patrick.net

Inventory is definitely on the rise in Marin. The same as everywhere else, there's a lot of gaming of the MLS data, so that data isn't very helpful. I know we've been tracking a constant folder of 12 homes in the Mill Valley, Corte Madera, Larkspur area, substituting new homes when with ones that sell, in an attempt to track days-on-market and price movements ourselves. Early last year, it was a lot of work because homes didn't stay in the folder longer than 30 days, but now we've only had to substitute 1 or 2 each month, and many have been stuck for 90+ days.

But there is price stickyness, at least in South Marin. My data has homes in our selection criteria dropping by and average of roughly $45K, but this is relatively minor (at least so far).

We recently started tracking North Marin also--primarily San Rafael and Novato. There, there is a much more rapidly growing inventory and, in particular, Novato prices have dropped quite significantly. Some McMansions (some of which are quite nice, all things considered), have come down by well of $200K, but my data is less than 3 months old there. Nonetheless, this is pretty compelling price movement in such a short time. Keep in mind that some of these poor saps in Novato bought 3,000K+ ft^2 homes for well for $1.3M, which is way out of line for what Novato should support given its geographic location, commute difficulties, and so-so schools.

Note, my data is merely anecdotal, and specifically targets properties which will accomidate my ability to care for a disabled retiree parent while still having room for my children, meaning we have fairly specific requirements.

Rant on Real Estate Data

I am particularly irked by the terrible dirth of accurate data/information regarding real-estate. It strikes me as the worst form of self-serving market manipulation, and it causes a great deal of damage and waste. From local MLS to state-wide "official" California Association of Realtors data, the information is simply erroneous.

This causes price stickyness, aggrevates the agency problem, and worsens the realtor(tm) intermediary transaction-friction, all to the benefit of those very intermediaries.

I don't know why we stand for this. It is unacceptible. I wish there waw some reasonable way that we could systematically leverage this type of forum to generate our own, statistically sound data sets that might provide a more accurate view of the RE market. I know...that would be hard for myriad reasons, but I can dream.

Here's my take on the numbers . . .

The easiest one to look at is YoY inventory.

That number is hard to fork with. It's a number.

When you start talking about "# months" of inventory, then this has to include a certain level of sales, right? At the rate of 500 a month, there is a 5.6 month inventory. Well, frankly, that's going to open up the number to all kinds of manipulation.

Which is why I like YOY. Look at the yoy inventory for each month and calculate the %. Then look at the change in %. That # will tell you which way the market is going. I'll try to work some numbers for Fairfax later tonight.

When 70% of people already own, the calculation of "3 mos of inventory" I think is difficult...I think at the same time that inventory is rising, so to are days on market...not only due to picky buyers (whos mentality is also affected by "so many choices")...but also the buyers left are cautious type...haven't bought yet for a reason. When things are so dynamic...which they appear right now (in spite of real estate valuation being a slow process)...calculations such as these are probably less meaningful than in steady upward/steady downward market.
Of course this idea of owner saturation could be non applicable, depending on...Question: is ownership saturation a new phenomenon of real estate? Is 70% ownership higher than, say, late 1980's in california?

Here are the numbers for Fairfax Viginia - I don't know how there could be anyway that these numbers mean anything other than a downward turn.

2005

Jan -40%
Feb -18%
Mar
Ap
May
June
July
August

[How do I keep doing that? What is that, tab and enter - crap]

Here are the numbers for Fairfax Viginia - I don’t know how there could be anyway that these numbers mean anything other than a downward turn.

2005

Jan -40%
Feb -18%
Mar +3%
Ap +8%
May +18%
June +12%
July +27%
August +47%

Interestingly, price has kept up. I think this is simply because the obvious spike in inventory isn't obvious to buyers whose major source of information is their realtors. Further, I think people who are not risk averse and will buy into the peak like this want to believe that the house is worth what they are paying. In other words - who would buy a ratbox in fairfax for 900k if they thought that it wasn't going to appreciate? Not many. So those who are still left to buy believe appreciation will occur. Many no longer see it this way, which is why inventory is climbing. When inventory gets high enough, there won't be enough RE bulls to keep prices aloft. Said in one last permutation, momentum has kept prices up, but the increasing inventory is a sail that will add drag, thereby reducing momentum

In final words, it's going to take 6 months of building inventory before buyers finally decide that the asking price is too high. I think that 6 months of increasing inventory for Fairfax puts us in . . .

September 06.

So I think that's it then. Fairfax is done. I'll chart the selling prices for Fairfax once the September #s come out. I think late summer will show a flattening of the housing price curve . . .

So, we'd probably also agree that #properties owned per household, at least in California, is also at an all time high...or is that already factored in? Hmmmm...I wonder...is it factored in already?
Leading to the question...
Is it: 70% of households own property (at least one, but maybe more)?
Or is it: the total # of properties owned by households equates to a 70% level of household ownership?
Maybe it's obvious & I'm confused (this is usually the case)...seems this is rather important--how this 70% number is calculated.
At any rate...it's just amazing...with the leveraging/speculating/and credit-based lifestyle...when you stop & think about how "different" it appears to be this time.

The 70% is the percentage of households that own the home in which they live.

30% of all households rent from someone else.

Here's some anecdotal evidence . . .

I was in Lowes today at about 9:30 - 10 am. The place was virtually empty. Really not what I'm used to. I generally don't go on the weekends unless I have to.

Escaped from DC - Here's a question for you. I've come to the same conclusion about buyers getting much more concerned about peaked prices in Fairfax.

Here's my question - Does you believe that this means buyer/investors or buyer/occupiers are becoming savvy to this new perception?

The buyer/investor has been fueling much of the demand recently, so it follows that when the buyer/investor gets worried, a double whammy of lowered demand and an increased amount of invested properties on the market hit the supply/demand curve at the same time.

Like all markets, excepting realistic boundaries, perception is a self-fulfilling prophecy. I've noticed a demand dip and a supply increase, but I am not sure which type of buyer is being affected...

Not sure if there's a way to get a real answer (at least not for a while, information is always disseminated very slowly in real estate I've come to realize), but just wondering about thoughts.

Ownership levels are higher than ever in history. However, they have been increasing slowly, and steadily Since WWII.

The ability to buy a house has improved over the last 60 years, as evidenced by the ever rising percentage of the population that owns their own home.

This is a direct consequence of the real growth in living standards and wealth of the average American during the period. Of course, this prosperity has come in cycles and some people have benefted more than others.

I wish there waw some reasonable way that we could systematically leverage this type of forum to generate our own, statistically sound data sets that might provide a more accurate view of the RE market.

Yes, data is particularly hard to get for Marin. Personally, I don't really trust the realtors to provide anything factual, unless a personal friend is in the business. Speaking of which, I thought it rather telling that several realtor friends urged my mom to sell lastfall--think they knew something already? I do.

Back to Marin, I'd like to track prices of individual properties over the years. I'm sure realtors have access to that data, but would they share it? I've considered going to the county assesor and estimate prices through tax records.

it seemed like in a balanced market, a house might take 3 months to sell, or anywhere from one to 6 months at both extremes.

Jack--that could be it: we're now seeing more normal inventory levels, which have been absent for the past 4 years. I think I've pretty much forgotten what a "normal" RE market is.. When the investors do bail, I wonder what that will look like?

Thanks Zeph; so, wow, okay...it would *seem* there really aren't too many buyers left...and with interests rates & lending standards having nowhere to go but up...so then: (rhetorical) what % of the non-owning 30% will be able and willing to buy in 6 mos at prices near today's prices?

Escaped...
That reminds me...beginning of summer, I could not believe how mad-crazy Home Depot was...all hours of the day. I kept thinking: everyone's upgrading before puting on the market. Haven't been in there lately to gauge.
Speaking of upgrades...here in SJ there are tons of these condos called McKuen's or McKean's or whatever...all built in late 60's/early 70's...usually 4-plexes w/2br units having either 798, 810, or 903 ft^2 (you look at listings enough & these #'s stick in your head!). Besides being old & IMO poorly constructed...the kicker is most have a shared, coin-op laundry facility...well in the past year I see these units being listed w/granite counters & SS appliances....yadayadayada...trying to sell for 375k when going rate is ~325k. Reminds me of when you make a 20 foot put after needing 6 to get on the green...whipped cream on $hit.
"Granite/SS/pergo" is so ubiquitous that it's practically standard now...a nice unintended consequence of the bubble, I suppose.

Thx for the additional perspective, Zeph.

I've posted this site before, but just in case anyone missed. It's s.san jose only. I shows high resolution in neighborhoods (I grew up hear & didn't know of some of the neighborhood names). It shows initial list price, current ask price, and final sale price (for closed sales). Also, listing date. It's decent for seeing how long properties have been on market...& trends as far as asking price adjustments (lots of 1-2% reductions).
Key neighborhood types (general):
lower-middleclass: "south san jose"
middle-middleclass: "blossom valley", "santa teresa"
upper-middleclass: "evergreen"
top of middleclass: "almaden"
The site updates at practically ALL hours of the day, so looks like there's some sort of direct MLS synchronization.

http://www.southsanjose.com/realty.php

Sent wrote - Here’s my question - Does you believe that this means buyer/investors or buyer/occupiers are becoming savvy to this new perception?

Yes. In other words, everybody is by this point.

When we lived there, everybody in the neighborhood tracked prices. Every conversatin was peppered with, "can you believe they want that much for that house?" But the asking price was invarably met.

After we sold, however, a few houses stayed on the market. One house, on our street, had 3 contracts fall through for want of financing.

So, I think owners/buyers/speculators are all becoming more savy to the situation. I can't say "investor," because I believe that you have to be intelligently investing to be an investor. Those who are buying houses in Fairfax right now who don't intend to live in those houses are not investors; they are foolish speculators.

In addition to all of that, I just don't think that Fairfax provides enough high income opportunities to support houses going any higher.

So put it together and what you get is a market that has reached its natural and artificial limits, and that can only flatten and go down.

Here's another example. We sold in April in a few days (the offer was on day 1, but it took two days to ratify it the way I wanted it). The house referred to above went on sale in June and was on the market for two months. A third on our street, which was built in 2001 for 800k, has been on the market since June for 1.3 million. It was an OK house, but this one's easy - anybody with 1.3 million to spend (or borrow), is not going to want to live in a 3000 sf house with no yard on the corner of our street and a four lane road - what these people haven't figured out yet is that they might not even get a million in a descending market.

I think DC hit it on the head. Sentiment has already turned amongst the "opinion leader" group...which I self servingly think most of us fall into by the very fact we're here discussing the topic. The masses are in the process of turning now, in no small part because they see all the anecdotal cases of folk like us holding out, selling, renting-and-waiting, etc.

I can add my own individual case. My wife and I have owned our own homes, starting with 20% down back in the early 90s on the Peninsula and ending with over 50% equity, 2 homes later, in Marin. We sold in April, and are renting now waiting for sanity. Call it locking in gains, defensive finance, or just a fortunate change of jobs which made this a reasonable thing to do. But, this isn't a decision one comes to easily after having been a home owner for the better part of two decades. Renting, with an elderly, disabled mother and children is a bitch. But I have confidence it's the right thing for my family to not pay the bubble premiums on another Marin home.

Of the few of my friends that have stayed in the Bay Area, all but one of them has also sold and is renting now, sold off "investment properties", and in one case sold and downgraded so they could afford a 15-year fixed at 20% down. These folks like me see a downturn coming and intend to survive it.

Randy,
I'm a bit on the opposite end of the spectrum. Last spring, there I was, 7 yrs out of undergrad, never owned property, and I made an offer on a condo that I *thought* I should be able to buy...not with traditional financing but not ultra-high risk, either. Well, the winning bid came in 21.5K above my offer (386.5 vs. 365). I certainly could have "afforded" to exceed that offer. But I told myself the following, "this property *shouldn't* cost this much."
Yes, yes, yes...an object is worth whatever someone pays for it...but that reasoning works on the way down as well as on the way up.
So, I searched for data & decided to investigate the market more thoroughly...I admit I was buying more out of fear than anything else (certainly not out of market knowledge!)...I was a bit caught up in the frenzy. After learning a little more, and in light of recent *apparent* trends, I think perhaps it's a good thing I didn't "win" that property (I would not have wanted to live there longer than 5 yrs). (And yes it of course goes without saying that I could be wrong.)

H.Z.,
No, I'm not sure. I used 70% because that's a # I've heard thrown around a lot...which I suspect is more of a national average. I did mean to imply that that was the rate in california...however, I see that my subsequent posts implied this...when I discussed other factors known to exist in california more so than other parts of the nation. Apologies...thanks for noting this & for finding those numbers. Hey I feel better now that I belong to a larger minority (err, actually...no, it doesn't matter that much to me!).

***CORRECTION for above: should read "I did NOT mean to imply..."

Randy wrote - "We sold in April, and are renting now waiting for sanity."

Randy, i often disagree with your use of economics, but this one I can't argue with . . .

This one was simply brilliant. I would like to be there in a year, two, three, whenever you choose - because you're holding the cards now - to reenter. The satisfaction at buying a place for 1/2 or 3/4 of its 05 peak is going to make the wait so so worth it.

And whoever said "I didn't "win" that bidding," right on brother.

The last time my son used ebay he says to me . . "dad, dad, I won!"

I returned with - you didn't win anything - you were just the guy willing to pay the most for the item.

Took the shine off the boy's mood, but I think in a good way. Hopefully he'll remember my words when he gets into a bidding war in the great house bubble of 2029.

CA homeownership:
"The rising cost of real estate hasn't kept Californians from buying homes, as home ownership rates hit 59 percent in the state, according to a report being released today by the Public Policy Institute of California.
But California is still well below the national average of 70 percent home ownership, ranking No. 48 in the nation, ahead only of New York, at 54 percent, and Hawaii, at 57 percent."

I believe it's a 2003 number.
From the "Desert Sun Sacramento Bureau".
http://tinyurl.com/bflu9

Here is another "renting is cheaper than buying" article, and from the SF Comical no less:

http://tinyurl.com/ap2b6

Yes, homes are much larger today than they were 30 years ago. I posted that URL to back that up a few months ago, let me see if I can find it again.

Here is something that turned up with Google:

http://recenter.tamu.edu/tgrande/vol12-1/1713.html

So yes, not only are home sizes increasing, but lot sizes are decreasing at the same time.

There is a similar article in The Economist that I can dig up if you really want it.

Hey Stanman.

I've lived in an 1,800 (1954) sf house and a 2,100 (1955) sf house and now in a 2,400 (1973) sf house. The next one I plan to be 2,000 on the dime, maybe even smaller, that I design.

But to know whether houses are getting bigger, ask yourself this:

When is the last time you saw a house for sale that was both "new construction" and less than 2,500sf? Looking back, I haven't seen one of those. Ever, and I've been watching houses for at least 8 years.

Randy,

if it is not too intrusive, I'd like to know how you park your cash proceeds from the sale. I will put up my primary residence in a heartbeat if I can resolve the following problems:
1) Where to park my cash. USD is obviously heading for the toilet, but when it does, how safe are the banks/brokerages where I parked my euro/yen/gold certificate?
2) What if there is a rampant inflaton (not yet hyperinflation) couple of mild correction of USD, a likely scenario, so that my home will retain its nominal value in USD, and USD is only heading downwards at 5% per annum.
3) If you bought early(~10 years ago), you are locked in a nice prop 13 property tax treatment, only 50% of what you recent neighbors pay. Also, the gain is above the $500K per couple so that you'll need to pay tax. You'll also lose the mortgage interest deduction on top of that. The number may not work out if scenario 2) happens.

If I had 2 houses, I would definitely unload 1. But unloading my primary residence that I got for cheap requires a bit more courage. Kudos to your courage.

H.Z.

thanks for the feedback. I do like my neighborhood and the schools are great, the only motive for me to cash out at this point is the hope of buying into really upscale suburbs later. But I will be perfectly satisfied staying where I am.

However I don't feel comfortable about USD. I personally believe that if things continue its current path, we will be heading for the US peso era rather soon, I am sure of the end but I don't know when and how this is going to unfold. I still hold a small amount of USD CDs maturing no later than Dec 2006 and have no intention to carry more.

I talked to a couple of cool-headed friends and they share the same feelings. There is simply no better, safer asset to park their money if they cash in. All of us bought our primary residence >5 years ago doing the traditional fixed-rate mortgage financing. So we would like to take advantage of the bubble by selling out, but where do you safely park your money? In a way, our home is also a hedge against the free fall of USD (or inflation), that is certainly one of the motivatons for current owners to hold on to their homes.

In a way, our home is also a hedge against the free fall of USD (or inflation), that is certainly one of the motivatons for current owners to hold on to their homes.

I disagree. If you house falls 30% in value, then what kind of hedge was that? OK, I guess, if dollars fall 50% in value.

No investment advice here, but I don't think it's that complicated. If your fear is that putting your money in dollar assets puts it as risk to a falling dollar, then put your money in something that is a proven hedge against a falling dollar. Or split you money up.

In any case, in my opinion and my opinion alone, I think keeping 500,000 of paper equity in a one million dollar house in Cali is a gaurenteed loss of 300,000 over the next two years.

Again, that's just me.

What I did is take out the equity and use it to buy a much cheaper house for cash. That's it. Now, mortgage is gone - poof - and so I used the fake equity to dump the loan. If house prices get cut 30%, which I expect, 1. I have no mortgage to pay and 2. I've only lost 1/2 of the equity I would have in the prior house.

Something like that, anyway.

Of course, if you love where you are at, don't want to move to a different place where houses are much cheaper . . .
Then stay where you're at.

Too bad you couldn't sell an option to somebody who wants to bet that your equity will stay where it is . . .

Escaped from DC,

in a sense, real estate asset is a better asset than paper, that is for sure. So, when USD does head down, realty value will climb in USD denomination to compensate for the loss of USD, to a certain extent, of course. Even in Argentina, its realty value (measured in USD) held up relatively much better than Argentina currency after the famous crash. Of course I don't think my house is worth what the market is willing to pay now, but there are also considerations like locked-in low prop tax, capital gains tax, etc. on top of real living issues.

As you said, what I would love to see is a financial product that bets against the value of my home, while I can still occupy the same house and make some nice gains when its value goes yoyo up and down. I am willing to pay a lot for that option. :-)

Isn't there an online exchange where you can bet on the rising or falling of home values in various regions? I heard someone on this blog talking about it before, but I forget the name of it.

When is the last time you saw a house for sale that was both “new construction” and less than 2,500sf? Looking back, I haven’t seen one of those. Ever, and I’ve been watching houses for at least 8 years.

Don't know about SF, but there are tons out here from the 1100sqft-1500sqft range. It's interesting how many entry level homes are being built and have been built in the last few years. Now we're just waiting for entry level prices.

Fyi: I will be mostly MIA for at least the next month, due to celebrating my 10-year anniversary/extended vacation and not being near a computer most of the time.

I wanted to take the time to thank all those who pitched in and registered as moderators: Sentinel78 (who started this thread), Kurt S, Jamie, Escaped from DC, Surfer-X, Prat, and anyone else I missed. If you haven't heard back from Patrick in a couple of days on your moderation rights (he's a little slow to respond sometimes), then email him again. Once you've been granted rights, just logon (patrick.net/wp/wp-login.php), then go to "Site Admin" link under "Meta" on the main page, then "Write" to create new threads. To moderate threads you've already created (delete troll comments, get addresses, etc.), click on "Manage".

Have fun everyone --I know I will!

A question for SURFER-X (and a few others who use this term) - why do you use the term ‘$HITBOX’? And what type of construction does it exactly refer to?

ptiemann,

The term "$hitbox", or variant, "stucco $hitbox", etc. is meant as a sarcastic rebuff to Realtor/flipper-hype regarding overpriced hyperinflated RE. It doesn't usually to refer to any specific type of developer or construction, with the possible exception of cheaply built tract homes aka "McMansions".

SactoQT wrote - "Don’t know about SF, but there are tons out here from the 1100sqft-1500sqft range."

Hmmm. Must be a west coast thing.

On the eastern sea board, they just don't make them that small anymore. Maybe it's a zoning thing, I don't know.

Randy,
Were you able to negotiate a better than 6% commission when you sold ?

We negotiated 4.25% commission, which still didn't make me happy (but my wife won that argument because she wanted to sell asap and not dicker over the .25% I was holding out for). But I could've gotten 4%, damnit! lol We were selling an expensive home, which generally go for less than the 6% commission if the seller is informed.

Our selling experience was a bit of a nail-biter, even back in April. We had a zillion interested buyers, but only one reasonable bid (meaning they had a shot in hell at getting financing). We had to risk losing that buyer to keep a reasonable price. No, we didn't get asking, but I'd anchored high expecting so much. I got what I wanted, but not a penney more.

This one was simply brilliant. I would like to be there in a year, two, three, whenever you choose - because you’re holding the cards now - to reenter. The satisfaction at buying a place for 1/2 or 3/4 of its 05 peak is going to make the wait so so worth it.

Thanks DC, I hope your'e right. It's nice knowing we have essentially purchased a lot of valuable options at the price of the inconvenience of renting--including the "leave CA" option. Even if we stay, at least I'll know it's on my terms, not the terms of my debt structure.

(maybe we should pack up our RE winnings and move to a very socialist country in Europe so we don't have to work hard anymore...*chuckle*)

Hey jack, good summary of McMs.

Randy - "Even if we stay, at least I’ll know it’s on my terms, not the terms of my debt structure."

Yeah, OK, call yourself an Objectivist and not a libertarian. You're Howard Roarke man, I'm John Galt. As long as we hate the golden handcuffs and the Man's tax noose, we're brothers in arms.

Well, maybe it was subconcsious. Those buying now are certainly buying the hose.

Thanks Jack for the support, and thanks to SoldAtthePeak for the non-investment advice. :-)

I think $hitbox is defined by the neighborhood, then by the house itself. I have seen some new developments in high-crime neighborhoods selling at a price that is only reasonable in a nice, safe neighborhood. I don't care how big the lot is, or how big the home is, you can buy your home, you can't buy your neighbors. A house in an undesirable neighborhood with frequent drive-by shootings is most certainly a $hitbox.

Then the Monster homes in a neighborhood with smaller lots. The funniest thing is a fenced off, 4,500 sft homes on a 6,500 sft lot, who do you think you want to show off to? Your neighbors who paid 50,000 for their shack 30 years ago and paying 1/10 of your property tax? But I usually have no complaints about these new buyers, hats off to their property tax contribution to our school system.

I don't usually call an old 1950-home, if nicely built with out-of-date decor, on at least a 1/4 acre lot a $hitbox. Interior deco is easy to fix, if I don't like the house, I can always preserve a few walls for property tax reasons and rebuild. The key is location, location, lot size.

Randy,

if it is not too intrusive, [...]
1) Where to park my cash. USD is obviously heading for the toilet, but when it does, how safe are the banks/brokerages where I parked my euro/yen/gold certificate?
2) What if there is a rampant inflaton (not yet hyperinflation) couple of mild correction of USD, a likely scenario, so that my home will retain its nominal value in USD, and USD is only heading downwards at 5% per annum.
3) If you bought early(~10 years ago), you are locked in a nice prop 13 property tax treatment, only 50% of what you recent neighbors pay. Also, the gain is above the $500K per couple so that you’ll need to pay tax. You’ll also lose the mortgage interest deduction on top of that. The number may not work out if scenario 2) happens.

These are great questions, and I spent a great deal of time modeling (with a statistical simulator) before we made the decision.

::3) We traded up twice between the early 90s and 2005, so we locked in gains at every round and avoided cap gains by coincidence; so this wasn't an issue...we gained far less than 500K on the last sale.

::2,3) We parked our cash, which turns out to be quite a lump, in a diversified portfolio of CA/Fed tax exempt muni bonds, commercial paper, and STRIPs. This was a temporary measure to offset most, if not all of inflation while we figure out our liquidity needs. Originally, we thought we'd be parking the money for 1-1.5 years, and we wanted the flexibility to pull it on demand when we'd buy back in.

Now, we're looking at some better return devices which have the option to take a secured loan around 1.5% against the principle to have buy-in liquidity. This option is only available if you have enough cash you can utilize an investment bank. Still, I'm not convinced of this approach, but I'm modeling it to see.

To date we've beaten the SF Fed CPI regional data by about 1/4%, with 12% exposed to taxation...so probably a wash to a small loss vis-a-vis inflation.

I don't care about the USD vis-a-vis other currencies because I'll repurchase in nominal USD. I'd only care if I were investing the proceeds internationally, which I'm not. If I were, then it would only help as the USD eroded because I'd be earning returns in a stronger currency.

I'm not convinced that RE value will weather a correction at any less of a rate than inflation erodes nominal dollars. It's just as likely that your worries will play out to the opposite. This is why I'm not betting either direction. I'm just trying to preserve my real-dollars.

Finally, if inflation ticks up and interest rates don't rise, then you may be right. But I am assuming that nominal rates will rise with inflation, thereby naturally hedging me against inflation. If hyperinflation hits, then RE will be better (assuming a mild RE correction), but I'm not worried about hyperinflation as much as stagflation. In that case, RE will get hit harder in the early phases at least, giving me a buy-in opportunity before my real-dollars erode too much.

---

I'd be enormously grateful for any advice on this, my comments aside. I do worry--as anyone would--with so much of my net worth now out of RE and tied up in the devices I described. Right now I'm 100% liquid and can move my assets to a better portfolio either en masse or dollar-cost-averaged.

Has anybody heard the French guy's comments on Greenspan.

Says that Greenspan told him that the U.S. has "lost control" of its deficit. Said he was quoting Greenspan verbatim.

I set the under/over on Greenspan denying he said it at noon tomorrow - that's how long it'll take before Bush's boys get to him and let him know that that kind of honest will not be tolerated.