patrick.net

But if one has enough vanity to move into a rich neighborhood stretched thin, the kids may not have that great a time

You have misunderestimated Face Reality. I bet he really meant that shitboxes in crappy neigborhoods will be priced at 1M - 1.75M because these high-income people have no choice. After all, they rather pay 7K mortgage than 1200 rent because they WANT to buy.

I was inspired by the cultural/emotional subtext of the posts here. New thread:

The Psychology of “Ownership”

Let's ask this question: how much premium over renting would you pay in order to own?

I know that from a financial standpoint, my family is not alone - there are others like this. Unless there is some catastrophic event that clearly causes prices to fall, it is very difficult to convince these folks that it is not a good time to trade-up.

Trading up is not necessarily a bad thing now, because of extreme price compression. The key is whether one can afford the new house conservatively.

I am beginning to feel that a crash may not exactly be imminent because these fools will rush in to support a gradually declining market until things pick up again.

PS, let's look at it this way: If there are enough cash-rich "greater fools" out there to indefinitely support current housing prices, then there's really no bubble. By definition, prices would be reflecting fundamental demand, not irrational exuberance/easy credit.

OTH, there are usually a few "dead cat" bounces on the way down after an asset peak has been reached. This is to be expected, and in now way should be misconstrued as a "buying opportunity". At least not until fundamental price support levels have been reached.

I am beginning to feel that a crash may not exactly be imminent because these fools will rush in to support a gradually declining market until things pick up again.

I believe the lower-end is feeling the chill from rising interest rate, especially on the subprime side.

The Silly Valley is full of silly people who think they are smart, we will see.

PS, I understand and agree with you.

PS,

same boat here. I am eyeing some really nice acreage properties, and I am sure they will fall much harder than my place. Save up more money in the meantime, and upgrade, debt free in 5 years. In fact, ALL the acreage stuff I am targeting have already gone through one round of reduction with no takers, some reduced by 10-15%.

The higher end will fall real hard if we don't upgrade. When the market falls, at least I can rely on some cash-rich first time buyers to take over my place, these high end places have far fewer people in the line waiting.

SFWoman Says:

"I see people in the city doing this all the time. They make $250,000-$500,000 a year..."

I can't friggen' believe those salaries. Simply unimaginable to me.

Even a $125,000k salary seems beyond my dreams.

Just amazing.

Must be doctors or high-paid lawyers.

Maybe it's just that I'm so used to making sh-t...

Even Larry Ellison seems to have Bill Gates envy (and his accountant wants him on a budget!).

Poor him. He is not buying a private Mars colony with Option ARM, is he?

DeoVindice Says:

"I’ve come to one conclusion. I’m just going to focus on making a lot of money. Seriously, if there is one lesson of “Rich Dad, Poor Dad”, it’s that being wealthy is a decision."

When I was in High School one of my first bosses told me that you need to "be your own boss if you want to make a lot of money" but it wasn't until years later when I heard rapper Ice Cube say "in life you are either a pimp or a whore" that it became clear that most people working for a boss are not much different than a whores working for a pimp...

Owneroccupier Says:

"I am not saying people are not making that kind of salary, I have plenty of friends with 250K+ household income, but they are all people armed with ivy league degrees, JD/MBA, 5-8 years of working experience"

Then SFWoman Says:

“I see people in the city doing this all the time. They make $250,000-$500,000 a year…”

Most people tend to socialize with those who have a similar education and income level. As an apartment owner I talk to a wide variety of people from tenants to vendors on a regular basis. It is always interesting to come home to San Francisco and hear a friend's wife (who's idea of a wide variety of people is the mom's in both the KDB and Town School PTAs) talk about buying three pair of $500 shoes when I just made a deal with a hard working new tenant to pay his $500 security deposit over five months. A while back a friend (that makes about $250K a year) commented on an article that said less than 1% of American "households" (not individuals) have an annual income of over $225K. He said that is sad that even though he is in the "top 1%" he would not be able to live in SF and send his kids to private school without help from his parents...