patrick.net

thomas.wong1986 says

Hyperinflation.. ? I dont see anyone getting raises anytime soon or unions going on strike demanding higher wages.

If the government manipulates the market and pushes interest rates lower somehow... Even with the credit rating downgrade. What will happen? The US govt is bashing Moodys and credit rating agencies now... They are basically attempting to discredit credit rating agencies in general.... If home prices drop much further... I would guess 50% of home buyers in the last 10 years would squat and default... People with 800+ credit scores would realize having good credit isnt worth losing all their wealth... Credit scoring systems will continue to be discredited and maybe regulated by the us govt... Another 30% drop... 70% from thr peak would lead to 80% of the population having undesirable credit scores... Lets me realistic... The majority of renters have crappy credit... Only a select few renters on here maintain a high credit score. A depression will just make things worse... If home prices drop to 2.5x incomes what is to stop all FHA buyers in the last 10 years from squatting... Saving enough cash to practically buy a new house with cash! Maybe a smaller 1-2 bedroom condo... But still i know a lot of homeowners with 500k houses who if it dropped to 250k... Which is 2.5x incomes..could squat and save up enough to buy a nearby smaller condo with cash in a matter of a few years.

As the products of US treasury are downgraded, the Federal Reserve will have no choice but to increase the interest rates. This will plunge the already battered house market into oblivion, shrink the buyers pool who depend on bank loans to afford a house and finally provide a good opportunity for the "real" buyers who have cash in hand.
However, I am truly afraid of a complete bankrupcy for our country because we were not responsible with our spending for so long.

More pain due to today's market collapse. How is this going to help housing market. Any bulls?

E-man says

It's time to refinance to lower my mortgage payments and put more money in my pocket.

I see, so you get a break on the payment but the very same break is wiped out very next year due to decline in value. Good math. Keep it up. :)

Buy.........i did as an investment. Look back at history. What goes up must come down but also vice versa.....I have purchased a REO property in florida right on the beach. I intend to rent until things improve.....trust me...in 10 years you will be kicking yourselves for not jumping in. Don't wait for rock bottom because once that happens there will be heavy competition with those investors who decide they better get a piece.

faith says

I have purchased a REO property in florida right on the beach. I intend to rent until things improve.....trust me...in 10 years you will be kicking yourselves for not jumping in.

I am in the best part of South Florida, and in all honesty in ten years I don't want to touch down here again, either body or investment.

Why?

Los Angeles Renter says

Peter Schiff is still saying we'll have a great depression.. But then hyperinflation soon after... So we are all screwed... Your money in the bank will be worthless in the end.

I feel like I have read some interesting stuff from LA renter before, but not I am afraid I must click 'Ignore'.

My Mother in lawn owned southern coastal real estate and sold it. Why? The insurance on the thing was ridiculous. You couldn't pay me to own land anywhere near the Southern coast.

My insurance is only $450/yr and that includes flood.....that's less than internet per month.....do you consider that expensive?

commonsense says

Does anyone really know what the hell happens to property owners in a scenario of hyperinflation? It isn't pretty.

What isn't pretty? I've been an owner during multiple periods of inflation. With a fixed rate mortgage, my housing payments stayed stable, while income went up. Rents go up during times of inflation. Obviously other expenses go up as well. But those costs go up whether someone rents or owns. Inflationary periods are the most advantageous time to be an owner.
Or is there something I'm not understanding about this comment?

Exactly....that's what I intend to do on florida. Rent and wait. I'm almost fully booked for winter/spring of 2012.....thank you!!

faith says

My insurance is only $450/yr and that includes flood.....that's less than internet per month.....do you consider that expensive?

Her's was $4,500 a year. But that aside, I helped her maintain the house for 3-4 years. The salt air accelerated corrosion of everything 5-fold. Light fixtures, air conditioners, paint, wooden decking, nails, hardware, and even interior metal components just rusted away. It was an absolute nightmare of a house to keep care of. After you've been there enough times the allure of being on the ocean gets old too: There was NOTHING to do there except sit around and watch old farts from NY and MA bumble around.

Anyway, she sold the thing at the peak of the market after having owned it for 30 years. She bought it back when getting to the area was difficult thus the land was cheap. She did quite well for herself. But after that experience there's no way I would buy a house on the Southern coast.

E-man says

Don't be a loser and buy now.

Thanks for the tip.

E-man says

All I know is someone like you will be paying off my mortgages.

But I am free and not a debt slave. I don't have few middle guys IRS,renters to make my finances. Good luck on your endeavours. By the way this a bear site, you must be hanging around here for your post purchase rationalization. :)

E-man says

Don't be a loser and buy now.

Just how you think you are a smart investor guided by your instincts,so do I. I'll know when to buy. After all it matters who wins the race at the finish line.

Your friend got ripped off with insurance. What? How could the ocean get old? Yes, things do corrode a bit over time. But so what if you have to replace the odd faucet or doorknob? Everything is so damn cheap down there to buy....And those old farts are the ones who pay my rent...lol

I came of age in Southern California around the time Prop 13 was passed. That was not a period hyperinflation and we have yet to see hyperinflation in this country, on the levels of other parts of the world (at least not yet.)

bubblesitter says

I'll know when to buy. After all it matters who wins the race at the finish line.

I am with you there. I too know when to buy something, and what to pay.

faith says

What? How could the ocean get old? Yes, things do corrode a bit over time. But so what if you have to replace the odd faucet or doorknob? Everything is so damn cheap down there to buy....And those old farts are the ones who pay my rent...lol

Trust me. It does. I live next to the ocean now and after a few years it sort of like ho-hum, and that's out there in California where its not a bazillion degrees, humid, and always under threat of hurricanes.

We had to replace ALL of the outdoor electrical fixtures every 2 years. They basically turned into a rusted crust. We tried aluminum. No luck either. Wood dry rots and disintegrates.

The local economy was totally driven by tourism. The entire population was transient- they were usually only there on vacation. That was a tad depressing.

Anyway, to each their own I suppose. Do whatever makes ya' happy.

My family's assets are not invested in real estate (and frankly if you have over 50% mortgage you aren't an owner (free and clear.) You don't own anything in my opinion until it is paid in full.) I have allocated cash reserves, credit lines that are pristine (in the past three months I've had three credit card rates reduced due to my credit history thank you,) absolutely no mortgage debt, no auto debt. I have invested in top quality furniture and antiques, decorative arts and fine art. End of the day I'll buy cash and I have a fortune in assets that are PAID. I am not into the Russian roulette debt game of real estate, which for some will never end.

I intend to vacation there like everyone one else.....not live there year round. Eventually the hope is that i can move from being at par with the books to a positive cash flow and use that money to travel other places along with florida....until of course i become an old fart in which case florida is fine by me.

commonsense says

I came of age in Southern California around the time Prop 13 was passed. That was not a period hyperinflation and we have yet to see hyperinflation in this country, on the levels of other parts of the world (at least not yet.)

Exactly. You can only build so much inflation out of phantom money. In the end you need real money to have a true hyper inflation. Until America and its populace payoff the current debt and then start over, this talk of inflation is BS. One don't need Phd in economics to understand this.

bubblesitter says

Until America and its populace payoff the current debt and then start over, this talk of inflation is BS. One don't need Phd in economics to understand this.

Precisely.

faith says

I intend to vacation there like everyone one else.....not live there year round. Eventually the hope is that i can move from being at par with the books to a positive cash flow and use that money to travel other places along with florida....until of course i become an old fart in which case florida is fine by me.

I dunno... I grew up in NC and we went to FL a lot when I was a kid. Not my favorite place but again- to each their own... Good luck with the property and your future vacations.

commonsense says

you aren't an owner

You ARE the owner. You have whats known as a bundle of rights. The right to sell, the right to make improvements to rent, etc. Unless you do not make payments as you promised.

faith says

trust me...in 10 years you will be kicking yourselves for not jumping in.

Are you suggesting there will be no bare land left to build a house in ten years ?

Florida already had its land grab years after the Tulip fiasco but years prior to the shortage of electricity. Our most recent Real Estate bubble was a direct result of the introduction and improvements to the most important and influential invention of ALL time known to mankind. (that thing you are reading this on) Real Estate prices spike when incomes spike. Real property values decline when JOBS are lost. Those millions of jobs lost were of the individuals involved in the introduction of the computer. Are those jobs coming back ?

E-man says

BUY, BUY, BUY!!!

Upton Sinclair wrote:
It is difficult to make someone understand something when their income is dependent on their NOT understanding it. Real Estate Agents, Mortgage brokers , Bankers, Politicians, NEWS MEDIA ! Anyone who will lose money as values retreat to their PHENOMENOL levels.
A good indicator will be when shared equity mortgages return.

TMAC54 says

You ARE the owner. You have whats known as a bundle of rights.

I hate to inform you that renters also have a bundle of rights, those rights you refer to still do not make you the outright owner.

TMAC54 says

PHENOMENOL

Phenomenol sounds like it should be an OTC "male enhancement" drug hawked on infomercials.

commonsense says

I hate to inform you that renters also have a bundle of rights, those rights you refer to still do not make you the outright owner.

Just lemme know the bank that will give you cash for your rental. Heck lemme know the rental that allows you to paint it your choice of colors. Your rights under a rental agreement are limited to quiet enjoyment. And if you don't pay as promised same as ownership , you get evicted.
Don't hate, read some real estate books.

corntrollio says

Phenomenol sounds like it should be an OTC "male enhancement" drug hawked on infomercials.

People don't buy mortgages over 14%, people don't drive over one hour each way to work, people average 73 mph weather the speed limit is 55 or 65, people do phenomenal things. They also pay 2.5 times their income for a real estate mortgage unless they have had a windfall.

TMAC54 says

Don't hate, read some real estate books.

Please spare me the "don't hate" bit, it is really just a bit too much. Paint your own colours? Come on, that is the oldest sales pitch to buy a house that has been used for ages how you can paint your own colours and go deeper into debt by remodeling all for that perceived end return (that most are realising doesn't always happen.) For your info, I've read plenty of RE books I've held real estate licenses in two different states simultaneously for referral only mind you, but I still rely on common sense.

Witch book or witch state did you read that you are not an owner ?

I am referring to my viewpoint that outright 100% ownership means without loans or liens against the property, as in, "Without additional payments owing, constraints, or stipulations: owns the property outright." The American Heritage® Dictionary of the English Language. Do you believe someone who walks in with 3% down on a property is the 100% owner free and clear? If you do, then I'd like to know the books you are reading.

commonsense says

3% down on a property is the 100% owner free and clear?

I think he means free and clear after 30 years. Keep spending a $ to get 25 cents back and the later part of the loan it is just give away to banks cuz interest is not as enough as standard deduction.

bubblesitter says

I think he means free and clear after 30 years.

Ah!!! OK well if that is the case now it all makes perfect sense to me. Thanks bubblesitter.

It's a good time to buy stocks. When stock markets drop, it's a rare opportunity to make very nice returns.

bubblesitter says

I think he means free and clear after 30 years. Keep spending a $ to get 25 cents back and the later part of the loan it is just give away to banks cuz interest is not as enough as standard deduction.

I have one neighbor sweating bullets lately. He bought couple of years ago, took on way more risk than he should, lost a job couple of month ago and can't pay mortgage and can't find a renter either to cover his mortgage and property taxes....

bubblesitter says

I think he means free and clear after 30 years. Keep spending a $ to get 25 cents back and the later part of the loan it is just give away to banks cuz interest is not as enough as standard deduction.

It's better to rent then? You pay a $ to get nothing back.

tatupu70 says

It's better to rent then? You pay a $ to get nothing back.

He is renting a house, in many situations it is cheaper than renting money. If you are making payments on a liability you have to think of what is that money not doing elsewhere.

tatupu70 says

bubblesitter says

I think he means free and clear after 30 years. Keep spending a $ to get 25 cents back and the later part of the loan it is just give away to banks cuz interest is not as enough as standard deduction.

It's better to rent then? You pay a $ to get nothing back.

I'm putting the difference between renting and owning the same house in the bank. My investments are growing, houses in my area are sinking in value.