[permabear]

I think whatever happens to the $2M+ crowd will determine the direction of the market.

Right now there’s a flood of $2-5M homes. RSF has 2 years of inventory in that price range. You can’t spit without hitting a $2M custom listing in Santaluz.

If those sellers start dropping their prices aggressively, others will be forced to follow suit. So it seems to me a “who can afford to wait the longest” game.

sdr has good points about original owners who don’t have to sell. But on the flip side, my uncle builds high-end spec homes for a living. Over the past 2 years he has narrowly avoided certain death on more than one occasion. Many spec builders still need financing and in a place like Santaluz, a builder might be carrying at $15-20k/month until they (a) find a buyer or (b) exhaust their cash and get foreclosed on.

[permabear]

I think whatever happens to the $2M+ crowd will determine the direction of the market.

Right now there’s a flood of $2-5M homes. RSF has 2 years of inventory in that price range. You can’t spit without hitting a $2M custom listing in Santaluz.

If those sellers start dropping their prices aggressively, others will be forced to follow suit. So it seems to me a “who can afford to wait the longest” game.

sdr has good points about original owners who don’t have to sell. But on the flip side, my uncle builds high-end spec homes for a living. Over the past 2 years he has narrowly avoided certain death on more than one occasion. Many spec builders still need financing and in a place like Santaluz, a builder might be carrying at $15-20k/month until they (a) find a buyer or (b) exhaust their cash and get foreclosed on.

[permabear]

I think whatever happens to the $2M+ crowd will determine the direction of the market.

Right now there’s a flood of $2-5M homes. RSF has 2 years of inventory in that price range. You can’t spit without hitting a $2M custom listing in Santaluz.

If those sellers start dropping their prices aggressively, others will be forced to follow suit. So it seems to me a “who can afford to wait the longest” game.

sdr has good points about original owners who don’t have to sell. But on the flip side, my uncle builds high-end spec homes for a living. Over the past 2 years he has narrowly avoided certain death on more than one occasion. Many spec builders still need financing and in a place like Santaluz, a builder might be carrying at $15-20k/month until they (a) find a buyer or (b) exhaust their cash and get foreclosed on.

[permabear]

[quote=briansd1]An aquaintaince of mine is about to walk on her house because her interest-only loan resets next year. Back then she was so sure that buying was the right thing.[/quote]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.

[permabear]

[quote=briansd1]An aquaintaince of mine is about to walk on her house because her interest-only loan resets next year. Back then she was so sure that buying was the right thing.[/quote]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.

[permabear]

[quote=briansd1]An aquaintaince of mine is about to walk on her house because her interest-only loan resets next year. Back then she was so sure that buying was the right thing.[/quote]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.

[permabear]

[quote=briansd1]An aquaintaince of mine is about to walk on her house because her interest-only loan resets next year. Back then she was so sure that buying was the right thing.[/quote]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.

[permabear]

[quote=briansd1]An aquaintaince of mine is about to walk on her house because her interest-only loan resets next year. Back then she was so sure that buying was the right thing.[/quote]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.

[permabear]

[quote=nocommonsense]3)11.9% for “Married with 2 kids”? I have more children and I pay much more taxes than 12%.[/quote]

Do you own a home, contribute to a 401(k)/IRA, and itemize deductions? If so, 12% is about right. My tax rate last year was 10%, and I’m in a similar situation.

[quote=nocommonsense]4) By the way, income tax is only one of the many taxes we pay. I actually forgot to include in my previous post payroll and medcicare taxes.[/quote]

That’s the same in other countries. Here’s another graph:

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

Nobody likes taxes, but equating them to robbery is silly.

Until we can put forth major cuts in money-wasting areas like foreign military bases and the TSA, we have to fund it somehow. Sounds like you should write your congressman and express your dislike for spending on XYZ.

[permabear]

[quote=nocommonsense]3)11.9% for “Married with 2 kids”? I have more children and I pay much more taxes than 12%.[/quote]

Do you own a home, contribute to a 401(k)/IRA, and itemize deductions? If so, 12% is about right. My tax rate last year was 10%, and I’m in a similar situation.

[quote=nocommonsense]4) By the way, income tax is only one of the many taxes we pay. I actually forgot to include in my previous post payroll and medcicare taxes.[/quote]

That’s the same in other countries. Here’s another graph:

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

Nobody likes taxes, but equating them to robbery is silly.

Until we can put forth major cuts in money-wasting areas like foreign military bases and the TSA, we have to fund it somehow. Sounds like you should write your congressman and express your dislike for spending on XYZ.

[permabear]

[quote=nocommonsense]3)11.9% for “Married with 2 kids”? I have more children and I pay much more taxes than 12%.[/quote]

Do you own a home, contribute to a 401(k)/IRA, and itemize deductions? If so, 12% is about right. My tax rate last year was 10%, and I’m in a similar situation.

[quote=nocommonsense]4) By the way, income tax is only one of the many taxes we pay. I actually forgot to include in my previous post payroll and medcicare taxes.[/quote]

That’s the same in other countries. Here’s another graph:

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

Nobody likes taxes, but equating them to robbery is silly.

Until we can put forth major cuts in money-wasting areas like foreign military bases and the TSA, we have to fund it somehow. Sounds like you should write your congressman and express your dislike for spending on XYZ.

[permabear]

[quote=nocommonsense]3)11.9% for “Married with 2 kids”? I have more children and I pay much more taxes than 12%.[/quote]

Do you own a home, contribute to a 401(k)/IRA, and itemize deductions? If so, 12% is about right. My tax rate last year was 10%, and I’m in a similar situation.

[quote=nocommonsense]4) By the way, income tax is only one of the many taxes we pay. I actually forgot to include in my previous post payroll and medcicare taxes.[/quote]

That’s the same in other countries. Here’s another graph:

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

Nobody likes taxes, but equating them to robbery is silly.

Until we can put forth major cuts in money-wasting areas like foreign military bases and the TSA, we have to fund it somehow. Sounds like you should write your congressman and express your dislike for spending on XYZ.

[permabear]

[quote=nocommonsense]3)11.9% for “Married with 2 kids”? I have more children and I pay much more taxes than 12%.[/quote]

Do you own a home, contribute to a 401(k)/IRA, and itemize deductions? If so, 12% is about right. My tax rate last year was 10%, and I’m in a similar situation.

[quote=nocommonsense]4) By the way, income tax is only one of the many taxes we pay. I actually forgot to include in my previous post payroll and medcicare taxes.[/quote]

That’s the same in other countries. Here’s another graph:

http://en.wikipedia.org/wiki/File:Income_Taxes_By_Country.svg

Nobody likes taxes, but equating them to robbery is silly.

Until we can put forth major cuts in money-wasting areas like foreign military bases and the TSA, we have to fund it somehow. Sounds like you should write your congressman and express your dislike for spending on XYZ.

[permabear]

[quote=Bubblesitter]Deadlocked, partisan congress will not tackle any near term or long term structural reform.

I’m trying to provide some protection of my hard earned assets in event of this increasingly likely “black swan” event.[/quote]

Are you still in cash and gold? I think that’s about as good as you can get. I think bonds will continue to get killed, especially with the missing Build America Bonds in the current tax “compromise”. I could also see stocks continuing to advance another 10%, but that entails risk.

Gridlock doesn’t concern me, despite the media. The previous housing credits, for example, were passed near unanimously. Just ask, “will this help banks” and if the answer is “yes”, then it will pass.

I too think there’s about a 10% chance of a debt crisis and spike in interest rates. But I think it would be temporary.

[permabear]

[quote=Bubblesitter]Deadlocked, partisan congress will not tackle any near term or long term structural reform.

I’m trying to provide some protection of my hard earned assets in event of this increasingly likely “black swan” event.[/quote]

Are you still in cash and gold? I think that’s about as good as you can get. I think bonds will continue to get killed, especially with the missing Build America Bonds in the current tax “compromise”. I could also see stocks continuing to advance another 10%, but that entails risk.

Gridlock doesn’t concern me, despite the media. The previous housing credits, for example, were passed near unanimously. Just ask, “will this help banks” and if the answer is “yes”, then it will pass.

I too think there’s about a 10% chance of a debt crisis and spike in interest rates. But I think it would be temporary.

[Author]

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