patrick.net

It appears I've bungled the link mentioned above, which can be found here:
http://auth.mhhe.com/wmg/flashcomps/images/marintrend9305.jpg

Now you wouldnt by any chance be suggesting that the green line is where prices “should be” right now are you?

If prices do not return to their long-term trendline, it would be a new paradigm indeed. Where is my hover-car?

Jack, I did not say anything about the green line. :) It may or may not represent the (long-term trendline".

I would not recommend you to sell. It is a nice comfortable home after all.

Forgot to add...

Not investment advice.

"I am sure Kurt S will even agree that the green line in no way represents a “long term trend”! What, only 5 years, and two of them were appreciating when the rest of the market was still going down! (Hover car?) "

Yeah...that's a short span to calculate a "trend"--but only because I couldn't find stats prior to '93. When I have those, I'll figure them in.
And, of course, I don't suggest Marin housing should toe that green line, but it's certainly interesting to see how the slope changes, particularly during that timeframe. Alarm bells went off when I saw this--had to share.

Regarding selling--we've seriously considered it. As we could sell things and move back N. to Seattle and live quite nicely; that option has been spinning in our heads. But there's the job thing, family in Marin, and that's stopping us (for now).

Peter, Peter P...

Can we agree to sign/address by screen name only?

Of course, we can always pull a Netrugu and change name. ;)

"And I am sure you know as well as anyone that ’statistics can be morphed”
(or if not morphed, at least that green line’s path can be changed by starting it wherever you like!) I thought it was curious and somewhat arbitrary that the green line started in the third year ...etc. "

Take this all as a bit of fun! Since the data appears rather linear, I simply drew a line between '93 and '99 datapoints, extending (arbitrarily of course!) to '05. Now, if I get date for say '80-92, and the same trend stands, that would be interesting.

Now, if I get date for say ‘80-92, and the same trend stands, that would be interesting.

Robert Shiller does have a similar analysis. The result is that prices are really out-of-whack with the long-term trendline.

Face Reality, Jack can definitely afford his home. Moreover, if he has locked in a low Prop 13 property tax, there may not be much incentive for him to sell.

Buying a long-term home with room to grow without stretching is not easy for most people. If someone can afford one nontheless with some margin of error, I would say enjoy your house.

I don’t quite get the bear position which says a crash is coming, don’t buy, but don’t sell either.

Perhaps I am not just any bear. ;)

Real estate is probably a good investment for the long term if one does not have an absurd entry point. Jack's entry point was pretty good.

Face Reality, would you prefer me to say "sell, sell, sell" or "buy, buy, buy"? ;)

Sell sell sell, and then put your money in the stock market! :D

Sell sell sell, and then put your money in the stock market!

Any stock tip?

I would definite recommend selling investment properties in any bubble area. One may keep a primary residence and perhaps a vacaton home depending on his/her comfort level. Selling is not a bad idea either if one feels right about it.

I am using only the consumption view of housing here.

(Not investment advice)

I don’t get all these proposals for letting people invest their social security money in the stock market.

I get the idea... this way, the government can blame the market if the retirees do not have enough money.

I’m always surprised at people’s unrealistic expectations from 401(k).

I share the same surprise. People seem to think that the "average historical return of the stock market" is the return they are going to get in the next 40 years. They have no concept of risk and variance.

When I hear about expected returns of 7% or 10% per year, I’m surprised. The market will really need to go up a lot in the not-too-distant future to compensate for the 0% return over 1999-2005, so I still get 7% or 10% per year!

The stock market does seem to have remarkable movements. Actually, much return occurs in just a few days.

However, most people do not realize that if a bear market occurs near their retirement, they will do a lot worse.

...but I think it’s irresponsible that 401(k) is being pushed as a way for people to take care of their retirement needs...

I totally agree. Too bad I have highly educated friends who believe in the propaganda. Too me, I rather count on real-estate. (Entry point is important though.)

Let me add that there are balanced stocks/bonds/commodities investment strategies that should work though. But they take a lot of work.

I think a "passive" real-estate portfolio should outperform a passive 401(k) account with index funds. However, there are a lot of other possibilities out there.

(Passive means Buy-and-Hope. Not investment advice.)

who has the time and expertise to be an “active” 401(k) investor?

That's why you have to become a Merrill client. ;)

(Not affiliated with Merrill Lynch)

arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of "wealth" with the reality. This has happend before elsewhere in the world.

arthur, housing can also be a driver in a downturn as people suddenly realign their projected growth of “wealth” with the reality. This has happend before elsewhere in the world.

No doubt. The so-called "multipier effect" also works in reverse. This recent CNN-Money article lends credence to the idea that much of today's consumption is directly related to the housing-price mutliplier effect:
"Cash-out Refis Soar"
tinyurl.com/9ckbe