your mind around a loss of a few percent, like the 2% that is now being reported in the news. Much more difficult to accept the fact that your nice 200k cushion has now disappeared! Once the masses panic it is going to really go downhill.
ParticipantI moved from San Marcos this past March and know quite a bit about the city, crime and housing. I’ve lived in Carlsbad, Vista, San Marcos, Encinitas and Temecula the past 10 years, so I have some perspective.
Housing wise, there are a number of really great planned communities in the city that are just as nice if not more desirable than San Elijo Hills. None are as master planned and cookie cutter as SEH with the downtown and amphitheater etc., but many have an abundance of trails, good grade schools, and even larger yards and wider streets than SEH. Here are some examples:
Rancho Dorado – Very nice homes, great views and located right next to Carlsbad. It borders Rancho Carillo, a Carlsbad community.
Twin Oaks Valley Ranch – North of the 78, very nice homes, golfing etc. I would look here before SEH.
Santa Fe Hills – Large tract home community, schools, parks, trails, near Palomar College. I saw a 2600 sqft. home a block from a good grade school for 559k there yesterday.
Discovery Hills – Low HOA, mello roos, nice community feel, trails, lake, schools, normal neighbors. Near CSUSM which is a growing school (10k enrollment will be 20k + in 15 years). City of San Marcos has committed to build out the area to the west of this neighborhood and it will be a $50-100 million project that will create a sort of downtown San Marcos along the creek area. Commercial, housing etc.
Coronado Hills – Some very nice homes hidden above the college area. Worth driving around just to experience the views and rural feel of the area.
Stone Canyon – Above the college and to the west, above Discovery Hills. It is on the other side of the mountain from SEH. Nice gated community, good views and I like this neighborhood alot.
Others – Silvercrest, Belleza, and more…
San Marcos has rapidly improved its image and is now home to some very nice, safe communities and lots of young families. The city itself is fantastic and has a budget surplus every year unlike most cities around here. The city building is brand new and the most attractive building I have ever seen in the area. Were talking millions left over in surplus becasue they run the place so well. Lots of new shopping areas like Best Buy, Frys, and a new Nordstroms going in off of the new exit from the 78. The city owns the properties and leases to many of the tenants, hence the surplus. There are older areas with crime, but slowly they are disappearing and being renovated.
Gang tagging and small level crime exist, but the city has money and they are tackling the problems. The middle and high schools also may not be the best, but are far from the worst either. IMO, having seen the city master plan, met many people who work at the city and lived there I can say that this is a city to bet in. It will keep getting nicer, and the city government is very active. Go to the Christmas party they throw in December and you will be very impressed. Other cities like Carlsbad and Encinitas are also very nice, better schools etc. but largely built out (Encinitas), prices are sky high and not as many young families around. If you can afford it, move to Carlsbad. If you can’t, San Marcos is a great choice and you can find a nice home for 560k right now.
ParticipantDH is more down to earth, less pretension, lower home prices, less mello roos, less HOA, less investors. Your neighbors in DH could be teachers, firemen, janitors and even garbage truck drivers. SEH is nicer, newer, cookie cutter and your neighbors are more likely to be investors, middle income people who bought 4-5 years ago, upper income families. You will find quite a few 30 something fake blonde women who drive high end Lexus SUVs paid for with home equity loans in SEH. You will see them around town with the ‘SEH’ bumper stickers, clearly indicating to all that they live in this prestigious, small town community and not in the city of San Marcos. In DH you are more likely to find a few beat up cars in driveways, and even a couple campers parked on the streets. SEH will not allow any of these things, nor will your neighbors who are most concerned about the value of their home than your friendship. Overall, there are nice people in each place, but generalizations are always useful and that is what I am providing you.
ParticipantYes, now that huge discounts are the norm, properties that have been sitting all summer have a ‘perceived’ incentive in raising the price so that the discount can be taken off a higehr number. Also, if potential buyers ask about it they can just say, “Well, based on recent sales and our research we realized we were actually priced really low. The median in this area continues to do well you know.” There may be cases where new solds on a street come in higher than what sellers of an active home expect and they in turn raise their asking price. EG: You are asking 900k, but the neighbor just closed at 1 Mil. You now think yours is worth that and you reprice higher. Or it could all be a trick to create the illusion that prices are still rising fast in some areas.
September 15, 2006 at 9:38 AM in reply to: WSJ most popular article today – how low will home prices go #35418ParticipantAgreed, and the key is that it has only been in the past two months that we have seen this kind of national coverage and news of real price declines. Sales data for August does not reflect this sentiment, but September numbers should at least partially. October and November will be off the cliff IMO. Never underestimate the power of the media and the influence of psychology. These are the two most important forces at work in this market right now. They have the power to bring victory or defeat in war, to drive a country to revolution, and to incite an entire religion to fanaticism over a cartoon.
-
AuthorPosts
