[Rich Toscano]

[quote=deadzone]Wow, I didn’t realize so many (nearly all?) of the long time Piggingtons have purchased a home.

That seems to me like a big time contrarian sign for home prices.
[/quote]

How is that a contrarian sign of anything?

[Rich Toscano]

[quote=deadzone]Wow, I didn’t realize so many (nearly all?) of the long time Piggingtons have purchased a home.

That seems to me like a big time contrarian sign for home prices.
[/quote]

How is that a contrarian sign of anything?

[Rich Toscano]

[quote=deadzone]Wow, I didn’t realize so many (nearly all?) of the long time Piggingtons have purchased a home.

That seems to me like a big time contrarian sign for home prices.
[/quote]

How is that a contrarian sign of anything?

[Rich Toscano]

[quote=deadzone]Wow, I didn’t realize so many (nearly all?) of the long time Piggingtons have purchased a home.

That seems to me like a big time contrarian sign for home prices.
[/quote]

How is that a contrarian sign of anything?

[Rich Toscano]

[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]

That is the key concept here.

I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)

So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.

Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.

Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.

Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.

Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.

[Rich Toscano]

[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]

That is the key concept here.

I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)

So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.

Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.

Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.

Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.

Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.

[Rich Toscano]

[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]

That is the key concept here.

I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)

So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.

Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.

Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.

Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.

Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.

[Rich Toscano]

[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]

That is the key concept here.

I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)

So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.

Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.

Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.

Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.

Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.

[Rich Toscano]

[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]

That is the key concept here.

I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)

So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.

Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.

Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.

Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.

Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.

[Rich Toscano]

[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.

We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.

There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]

You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).

In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.

[Rich Toscano]

[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.

We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.

There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]

You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).

In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.

[Rich Toscano]

[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.

We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.

There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]

You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).

In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.

[Rich Toscano]

[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.

We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.

There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]

You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).

In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.

[Rich Toscano]

[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.

We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.

There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]

You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).

In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.

[Rich Toscano]

[quote=kcal09]Savings accounts are not yielding anything and the stock market is too risky for me. I’m sitting on enough cash to buy an investment property outright without going through the hassles of applying for a mortgage.[/quote]

That may be the case right now, but it makes more sense to think about what savings accounts will yield (or whether other options will be too risky) on average over the entire duration of the mortgage, not just right now.

[Author]

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