patrick.net

tannenbaum
I wasn't tracking rents back then...so off the top of my head rents did drop, though I'm not sure by how much...my guess is about 10% for SFH. But that's only a guess.
Remember,we also had the quake which caused people to flee. I have friends that own apt. bldgs that were looking for ANYBODY to rent their units. ..not good renters, ANY renter.

astrid
I, for one, am absolutly intrigued with straw bale building. Thick walls, eco friendly, etc. It's kind of a dream of mine that perhaps I can build one someday. Maybe when this baby crashes I'll buy a little piece of land so that when I retire I can design the coolest straw bale house ever!( and build it myself)

@tannenbaum,

I wasn't systematically tracking rents back then either, but I'll second Linda and guesstimate that they fell modestly (10-15%) during the recession, which btw was very protracted in CA vs. other parts of the country. By the mid-90s rents had definitely levelled off and restarted rising at a rate close to inflation. Generally they had held up better than house prices during the same period. There certainly wasn't any big increase (from increased demand by former owners turned renters), as bulls like to believe.

Re: RE in the Southeast

Beware! Do you have any idea how bad the summers are? Do not even CONSIDER moving there for at least the next 2 years. By that time I should be well settled in my sub-300k 100% cash transacted home.

My wife & I visited Raleigh, NC over XMAS and made a game out of guessing the prices of home listings based on descriptions/pics alone. Laughably low compared to here, and last time I checked, engineering salaries were not laughably low compared to here.

Haha,

the GLD management fee (as well as that of IAU) is long known to us gold hoarders, if gold price doesn't go up at least .4% a year, the value of GLD will eventually go to 0.

However, for those people who already know that they need to seek refuge in precious metal, there is no better choice. Hoard gold yourself? Well, to buy physical gold, you are looking at an average of 1.5%-2% shipping and handling fee, plus annual insurance and storage cost. Well, you can skip on the storage cost if you are going to bury it in the backyard, but if you are betting a significant portion of your HaHas on the precious metals, you'd better have an insurance coverage. The standard shipping and handling charge for silver is 3%.

I am not arguing that gold and silver are good investments. They are hedges, not investments. But if one does decide to get into gold and silver, then ETFs are probably the most cost efficient way to do it, even factoring in the annual management fee.

astrid and HARM,

thanks for the links.

George,

congratulations on finding a good keeper. She is the one.

My wife occasionally nags me about a big stone, but then I gave her some investment articles on diamond and she happily agreed to divert her attention to making more Hahas instead of spending them.

She is more of a number cruncher and savvy investor than myself, if I dare to upgrade in this environment, she will make sure I get no corpoal pleasure for god knows how long.

Did someone see a Century 21 ad featuring a Mandarin speaking couple being picked up by the agent at the airport?

WTF is that about? We are running out of idiots in this country so we need to import some non-English speaking idiots from somewhere else?

@Hokies

I met someone back in 1989 who was buying everything he could get hands on. He said "real estate never goes down". He was 31 then. I met that same guy seven years later and he was being evicted from his 3 condos, thanks to the market tanking and him losing all his equity and then some. That was 1996 and he was 38 years old. Meanwhile, he’s lost his entire net worth, and had to start over from scratch. It’s now 2006 and he's just finally getting back to where he started 17 years ago. Sad.

How do you destroy your life, with family and kids if you just buy a house without even researching the market first or considering consequences of buying at the top?

Point is, if you time it right.. that’s fine. But if you don't, you could be screwed for a loooong time.

Pop!,

I think Fidelity freedom fund is such a sloppy product, it is just a packaged up USD fixed income fund, worse return than a CD. I can confidently do much better than this fund just by putting money into short-term USD treasury.

Do you have to stick with Fidelity? If not, there are plenty other choices. If you have to stick to Fidelity, then the closest thing I can find is Fidelity Gold Select Portfolio, Natural Resources and Energy.

Hokies is just another maggot here to annoy. He does this when he is not jacking off with his frat boy buddies with a bottle of bud light watching VT fucking lose.

Hokies
Everybody who is anybody is getting OUT of real estate now. Everybody.

Pop!,

I rolled over my past 410K from Smith Barney to Schwab, you can call up both companies to ask if you can do so. Once I roll the 410K over, I can do whatever I want.

Here are a few choices
XLE - energy ETF
DBC - commodity ETF for oil, heating oil, gold, alumnium, corn and wheat, you should definitely hold DBC in Roth/IRA accounts due to its more complicated tax reporting of PFIC in a taxable account (basically a way for IRS to screw everyone who wants to hold *passive* investment in a foreign fund)
USO - an ETF for crude, just launched today
GLD, IAU, CEF - first two are gold ETFs, the last one holds both gold and silver coins, hold CEF in non-taxable account for the same PFIC issues
SLV - not launched yet, but approved, silver ETF
BHP - Australia's largest mining company, enjoying one of the highest correlations with metal and mineral prices

The real commodity funds that invest in the commodity itself but not the company mining/growing these commodities usually have a heavy front load of 5-5.5%, Pimco, Oppenheimer all have such true commodity funds. That's why I prefer to invest in ETF, bypassing hefty front loads.

hate to rent,

I don't think you can do anything with your existing 410K. You can only roll over the previous ones.

Interesting data from Morningstar:

http://screen.morningstar.com/Movers/FdMovDef.html?fsection=losers

Bigest Loser Mutual Funds (Any pattern here?)

REPSX ProFunds Ultra Real Estate Svc 46.07 -1.36 -2.87
REPIX ProFunds Ultra Real Estate Inv 45.27 -1.33 -2.85
STMDX Stratton Monthly Dividend REIT 37.68 -0.97 -2.13
SOABX Spirit of America Real Estate B 14.75 -0.32 -2.12
PETBX PIMCO RealEstateRealReturn Strategy B 8.83 -0.19 -2.11
PETCX PIMCO RealEstateRealReturn Strategy C 8.83 -0.19 -2.11
BCSIX Brown Capital Mgmt Small Co Instl 34.17 -0.73 -2.09
PETDX PIMCO RealEstateRealReturn Strategy D 8.92 -0.19 -2.09
PRENX Principal Inv Real Estate Sec AdvSel 23.38 -0.50 -2.09
SSREX SSgA Tuckerman Active REIT 19.20 -0.41 -2.09

sex is not a weapon :twisted:
chilren are not weapons :evil:
Thanks SQT

-chilren
+children

New thread: Housing Bubble Haiku

Fewlesh,

I second your concern about 401k, 403b, SEP, SARSEP, SEPIRA, IRA, RothIRA, etc. tax status.

I have contended for years now that there is a very significant risk that the government will create a special tax mechanism to disproportionately tax returns/disbursements from these tax deferred vehicles sometime in the future. A simple demographic revenue extrapolation should be enough to convince yourself that the gov't will not be able to contain their need to get their hands on all this untaxed/undertaxed money.

George,

There is a lot of interesting stuff happening with the USD. Even as it devalues further against the EUR, it is appreciating pretty quickly against the "carry trade" currencies. Last weekend's FT had a couple articles on how Iceland, New Zealand, South Africa, and Australia are all either at or very close to entering stagflation and sinking currencies largely because of the USD. In essence, the US economy is unloading a portion of our inflation/stagnation pressure to those economies primarily through currency trades. It's all very complicated by also very interesting.

Hokies,

I'm in my 40s and pay about 40% less renting than I would if I bought a comparable property today. I'd much rather pay a cheaper price in 4-5 years and bank some of the difference in savings bonds in the meanwhile than buy at the top and watch my kids and wife suffer economic starvation as interest rates ratchet up my economic pain year after year.

By the way, I'm putting more away right now than I would be paying down in principle at the start of a 25 year amortization anyway!

Better a higher rate on a lower principal, that's my principle - all the benefit is on the downside of rates for someone smart enough to do that. Even if rates go up, the pain is less with a lower principal amount.

All the pain is on the upside of rates for someone too dumb to wait, who jumps the gun and buys at the top. Bigger principal plus rising rates equals potential default!

I happen to be at the top of my income potential with the current employer. It would be oh so stupid to worry about how old I am when I purchase a property and let that guide an investment decision.

tsusiat

http://finance.yahoo.com/columnist/article/richricher/3413

We need to wait and buy in the stage 6 of the boo/bust cycle: when the panic begins.

Amateurs now hate their asset. They start to dump it as prices fall and banks stop lending. The panic accelerates. The boom is now officially a bust. At this time, controls might be installed to slow the fall, as is often the case with the stock market. If the tumble continues, people begin looking for a lender of last resort to save us all. Often, this is the central bank.

The good news is that at this stage, the professional investors wake up from their slumber and get excited again. They're like a hibernating bear waking after a long sleep and finding a row of garbage cans, filled with expensive food and champagne from the party the night before, positioned right outside their den.

true, mike...

Mike,

Thanks for your perspective. I argue that your definition of rent-to-price is a bit too narrow to explain how people intrinsically value a property. I think buyer psychology does include rent as a factor; but much more so in a sort of opportunity-cost calculation (although flawed).

Therefore the theoretical, fundamental-determined price prediction for a home will inevitably be lower than the theoretical, factor-determined price prediction for the same home. Put more simply, in your example of house prices being $650K, but the theoretical price prediction being $400K, I would argue that actual support prices will almost certainly much higher than $400K (but probably lower than $650K) because of various significant factors which are not strictly fundamentals. I posited a formula for this here.

John,

I can't speak to your specific situation. The best I can do is point you to a tool me and others created which might help you to evaluate your on situation. The tool is a spreadsheet here on my own blog.