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  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    E-man says

    FunTime says



    http://www.nbcnews.com/business/real-estate/nation-renters-fewer-americans-now-own-their-own-homes-n167776


    The reason less Americans owning homes is because they couldn't afford to buy. Wait until they and their kids are renting from the Chinese and Indians and don't understand why.

    The reason is quite simple.

    Homewownership is painful in the first 10 years for everyone who has a mortgage. After the first 10, the home is an asset.

    Some take the approach that you have to scrap, work extra jobs, borrow and do what it takes. If my kids need a house at age 25, I'll write them the downpayment check, not have them wait and save for the DP.

    Some look at it like I don't want to be tied down to this debt, save cash, rent ratio is not good, income % is too low, the Patrick way.

    The US will be more competitive not less, so me thinks there is no choice but to compete or go to South Dakota. Basic demand and supply tells you things people covet will cost more, me thinks people will be even more demanding and pay even more money for things people like. A premium paid today is superpremium tommorow.

  • On 19 Aug 2014 in Why do Americans pay so much more for data plans, SFace said:

    How else do you get a new iPhone for $199 every 20 months and resell it for $500 used.

    You're buying the data as well as the $700 phone.

  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    Fell in love with the calculator that raped you dry. Lol

  • On 19 Aug 2014 in Why your house is a terrible investment, SFace said:

    retire59 says

    We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

    I don't understand. had you bought in SF during your saving days, you would have still retired and have three houses now instead of one.

  • On 19 Aug 2014 in Rising Inventory & Low Rates Hasn't Created More Housing Demand, SFace said:

    The economy is fine in spite of housing construction.

    "KISS" principles (Keep in Simple Stupid)

    When new home construction are below normal for a long period of time, it is bullish for home price. less new homes means less supply long term available more people. It's that simple.

    and there is nothing wrong with builders, their margins are higher than ever. They just make more money with less, pretty brilliant.

    KBH gross margin went from 6% to 11% to 14% to 17% in 2010-2103. It's not isolated, Pulti margin went from 11% - 20% last Q was 23.6%
    2014 is annulizing at 19% YTD. Why build more homes when you can focus making more on each one. I love home buidlers cautious approach to not hit and run like it was in 2003-2008.

  • On 19 Aug 2014 in Only the boats of the rich are rising, SFace said:

    John Bailo says

    Where are the Big Raises?!

    If you have 10M in assets and it goes up 10%, your net worth increased by 1M without lifting a finger.

    A $5 raise or 10K a year, 7K net of tax does jack squat in comparision. Wealth is never made from working.

  • On 17 Aug 2014 in Rising Inventory & Low Rates Hasn't Created More Housing Demand, SFace said:

    Using normal as a pivot obviously means whether your pivot is in fact normal.

    And when people talk about going back to the way it was, or whatever factors existed in the past, you better think about transformative changes. If you talk grapg, there better be thoughts on changes that are permanent/transformative or temporary.

    A baseball ticket was 20 bucks for lower bowl near first base in 1994. That same ticket is 100 bucks now. That's a permanent change as basegame stadium don't need that segment anymore. The clippers was sold for 2b bucks which was what a 10,000% return in 30 years.

  • On 17 Aug 2014 in Myths about buying a house, SFace said:

    15x annual rent goes against location, location, location. Or factors that people are willing to pay for on the demand side and factors sellers are willing to sell on the supply side.

    I pretty much know location wins anytime in history in every corner of the world. Lets burn the 15x rule to sleep as it fails the real life results.

    And in my opinion, if location location and location are the first three things that creates demand and little supply, I believe it is location, location, location, location, location in the future.

  • On 16 Aug 2014 in Why California is Awesome, SFace said:

    swebb says

    People from Texas will tell you Texas is the best state for
    scenery/variety/outdoors activity. You know, mountains and desert in the west,
    beaches in the southeast, forests in the east. (let's just agree to not talk
    about the pan handle)


    People from the Appalachians, Ozarks, Rockies and Adirondacks will tell you
    they have the most beautiful wilderness They lack a coastline, though.

    I use to go the Dallas for client work. Basically flat ass land north, south, east and west. unless you mean driving across the damn state which may take eight hours.

    With respect to the weather, let's put it this way if I want warm and sunny, I drive half hour east or south and it is sunny and warm all the time. If it is 100 degree oven weather in Livermore, I am 80 degree degree in San Francisco. If I still feel hot, I head to ocean beach and it is 65 degree. It won't be 105 in Phoenix and 101 in Sedona and 103 in Scottsdale.

    What is more comfortable than biking across golden gate bridge in 65 degree weather in the dead of summer? If you want 20 degrees more, drive half an hour out and get on your shorts and sandals.

    If you drive 101 through Marin, it is tree lined hillside home on one side and the bay on the other side, one mile across from mountain to Bay. Across the mountain is the ocean, beach and Mt Tam park.

  • On 12 Aug 2014 in We're very close to an inflection point in the stock market, SFace said:

    mell says

    I could go for that.

    The government will be broke from a 10% flat tax on individual income and Corporate income.

    If you lower tax from one source, it will have to increase somewhere else to compensate.

  • On 12 Aug 2014 in adios., SFace said:

    That's the Patrick conundrum, people talk about politics, sports, problems and money to drive traffic. It drowns the core message of housing.

    The way I see it 51% agree on something and the 49% the other way or some combination in between. It is a waste of time.

  • On 9 Aug 2014 in Reverse mortgages?, SFace said:

    Reverse mortgage is subprime. Total interest cost is way higher all in. Insurance, fees, points. Like all subprime borrower or reverse mortage, it is simply pissing money away. Why be a subprime when you dont have to? Just basic common sense

    Seniors stress over saving a couple bucks on meals, but too stupid to realize they are pissing away thousands with a reverse mortage every year. Penny wise, dollar foolish.

  • On 9 Aug 2014 in Reverse mortgages?, SFace said:

    Only a complete idiot will reverse mortgage when every options are better. It's by far the most expensive way to access money.

  • On 9 Aug 2014 in Why you should NEVER have a debt card, SFace said:

    As long as you dont pay a cent of interest, credit card is great.

  • On 6 Aug 2014 in Wells Fargo loosens standards for jumbo mortgages, SFace said:

    Analyzer says

    bubblesitter says

    Analyzer says

    My goal is to leave the planet with the most debt possible, student loan, car loan, mutliple mortgages, HELOC, mutliple credit cards, you name it. It's what we have been taught and encouraged to do, right?

    Don't forget that without risks there are no rewards.

    Are you kidding me? A true motto to live by!

    WFB will make money from the loan, I make money from the loan. It's win win. That's why a deal happens because both side benefits.

    The WFB loan is on a 70% LTD ratio which means they are getting paid every last penny with interest. My borrowing cost is no different than Apple getting a loan to fund their business/dividends.

  • On 6 Aug 2014 in Wells Fargo loosens standards for jumbo mortgages, SFace said:

    I just took out a 500K LOC with WFB. None of the smaller banks/CU would touch beyond 250K.

  • On 5 Aug 2014 in 10 reasons debunked #5, SFace said:

    CaptainShuddup says

    I don't see how that is possible to just blanket-ly say.

    This is a debunked thread and the quote is not mine, it is the owner of the website.

    You just debunked point #5. Leverage is just reality, it's damn if you do and sure as hell, more damning if you don't.

    I've been here since 2009/2010 and argued against every point one time or another, and knew those headnote reasons are just not it. (Reasons #1 - #10)

  • On 5 Aug 2014 in 10 reasons debunked #1, SFace said:

    Bellingham Bill says

    location, location, location . . . location

    reason #1 is the opposite of supply/demand and that's why it is easy to debunk. basically ignores location factor. Ten years ago, it was location, locatio, location. In 20 years, it is going to be location, location, location, location and location.

    And you know by studying places with a longer real estate history like UK and France and see the flux between prime location and non-prime location, it is HUGE.

  • On 5 Aug 2014 in 10 reasons debunked #1, SFace said:

    farmer11 says

    He's not saying that you should buy in the ghetto instead of a nice area.

    Of course it is, think about what the rent/buy calculator is in its core.

    20% Ghetto
    3% Prime

    and eveywhere between those two extreme. The yield calculator is exaclty a tradeoff between the desirability and cost to own.

  • On 5 Aug 2014 in 10 reasons debunked #2, SFace said:

    farmer11 says

    So if everything is completely "unknown" as you describe and one can use no deductive reasoning to predict what might happen, would you rather go into debt for 30 years on an "unknown investment" or just pay a monthly rent until perhaps things become a bit more clear?

    I'm just saying basing a decision becuase the % is bad is a mistake. The best locations, the locations you, and everyone covets will always have a premium, that will never change and in fact will be even more premium prospectively.

    patrick tries to simplify a low number is bad while a high number is good, which is basically the opposite of reality. You know that because owners in prime area are doing better than renters (which is opposite of his claim and point) The best invesment are always associated with low yield. It is simply a function of high demand and low supply which creates the low yield. The better question is, is the premium worth it or the subsidy (for high yield) worth it?

  • On 4 Aug 2014 in Homeownership Rate for Americans Under 35 Lowest in 31 Years, SFace said:

    1990, 1997, 2012.

    It bodes well for home prices in 2014-2017.

    When households under 35 are buying, it is time to sell and vice versa.

  • On 4 Aug 2014 in 10 reasons debunked #5, SFace said:

    Call it Crazy says

    tr6 says



    SFAce is somewhat right in the current environment. For example, if 1.5M house goes up 10% a year, it would be hard to make 150K a year in profit if you only have 500K. So the person that leverages up first wins the game short term.


    I'm sure the people who bought in 2007 thought THEY were in the right "environment" too. How did their leverage work out for them?

    2007, not well, than you go back to 1997, and it is well. lol

    The point is if you wait for "cash" to buy, which is Patrick's point of no leverage, it will work out horribly most of the time.

    "The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage"

    That simple fact is downright false. You know that because Patrick cannot save enough to buy a house in Menlo Park. Had he bought in 1997 or whatever, we would have paid the thing off already with savings and have the same cash in the bank. I don't get why people buy this point like gospel when the owner of this site is a living example that it does not work. reality is a biatch.

  • On 4 Aug 2014 in 10 reasons debunked #3, SFace said:

    Heraclitusstudent says

    SFace says

    At the minimum low interest rate means low permanent cost of ownership

    You clearly misunderstood the point. Low rates don't mean low cost of ownership: The cost of ownership doesn't change. It's the balance interest vs principal that changes.

    The cost of ownership will be much less if interest rates are higher later and you have cash to buy.

    Future interest rate is another input bias. What you pay to the bank is a fact. The lower the interest rate the less cash out for a permanent cost. Speculating on the future is unproductive. If the permanent cost are low and it is rent generating (either from yourself as a guaranteed tenant or someone else), it is an asset and will never be distressed.

    Heraclitusstudent says

    Rates are almost guarantied to go higher over the next 20yrs.

    Reasons for that:

    We all know nothing is guaranteed. and besides, if interest rates rise, it is likely in response to inflation, in which case, you want inflation proof asset like housing.

  • On 4 Aug 2014 in 10 reasons debunked #5, SFace said:

    All I'm saving is leverage is just reality.

    If your plan is to save up and buy ahome with cash (no leverage) chances are you are still waiting. cough cough, Patrick.

  • On 30 Jul 2014 in 2015 Real Estate Prediction, SFace said:

    JH says

    eclipxe says

    Apple is in Cupertino, right next to San Jose.

    I didn't realize they were so close. So SJ with a tech bubble is similar in price to LA without a tech bubble. Interesting.

    San Jose's median price is around 700K-720K. Los Angeles median is 540's

    but LA has a shitload of people, something like 20M and they all can't live near the beaches or can't have the best school districts. If you want those, you'll have to compete like a madman for them. those will not change and will get worse.

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