[RightSide]

I think your anger against people who are profiting from the real estate bubble is misplaced. I for one am glad that we live in a free market economy where people are responsible for their own decisions and free to profit or loss money based on their own free will.

I’m happy that London is able to make $500K in two years and am even envious of all these San Diego flippers who bought over 4 years ago. I certainly wish I had bought a lot of real estate 4 years ago, but I had no idea the market would run.

He certainly isn’t “screwing” anybody. Anybody who buys the condo is doing it of their own free will and they are “screwing” themselves. Its time people own up and take some personal responsability for their actions. We fought a 40 year cold war to defeat communisim, but judging from some of the comments I hear about people always blaming someone for their own problems, you’d think California is trying to become a communist state.

[RightSide]

Yeah, that’s why I haven’t pulled the trigger yet. We enlightened folks here on Piggi’s forum aren’t the only ones who see the writing on the wall. It makes for a crowded trade, but that doesn’t mean we aren’t eventually going to be proven right.

Check it out, LEND has $9B in debt. This is the sub-prime mortgage debt that is going to be most at risk when the housing market turns. What’s really fasicinating, is that they estimate reserves against this bad debt using past performance. Well, in the last 10 years, the default rate has been almost non-existent and the actuaries have run all these monte-carlo simulations saying that in a worse case scenario, only X% of the total debt is at risk. Well, I respect their math skills, but they are forgetting some basic common sense and the fact that this crash isn’t going to be like anything we’ve ever seen before.

So against this $9 Billion dollars in debt, care to guess how much cash LEND has to defend itself in tough times?

$20 million bucks!!!!

If there is a big mortage failure rate, this company is on a one-way ticket to bankruptcy court.

Now, you are right to point out the high short interest and its precisely why I’m not yet short this stock as I think there might be one last gasp up to the upside forcing a small short squeeze. I’m also waiting till Rich here tells us the downside has started for sure. Then I will buy some long-term PUT Leaps and just sit tight and ride the wild ride it is sure to be.

I’m also eagerly waiting the coming trading of the housing futures market on the CME. I’m hopeful there will be some liquidity in that market that could make trading the san diego housing market very profitable.

[RightSide]

I think one of the major risks that the mortage market faces, is that this market used to require 20% down payments and never before have we seen such loose lending standards. Therefore I’d caution looking backwards when evaluating the risk, because as far as this bubble goes, it really is new territory.

You could hedge some of your risk by buying some PUT LEAPS (Long Term Equity oPtions) on stocks like LEND, which happens to have a big portfolio of sub-prime mortage. I expect the stock, which trades at $50 right now to go all the way to ZERO before this mess is over.

I’m not ready to start betting on the decline just yet, but I’ve got my finger on the trigger.

[RightSide]

I think everyone here will get a laugh out of this one though its really quite tragic that advice like this is floating around…this is from ZIP Realty on their outlook for the San Diego Real Estate market submited to RealtyTimes.

Zip Realty advises, “If you are a buyer thinking of purchasing, don’t wait. There is no bubble, it doesn’t exist, so it cannot burst. There is no time like the present. Get in now and pick up that equity for your future. You don’t have money to put down or pay for closing cost, don’t worry. With $0 down financing and the seller paying your closing costs, it is extremely easy to purchase a home. If you’re a seller, you have picked up a great deal of equity. Is it time for you to also make a move? There is a buyer out there that would love your home, and is willing to pay a high market value for it.”

Published: August 16, 2005

Personally, I’m looking to move back to San Diego, but I’m going to wait until some ugliness comes in the market.

[RightSide]

Actually, nominal interest rates were in double digits, but I don’t beleive real interest rates were that different then they are today. (Quck econ lesson, if inflation is 10% and the nominal interest is 12%, then real interest rates are 2%)

In any case, my question was regarding the characteristics and time duration of the last couple of busts. How long did prices take to from point a down to point b once the uptrend stalled? (Anyone know where this data might be available?)

My defination of a reasonable entry point is not based on price action, but on relative price to median income. Rich has some great charts showing how houses are currently trading at 15x median income, when the historic average has been around 8. When prices get closer to that reality, then I think they will be more sustainable and thus reasonable.

-Michael

[RightSide]

Just go to Craigs list:
http://sandiego.craigslist.org/apa/

The number of houses available for rent is staggering…and insanely cheap compared to purchasing. Its totally absurd why anyone would buy instead of rent at this price disparity.

[RightSide]

I had signed up for a few new housing developments in San Diego area about a year ago and I never heard from them, not an email, a brochure, nothing.

Guess what? Today I’m driving and they call me on my cell phone and offer me all these incentives if I buy one of their latest developments. Before they used to be all sold out, now they have one of the houses complete and ready to move in and 3 more that I could add my custom finsihing touches on. If I refer a friend, they will pay me $4,500 in cash!! Wow, what a change in attitude.

Here is my favorite prediction from Business Week for the Year 2000:

Nasdaq Composite on Dec. 31, 2000: 4500

LOL. Maybe 2010…

[Author]

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