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[quote=spdrun]Prices increased mostly in certain cities, not middle America that’s the core of the GOP constituency. I’d argue that there’s a certain part of the GOP that WANTS to punish residents of coastal cities. As long as the national average isn’t decreasing (by much), they can let SD, LA, and SF fry.

There are also people on the other side who are interested in provoking a recession before 2018 to flip Congress and make life hard for Donnie.

Thirdly, a 7-10% of SD County’s population are people who could be directly affected by immigration policy, hitting rental demand at the lower end.[/quote]

I’d have to agree with all three of your points. We’ll have to see how they play out.

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I’d think there is an assumption in your logic that they would allow the rates to continue increasing with prices going down. I’d think the past cycle shows they would do the opposite. I’m also thinking that if rates are going up so are incomes so people could potentially afford more depending on the ratio driving demand.

I think it’s all supply. There is not enough homes for the people that want to buy them and until there is pressure will push prices up.

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[quote=bewildering]I hate truncated graphs. And what was the point in truncating this particular graph?
https://en.wikipedia.org/wiki/Misleading_graph#Truncated_graph%5B/quote%5D

I never even thought about it, but I completely agree with you. I’ve always felt similar about the median. One inexpensive or very expensive sale throws the whole thing off.

The supply and demand aspect of the article is very compelling. Another reason that unless we get more entry level supply prices will sustain themselves unless people move.

I actually kinda dig the “one and done” mentality. Unfortunately, I’d imagine most are not doing it by choice though. Reminds me of my grandparents where they added a room as needed when the family grew, but never financed anything in their lives.

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[quote=FlyerInHi]I have a friend who bought a 2/1 condo in Huntington Beach for about $350. It’s old but with a good remodel it will be very comfortable. She did FHA.[/quote]

My brother bought something similar in Encinitas earlier this year for 315k. It cash flows in his instance, but in yours it could be a great starter pad that becomes a rental down the road once you have two incomes like you mention. It’s barely east of the 5 so you could walk to everything in Encinitas as well as the beach.

Good luck with everything!

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I think the articles are staying on the conservative side to avoid the risk of being wrong like most people. SD rents will outperform those estimates in most regions in my opinion…especially coastal over the next 2-3 years.

I think you might have chimed in a bit in a recent topic where Rich actually helped me find a chart that went back to 84 and the only times rents did not go up were a small window from around 91-93 as well as about a month of so in 2010 when the increase was zero (not negative though) and the chart even shows past recessions along the way for reference.

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It’s a worthy goal. When I think about it…when was the last time complaining helped a situation? That’s right…never.

A neighbor mentioned the other day that they miss Michael Jackson. I would not say I miss him that much, but I do think everyone should listen to “man in the mirror” once a week maybe as a reminder.

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[quote=scaredyclassic][quote=Escoguy]I’ve read some of Mr. MM from time to time.

What I like:
Agree that you should be able to get by with as little as possible. Maximize savings, minimize expense.

What puzzles me greatly:

What does a man who lives on 30K /year do with the revenue from advertising?

In this sense, the Zen lifestyle makes no sense. Either you are confident you don’t need the money and could say donate it to charity or there’s this little voice in the back of his head that says, perhaps I can’t keep this up forever and I will need more later.

Don’t think we’ll ever get the answer but for me, I do want to increase my standard of living gradually over time. Even if I can live on a small amount, it doesn’t mean I’ll always WANT to do it.

Live well[/quote]

yep.[/quote]
I get the Zen aspect with regards to the surplus, but I’m not sure if the 25-30k/year is necessarily the point. Maybe he’ll stick to it, but I’m pretty sure he’s going to increase his standard of living gradually over time just like you are….at least a little.

My gut says he uses the 25-30k number to eliminate all the “complainypants” out there that will right him off because they make less than the number and they get to use that as their first excuse why his methodology will not work for them. He’s overcoming that objection at the beginning so what he’s saying applies to more people when they make that much….or more and are NOT retired yet like he is.

He also defines retirement differently in my opinion. He still works he just does not have to. He helps friends with carpentry and things he enjoys or he chooses not to do it, which is something I think we can all appreciate. I believe he talks about retiring when his son was born because he wanted to spend more time with him and his family than working to provide for them and suddenly realized that if he could live on less then he could do it now vs. waiting until a later age when the kids are not there to hang out with anymore which is the norm.

I think he’s more about defining what it is to live well than to pick if you are going to or not based on what you make each year.

Live well….sooner in life and enjoy it.

Make it a great day!

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[quote=FlyerInHi]Scaredy, there is a huge population of westerners living the dudeist lifestyle in Chiang Mai Thailand. They ride bikes and eat vegetarian/vegan. Most were overweight and unhappy.[/quote]

I think they all need to watch the movie again then…

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I think someone on this blog actually turned me onto him. He’s amazing. I dont follow him 100% with my truck and all that, but there are so many things he writes about that I agree with. The one where he mentions “what he’s teaching his kids about money” should be read by everyone in my opinion.

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[quote=moneymaker]If those numbers are correct then rent went down slightly in the summer of ’09 and recovered within a year and has not gone down since. Sounds like a good bet to me![/quote]

Fairly compelling evidence huh? I love data sometimes.

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Thanks so much for this Rich! I believe that graph on FRED gives a lot of insight. Essentially…the rate of change year over year is does fluctuate a bit during a recession, BUT the only time it went negative since 84 seems to be a brief stint in 92-94 and it was zero more or less in 2010 breifly. Everything else seems to be positive although some years are more positive than others of course.

Is that what you see? Am I reading it correctly?

I’m not saying that it’s always going to be gravy with investment properties, but I’ve always believed people put too much emphasis on the appreciation aspect vs. cash flow from rents going up over time in growing communities. If you are always cash flowing then you can simply sell when things are high if you choose to…or hold forever depending on ones intentions.

I really appreciate you helping me find the data man. Thank you very much and if I end up going the financial planning route at some point I’ll definitely be going to PCA first.

Make it a great day!

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[img_assist|nid=25951|title=CPI-SD-84-2014|desc=I went a bit further back (84 which is as far as I can go I believe) and it looks like there was a small dip 92-94ish. Does seem to be going pretty much up and to the right for the most part though.|link=node|align=left|width=100|height=71]

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It might. I clicked the link you posted a few days ago, but could not find that. Thanks in advance Rich! I’m really just trying to make smart long term investment decisions for my family and to base those decisions on historical data rather than hunches, theories, etc. I like the control I gain with rental properties vs. other investments. I appreciate that I can take care of the properties/tenants and 10-20 years from now those properties can potentially take care of me and my family. That being said I do not want to be naive and make decisions based on my preference without using data to support.

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[quote=Rich Toscano][quote=sdsurfer]I’m really curious. My logic is that if prices were to fall then rents will go up because more people will choose to rent while they attempt to time the bottom of the market. What does everyone else think? Thanks![/quote]

I don’t know, you are focusing on just one supply/demand factor among many. For instance, if the price decline is driven by a recession, that would also negatively impact rental demand and pricing power.

Rents were somewhat strong during the GFC because so many people were booted from their homes they had owned. But that was a pretty severe situation, with mass foreclosures… barring that, I don’t think you can reliably predict rents going up in a housing downturn. Just my .02.[/quote]

Thanks Rich! I don’t know either and would love some data that goes through multiple downturns because there are always multiple factors. I’ve been looking for the data without success so here I am working from theories. I guess I thought this might be an interesting topic for anyone that is interested in long term investing tied to Real Estate in SD. I’m trying to use actual data to learn from the past rather than predict anything here.

I absolutely agree that a decline driven by a recession would negatively impact rental demand/PP, but to what extent? I guess it depends on how bad it is, but people would have to stop coming here AND leave for the rents to go down…just my opinion of course.

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[quote=The-Shoveler]I think this applies here as well,

What you have to understand is the largest generation in history is just now coming into the household formation age and we are building like there was a declining population bust for the last 25 years..

I don’t really see falling demand for at least 5 years anyway.

Just my opinion of course.[/quote]
I agree. Seems like good ol Econ 101.

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