[patientrenter]

I sure won’t make fun of you, vrudny, for betting heavily on the market going down. Let’s face it, no one here actually knows with any certainty which way the market is going. I don’t. It’s tough to find yourself depending on the vagaries of the stock market, either up or down.

I avoided the stock market almost completely until 1 3/4 years ago. Now I am probably 2/3 – 3/4 invested in it. Recent increases have helped me sleep better at night, but every day I think about how fragile that gain is. (I invested in a diverse group of dividend-paying stocks, and try to stick to measuring my success by the income they generate, not the market value gains, but it still feels all very fragile.)

I’m still rooting for a huge recession, preferably focused on So Cal, so that I can use my (money market) savings to buy a decent place for me to live at a halfway reasonable price. Yeah, it’ll murder my stocks, but I’m sick and tired of looking at home prices that are ridiculous.

Patient renter in OC

[patientrenter]

I sure won’t make fun of you, vrudny, for betting heavily on the market going down. Let’s face it, no one here actually knows with any certainty which way the market is going. I don’t. It’s tough to find yourself depending on the vagaries of the stock market, either up or down.

I avoided the stock market almost completely until 1 3/4 years ago. Now I am probably 2/3 – 3/4 invested in it. Recent increases have helped me sleep better at night, but every day I think about how fragile that gain is. (I invested in a diverse group of dividend-paying stocks, and try to stick to measuring my success by the income they generate, not the market value gains, but it still feels all very fragile.)

I’m still rooting for a huge recession, preferably focused on So Cal, so that I can use my (money market) savings to buy a decent place for me to live at a halfway reasonable price. Yeah, it’ll murder my stocks, but I’m sick and tired of looking at home prices that are ridiculous.

Patient renter in OC

[patientrenter]

SDR, have rates come down for fixed rate conforming loans only, or for other loans too?

What I’m thinking is that spreads over Treasuries are widening for bonds with credit risk. Bonds issued by the quasi-government agencies (FNMA, Freddie..) are thought to be essentially risk-free, so their rates should have gone down with Treasuries, making it possible to lower rates on the mortgages they buy. Rates on loans that can’t be sold to the agencies would have gone up, I would have guessed, especially for the riskier types of these loans.

I don’t follow home loan types and rates. Are some home loan rates going down, and some up? I am guessing that risk-free interest rates might go down a little (or just stay level for a while) while riskier rates climb, and this should flow through to home loans.

Patient renter in OC

[patientrenter]

SDR, have rates come down for fixed rate conforming loans only, or for other loans too?

What I’m thinking is that spreads over Treasuries are widening for bonds with credit risk. Bonds issued by the quasi-government agencies (FNMA, Freddie..) are thought to be essentially risk-free, so their rates should have gone down with Treasuries, making it possible to lower rates on the mortgages they buy. Rates on loans that can’t be sold to the agencies would have gone up, I would have guessed, especially for the riskier types of these loans.

I don’t follow home loan types and rates. Are some home loan rates going down, and some up? I am guessing that risk-free interest rates might go down a little (or just stay level for a while) while riskier rates climb, and this should flow through to home loans.

Patient renter in OC

[patientrenter]

SD_R, I am looking forward to some pros surfacing to weigh in on this.

Chris, are you in the interest rate business? I haven’t gone through all the archives, but I would have guessed you played mostly with your own money, and across multiple asset classes, mostly equities. Maybe I’m muddling the posts.

Patient renter in OC

[patientrenter]

SD_R, I am looking forward to some pros surfacing to weigh in on this.

Chris, are you in the interest rate business? I haven’t gone through all the archives, but I would have guessed you played mostly with your own money, and across multiple asset classes, mostly equities. Maybe I’m muddling the posts.

Patient renter in OC

[patientrenter]

I wish it were possible for buyers to collectively jawbone the markets down… But I can’t see it happening.

All the other groups (owners, lenders, agents..) have a core of people whose livelihood and/or wealth depend on real estate going up. These people are in it for the long haul and/or full-time and fight all-out for their interests.

Renters looking to buy are a much smaller group, and membership is temporary by definition. No full-time professionals make money from lowering prices.

Sorry, pnilesh.

Patient renter in OC

[patientrenter]

I wish it were possible for buyers to collectively jawbone the markets down… But I can’t see it happening.

All the other groups (owners, lenders, agents..) have a core of people whose livelihood and/or wealth depend on real estate going up. These people are in it for the long haul and/or full-time and fight all-out for their interests.

Renters looking to buy are a much smaller group, and membership is temporary by definition. No full-time professionals make money from lowering prices.

Sorry, pnilesh.

Patient renter in OC

[patientrenter]

John, pithy and accurate summary.

Allan, I’ll second that, about Bernanke and his right arm. (But is he left-handed?) He and others are constantly coming up with ways to explain why inflation higher than the goals is not important.

If we were in his shoes, what would we do? Maybe the same thing. After all, who wants to be held responsible for the inevitable deep recession that would follow from a clear break with the credit-fueled boom of the last 5 years? Maybe we kinda suspect that such a recession is inevitable, but maybe we’d prefer to explore for as long as possible the idea that the good times can last forever, or at least ease off gently. And if we do have to have a recession, then we’d probably prefer that someone else gets blamed.

Patient renter in OC

[patientrenter]

John, pithy and accurate summary.

Allan, I’ll second that, about Bernanke and his right arm. (But is he left-handed?) He and others are constantly coming up with ways to explain why inflation higher than the goals is not important.

If we were in his shoes, what would we do? Maybe the same thing. After all, who wants to be held responsible for the inevitable deep recession that would follow from a clear break with the credit-fueled boom of the last 5 years? Maybe we kinda suspect that such a recession is inevitable, but maybe we’d prefer to explore for as long as possible the idea that the good times can last forever, or at least ease off gently. And if we do have to have a recession, then we’d probably prefer that someone else gets blamed.

Patient renter in OC

[patientrenter]

hipmatt, if you are interested in triggering a discussion about Fed policies or actions, you may get a better response if you just phrase it differently. Let’s face it, fellow-bloggers best qualified to generate an illuminating discussion on this topic won’t normally get interested by “Ben Bernanke’s an idiot”.

I’m not defending BB’s policies. I am just pointing out that your calling him an economic idiot gives us more information about you than about him.

As for honesty, people who say everything on their minds without regard to the impact on other people are generally considered to be handicapped. You wouldn’t want that kind of person in an important national leadership role.

I really don’t mean to be as curt as this post sounds. I do look forward to any new thread you want to start discussing fed policies or anything objective like that.

Patient renter in OC

[patientrenter]

hipmatt, if you are interested in triggering a discussion about Fed policies or actions, you may get a better response if you just phrase it differently. Let’s face it, fellow-bloggers best qualified to generate an illuminating discussion on this topic won’t normally get interested by “Ben Bernanke’s an idiot”.

I’m not defending BB’s policies. I am just pointing out that your calling him an economic idiot gives us more information about you than about him.

As for honesty, people who say everything on their minds without regard to the impact on other people are generally considered to be handicapped. You wouldn’t want that kind of person in an important national leadership role.

I really don’t mean to be as curt as this post sounds. I do look forward to any new thread you want to start discussing fed policies or anything objective like that.

Patient renter in OC

[patientrenter]

Sorry, hipmatt, but like others on this thread, I am pretty sure Mr Bernanke is better than your average idiot when it comes to economics. What he says in various forums we read about is just a well-chosen projection of certain parts of certain of his and his staff’s thoughts. Of course that “well-chosen projection” part makes it biased and misleading for many, and you could mistake that for stupidity or ignorance or even malevolence.

He’s just a smart, knowledegable person trying to do his part to keep the economy going, and inflation under some control, and avoid any runs on the bank or other financial collapse caused by a loss of confidence. The avoiding of a loss of confidence part sometimes means he has to sound like a Pollyanna moron. Just comes with the job.

Patient renter in OC

[patientrenter]

Sorry, hipmatt, but like others on this thread, I am pretty sure Mr Bernanke is better than your average idiot when it comes to economics. What he says in various forums we read about is just a well-chosen projection of certain parts of certain of his and his staff’s thoughts. Of course that “well-chosen projection” part makes it biased and misleading for many, and you could mistake that for stupidity or ignorance or even malevolence.

He’s just a smart, knowledegable person trying to do his part to keep the economy going, and inflation under some control, and avoid any runs on the bank or other financial collapse caused by a loss of confidence. The avoiding of a loss of confidence part sometimes means he has to sound like a Pollyanna moron. Just comes with the job.

Patient renter in OC

[patientrenter]

PC, can you help? I followed your instructions and have the .jpg file. Err… How do I “post it”? I’ll need each step. Think posting jpgs for dummies.

Gary, I think we all see lots of people who have high expectations, quite often extending beyond their abilities. Seeing someone like you with modest expectations, that appear to be pitched below your abilities, is refreshing. I think we’re all responding to that. I hope that this forum can help get the best possible outcome for you, whatever that is. (And for all our sakes, I hope that’s not any kind of slum.)

My own outlook is not that different from yours, but your expectations are even more modest than mine. I hope to pay cash for a simple 2+1 or 2+2 w/ garage in OC for $300K +/- $100K, even though my income and savings are several multiples of the averages, and I have no debt or other obligations. My guess is that you’re younger than me, and if I were younger, I’d allow myself a little freedom if it got me my own place in a neighborhood where you felt more at home. (I could buy a place right now within my budget in a bad part of Santa Ana, but if I bought I’d be looking to get out as long as I lived there.)

I have lived for years in places where crime was an issue, and it’s wearing. It also costs time and money. It means you can’t own a new car without worry. Now I leave my car and apartment unlocked without a second thought, and never have to worry. That’s extreme, but the fundamental economics says that someone who’s above average should be able to afford at least an average home, and at some point in this cycle that oughta happen.

Patient renter in OC

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