patrick.net

Strategist says

unemployment is declining,

Real estate purchasing unemployment is still declining. Because there's 3 HB1 Visas for every for every American looking for work.

$ going up so gold down, anyone know howto short gold? Or am i late to the party?

KgK one says

$ going up so gold down, anyone know howto short gold? Or am i late to the party?

If gold doesn't hold 1060 level ...

Downside worst case is 680

Did anyone else think that Patrick was a fortune teller?

Ironman says

The advice and information people received here on the housing market was worth exactly what they PAID for it!

ANYONE making a huge financial decision of buying a house based on information they read on an anonymous Internet forum deserves exactly what they got!

Can you point us to a place where we could have gotten better advice by paying for it? I doubt it.

"PATNET scores number one on Google for one topic and one topic only:

CANNIBAL ANARCHY!"

Goes to show that a topic as poignant and relevant as CANNIBAL ANARCHY is just not discussed enough on the internet. People just can't face that face is on the menu.

justme says

Ironman says

The advice and information people received here on the housing market was worth exactly what they PAID for it!

ANYONE making a huge financial decision of buying a house based on information they read on an anonymous Internet forum deserves exactly what they got!

Can you point us to a place where we could have gotten better advice by paying for it? I doubt it.

If you paid for advice, you would end up with the same advice that Patnet has for free.
The best advice you can ever have is.......If you need a home, can pay for a home, then get the damn home.

(Housing is the cost of shelter to your own capacity to own the debt.)

Now that all the Crap &*^% Loans are gone, it's all about capacity now. That's how it should be, poor cash flow Americans should never be allowed access to non capacity debt or unique structured debt to buy a home, it's a disease and that is how we should always look at it

Millions and millions of Americans buy homes a year regardless of what the cycle is, where the inventory levels are because they can own the capacity of the debt shelter cost.

Millions and millions of Americans rent because they can't buy.

If you have looked at people's finances like I have for 20 years, you should see the Gap between natural lifetime renters vs home owners,

Those who bought with capacity

Owners

- Incomes are higher
- liquid assets are higher
- More educated
- Debt low and cash flow very positive

Renters ( Not putting in this group wealthy people who rent)

4 groups

1. Natural young renters who are working through the process of life and in time when they get to the home buyer age of 28-37, they biy

2. Forever renters because they can't ever own a home without a 2nd income factor. Their single income factor just doesn't allow them the process time frame to buy a home where they desire to live

3. People who have be foreclosed on part of a short sale. Some will be boomerang buyers but some will never be able to own a home because they
needed a 80/20 100% stated income

4. Those who even with dual incomes, even with some liquid assets, just live in Area where it's too expensive to buy a home that meets their family lifestyle

For the most part college educated Americans or those with good trade school skills who make money when they get to that home buyer age group of 28-37 tend to buy

Years 2020-2024 are the real cruical years for housing, because this cycle wasn't going to have the capacity to own the debt of housing in a strong way

For pete sake, 2014/2015 adjusted to population are the 2 worst years ever recorded in American history with the data line and this is with 3.5%-4.5% and 5 months plus inventory in both years.

I mean come on, even if you're the most Radical housing bull ever paid by people to spin this is a daunting data line

But come years 2020-2024... then you massive supply college educated dual income Americans who are married already and should be having kids, those are the real crucial years to see if the demand curve can grow

Plus by that time you shouldn't have to much debt leverage left from the housing bubble years.

Until then, it's a very slow and steady demand curve market place. However, be mindful, for the past 34 years in America each housing cycle has 2% plus lower Mortgage rates for that to happen in the next cycle, you need 1.25% - 2.25% 30 year rates... Not saying that can't happen with the 34 year trend, but that is the X variable factor going into the next decade

Sorry to hear you had a crappy holiday.

You're always going to get an overly bearish opinion here. Take it with a grain of salt.

(FYI - /Housing+-+I+was+wrong%2C+and+I+am+sorry.)

That said, I don't think anyone (or very few) saw what rents were going to do. Frankly, I'm surprised they can get so much. You can't get blood out of a stone.

My guess (and its just that) is many in the middle class are using their credit cards to supplement their wages, which haven't gone up in real terms in something like 15 years.

I don't presume to know your situation, but if the rents too high - perhaps moving is an option?

https://www.youtube.com/embed/U_6gHZjpuXs

Bubble Boy,
Do you live here in the Bay Area?

I'm just grateful today for not throwing away money on property taxes or excessive rent.

Logan Mohtashami says

mell says

Btw gold is approaching $1050,

A break of 1060. downside is as low as 680.

Never even reached $1000, but hey - where is Logan?

JasonM says

about you are paying FOUR FUCKING THOUSAND in rent these days?

You could really benefit from learning about minimalism. One of the most important factors is that you always live within your means. For instance my wife and I recently decided to move out of a house and save $700 by moving to an apartment. We'll miss the extra bathroom, but the additional money we'll have to put into long term investments, and take more vacations will be well worth it! On the other hand if we owned the place we live in, we'd be stuck with our mortgage payment till someone bailed us out by buying our house.

Seems like you just like being unhappy.

Strategist says

Jason, in the end you have to take responsibility for your actions. I'm sure both sides of the argument was presented on Patnet, and you decided to go with the bears. You could have purchased a home in 2010, 2011, 2012, 2013, 2014 and 2015, but did not. If you can afford $4,000 per month in rent, you can afford $4,000 per month in a mortgage.

I would say....stop crying over spilt milk and buy a home right now. The shortage of homes is very severe, unemployment is declining, the economy is slowly but surely picking up steam. This spring we will see the beginnings of one of the greatest real estate bull markets ever seen by living Americans.

I wonder if Jason ended up buying 2 years ago when he went on that rant. He would have been well ahead if he purchased even 2 years ago.
Nothing has changed from2 years ago. The shortage of homes is still severe, probably even more severe. The economy continues to improve, and unemployment continues it's downtrend. Bottom line......Home prices can go only one way. Higher higher and more higher.

NuttBoxer says

You could really benefit from learning about minimalism. One of the most important factors is that you always live within your means. For instance my wife and I recently decided to move out of a house and save $700 by moving to an apartment. We'll miss the extra bathroom, but the additional money we'll have to put into long term investments, and take more vacations will be well worth it! On the other hand if we owned the place we live in, we'd be stuck with our mortgage payment till someone bailed us out by buying our house.

In reality.....Your mortgage would be what you are paying in rent right now. You would also have a lot of equity.
Hope you learn from your mistakes.

I have been doing pretty good by not buying a house and investing all on SP500, what it's historically better

Strategist says

In reality.....Your mortgage would be what you are paying in rent right now. You would also have a lot of equity.
Hope you learn from your mistakes.

You mean in hindsight, which is always perfect.

Tell me, how would I extract said "equity"? And how would said "equity" be affected by say, an economic crash? And If I lost my job, would this equity enable me to continue paying my mortgage?

I've paid less than mortgage my whole life except for the past six months, I'll take my profit, my freedom, my time, and my inflation/economic crash proof investment over your decaying, inflation bloated, non-liquid "equity" any day.

The answers to the multiple questions in the OP depend on what JasonM have done with the money he didn't have to plop down as a downpayment.

Did Jason put his "Downpayment Savings" in Stock?

Or did he believe that Trump was gonna crash the stock market. After all, the Very Serious People told him, from Posters on Pat.net to Paul Krugman himself, that Trump was gonna tank the market.

KimJongUn says

The answers to the multiple questions in the OP depend on what JasonM have done with the money he didn't have to plop down as a downpayment.

ja says

I have been doing pretty good by not buying a house and investing all on SP500, what it's historically better

Oops, smart Patneters have beat me to it.

NuttBoxer says

Tell me, how would I extract said "equity"? And how would said "equity" be affected by say, an economic crash? And If I lost my job, would this equity enable me to continue paying my mortgage?

If you have enough equity, you could extract it with an equity line, or by selling the home. I would not recommend either.
In the event of an economic crash you are likely to lose your equity until the market comes back.
If you lost your job, an equity line would enable you to pay your mortgage. How would you pay your rent if you lost your job?

Curious what you think the removal of the SALT deduction will do to CA home prices. It personally affects my situation because I won’t have enough to itemize without my $13k state tax deduction. My mortgage interest and property tax deduction only come to $17k combined. Need them both plus the personal exemptions x family of 4 to make itemizing work.

We will survive because the child tax credit will be in play for us at a higher income than before and the lower tax rates in some brackets. But still won’t make up for currently itemizing about $43k... down to being forced to take the $24k standard deduction. Hell, even the “doubling” of the standard deduction is disingenuous in my families case... currrently my standard deduction plus my personal exemptions come to $28900. So where does that double standard deduction kick in?

The answer is clear: California must conform to a better, national standard and rejigger the laws that punish work and consumption while underplaying the property tax.

Raising the property tax rate will cause prices to fall, making houses more affordable and stabilizing the tax base. A tax base that depends on wages and consumption declines at the moment it's needed the most (ie a Recession).

Another great thing, and this could be done on a Federal Level, is to require all states to have Anglo-Saxon Water Rights. Not Imperial Spanish ones that favor latifundia, aka Slave-run Plantations or Estates.

And to charge the commonly held riprarian resources based on FLAT water use. In other words, residences and farms would pay the same rate per gallon.

As for plantation owners, they didn't make California great; technology and aerospace did,even if Lockheed Martin makes the taxpayer drop the soap once in a while.

In vast majority of cases, investing downpayment in stock market will seriously under-perform buying a house with 20% down due to leverage issues and rent increases. It is literally an unforced error in terms of tennis and may result in serious long term regrets.

$50k in the stock market with minimal commissions/flat fee trades in 2008... then fast forward almost a decade. SPY was what, $140 in May 2008? It's $240 now? That's a gain of $100/unit, though weeks later it crashed to $68/unit. That's a 70% gain in almost a decade, even if you brought just before the market tanked.

During that time you also collected dividends.

You also pay no taxes on stock price gains until you sell them. With DRIPs there is no taxation on dividend reinvesting either until you sell the stock many years later if you buy and hold like most of your portfolio should be.

With real estate, you pay property taxes annually AND capital gains at sale. There are also maintenance costs, not only roof patching or window caulking, but also leaves don't rake themselves. Maintenance for the SPY ETF is a fraction of a fraction of 1%.

Have California Properties average 70% gains since the middle of 2008 with almost no maintenance and no annual taxation?

anon_7ebb1 says

In vast majority of cases, investing downpayment in stock market will seriously under-perform buying a house with 20% down due to leverage issues and rent increases. It is literally an unforced error in terms of tennis and may result in serious long term regrets.

Thank You. Absolutely right. Lets take Jason's example.
With 10% down the difference is even more drastic. Stocks went up roughly 30% in the last 2 years, while the median home increased 15%. If you had 10% down, and purchased a home, you would up 150%, vs 30% for stocks. 60% if you went on margin. There is no comparison. Our system makes buying your own home the best investment you can ever make.

TwoScoopsMcGee says

With real estate, you pay property taxes annually AND capital gains at sale. There are also maintenance costs, not only roof patching or window caulking, but also leaves don't rake themselves. Maintenance for the SPY ETF is a fraction of a fraction of 1%.

With stocks you also pay capital gains tax. With your home you pay no capital gains tax for the first $500K in appreciation.
I cannot stress enough....buying your own home is the best investment you can ever make.

Sniper says

Strategist says

I cannot stress enough....buying your own home is the best investment you can ever make.

That's where you're wrong. Buying your home gives you SHELTER first, that's the MOST important piece. You have control over your shelter versus your landlord. Any investment growth is icing on the cake.

Yes, but there is a lot of icing, in warm coastal regions. With the fucking taxes state of California imposes, along with the appreciation, buying a home in California gives you one hell of a return.
Look at it this way.... A 6% long term appreciation, with 4% interest rates, is like getting paid to buy a home in California. So tell me, how can California be an expensive place to live in, when you actually get paid to live in your own home. More so when property taxes are not high, and we get tax write offs for the interest and property taxes, for both federal and ridiculous state taxes.
The numbers clearly show buying your own home in California and many other states is an incredible deal. Not a great deal in parts of the country where long term appreciation is very low.

Strategist says

Not a great deal in parts of the country where long term appreciation is very low.

So what happens in those areas (like here by me)?

Sniper says

Strategist says

Not a great deal in parts of the country where long term appreciation is very low.

So what happens in those areas (like here by me)?

I thought New York, New Jersey were appreciating areas. If you are happy there, have friends and family, you really have no reason to move. What good is life if you are not happy? You seem to have everything there. Roots, family, friends, grandchildren. Philosophically, you have everything. Most people would would love to have what you have.
From an investment point of view it's a whole different animal, but you have lots of alternatives in the stock market.

Rent: A

Mortgage interest + property tax + HOA + maintenance - (tax deductions): B

If B < A, then buy

As a general rule of thumb, B < A in lower class areas. B > A in affluent areas.

Strategist says

If you have enough equity, you could extract it with an equity line, or by selling the home. I would not recommend either.
In the event of an economic crash you are likely to lose your equity until the market comes back.
If you lost your job, an equity line would enable you to pay your mortgage. How would you pay your rent if you lost your job?

So debt is your answer. Figures, since debt is how most people get a house to start with. I enjoy living debt free and within my means. Keeps me from having to go through the shock of reality if rampant credit should ever disappear.

If I lose my job, I move to a smaller place. Since I'm just renting it's an easy, and immediate solution.

I do plan on buying some land for homesteading at some point, but waiting until my investment pays off, and I can do it with a minimum of debt.

Sniper says

In the event of an economic crash, can you guarantee your landlord will continue to pay HIS mortgage? What if he gets foreclosed and the sheriff shows up to kick you out? What do you have as saved equity in that situation?

Money I put into an investment with return not based on a bubble economy. If the sheriff shows up, it's a rental, I just move on to whatever is affordable given the market. Again the beauty of renting and living within your means.

Our system makes buying your own home the best investment you can ever make.

——————

My how quickly people forget.

When you say “our system”, do you mean Free Market Capitalist system? Or American Lemon Socialism?

I haven’t forgotten the housing crash from ten years ago. All the so called “Capitalists” demanded that the government bail them out, otherwise that system was going belly up. That system you celebrate that makes the same buildings that decay to literally Negative value over time, go up in perpetuity (when priced in US dollars).

Sniper says

errc says

My how quickly people forget.

When you say “our system”, do you mean Free Market Capitalist system? Or American Lemon Socialism?

Why you angry bro?

Didn't Bernie give you the free house he promised?

Your comment doesn’t make any sense.

I’m not angry

Bernie didn’t promise me a free house.

Why not try and answer the questions rather than attacking the messenger?

errc says

Bernie didn’t promise me a free house.

Really, he offered everything else under the sun for free? How did he miss that?

BayArea says

Rent: A

Mortgage interest + property tax + HOA + maintenance - (tax deductions): B

If B < A, then buy

Buy even if B > A, because in a few years B < A.

errc says

I haven’t forgotten the housing crash from ten years ago.

So what? the market came roaring back and went even higher. Happens every time.

NuttBoxer says

If I lose my job, I move to a smaller place. Since I'm just renting it's an easy, and immediate solution.

You can do this as a homeowner as well, you know that I assume? The reality is most people are completely fucked if they lose their job unless a spouse is a massive bread winner. You lose a job, you lose your house. Whether you rent or own. Not much to it. You move in with mom and dad or relative or a cool friend. The benefit of owning is the landlord (bank) will take absolute minimum 9 months to maybe years to kick you out. Even in tenant friendly cities, you stop paying, you're out in 90 days or less. There's value to that whether anyone want to admit that or not.