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patientrenter
ParticipantGary, thanks for another very thoughtful post. People will complain that it’s long. But I found it full of good insights, and not one of the rambling posts that give long posts a bad name.
I look forward to your future contributions, and hope you find a better place to live!
By the way, I am not 100% certain about the method of calculating prices based solely on current rent and other cash flows. I think that just sets a floor for a lot of investors. I think there are some other people who greatly value ownership of their personal residence, and others (like myself) who are anxious to immunize themselves againt long-term future rent increases. If you come up with any thoughts on how these other purchasers influence prices here in So Cal, I’d value them.
Patient renter in OC
ParticipantGary, thanks for another very thoughtful post. People will complain that it’s long. But I found it full of good insights, and not one of the rambling posts that give long posts a bad name.
I look forward to your future contributions, and hope you find a better place to live!
By the way, I am not 100% certain about the method of calculating prices based solely on current rent and other cash flows. I think that just sets a floor for a lot of investors. I think there are some other people who greatly value ownership of their personal residence, and others (like myself) who are anxious to immunize themselves againt long-term future rent increases. If you come up with any thoughts on how these other purchasers influence prices here in So Cal, I’d value them.
Patient renter in OC
ParticipantGreat stuff, Gary. I plotted the 3 series you gave (1/1, 2/1, 2/2) on my own spreadsheet at home, and got to the same conclusions you drew. (I too don’t know how to post charts). I appreciate your sharing your original, insightful, and objective research.
Gary, your description of the places in El Cajon you’re considering make them seem like slums. Based on the quality of what you’ve posted, you sound capable and level-headed. I don’t mean to offend you in any way, but if someone like you thinks they have to live in a slum, then maybe you’re not getting paid your worth. Have you considered finding higher-paying alternatives to your current job or business?
Patient renter in OC
ParticipantGreat stuff, Gary. I plotted the 3 series you gave (1/1, 2/1, 2/2) on my own spreadsheet at home, and got to the same conclusions you drew. (I too don’t know how to post charts). I appreciate your sharing your original, insightful, and objective research.
Gary, your description of the places in El Cajon you’re considering make them seem like slums. Based on the quality of what you’ve posted, you sound capable and level-headed. I don’t mean to offend you in any way, but if someone like you thinks they have to live in a slum, then maybe you’re not getting paid your worth. Have you considered finding higher-paying alternatives to your current job or business?
Patient renter in OC
ParticipantIs the Riverside County DA investigating the BUYERS for possible crimes involving mortgage fraud? Hmmm.. let me think….
Patient renter in OC
ParticipantIs the Riverside County DA investigating the BUYERS for possible crimes involving mortgage fraud? Hmmm.. let me think….
Patient renter in OC
July 17, 2007 at 9:07 PM in reply to: Missing Research Document on Long Term Appreciation Premium #66233Participantyoungster, no one intended to leave an impression that prices for what you plan to buy won’t drop a lot. I hope that you will buy your future home at a 50%+ discount off today’s prices.
But if I were planning to buy a beach house in Corona del Mar, I just wouldn’t count that 50%+ drop before it happens. If wealthy people get whacked by a big drop in stock prices, or a deep recession, then it could happen, but probably not if it’s just a credit contraction.
Patient renter in OC
July 17, 2007 at 9:07 PM in reply to: Missing Research Document on Long Term Appreciation Premium #66298Participantyoungster, no one intended to leave an impression that prices for what you plan to buy won’t drop a lot. I hope that you will buy your future home at a 50%+ discount off today’s prices.
But if I were planning to buy a beach house in Corona del Mar, I just wouldn’t count that 50%+ drop before it happens. If wealthy people get whacked by a big drop in stock prices, or a deep recession, then it could happen, but probably not if it’s just a credit contraction.
Patient renter in OC
Participantbsrsharma, I stay here because I have a good job at a good company and I love the area. If I ever need to buy a place, I’ll go where I can afford it. Some day, that may be right here in So Cal.
The only thing that would change my mind is if prices in other places I would be happy to live in were rising beyond my reach, and I had to buy now so as not to be “priced out forever”. Right now, I am feeling pretty comfortable because prices are doing anything from falling slowly to rising slowly in the places I might move to.
(By the way, my current first choice of affordable alternatives to So Cal is Vancouver, Washington, just across the river from you.)
Patient renter in OC
Participantbsrsharma, I stay here because I have a good job at a good company and I love the area. If I ever need to buy a place, I’ll go where I can afford it. Some day, that may be right here in So Cal.
The only thing that would change my mind is if prices in other places I would be happy to live in were rising beyond my reach, and I had to buy now so as not to be “priced out forever”. Right now, I am feeling pretty comfortable because prices are doing anything from falling slowly to rising slowly in the places I might move to.
(By the way, my current first choice of affordable alternatives to So Cal is Vancouver, Washington, just across the river from you.)
Patient renter in OC
Participantbsrsharma, JP Morgan and Goldman have full control over where to invest their own equity, but it’s only a drop in the bucket compared to the Chinese or Japanese FX reserves. Beyond that, the banks manage other people’s money, or lend to other people, and have some influence over the investments but are subject to other people’s will. If JP Morgan starts investing my money, sitting in their fund, in too many GNMAs that I don’t like, I am going to bail.
Why wouldn’t market forces trigger large purchases of GNMAs if they have the same guarantees as Treasuries? Not necessarily, because the two bonds differ in other respects – the time of repayment. If the biggest single buyer is buying only one type of bond, the market forces linking the prices of the two bonds can be stifled. (The price of convexity will be driven higher than in a ‘natural’ market, driving up yields on the GNMAs and rates on new home loans generally.)
Would getting the Chinese to buy more GNMAs ‘fix’ the housing market? Not at all. But if it’s one of 20-30 coordinated efforts going at once you might get some results.
Patient renter in OC
Participantbsrsharma, JP Morgan and Goldman have full control over where to invest their own equity, but it’s only a drop in the bucket compared to the Chinese or Japanese FX reserves. Beyond that, the banks manage other people’s money, or lend to other people, and have some influence over the investments but are subject to other people’s will. If JP Morgan starts investing my money, sitting in their fund, in too many GNMAs that I don’t like, I am going to bail.
Why wouldn’t market forces trigger large purchases of GNMAs if they have the same guarantees as Treasuries? Not necessarily, because the two bonds differ in other respects – the time of repayment. If the biggest single buyer is buying only one type of bond, the market forces linking the prices of the two bonds can be stifled. (The price of convexity will be driven higher than in a ‘natural’ market, driving up yields on the GNMAs and rates on new home loans generally.)
Would getting the Chinese to buy more GNMAs ‘fix’ the housing market? Not at all. But if it’s one of 20-30 coordinated efforts going at once you might get some results.
Patient renter in OC
ParticipantThe Chinese aren’t taking any extra default risk buying GNMAs instead of Treasuries. Principal repayment of both is fully guaranteed by the federal government.
I wouldn’t pay attention to his rank… The Chinese know he’s just the delivery man.
I think this is just one more piece of a multi-pronged effort to prop up house prices. Some important people won’t be re-elected, and some financial managers and private investors will get burned, if this effort turns out to be ineffective or half-hearted. They may have more success or less. We’ll just have to see.
Patient renter in OC
ParticipantThe Chinese aren’t taking any extra default risk buying GNMAs instead of Treasuries. Principal repayment of both is fully guaranteed by the federal government.
I wouldn’t pay attention to his rank… The Chinese know he’s just the delivery man.
I think this is just one more piece of a multi-pronged effort to prop up house prices. Some important people won’t be re-elected, and some financial managers and private investors will get burned, if this effort turns out to be ineffective or half-hearted. They may have more success or less. We’ll just have to see.
Patient renter in OC
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