patrick.net

Joe sixpack seems to be doing quite well against the Banksters. He refinanced about $2.6 trillion of mortgages in 2020 & about $2.7 trillion in 2021. He has a 30 year fixed rate loan at 3% or less. The Banksters on the other hand are sitting on unrealized losses on the loans they bought during that time frame of about $520 billion. As far as those super intelligent, manipulators at the Federal Reserve, they are sitting on unrealized losses of about $1 trillion.

There is no IQ test to be a Bankster.

Just tell me this - Who holds the bag for Joe when he fucks up his finances? And for the bankers..?

Rubicon says

“Because you CHOOSE to ignore history, it does not disappear. Housing busts go back to the 1800's at least in this country.”

In your lifetime, besides 2008, when was there another major housing bust?

So it only matters if it happens when we're alive? That's the way most people approach history, we are very ego-centric. But really it's about you were wrong, so you want to move the tape to still seem right...

I'll meet you half way and only focus on the 20th century. By CPI, you can see a drop of 1/3 of the value in '08. And if you look at 1916-1921, you see the same drop by 1/3. Definitely don't zoom in on the end of that chart, might freak you out..

https://www.longtermtrends.net/home-price-vs-inflation/

NuttBoxer says

Rubicon says

Prices go down when supply goes up significantly, exceeding demand. You saw 4M active listings in 2008 and prices plummeted. We are at 1M active listings currently.

Another great example of why the market will crash. Micro-focus instead of understanding the big picture of how central banking economies run. Central banking economies are built around a myriad of lies in order to disguise the theft being perpetrated. Prussian education is a big piece of this, because unlike Austrian economics, it's creates artificial silos where the big picture, and causation are lost as people muddle in mindless details. It requires our participation to succeed for any amount of time. But, as the system is designed to boom/bust as a key method of theft, this necessitates endless crashes.

Instead of reading RE articles, try reading Rothbard...

Yes, my parents experienced one in the late 80s, early 90s. They bought a home for $220,000 and sold it 8 years later for $219,000. Maybe it was 10 years. I remember they had difficulty selling.

Misc says

Joe sixpack seems to be doing quite well against the Banksters. He refinanced about $2.6 trillion of mortgages in 2020 & about $2.7 trillion in 2021. He has a 30 year fixed rate loan at 3% or less. The Banksters on the other hand are sitting on unrealized losses on the loans they bought during that time frame of about $520 billion. As far as those super intelligent, manipulators at the Federal Reserve, they are sitting on unrealized losses of about $1 trillion.

There is no IQ test to be a Bankster.

Yet, they will forever be bailed out. Bankers don't lose.

"Yet, they will forever be bailed out. Bankers don't lose."

Nope. If a TBTF fails, it's gonna get Nationalized.

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

Yep, the Federal Reserve was started right about the same time as indoor plumbing started becoming a thing.

I think both have their uses, and I don't see either as being a fad.

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop @NuttBoxer?

GNL says

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

I’m not smart enough to know fiat is a scam. I’m not sure who celebrate it. I don’t know what the yellow brick road is, but I know I’m not a buyer in the current market. I will focus on what I can control. I can’t control what the market and the Fed will do.

Misc says

Nope. If a TBTF fails, it's gonna get Nationalized.

Do you know what happens in those situations? Shareholders, at the least the big ones are made whole, but everyone else takes a bath. And nationalized is just another way to say perpetual bail-out. Amtrak is a great example.

NuttBoxer says

Misc says

Nope. If a TBTF fails, it's gonna get Nationalized.

Do you know what happens in those situations? Shareholders, at the least the big ones are made whole, but everyone else takes a bath. And nationalized is just another way to say perpetual bail-out. Amtrak is a great example.

You should brush up on Bankruptcy proceedings.

Rubicon says

Thank you. Looking at the charts on your link. I see higher highs and higher lows. Are you saying any pull back on the chart is a bust?

Any yes, I think looking at a timeframe that captures your lifetime matters. I want to raise kids and my dog in my own house with a yard, good location etc. I don’t care if there was a bust in the 1800’s or if the next bust will be in 2080. I also think about retirement. The rentals I own will secure a comfortable retirement for me and provides generational wealth. Waiting for a bust like 2008 might mean I never buy.

You already know the answer, I specifically looked for a bust that dropped the market the same percentage as '08. Still trying to sidle out of your initial statement huh? If you consider the basic tenants of inflation and the boom/bust cycle, the increase in the rises and dips makes perfect sense.

I think if I want to build wealth for my family, I first need to understand the difference between real wealth, and paper. Then if I want to keep it, I need to study history to anticipate situations that often repeat, like market collapses. But mostly, I need to understand the nature of men who attempt to rule over other men, as they are my biggest threat, my greatest enemy.

Certainly none of us will perfectly time the market, unless we're big enough to rig it. If we buy close to the bottom, and sell close to the top, that's the best we can hope for.

Eman says

GNL says

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

I’m not smart enough to know fiat is a scam. I’m not sure who celebrate it. I don’t know what the yellow brick road is, but I know I’m not a buyer in the current market. I will focus on what I can control. I can’t control what the market and the Fed will do.

Don't get me wrong, You are a smart guy. Yes, we all need to take care of ourselves and do what we can to create our best life. History tells us many many things about fiat though. Fiat is inherently unfair and keeps most of humanity on the treadmill. Our economy would die without debt and more and more "value" is driven by debt accumulation. Why is the American Debt so large? Who benefits?

Eman says

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop NuttBoxer?

Not sure what site you used, but I see a top in April of last year, and a downward trend since then. That top was indeed higher than the top in '06. Pretty easy to see using the link I provided and the 30 year view, though you could certainly start at January 2006.

NuttBoxer says

Eman says

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop NuttBoxer?

Not sure what site you used, but I see a top in April of last year, and a downward trend since then. That top was indeed higher than the top in '06. Pretty easy to see using the link I provided and the 30 year view, though you could certainly start at January 2006.

I see the screen shot shared by Rubicon got cropped. I analyzed that chart going back to prior to the Great Depression. Look at that run up in 1941 to 1946, and then the subsequent drop.

If I have to make an educated guess, I’d say a drop to 0.8 is possible. If you expect a crash like 2008-2009, I wish you the best of luck. Knowing what I know now, I’m a buyer whenever the numbers pencil out or close to it. I wouldn’t be hang up on timing the top and bottom. I know I’m not a buyer in the current market, or anywhere close to being one though. Good luck with waiting. I hope the patience will payoff.

@GNL,

Thanks for the compliment. I used to hang out with retirees and older gentlemen to learn about history and real estate for the Bay Area. A few take away nuggets for me:

1) one guy complained about the national debt being unsustainable, sold his house in 1989, became a renter. Never bought back and eventually moved out of state as Bay Area prices got away from him.

2) another gentleman said if he knew what he had known now, he would have bought 5 SFHs in Cupertino, and he would be set. No need to mess with 401k.

3) billionaire George Marcus invested in Houston and lost money during the oil bust in the 1980’s. He told us to stay and invest in the Bay Area. This market is supply constraint due to its geography. It’s almost a sure bet long term.

Regardless of what the circumstances are, history suggests investing in Bay Area real estate has a high probability of being profitable. Tune out the noise a little and focus on the numbers and value we can create, or extract. This national debt has been going on since Regan? Regardless if it’s a Ponzi scheme or not, it’s still going on after 4 decades. It may continue long after we’re dead, and it’s something we have no control over.

@Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

1337irr says

Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

I'm pretty sure any company that moves to Puerto Rico does not have to pay taxes. Special program.

GNL says

1337irr says

Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

I'm pretty sure any company that moves to Puerto Rico does not have to pay taxes. Special program.

My biz partner told me this once. Something along the line “if we moved to Puerto Rico and lived there for 6 months, we wouldn’t have to pay capital gains.”

Home is where our family is so we’re not moving anywhere anytime. Once the time is right, I’ll look into it. Talking about another loophole in our tax code, which was designed by…… and for………?

Rubicon says

And the funniest thing is, even if you would have bought at the worst possible time (peak of 2006) you would be totally fine today. Those prices in 2006 are dirt cheap compared to today’s prices.

1. Hardly anyone stays in their home that long anymore.
2. You're timing the market with your statement BUT with the benefit of hindsight.
3. Both 06 and covid were unknowable events and how they would play out. Well, most "financial" people should have known 06 would happen. Peter Schiff was screaming from the hilltops.
4. I still say inventory is the metric to watch. These high rates have not destroyed equity anywhere near where I would have thought they would. However, the fat lady hasn't sung yet.

I said your timing because you aren't counting whether a person had to sell during the 06 crash. Plenty of people were fucked.

Look, there's no question about it, RE has been phenomenal since 2010 or so. But these last 3 years are aberrations. RE is now a manipulated market. I'm sure of it.

I try to think big picture and believe this is bad for the country. Have incomes gone up as much as RE over the last 10 or so years?

I use to think RE had to crash but then we started having massive inflation. Unless we go into a depression or some other economic calamity I don't really see a crash and if those things happen we have more to worry about than a housing bubble. Our markets are 100% being manipulated across the board not just housing, hell our whole society is being massively manipulated at this point.

Eman says

Good luck with waiting. I hope the patience will payoff.

We never just wait though. We're always investing in something, just need to ensure it makes sense in the current market.

Rubicon says

It’s total fantasy. And nobody treats houses like a stock. Most people just enjoy living in their house and have no interest in selling to go back to renting.

You do. If you view something as an investment, not a place to live, that's the same as stock, or any other investment. The rest is your fantasy. Many of us have been much more successful by renting. Don't portray your narrow viewpoint as fact.

Rubicon says

Fast forward to today and I gained 500k in equity in just that house.

Prove it, sell the house for $500k more. You do understand the difference between potential, and realized gains right. Might be that greed clouding your logic again though.

Rubicon says

even if you would have bought at the worst possible time (peak of 2006) you would be totally fine today.

Sounds an awful lot like ever RE I've ever heard, "It's NEVER a bad time to buy!". You are heavily influenced by central banking propaganda, readily embracing the shackles of debt slavery. You have no understanding of history or holistic economics, and you revel in it.

I have no problem admitting situations I would buy in, you never admit there is a situation where renting makes sense. Your views are fanatical, and I have no time for fanatics.

Rubicon says

It’s total fantasy. And nobody treats houses like a stock.

Be careful, someone may think you don't know what you're talking about.
I am a virtual tour company owner. I can point to many Realtors whose entire efforts are aimed at getting people to "invest" in RE. Yes, that is like uh investing. I know 1 Realtor group who turns everything into Airbnb advice. In fact their whole retirement plan is to live off of their Airbnbs. I know another Realtor group (extremely successful in the DMV (that's DC, Maryland and Virginia) that pushes nothing but how to profit from RE. In fact he is constantly on Instagram driving around in his Ferrari and/or Range Rover pointing out the best areas to invest in. Be careful not to lean too far out over your skis when talking about RE.

How about all of those flip this house shows? Is that investing in RE?
How about this article found just now on Yahoo...https://www.yahoo.com/finance/news/real-estate-agents-buy-property-145842517.html

Rubicon says

Huh? Of course RE is an investment. Nobody has questioned that. For many it’s the biggest investment they’ll ever make! Most of my wealth is invested in RE. What’s your point?

You said no one treats houses like stocks.

GNL says

How about all of those flip this house shows? Is that investing in RE?
How about this article found just now on Yahoo...https://www.yahoo.com/finance/news/real-estate-agents-buy-property-145842517.html

“Flip This House” show does it for publicity and to raise money for more flips. Flipping real estate is a job, a very well paying job, if one is good at it. It would be investing if you’re an equity partner.

Check out this gal in my market. She’s quite successful at it and makes 7 figures e year vs. works for the man and makes six figures.

https://youtube.com/@TransformRealEstate

The article you linked has good contents, just lack of depth. The investors in the article shared good advice about those markets and made a good case for them: 1) population growth, 2) economic prosperity, 3) favorable policies and 4) affordable. The fact that they’re affordable, “This allows for tremendous appreciation for property owners with the right investments.” This advice should be heeded. Buyers beware and should do their own due diligence.

Rubicon says

GNL says

Rubicon says

Huh? Of course RE is an investment. Nobody has questioned that. For many it’s the biggest investment they’ll ever make! Most of my wealth is invested in RE. What’s your point?

You said no one treats houses like stocks.

Exactly.

Have you ever met someone who said: market is pretty high right now. I am going to sell my house! Live in a car or a rental and then buy back in a year when the market is down 30%.

It takes conviction to do that. I actually know someone who did it during the last housing bubble successful. She listened to Bruce Norris and actually pulled the trigger. Her name is Geraldine Barry, former president of SJREI. However, Bruce doesn’t expect a crash this time around so don’t do it.

Everyone is different. NuttBoxer believes in his “housing crash” thesis so let him be. I don’t know about other markets, but it makes no sense to be a home buyer, in most cases, in the Bay Area at the moment. The own vs. rent disparity is massive.

Rubicon says

Have you ever met someone who said: market is pretty high right now. I am going to sell my house! Live in a car or a rental and then buy back in a year when the market is down 30%.

Yes and no. No, I haven't heard anyone say they were going to go live in a car for God's sake. That is a ridiculous question and you know it. Come on, be an honest debater will you? Yes, there are people I know that have sold in order to buy back in. Yes, their personal residence. No, they did not have kids are other factors that would cause too much discomfort. Are you telling me that people don't sell into a high and then put their $$ some place else that they believe will bring greater profits? Is everyone doing these types of things? Of course not but I do know several RE investors that are selling right now. Maybe not all of their RE but certainly some of it.

@Nuttboxer is right, you only look at it one way.

@Eman, of course flipping is a job and has made many people tons of $$. I see it every day. Whole neighborhoods being knocked down one house at a time and replaced with McMansions because those old lots are the only ones left big enough to build close enough to town/city/work. I know of homeowners who have lived in 900 square foot shit boxes for the last 30 years but add on or "pop the top" just before selling because they have been lowballed forever by the builders and the only way they see to get top dollar is to make the home unprofitable for the builders to knock down.

@Eman, btw, I'd love to hear your number crunching strategy on when, where and how to buy RE.

GNL says

Eman, btw, I'd love to hear your number crunching strategy on when, where and how to buy RE.

I believe I’ve shared my number crunching on here a few times. It’s not rocket science. Anyone can do it on a piece of paper at anywhere, any place. With enough practice, one can eyeball the deal from miles away before even needing to crunch any numbers.

We only buy in one zip code (95112), which is our farm. We have the scale and a full time handyman to make our lives easier.

I have ventured out a little, within driving distance of course, because the deals were good. Otherwise, not worth the efforts. We only have a finite amount of time on this earth. I’m trying to be wiser with it.

Eman says

I believe I’ve shared my number crunching on here a few times.

Yes, I believe you have. I'll look for it.

Rubicon says

“ Yes, there are people I know that have sold in order to buy back in. ”

Market timers? Yeah, and how did that work out for them?

Sure, you can always find someone who makes a bad choice (like nutty). Believe it or not I know someone who knows a lesbian who got her vagina removed and replaced with something that was supposed to be a penis.

On the same token, we have some really smart people on this site like “justme” who was holding out on buying since the housing crash. Not sure if he bought something eventually.

BMWman took the tough pill and bought a SFH in Santa Clara for $850k around 2015. I thought it was high at the same, but I wouldn’t be surprised if it’s worth $1.5-$1.7M now.

Iwog, SFace and I got lucky we bought at the bottom of the housing crash. They stopped buying around 2012-2013 while I kept buying.

A retiree, who is also a real estate investor, told me his neighbor sold his house in 1989 due to the top of the housing market and the collapse of the national debt coming. He was priced out after that and ended up moving out of state.

At the end of the day, we all make our bets and live with the consequences. Everyone’s risk tolerance is different, and everyone has different comfort level when it comes to renting vs. buying. Let them be.

For the record, I didn't say you guys haven't been successful. Or that RE isn't a wealth creation vehicle. Of course it is. The problem is that people say there is no risk. Of course there is.

Rubicon says

It’s about calculated risk.

Yeah, loved reading the Calculated Risk Blog with Doris "Tanta" Dungey providing much needed insight (and relief) among the sea of real estate sales industry clowns and fools.

And Patrick came on scene around when I was following Calculated Risk Blog with his 20/20 appearance an his very valuable book.

The Wolfman offers a lot of similar perspective and insight also in his Wolf Street website.

,

Rubicon says

Exactly.

Have you ever met someone who said: market is pretty high right now. I am going to sell my house! Live in a car or a rental and then buy back in a year when the market is down 30%.

I remember Alan Greenspan testifying for Congress and making similar reference to this as far as housing being comparable to stocks.

,

You should own your primary home if you're at least handy enough to take care of the basics. You'll likely live there 7-10 years. It will almost certainly appreciate. Those are tax free gains on a primary home. That's a big deal if you earn a decent income. If you bought a $400k home and it now $500k you get $100k and no payment to the government or state.

Renting has it's place. But it make little sense in the long term as generally no one is disciplined enough to invest the difference if renting is cheaper. Flexibility is nice, but so is the flexibility of the landlord to sell the place at any time. Been there, done that. Won't do it again unless it's a snowbird type of thing in the Caribbean during retirement years for 4-6 months.

@Rubicon

A lot of predictions would have been proven correct if not for government intervention. This opens a whole new type of conversation...moral hazard.