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powayseller
ParticipantShouldn’t this go in off-topic? This has nothing to do with the auto industry…
ParticipantWiley, I was wondering the same thing. I guess home and auto loans, bank credit cards, all cost over 5%, so they are making money on loans. That’s my guess.
Participant4plex, I did home price/rent calculations for San Diego going back to 1983, and I’ve not seen it get as low as 8 or 10. The lowest is 13. Maybe my data does not line up properly with the way you price rental SFR. I’m using OFHEO HPI for median home price, and BLS rental index based on average Craiglist rents (per Rentslicer) for rents. I would like to do a chart of price/rent using SFR, but I don’t have any data points I can use. What do you think would be reasonable sources for median home price for a 4 bedroom home today, and a 4 bedroom rental today. I can use the index to adjust these figures back several decades. Why do you think we will go back to 1998 prices? That would require a very big overshoot on the downside.
ParticipantI’d like to clarify that I have no idea which asset class is going to outperform. Many of the questions I bander about are to get more ideas from fellow contrarian thinkers. Is it gold, euros, something else? The only thing I am very certain of, is that cash will outperform stocks and real estate in the next few quarters.
ParticipantI’d like to clarify that I have no idea which asset class is going to outperform. Many of the questions I bander about are to get more ideas from fellow contrarian thinkers. Is it gold, euros, something else? The only thing I am very certain of, is that cash will outperform stocks and real estate in the next few quarters.
ParticipantThe reason I suggest waiting 2-5 years is the historic housing cycles in San Diego last 5-7 years up, 5-7 years down. Rich’s Bubble Primer is a classic. Look at his charts, and extrapolate 5 years out.
One caution – the rental market is extremely tight right now. Vacancies are low in rentals, and landlords have been able to command big price increases. People are turning to rentals instead of buying, making the rental market squeezed. We haven’t built apartments in a decade, and many apartments were converted to condos for sale, thus reducing apartment rental stock even further. In the long run, reduced population should ease this condition.
ParticipantPrices are dropping in my Poway townhome neighborhood every month. Why do you think prices are not dropping? Check Sold prices, not listings. Ask your realtor to give you the Solds in your price range over the last 4 months, and notice the lower price/sq ft, dropping every month. It’s hard to predict how fast it will decline. I think it depends on several factors: how many people will keep leaving San Diego, the number of listings, the quality of listings (how many are vacant, REO, distress sales, moving), sales… Months supply keeps rising. The longer you wait, the cheaper it gets. I sold my Poway house and am renting; signed a 2 year lease this summer. My 3 kids are very happy in this rental. I suggest you rent for 2-5 years.
ParticipantWiley, CDs are insured by FDIC. Most banks are now paying over 5%. CDs are certificate of deposit, so they are just bank deposits that you have to commit for a period of time, 3 months to 5 years. I have 3 month CDs.
Dollar cost averaging makes sense, but not if we are buying overpriced stocks. My plan now is to be in cash until the recession gets in full swing, and then to look for signs of an economic recovery. Once wages and consumer spending picks up again, probably in the middle of the recession, is the time I plan to enter the stock market. Of course I could be wrong, and the markets could behave different. However, I am more worried about losing out on a gold or euro rally than I am about losing on long term increases in the stock market.
Most of my investing years, I’ve struggled to make sense of where to put my money. Which asset class will perform better? This is the first time in my life, where I have great clarity about a housing-led recession. I doubt that I will have this much clarity about investing ever again. After 2007, I will be struggling once again, wondering what will happen next.
ParticipantNobody can beat the market. That’s why index fund investing is the best way, I think, to be in the market. Right now though, with risk free CD earning 5.5%, you don’t even need to risk the market going into a recession. In my 20 years of investing, this time has been the easiest to decide to get out of the market. I have never been so sure of a recession. Even in 1999 I didn’t realize the stock market bubble bursting would cause a recession. Thanks god to blogs for educating me. However, whether to be invested in precious metals or euros, that is a question not even the pros are guaranteed to get right. If the dollar does indeed keep losing its value, then we will regret listening to the pros who told us to dollar cost average.
ParticipantThanks PD, good article. I had not realized how much autos contribute to our economy.
ParticipantI already commented on this yesterday, in the thread titled “1.6% GDP”, noting GDP is really .9%. Now we have 3 threads on GDP…
ParticipantPD, I’m not really sure how you drew a connection between reduced postings and this thread. I also don’t think that comment has anything to do with zk’s response.
Participantjg, this is a housing forum, but we do have an off topic section which is wide open for your off topic writing pleasure.
ParticipantCome on, jg, even this is a little over the top for a die-hard Republican, isn’t it? Walker is the perfect guy to pitch an idea that BOTH parties want to address, but are afraid to do. Walker has been talking about the deficit for over a year, even 2 years now. Once Walker gets the public enthused about this issue, the candidate, whether Democrat or Republican, can address this issue. Until then, it’s political suicide because the solution is higher taxes and reduced benefits. I also think that nobody can hold Republicans accountable for the high deficit. The deficit has been created through both parties, and is a symptom of our culture. I certainly don’t hold it against the Republicans. The Democrats have big social programs which increase the deficit too. Last, this thread belongs in off topic, and several of the other recent threads belong in properties and areas; just call me the forum police 🙂
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