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I would agree with xironman about the job market compared to the east coast or many other major markets. Also, a lot of people from the east coast move out here and find San Diego too slow, lacking in culture, diversity, etc. People even get tired of the sunshine – they miss the seasons. Not my opinion, just what a lot of people from bigger cities complain about and therefore leave SD to go back east or move to SF, LA, etc.

I would move here and evaluate neighborhoods as well as whether you see yourself here for many years to come before buying.

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On Dingo’s numbers, here’s the math with a few assumptions on tax rate, HOA, insurance

Assumptions
Purchase Price $445,000
Down Payment Percentage 0%
Mortgage Interest Rate 6.10%
Points 3.00%
Mortgage Term 30 years
CPI for HOD & Insurance 3.00%
Long Term Capital Gain Tax Rate 15.00%
Effective Individual Tax Rate 28.00%

Loan Constant 7.27%
Loan Amount $445,000
Down Payment Amount $0
Monthly Mortgage Payment $2,696.68
Monthly Payment $3,354.59
“Effective” Monthly Payment $2,309.34

Homeowner’s Dues/Assoc. Fees $250 /month
Homeowner’s Insurance 0.10% Loan Amount
Private Mortgage Insurance 0.00% Loan Amount
Real Estate Property Taxes 1.00% Purchase Price

[zzz]

On Dingo’s numbers, here’s the math with a few assumptions on tax rate, HOA, insurance

Assumptions
Purchase Price $445,000
Down Payment Percentage 0%
Mortgage Interest Rate 6.10%
Points 3.00%
Mortgage Term 30 years
CPI for HOD & Insurance 3.00%
Long Term Capital Gain Tax Rate 15.00%
Effective Individual Tax Rate 28.00%

Loan Constant 7.27%
Loan Amount $445,000
Down Payment Amount $0
Monthly Mortgage Payment $2,696.68
Monthly Payment $3,354.59
“Effective” Monthly Payment $2,309.34

Homeowner’s Dues/Assoc. Fees $250 /month
Homeowner’s Insurance 0.10% Loan Amount
Private Mortgage Insurance 0.00% Loan Amount
Real Estate Property Taxes 1.00% Purchase Price

[zzz]

On Dingo’s numbers, here’s the math with a few assumptions on tax rate, HOA, insurance

Assumptions
Purchase Price $445,000
Down Payment Percentage 0%
Mortgage Interest Rate 6.10%
Points 3.00%
Mortgage Term 30 years
CPI for HOD & Insurance 3.00%
Long Term Capital Gain Tax Rate 15.00%
Effective Individual Tax Rate 28.00%

Loan Constant 7.27%
Loan Amount $445,000
Down Payment Amount $0
Monthly Mortgage Payment $2,696.68
Monthly Payment $3,354.59
“Effective” Monthly Payment $2,309.34

Homeowner’s Dues/Assoc. Fees $250 /month
Homeowner’s Insurance 0.10% Loan Amount
Private Mortgage Insurance 0.00% Loan Amount
Real Estate Property Taxes 1.00% Purchase Price

[zzz]

This is going to be my last post on this as I don’t think anything I write will illuminate my points to davelj nor do I care to. First off, I never said wealth cannot be destroyed, never wrote it in my last posts. I simply said I love it when people make that statement and I question if it goes into a vacuum. Like I said, looking at a singular instance, yes, it can be destroyed. I have not and am not talking about me, you and your neighbor. I’m not talking about individual specifics, I’m looking at this from a MACRO view.

Wealth is lost is even subjective – are we talking about paper wealth or real money? If someone bought a security at X, it then went to 5X, but the person cashed in at 2X, was wealth destroyed or did they simply fail to capitalize on their gain? $10M building destroyed in an earthquake, how much did this person pay for it? Is the land still commercially viable and if so, what is it worth immediately post earthquake versus in 1 year? If the land must be sold, is this an opportunity for someone else to buy it for cents on the dollar and wait for a recovery, to which a different person will make a significant amount? Davelj – is this your straw man example without all the details?

I have said and will say it again, at a MACRO level, wealth can and does get transferred. I don’t give straw man examples, I give simplified examples because unless you are an insider, no one really understands the implications, nor can it necessarily be measured looking at short term effects verus long term. An investment banks headquarters was destroyed on 9/11 and they lost much of their staff, including entire teams that were decimated. There were people that day who lost wealth- no argument there. The bank – helped along by its clients and competitors rebuilt their lost staff and came back and 5 years later, had multiplied in revenue from their pre 9/11 time, and had gone public. Net, this bank and its effect on the economy is clear. If you look only at 9/11 as a singular event, wealth in parts- was definitely destroyed that day, but what happened to that wealth that remained over time? There were many companies who were insured, their insurers paid, but many of those insurers were re-insured. How the re-insurers were further hedged, I don’t know all those details as each instance would be different. If you have the time to go chase down ALL the details and all the dependancies, links, hedges, go for it -maybe you can then build what you call – not a straw man argument. So one could argue that wealth was destroyed, others could argue that a year later, for some it had not – they had recovered. There are many ways to measure the net effect of this wealth, at different points in time. I challenge people to take a deeper look and evaluate whether people are losing wealth, temporarily or not, real or not, or whether people are failing to capitalize, failing to make the correct market bets, when others are finding opportunity amongst what is chacterized as all this wealth destruction.

There are economists who believe wealth is indeed not destroyed, but rather its transferred- macroeconomics is not a perfect science – that is why there are theories and many economists. If there is only 1 view on economics, why are there multiple theories and economists who evaluate the marketplace? There are many factors and until you evaluate all the factors, or are even privvy to all the factors – my argument is that WE (the public)are not privvy to all the factors of complex institutional transactions. I’m not here to say which theories are right and which are wrong, I merely am providing examples of a different vantage point. Decide for yourself, but the point is, in complex transations and macroeconomics, there is never just 1 view of any situation – even the world’s renowned experts will argue and come up with different analysis.

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This is going to be my last post on this as I don’t think anything I write will illuminate my points to davelj nor do I care to. First off, I never said wealth cannot be destroyed, never wrote it in my last posts. I simply said I love it when people make that statement and I question if it goes into a vacuum. Like I said, looking at a singular instance, yes, it can be destroyed. I have not and am not talking about me, you and your neighbor. I’m not talking about individual specifics, I’m looking at this from a MACRO view.

Wealth is lost is even subjective – are we talking about paper wealth or real money? If someone bought a security at X, it then went to 5X, but the person cashed in at 2X, was wealth destroyed or did they simply fail to capitalize on their gain? $10M building destroyed in an earthquake, how much did this person pay for it? Is the land still commercially viable and if so, what is it worth immediately post earthquake versus in 1 year? If the land must be sold, is this an opportunity for someone else to buy it for cents on the dollar and wait for a recovery, to which a different person will make a significant amount? Davelj – is this your straw man example without all the details?

I have said and will say it again, at a MACRO level, wealth can and does get transferred. I don’t give straw man examples, I give simplified examples because unless you are an insider, no one really understands the implications, nor can it necessarily be measured looking at short term effects verus long term. An investment banks headquarters was destroyed on 9/11 and they lost much of their staff, including entire teams that were decimated. There were people that day who lost wealth- no argument there. The bank – helped along by its clients and competitors rebuilt their lost staff and came back and 5 years later, had multiplied in revenue from their pre 9/11 time, and had gone public. Net, this bank and its effect on the economy is clear. If you look only at 9/11 as a singular event, wealth in parts- was definitely destroyed that day, but what happened to that wealth that remained over time? There were many companies who were insured, their insurers paid, but many of those insurers were re-insured. How the re-insurers were further hedged, I don’t know all those details as each instance would be different. If you have the time to go chase down ALL the details and all the dependancies, links, hedges, go for it -maybe you can then build what you call – not a straw man argument. So one could argue that wealth was destroyed, others could argue that a year later, for some it had not – they had recovered. There are many ways to measure the net effect of this wealth, at different points in time. I challenge people to take a deeper look and evaluate whether people are losing wealth, temporarily or not, real or not, or whether people are failing to capitalize, failing to make the correct market bets, when others are finding opportunity amongst what is chacterized as all this wealth destruction.

There are economists who believe wealth is indeed not destroyed, but rather its transferred- macroeconomics is not a perfect science – that is why there are theories and many economists. If there is only 1 view on economics, why are there multiple theories and economists who evaluate the marketplace? There are many factors and until you evaluate all the factors, or are even privvy to all the factors – my argument is that WE (the public)are not privvy to all the factors of complex institutional transactions. I’m not here to say which theories are right and which are wrong, I merely am providing examples of a different vantage point. Decide for yourself, but the point is, in complex transations and macroeconomics, there is never just 1 view of any situation – even the world’s renowned experts will argue and come up with different analysis.

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I love people who never pause to take what they are reading and their response into context of someone else’s vantage point. People who take very micro perspectives and use absolute examples – therefore statements like wealth is lost must be true in every sense. My point that wealth doesn’t just get sucked into a vacuum is something you can choose to take literally as well and apply it to everything. The world is not black and white all the time, perhaps you need to learn to see the gray. I’m not an idiot that doesn’t understand people lose money – and to the person losing money, that wealth is indeed lost and could possibly never be regained. It also doesn’t mean there are not others who profit from a person’s loss. Its an INCREDIBLY narrow perspective when looking at the BROADER marketplace. Like I said in my last post, this is not about 1 =1 or positives replace negatives. I give examples that someone’s loss “could” be someone else’s gain. The example of a home crumbling into dust – people profit off of others devastation. I hear traders talk ALL the time about how hurricanes, natural disasters, etc….although highly unpleasant to people suffering extensive tragedy, is actually great for trading and the market – volatility means opportunities for profit taking. Is this a horrible concept from a moral perspective, certainly, but does this mean profit taking stops? No. There are no absolute examples. My point is that wealth is often transferred, temporarily or not. You can take a very micro perspective about economics, or you can choose to take a macro one. This thread discusses the losses that are occurring in the subprime market. My examples point to the fact that unless the fund manager is a complete idiot, there aren’t too many funds or institutional investors that are long or short entirely in 1 position, 1 direction. YES – people are absolutely losing their pants in the subprime market, but there are also people out there making a killing. It does not equate 1 to 1 – I feel like I need to repeat myself because clearly my point is lost. People too often overlook the ability to make money betting the bears.

This is a forum where people post comments and their opinions – an opportunity for discussion. If we all had all the answers, we wouldn’t be here would we? I understand that this isn’t meant to be a novel or dissertation on perception of how the marketplace functions. I think in the future I’ll have to make sure I write DISCLAIMERS about my posts so that I don’t get attacked on comments taken so literally. I don’t write and explain everything in detail – sorry I don’t have that much time. The points I make are not necessarily my personal beliefs or opinions – they are perspectives.

I tend to find that people who call others idiots should apply the idiot test to themselves.

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I love people who never pause to take what they are reading and their response into context of someone else’s vantage point. People who take very micro perspectives and use absolute examples – therefore statements like wealth is lost must be true in every sense. My point that wealth doesn’t just get sucked into a vacuum is something you can choose to take literally as well and apply it to everything. The world is not black and white all the time, perhaps you need to learn to see the gray. I’m not an idiot that doesn’t understand people lose money – and to the person losing money, that wealth is indeed lost and could possibly never be regained. It also doesn’t mean there are not others who profit from a person’s loss. Its an INCREDIBLY narrow perspective when looking at the BROADER marketplace. Like I said in my last post, this is not about 1 =1 or positives replace negatives. I give examples that someone’s loss “could” be someone else’s gain. The example of a home crumbling into dust – people profit off of others devastation. I hear traders talk ALL the time about how hurricanes, natural disasters, etc….although highly unpleasant to people suffering extensive tragedy, is actually great for trading and the market – volatility means opportunities for profit taking. Is this a horrible concept from a moral perspective, certainly, but does this mean profit taking stops? No. There are no absolute examples. My point is that wealth is often transferred, temporarily or not. You can take a very micro perspective about economics, or you can choose to take a macro one. This thread discusses the losses that are occurring in the subprime market. My examples point to the fact that unless the fund manager is a complete idiot, there aren’t too many funds or institutional investors that are long or short entirely in 1 position, 1 direction. YES – people are absolutely losing their pants in the subprime market, but there are also people out there making a killing. It does not equate 1 to 1 – I feel like I need to repeat myself because clearly my point is lost. People too often overlook the ability to make money betting the bears.

This is a forum where people post comments and their opinions – an opportunity for discussion. If we all had all the answers, we wouldn’t be here would we? I understand that this isn’t meant to be a novel or dissertation on perception of how the marketplace functions. I think in the future I’ll have to make sure I write DISCLAIMERS about my posts so that I don’t get attacked on comments taken so literally. I don’t write and explain everything in detail – sorry I don’t have that much time. The points I make are not necessarily my personal beliefs or opinions – they are perspectives.

I tend to find that people who call others idiots should apply the idiot test to themselves.

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I think I’m looking for personal details aside, what the clinical real estate driven – most opportunistic time is? Does anyone have any empirical data on historical trends that have shown when it becomes more economically effective to buy versus rent? At what price per sq ft, evaluating interest rates if they are moving inversely to prices, etc, inventory levels and their trends, etc. to determine optimal time to buy versus rent.

I know there is no magic ball – I’m just looking for some statistical analysis if anyone has looked at this?

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I think I’m looking for personal details aside, what the clinical real estate driven – most opportunistic time is? Does anyone have any empirical data on historical trends that have shown when it becomes more economically effective to buy versus rent? At what price per sq ft, evaluating interest rates if they are moving inversely to prices, etc, inventory levels and their trends, etc. to determine optimal time to buy versus rent.

I know there is no magic ball – I’m just looking for some statistical analysis if anyone has looked at this?

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Never suggested positives offset the negatives. Never suggested people in the market don’t do damaging things. My point is Wall St is in many respects a closed community – the average joe does not buy CDSs, MBSs, unless you are misfortunate enough to hold a fund that does. The mass public in general has no understanding or influence over institutional deals and trades. I am however suggesting that in all this madness, someone is for certain making money, even when others are losing big time. And there is no dispute that there are 2 sides to a trade – a trade would be impossible if there was not a buyer and a seller. You cannot buy an option contract unless someone is willing to write it.

I think its interesting that so many people believe wealth is just simply lost. Where do you think the money goes? Is there a vacuum I’m unaware of that sucks dollars out of the world? All while someone is buying MSFT or CSCO, there is another person shorting it. So if the price of MSFT goes down, certainly the person betting long loses money, but the person who shorted it makes money. People trade CDSs, credit default swaps because there are 2 sides – someone is betting their will be no default, whilst another is betting there will be. Someone profits from that trade.

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Never suggested positives offset the negatives. Never suggested people in the market don’t do damaging things. My point is Wall St is in many respects a closed community – the average joe does not buy CDSs, MBSs, unless you are misfortunate enough to hold a fund that does. The mass public in general has no understanding or influence over institutional deals and trades. I am however suggesting that in all this madness, someone is for certain making money, even when others are losing big time. And there is no dispute that there are 2 sides to a trade – a trade would be impossible if there was not a buyer and a seller. You cannot buy an option contract unless someone is willing to write it.

I think its interesting that so many people believe wealth is just simply lost. Where do you think the money goes? Is there a vacuum I’m unaware of that sucks dollars out of the world? All while someone is buying MSFT or CSCO, there is another person shorting it. So if the price of MSFT goes down, certainly the person betting long loses money, but the person who shorted it makes money. People trade CDSs, credit default swaps because there are 2 sides – someone is betting their will be no default, whilst another is betting there will be. Someone profits from that trade.

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hi dave, yes you’re absolutely correct, not having the time to go back and read all the posts, i think i was writing in reference to people’s comments about the whole lot of MBSs becoming worthless, and therefore the 100B fund being a total scam.

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hi dave, yes you’re absolutely correct, not having the time to go back and read all the posts, i think i was writing in reference to people’s comments about the whole lot of MBSs becoming worthless, and therefore the 100B fund being a total scam.

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Not having been here in SD in 91 or 96, what were the factors outside of low interest rates that started the buying trend? Were there any sound fundamentals – IE. job growth spikes, population spikes, etc. -or was it market perception, speculation, lax lending, etc?

Assuming you have exited the housing market and are a renter – If the market declines by 35%, and the rent vs buy values have relative parity, and alternative investments, discounted payback period are all taken into effect, what would be your advice to others? Buy or continue to rent?

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