patrick.net

I'd love to have another post from OO, who used to post on the old school threads. He was hardcore: Perth Mint certificates in $100k increments. Sigh, I got stopped out of my GLD and AU sub $900...

In regards to funds going from the haves to the have nots, this is not exactly accurate. It's more like the have littles being squeezed to fund the have lots and the have nots. When you look really closely, the most money winds up in the hands of the have almost everythings. Even the money going to the have nots winds up in the top tiers of society. Just think about Heath insurance. The current insurance system was started by a physician because he found it difficult to make a living from pay as you go patients. The insurance company became blue cross. So for this added layer we all pay, and isn't that the point after all- find every way possible to transfer the fruits of peoples hard work to the top?

Armando148 says

Good time to sell if you bought low. Or at least sell enough to get back your original investment adjusted for inflation.
If gold crashed it wouldn’t hurt as much given you got your original investment back. If it doesn’t than you can laugh all the way to bank, either way you win!

This is an awful time to sell. Gold is on the cusp of going parabolic and the dollar is poised to drop off the side of the cliff the second interest rates rise.

guys,

what do you suppose could happen if gold "parabolic?"?

Maybe, it will become impractical to sell the physical bullion if this were to happen. Someone I know inquired about selling a gold bar, the buyer said he'd have to get an assay from someone that the buyer approved of, and he'd have to pay for the assay. If it comes to that, it may be difficult to avoid a 1099 form or some such.

I am not opposed to using gold as a money substitute, maybe I have even done so myself, and if I did, I would think about the different possibilities of "golden handcuffs".

Nomo, time will tell which of us is right. I stand by my statements. You always seem retaliate with your little negative barbs. Haha, so be it. We'll see who is right.

Moderate (right of center) republicans are being replaced by extreme right wing Tea Party candidates. Let's see, before Obama, the only democrat president since 1980 was Clinton who ultimately was a good republican president.

In a way it's understandable that some of the right wing extremist whackos on this site don't even know what democratic policy is about. All they really know about it is the huge well funded propaganda they have heard preventing it's existence since the seventies.

I've been under the assumption that Abe adnd Ray are very old conservatives married to the political bitterness that goes way back to Vietnam or earlier. But I think that might be wrong. Maybe they are younger and have only been adults since Reagan or after. It would explain a lot.

I am the opposite of an expert in 1930s history, but I think the record of FDR's intervention is a little more mixed than that.

http://en.wikipedia.org/wiki/Agricultural_Adjustment_Act

The problem with just "printing" is that it is a bandaid on a bigger problem.

in the SFH market rentals are few and far between

The California average for non OO purchases during the boom was 25-30%. For La Jolla I would expect this to be a LOT less, with most rentals coming from a desire to preserve the Prop 13 valuation while cashing in on the rental value. (This is entirely a non-scientific guess however).

According to:

http://www.movoto.com/neighborhood/ca/la-jolla/92037.htm

La Jolla has a population of 44,000, a total household count of 17,000 or so, and 30% rentals.

5% rental turnover per month would give us over 200 rentals available at any given time.

http://sandiego.craigslist.org/search/apa?query=la+jolla

matches that I guess.

how is it that rents can be tied to purchase price when there is essentially no rental market and no prospective landlord purchases to drive pricing

at the end of the day all markets compete with each other. Clearly La Jolla is one of the nation's foremost "terminal neighborhoods" -- in the top 100 at least -- so it has that going for it.

Rents provide a floor for housing, but some areas will stay above that floor. Depends on the larger macro situation I think, people expect this decade to balloon out like every previous decade has since the 1960s. But we're not even through the first year of the 2010s, who the hell knows what's going to happen.

Of course not! But there are psychological valuations, where one ponders "Hmmmm Pay $3500 in mortgage, tax and insurance, "OR" pay $1900 Rent?".

That's gotta be a deal killer for many...

There are no ties, just basic fundamental reality. And the Reality is, Americans only Wish they were as Rich as they thought they were in 2000-2007. So unless we elect a president that can Crap gold bricks and will dole them out to everyone. We're stuck with the reality that a lower end "UP SCALE" house, starts at 160-225, and Mc Mansions aren't worth a penny over 250K, and modest Burbdale community homes are only worth $79-130K, and Condos! 35K for a 1br for Grandma to retire in, and 120-200K for the more upscale Condos on the beach.

There's less than 10% of American population that can afford a housing market outside of this structure. It's pretty much the same structure we've been in since the late 80's.

And let's face it, while Minimum wage may have risen since then, the basic Middle Class wages have not.

"WAGES" is what "Real Estate" is really tied to, both fundamentally and philosophically.

Tenouncetrout says

So unless we elect a president that can Crap gold bricks and will dole them out to everyone

If that were to happen, then those yellow pieces of metal would be completely worthless. Gold prices are driven up by fear, not the true inherent value of the yellow commodity. Once that commodity is as prevalent as sand, then the fear mongers will find another more rare commodity to drive up in price.

In order to artificially inflate the prices which theoretically raised the profits for farmers. My point being, YOUR reason the crops were “rotting in the fields while people in the cities starved” isn’t even close as to WHY they were rotting in the fields. But don’t let the facts interfere with your silly nonsense. Incidentally, did you know the Agricultural Adjustment Act was ruled unconstitutional by the Supreme Court? Interesting, don't you think?

Read my post Duckie Dude, I already stated the why. And thanks for the offer to "teach" me "something," but based on your past performances, I'll skip that class. LOL!

There's an easy answer to your question, just go to City-data.com. For example:
http://www.city-data.com/housing/houses-Walnut-Creek-California.html

Scroll down the report and one sees that Walnut Creek has very low rental occupied versus owner (depending on unit type, but certainly SFR). I couldn't get La Jolla to come up apart from greater San Diego, is it actually a City or just a named place? If you use your zip code you can find it.

You make a good point, and it is one of the few compelling arguments for prices holding up in 'fortress' areas. The debate for me is in the boundary of the fortress.

I should add that in my zip, SFR rentals amount to less than 10%. I am one of those and pay rent at about 1/2 (or less) the cost of carrying a standard fixed 30 yr mortgage at 5% with 20% down.

My point is that they are *not* tied to rents any more, but should be, and one day will be again.

pkowen above is saving a boatload of money exactly because the price is disconnected from the rent.

pkowen did not account for mortgage/property tax deduction (which is pretty significant for buying a home in places like Walnut Creek. A 200K household should be able to shave 35% off interest and property tax) and principle payback (which is more significant as interest rates are lowered and principle payback makes up a bigger portion of the mortgage) Once those are accounted for, renting is more or about the same as buying currently.

From my experience, a typical buyer in Walnut Creek, Lafayette can utilize anywhere from 30-40% in mortgage interest and property tax deduction, a buyer in Concord and Antioch is 0-20%. That makes up for a bulk of the rent/buy variation between the more expensive place.

If you put this in a social science context, how many 200K households live and especially buys as a primary in Concord vs. Lafayette? If it is such a great deal, wouldn't all the 200K household move to Concord too realizing all the "value"?

shrekgrinch says

Yeah, I sure don’t — from as broad a tax base as possible and fairly, too. The top 10% income earners already supply 70% of income tax revenues to the Feds as it is. That’s not a ‘broad tax base’ nor is it fair.

That would be fine if the wealth was broadly distributed as well. But when the top 10% own 95% of the wealth, it's hard to have a broad tax base...

Nomograph says

theoakman says

This is an awful time to sell. Gold is on the cusp of going parabolic and the dollar is poised to drop off the side of the cliff the second interest rates rise.

The goldbug’s fatal flaw: they can never bring themselves to do a little profit-taking

Maybe you missed the part above where I said how fun it's going to be to sell it to all the suckers who will be the last ones in the door. Once Gold goes parabolic, I'll start selling. This has been a healthy bull run with plenty of pullbacks to prevent it from getting out of hand so far. I don't really need to do any profit taking. I quintupled my net wealth in the past 3 years. Gold would have to fall down to about $200 an oz and someone would have to liquidate my bank account to get me back to square one.

shrekgrinch says

Tenouncetrout says

“WAGES” is what “Real Estate” is really tied to, both fundamentally and philosophically

Funny, all these years I thought it was mostly tied to D-E-B-T.

Wages _should_ be the main determinant of house prices (as they are of rents) but very risky lending resulted in prices far above what wages will actually support. So you're both right.

shrekgrinch says

Tenouncetrout says

“WAGES” is what “Real Estate” is really tied to, both fundamentally and philosophically

Funny, all these years I thought it was mostly tied to D-E-B-T.

In the 70s, 80s, and 90s rising household wages supported rising household debt loads.

In the 2000s, IMO, rising debt loads supported rising wages.

This is why this recession is not your father's recession.

The socialist bashers who defend the corporations are Tea Party John Birchers. Koch was a John Birch founder and he is the biggest Tea Party supporter.

So, you guys who yell about socialism, and make social security a part of it, can take a long walk off a short pier. Or you can wise up and realize you have been had by one of the more radical political groups in the history of the United States.

I have a completely different theory. Let's profile "renters" vs "owners." On the whole renters tend to be younger and do not have families. Households tend to be 1-2 people. And occasionally a young family. There is no big reason to rent a house in suburbia (nice or not). When people get married, have children or their children head to school they staart nesting and yearning to own. Many people would rather "own" in a neighborhood they can afford than rent in a "nice" neighborhood. And for the singles/couples that want to own? They tend to favor urban areas, or more dense areas.

As much as people recommend renting in a nice school district, most families with kids would rather own elsewhere. There really aren't many potential renters for those neighborhoods. Renters tend to have lower incomes (even in the Bay Area). This may shift as more people decide owning isn't a good idea, the profile of renters may change and there might be more options in the "nice" neighborhood.

Shrekgrinch,

"Show us all where in the Constitution it says ‘all men are created equal’."
http://www.usconstitution.net/declar.html
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Shrekgrinch,
who said "Better to keep your mouth closed and be thought a fool than to open it and remove all doubt"?"

It was also my understanding that around 70% of newly Latino voters vote Democratic.

http://query.nytimes.com/gst/fullpage.html?res=9C06E0DC1638F934A35752C1A96E9C8B63

I also understand that the Senate was used to help convince sparsely populated states to join the union. Otherwise they would only have 1 representative in Washington.

note, the filibuster can be removed with 51 votes right when the new Senate is seated.
a: Mark Twain

Troy says

Honest Abe says

Government interventionism ultimately leads to socialism. Socialism leads to tyranny.

What about Norway? Most socialized economy I’m aware of, per-capita GDP tops for an actual non tax-haven nation:
1 Liechtenstein $122,100

2 Qatar $119,500

3 Luxembourg $79,600

4 Bermuda $69,900

5 Norway $57,400

6 Jersey $57,000

7 Kuwait $52,800

8 Singapore $52,200

9 Brunei $51,200

10 Faroe Islands $48,200

11 United States $46,000
How does this fact not penetrate your ideological defense barriers? Why do you avoid it?
Are the Norwegians not free? Does their socialized systems work well for them? Are they not happy?

Norway is a homogenous, small, oil-rich nation with hardly any crime or military expense. Hardly a comparison to the US.

dude ... the part about created equal is not constitutional ... ummm ... it's Declaration of Independant-al......

and, what's a "newly Latino voter"? If you are suggesting that those who invaded our land are aware of the fact that they will continue to be given free money, food, Section 8, medical, schooling, legal council for as long as they help keep D's in power so those Demliberals can force the legal-immigrant-workers to hand it over - well then, you are correct. That powder keg is just about ready to pop anyways.

Is it safe to assume that you send in more taxes than you are required to?

They thought they had it in the bag but there were no steep victories so I assume they're a bit green and will have to turn over a new leaf.

Nomograph says

Norway isn’t Socialist. They have a three-branch parliamentary government, just like the US.

Socialism is an economic system and the government power structure is orthogonal to that.

Socialism is the public/government "owning" and operating capital and Norway's socialism has historically extended across a broad swath of the economy, from Statoil (hello???) to the government-run banking and telecom (Telenor is still majority-owned by the state AFAIK) companies, to the oil-funded pension plans, to hydroelectric development and aluminum production (Norsk Hydro is 40+% owned by the state).

Liberal guilt is a hell of a thing isn't it :)
Pussies

Ptipking222 says

Norway is a homogenous, small, oil-rich nation with hardly any crime or military expense. Hardly a comparison to the US.

We were once an oil-rich nation with hardly any crime or military expense. We took a different course, and it fucked us up but good.

The homogeneity of Norway and the other Scandinavian examples of state Socialism is an important point but if that's why socialism can't work here then it's a pretty damning indictment of the American experiment and our humanity.

Maybe it's our size? 5M people may be the limit as to how large an effective government can become.

SF ace says

pkowen did not account for mortgage/property tax deduction (which is pretty significant for buying a home in places like Walnut Creek. A 200K household should be able to shave 35% off interest and property tax) and principle payback (which is more significant as interest rates are lowered and principle payback makes up a bigger portion of the mortgage) Once those are accounted for, renting is more or about the same as buying currently.
From my experience, a typical buyer in Walnut Creek, Lafayette can utilize anywhere from 30-40% in mortgage interest and property tax deduction, a buyer in Concord and Antioch is 0-20%. That makes up for a bulk of the rent/buy variation between the more expensive place.
If you put this in a social science context, how many 200K households live and especially buys as a primary in Concord vs. Lafayette? If it is such a great deal, wouldn’t all the 200K household move to Concord too realizing all the “value”?

How exactly do you know I didn't factor in tax savings? Actually I did factor it in, I just didn't waste time detailing a full accounting of rent vs. buy on the place I rent. Factoring in tax savings, which I always do when considering a purchase (I have owned two houses), I am paying about 1/2 the nut to buy the same place compared to my rent.

Prices are indeed disconnected from rents in some places. For me, that means some places are better to rent than buy.

pkowen says

SF ace says

pkowen did not account for mortgage/property tax deduction (which is pretty significant for buying a home in places like Walnut Creek. A 200K household should be able to shave 35% off interest and property tax) and principle payback (which is more significant as interest rates are lowered and principle payback makes up a bigger portion of the mortgage) Once those are accounted for, renting is more or about the same as buying currently.

From my experience, a typical buyer in Walnut Creek, Lafayette can utilize anywhere from 30-40% in mortgage interest and property tax deduction, a buyer in Concord and Antioch is 0-20%. That makes up for a bulk of the rent/buy variation between the more expensive place.

If you put this in a social science context, how many 200K households live and especially buys as a primary in Concord vs. Lafayette? If it is such a great deal, wouldn’t all the 200K household move to Concord too realizing all the “value”?

How exactly do you know I didn’t factor in tax savings? Actually I did factor it in, I just didn’t waste time detailing a full accounting of rent vs. buy on the place I rent. Factoring in tax savings, which I always do when considering a purchase (I have owned two houses), I am paying about 1/2 the nut to buy the same place compared to my rent.
Prices are indeed disconnected from rents in some places. For me, that means some places are better to rent than buy.

Ok, not 1/2, maybe 55% ;)

pkowen says

SF ace says

pkowen did not account for mortgage/property tax deduction (which is pretty significant for buying a home in places like Walnut Creek. A 200K household should be able to shave 35% off interest and property tax) and principle payback (which is more significant as interest rates are lowered and principle payback makes up a bigger portion of the mortgage) Once those are accounted for, renting is more or about the same as buying currently.
From my experience, a typical buyer in Walnut Creek, Lafayette can utilize anywhere from 30-40% in mortgage interest and property tax deduction, a buyer in Concord and Antioch is 0-20%. That makes up for a bulk of the rent/buy variation between the more expensive place.
If you put this in a social science context, how many 200K households live and especially buys as a primary in Concord vs. Lafayette? If it is such a great deal, wouldn’t all the 200K household move to Concord too realizing all the “value”?

How exactly do you know I didn’t factor in tax savings? Actually I did factor it in, I just didn’t waste time detailing a full accounting of rent vs. buy on the place I rent. Factoring in tax savings, which I always do when considering a purchase (I have owned two houses), I am paying about 1/2 the nut to buy the same place compared to my rent.
Prices are indeed disconnected from rents in some places. For me, that means some places are better to rent than buy.

please share some details.

price to rent your house based on best available market value
price of house based on best availble market value
SFH, condo bedroom/bathroom sq ft, city and state

Keep in my im not talking about what the "nut" did in 2006, Im talking Sep 2010 price and rent and I doubt that a buyer now will be paying twice the rate of renting. prove me wrong

Most recent sale (this year) of an almost identical property: $940,000. Rent: $2500.

that's pretty vague so I will have to play your game as well.

30,000/940,000 = 3.19%

3.875% 15 year fixed rate mortgage
1.25% CA property tax
5.125% Interest and property tax
38% Fed and CA income tax bracket for people that qualifies for this loan
3.18% = mortgage and property tax net of tax benefits, net of principle.

SF ace says

that’s pretty vague so I will have to play your game as well.
30,000/940,000 = 3.19%
3.875% 15 year fixed rate mortgage

1.25% CA property tax

5.125% Interest and property tax

38% Fed and CA income tax bracket for people that qualifies for this loan

3.18% = mortgage and property tax net of tax benefits, net of principle.

It's not a game, I just don't care to share too much personal info on a forum, and also don't really care to argue with you.

SF ace says

A 200K household should be able to shave 35% off interest and property tax) and principle payback (which is more significant as interest rates are lowered and principle payback makes up a bigger portion of the mortgage)

I don't understand this. How do you deduct the principle from your taxes? How do you get 35% in the 28% tax bracket? It's only 33% on income above 209k (assuming married, few single people buy 900,000 houses). All the taxes up to 209k is at the lower brackets. Taking 35% (however you manage to do that) off of 1.25% property taxes isn't very much money.

I want to meet your accountant.

SF ace says

30,000/940,000 = 3.19%

3.875% 15 year fixed rate mortgage
1.25% CA property tax
5.125% Interest and property tax
38% Fed and CA income tax bracket for people that qualifies for this loan
3.18% = mortgage and property tax net of tax benefits, net of principle.

You seriously have to explain the math on this one.
I show 900,000 with 20% down to be 720,000
15 year at 3.75 works out to 5,236 monthly or 62,832 per year.

If you deducted the entire amount at 33% (obviously fiction since at 200k you aren't in the 33% bracket and the bulk of your income would be in the lower tax brackets) I can only come up with 3,455 per month.
You can't net all the taxes together anyway. You deduct your state and locals against your federal not pay/deduct twice.

I really, really want to meet your accountant.

I am convinced asking selling prices compared to rents are way out of wack in Chicago area, and nobody has provided one single counter example in another thread. There are a gazillion examples of asking prices that would lose a ton if bought and then rented out.

If this is how it is in Chicago, it must be more so in California where housing prices had gotten even more out of wack.

Ok I just saw the little qualifier "qualifies for this loan". What number would that be????

bob2356 says

How do you deduct the principle from your taxes?

SF Ace was saying principal repayment should not be compared to the cost of renting:

"Once those are accounted for, renting is more or about the same as buying currently."

How do you get 35% in the 28% tax bracket?

9.3% California bracket starts at $40K. State withholding is deductible so this is effectively to ~6%.

Taking 35% (however you manage to do that) off of 1.25% property taxes isn’t very much money.

$3000 is $3000.