[lindismith]

JG, you are on fire!

[lindismith]

Yeah, my brother-in-law just started work as an attorney for a bankruptcy firm. One of the more juicy stories he was telling me last week was of the couple, both realtors, who came to see him after they lost their jobs, realized their investment condo was not going to sell, and that they might have to declare bankruptcy.

He asked them why they bought it, knowing their industry? They said it was on a whim, and that they didn’t really want it anyway. This couple had also spent $35K on a Harley, and $75K on a luxury car. Their firm (they were employees) completely shut down 5 months ago, and it took them that long to find jobs, so in the meantime, they accrued 4 months worth of debt. Now they are about to foreclose on their condo.

And so it goes….

[lindismith]

And not only is it a problem in the UK and Europe, but it’s now affecting people in Asia. I have been on holiday in Thailand, and seen very wealthy Chinese families do the same thing with their kids. It is a problem of money I believe.

In the pursuit of money, we have forgotten how to live and eat.

I say turn off your TVs. It is so powerfull – makes you buy more stuff, and eat more junk.

[lindismith]

It could also be that sellers have heard “the median continues to rise” and so in their heads, without checking any numbers, they actually think they can get what they believe their house is worth.

We kept hearing that all summer, so if they’ve missed that the median doesn’t acutally mean anything, they still think it’s a hot market.

[lindismith]

You’re clearly missing the g-factor. Greed.

And yes, the p-factor. Psychology.

Have no idea how you measure those.

[lindismith]

Yeah, when I read those types of numbers, my stomach turns over.

On one hand we need a dose of reality, but on the other….

[lindismith]

I think you are 10x smarter than me!

So, what’s the future look like?

[lindismith]

Saiine,
If you have to live there, please go to one of the condos you’re looking at during the night, and make sure you can’t hear either the noise from I-5 or the 56.

Vrudny, your rent sounds about right. But then again, I think all rents are too high relative to wages in SD. We’ve discussed this quite a bit here.

[lindismith]

Greek, that opiate one’s very good!

[lindismith]

Obviously it wasn’t me, but I did want to say, I find a lot of people who, when talking about the state of the RE market, almost say verbatim what’s written on this board. I can’t tell if they’re reading it, or journalists that are writing about the situation are reading it, and thus just transferring what we say. Make sense?

I’ve found friends saying things like, “catch a falling knife,” and I’d never even heard that expression until I started reading these boards!

[lindismith]

It seems like you could trim that rent. I’ve seen very nice new condos, that don’t sell on Zip Realty, transfer to Craig’s list as rentals. You can get a brand-spanking-new condo on Banker’s Hill for $1600/month – there’s another $1000 to put towards credit card debt each and every month.

There are lots of great offers from credit card companies for lower rates. I had a great experience with Citibank, (but a bad one with Capital One), so I would also recommend finding lower rates.

I think we’re all fairly conservative with our money on this board, and that’s why ‘creative’ financing options aren’t really being suggested. I mean, why take on more debt, to ‘get out of debt’? I think you’d just be digging a bigger hole for yourself.

Plus, your life sounds like it is in transition right now. You just divorced, and you founded a company. That’s a lot of change! Sit tight, live very frugally, simplify, and watch the market keep heading south.

You’ll be glad in 6 months you did not buy. Plus, if you move, you’d have $6K less of debt!

[lindismith]

That’s interesting that it’s their most popular article. If a site like Rich’s gets 2500 hits a day, we can imagine what The WSJ gets a day. The news of the bubble that has burst is spreading rapidly.

A reporter doesn’t usually understand ARMs etc so well. I found it interesting that she actually came out and said to avoid one, (“I’ve urged my sister to avoid ARMs,”). It’s unfortunate, but this information was needed by many a few years ago. Now it’s a little too late for a lot of people.

[lindismith]

What was he thinking when the mortgage price is $3500, and the rent is only $1600?
Did you ask him this? If so, what did he say?

[lindismith]

These types of numbers are why I sometimes have to take Piggington breaks. It’s just too frightening to think about what the consequences are.

Does anyone have any data that says these numbers are not true?

I was thinking maybe the median home is more like $300K.

And, the economy does appear to be still chugging along.

Anyone have any good news related to all this?

[lindismith]

Yes, we have discussed this in the past. It is an interesting situation. On one hand you have owners, trying to get as much as possible for their rentals, but on the other, salaries simply don’t command the rents they’re asking.

A lot of the condos I see on Zip have turned to rentals now on Craig’s list. The owners use the same photos! I know a lot of them must be losing a lot of money on their rental every month. There is no way $1600 for a one-bedroom in a new complex is covering someone’s mortgage, unless of course they had a big chunk to put down.

As for complex owners, I’m sure it’s a nightmare being a landlord. No wonder so many converted to condos – “let the renters take on their own problems,” is probably what a lot of owners thought!

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