patrick.net

Call it Crazy says

Iosef V HydroCabron says

I am really having a hard time recalling a stream of anti-Boehner/Ryan/Cantor/Norquist threads from you.

Last time I checked, that team wasn't running the country....

I was waiting for the first one to post that... Typical...

(The point being: your remark is precisely the point I was making in my first comment. Why is it only objectionable when I do it?)

What? The Fed is still buying like there's no tomorrow, you call this a significant taper? LOL. The market has been flat to slightly down YTD and rates have risen by a full point. The market has been fairly resilient and a small part of the recovery was organic, but the impact of the Fed has been clearly proven looking at the last 6 years and the slow-down in the market and slow rise in interest rates pretty much correlates with the smallish taper the Fed has begun.

Call it Crazy says

Come on, let's add to your 14 thread count

Go easy on him.

We can't all be uncritical, Pavlovian, "Ctrl-X Ctrl-V" automatons reposting every outrage piece from extreme rightist propaganda organs.

Rew, that link was interesting.

I bought houses in 2011 and 2013 & both are financed at 3.375. That has worked out well so far. As for stocks, I was all in with my retirement money, but too conservative with some other money. It took too long to get comfortable with the direction things were moving. Maybe the backfire effect had something to do with that.

I'm gonna need some unskewed polls here. This looks biased to me:

There's a reason we see so many desperate anti-obama posts: The GOP and their followers know they're losing big time. No doubt about it. Hell- just yesterday it was announced that even more people than anticipated signed up for healthcare, hence further making the last 5 years of the entire GOP's agenda a huge waste of time.

I got to say, it is nice seeing some people step up and take some measure of accountability about how wrongheaded this site has been for a while now. Unfortunately, it had a very large effect on my SIL & her family who are now worse off because of it.

Its funny, when she found this site (2008), she was under the (in hindsight naive) assumption that housing blogs were news/information, and that the zeitgeist here would change when the facts on the ground change. It wasn't until late 2012 that she woke up and realized she was being deluded by a self selected group who were driven more by emotions than fact.

If a fugitive is hiding in a cave, special ops procedure may involve throwing gas inside the cave in order to cause the fugitive to come out of the cave so that they may be captured. By ZIPR and QE that's what the Fed essentially done to those who wanted to remain in cash, they "encouraged" them to invest in riskier assets and they certainly did, perhaps obviously not all, but enough of them. To what extent the current total value of major indexes is due to this effect, I cannot say, but I would not be at all surprised if 20%-30% of total current value is due to QE/ZIRP. Hey, I am not complaining, my 401K is doing great and the value of my home is way higher than when I bought, but it is what it is.

Iosef V HydroCabron says

We got Austrian austerity.

The U.S. budget is far from austere. Government spending is plentiful -far too plentiful and in and of itself does not generate sustainable economic growth

The problem with a lot of those "HOUSING PRICES CONTINUE TO FALL!" type charts/stats is that it includes data from broad areas.

Once you look at the "desirable areas" such as NYC Manhattan, Bay Area, Austin, DC area, real estate prices and rents have just continued to climb. What's worse, if you look at the "nice" areas within these "desirable areas" the rate of increase is disproportionately high!

I do regret buying a little back in 2012 (or earlier). It would have been a stretch of my income to buy back then in the desirable areas, but now it's flat out beyond impossible. What I really regret though was listening to the bears when DOW was 13k and not continuing to go all-in with stocks. I pulled back and stop contributing and missed the 30% increase. BIG WOOPS there.

I think that people made 2 major errors:

1) Believing that "rental parity" would automatically mean that house prices would go down. Not many considered rents going up to achieve "parity."

2) Fear of down payment loss aka vaporization. But they didn't look at other side of the coin - house prices going up which causes future income to be "vaporized" due to continuing to rent and then buying at a higher price.

CDon says

It wasn't until late 2012 that she woke up and realized she was being deluded by a self selected group who were driven more by emotions than fact.

Don't worry we will be revisiting the 2008 situation very soon when the next recession hits, it is not a matter of "if". Any gains above the normal rate is going to be corrected whether it is a stock market or housing.

bubblesitter says

CDon says

It wasn't until late 2012 that she woke up and realized she was being deluded by a self selected group who were driven more by emotions than fact.

Don't worry we will be revisiting the 2008 situation very soon when the next recession hits, it is not a matter of "if". Any gains above the normal rate is going to be corrected whether it is a stock market or housing.

The problem is the bears have been saying the next recession is going to hit for the past 2 years. Instead the stock market went up 30%+, housing market went up, rental market went up. The only thing that didn't go up was wages (for people that actually work).

The "correction" could be 10 years from now. By then your real wage may be 2/3 of what it is now.

These types of analysis are so deceptive. They fail to take into account historical and potential real estate appreciation. Throw that into the equation and all the colors get reversed.
Ask yourself why the rich Chinese are not buying in the best place to buy according to this map - Baltimore, but instead buy in the worst place - San Francisco. These rich Chinese got rich by being smart, they must know something.

Strategist says

These types of analysis are so deceptive. They fail to take into account historical and potential real estate appreciation. Throw that into the equation and all the colors get reversed.

Ask yourself why the rich Chinese are not buying in the best place to buy according to this map - Baltimore, but instead buy in the worst place - San Francisco. These rich Chinese got rich by being smart, they must know something.

They're buying where there are other Chinese people (Bay area, NYC, DC) and where the good universities are at. Why the hell would anyone buy in Baltimore. Aside from JHU and inner harbor, that place is a dump. Also the demographics aren't attractive to east asians.

Actually I used to see mostly east asians (75%+) at open houses in the bay area. Lately, it's basically all Indians. The last open house I went to consisted of me (asian), my spouse, a white guy and his asian spouse....and 20+ Indians (I didn't bother counting all the kids they had there). NYC real estate remains white and east asian central.

CaffeineAddict says

The problem is the bears have been saying the next recession is going to hit for the past 2 years. Instead the stock market went up 30%+, housing market went up, rental market went up. The only thing that didn't go up was wages (for people that actually work).

The "correction" could be 10 years from now. By then your real wage may be 2/3 of what it is now.

At least, you admit that correction is in future. Even couple of bulls have admitted 2017 could be it. It seems like you are totally oblivious of the national debt and decline in government revenue. On top of it they come up with more taxes on folks....all this just does not add up. Correction is inevitable, we can debate all day as to when that is gonna happen. Until then enjoy the good times.

CaffeineAddict says

Ask yourself why the rich Chinese are not buying in the best place to buy according to this map - Baltimore, but instead buy in the worst place - San Francisco. These rich Chinese got rich by being smart, they must know something.

They're buying where there are other Chinese people (Bay area, NYC, DC) and where the good universities are at. Why the hell would anyone buy in Baltimore. Aside from JHU and inner harbor, that place is a dump. Also the demographics aren't attractive to east asians.

Actually I used to see mostly east asians (75%+) at open houses in the bay area. Lately, it's basically all Indians. The last open house I went to consisted of me (asian), my spouse, a white guy and his asian spouse....and 20+ Indians (I didn't bother counting all the kids they had there). NYC real estate remains white and east asian central.

A smart businessman and investor will seek to maximize his returns. The most influencing variable in the equation will be potential total returns, while the rest of the variables will be secondary. If history is a guide it will show that Baltimore will continue to be the worst place to invest in, while San Francisco among the best. I am biased towards Orange County though.

EastCoastBubbleBoy says

Good counterpoints. Particularly 1, 2 and 5.

Although I now am a homedebtor and don't post much, I still lurk.

I'm thankful that I pulled the trigger when I did.

I'd like to say I made a data driven decision based on all the great feedback here at this site - but truth be told I just got lucky.

That said, this place does have it's pulse on where things are, and more importantly, where they are headed next.

(Trolls and permabears notwithstanding)

To echo what you said above, when the sky is cleared, it's way too late. The saying of "buy when there's blood in the street" is very true.

I was nervous seeing you kept on waiting and waiting to pull the trigger. You barely got in at the tail end of the cycle. Congrats for pulling the trigger.

I know quite a few people that wish they had pulled the trigger. One of my tenants is currently shopping for a house. Ironically, they were so negative toward housing when their friends bought houses in 2011 - 2012. They even talked their friends out of buying houses at those prices. Now, they're a little panic because prices are 30% higher than just from a couple of years ago. They NOW feel that home prices will likely go higher because of the tech boom in the Silicon Valley, which has created a lot of millionaires in the recent years and will likely created even more millionaires in the coming years.

This couple is in their early 30's and is making close to $250k/year. It's ironic to see it comes in full circle.

Looks like @seaside is still renting. Hope @TechGromit is doing well.

@CDon, I got out of FB and made some money. I guess it was a lucky bet. :0)

By the end of the year, Fed will have 5T on its balance sheet. How much is that? At 376K median price for California, it's enough to buy 13.2 Million homes. Yes, enough money has been printed to buy all houses in California at today's prices.

Does everyone really think that 5T on the Fed balance sheet will not have negative consequences on the quality of life in the future?

bubblesitter says

CDon says

It wasn't until late 2012 that she woke up and realized she was being deluded by a self selected group who were driven more by emotions than fact.

Don't worry we will be revisiting the 2008 situation very soon when the next recession hits, it is not a matter of "if". Any gains above the normal rate is going to be corrected whether it is a stock market or housing.

Please define "very soon" and a date where if it doesn't happen, you will step up to the plate and apologize saying "I was wrong"

I ask because while I think most everyone understands that on an esoteric level, there will be a giant WOOSH type correction inevitably, I fail to understand why it is imminent.

In point of fact I could very well see this happening and hear this on this site:

EVENT & PATNET COMMENT
2014 Prices 500K Don't buy now, prices are gonna CRASH!
2015 Prices 515K Don't buy now, prices are gonna CRASH!
2016 Prices 530K Don't buy now, prices are gonna CRASH!
2017 Prices 550K Don't buy now, prices are gonna CRASH!
2018 Prices 580K Don't buy now, prices are gonna CRASH!
2019 Prices 630K Don't buy now, prices are gonna CRASH!
2020 Prices 680K Don't buy now, prices are gonna CRASH!
2021 Prices 740K Don't buy now, prices are gonna CRASH!
2022 Prices 540K SEE I TOLD YOU SO!!!!!!!!!

In this hypo those that waited are now 9 years older, and passed on 500K prices only to buy at 540K. In a way, this hypo above is exactly what happened 2000-2011 - while the crash happened, 2011 prices were still way above 2000 prices so the year 2000 bubble sitters have ever thought possible - forcing some to sit on the sidelines forever.

So in any event @bubblesitter, since you responded care to tell us when is the end all be all date for the great crash you envision? Since you are so certain that it will be "soon" when do you give the "all clear" signal for those who simply want to some day buy a house and get on with life?

CDon says

So in any event @bubblesitter, since you responded care to tell us when is the end all be all date for the great crash you envision? Since you are so certain that it will be "soon" when do you give the "all clear" signal for those who simply want to some day buy a house and get on with life?

Boom and bust cycles is what USA is about. 2017 is year of housing collapse like the last one. So get out from RE by then.

bubblesitter says

2017 is year of housing collapse like the last one. So get out from RE by then.

So we can put you on record then? Are you saying to the sitters that do not want to pay say 500K in 2014, if they wait 3 more years until 2017, they will see nominal prices far below 500K so as to justify waiting and paying whatever amount of rent in the interim?

CDon says

So we can put you on record then? Are you saying to the sitters that do not want to pay say 500K in 2014, if they wait 3 more years until 2017, they will see nominal prices far below 500K so as to justify waiting?

It could be sooner then 2017. If not then there is a pullback in price by 2017.

bubblesitter says

CDon says

So we can put you on record then? Are you saying to the sitters that do not want to pay say 500K in 2014, if they wait 3 more years until 2017, they will see nominal prices far below 500K so as to justify waiting?

It could be sooner then 2017. If not then there is a pullback in price by 2017.

And again, that pullback will be so severe as to put nominal prices below 2014 values, and paying whatever amount of rent in the interim so as to justify waiting - yes?

Tim Aurora says

you are apt to lie about the housing prices as you are a fence sitter.

I am bear for a reason. I make much more then investing in shacks.

Tim Aurora says

but I do not see any compelling evidence to corroborate your theory

Live your dream. I can't stop you from doing that.

CDon says

And again, that pullback will be so severe as to put nominal prices below 2014 values, and paying whatever amount of rent in the interim so as to justify waiting - yes?

yes and yes. Why would I block my earnest money and not have any gains on it? Go revisit your rent vs buy math cuz I have and concluded that for my financial situation buying never makes sense, it is a money pit, home is a place to live and enjoy - nothing more.

bubblesitter says

CDon says

And again, that pullback will be so severe as to put nominal prices below 2014 values, and paying whatever amount of rent in the interim so as to justify waiting - yes?

yes and yes. Why would I block my earnest money and not have any gains on it? Go revisit your rent vs buy math cuz I have and concluded that for my financial situation buying never makes sense, it is a money pit, home is a place to live and enjoy - nothing more.

And there it is. There is your true motivation (my boldface of your comment) - you are not a bubble-sitter... you are a perma-sitter. There is nothing wrong with that BTW for some people given their risk tolerance & location, it will never make sense to buy. Again no problem there.

The problem is we are not all like you. For every person in your situation - there is another for which buying does make sense. Yet, given that they continue to hear a great CRASH is just around the corner, they continue to wait - and why wouldn't they? Sure they could easily afford 500K now. But why risk it when others here are certain that same place will be 420K soon?

So again, if that is your personal situation and it will never make sense for you then that is fine. If I may, may I suggest that you recongnize that you recognize that fact. You should simply say "I cant afford it" shrug your shoulders and go out and live your life...OR if you really like being here - espouse the virtues of lifetime renting for some. That said, it is incredibly irresponsible to come here and continue to spout of your opinion (presented as some sort of axiomatic fact BTW) that if they wait juuuuuust a little longer, a magnificent CRASH will come such that the long time sitters will be richly rewarded.

CDon says

That said, it is incredibly irresponsible to come here and continue to spout of your opinion

Hahaha. Now you are the police on this site?

I remember the mantra "Don't fight the Fed" as far as stock markets are concerned, i.e. if interest rates are low, stocks would do well. This has been true in the last few years.

QE may slow down but the Fed may not touch interest rates for quite some time.

Some interest rates are out of the Fed's control, this is confusing sometimes.

Let us see how soon they actually stop QE.

People buy houses for themselves where 1. they want to live 2. near where they work

People buy houses to rent out where 1. they can afford to buy it 2. (hopefully) where people exist to pay rent, i.e. people have jobs there.

Often the cheap properties are located in welfare zones, unemployed zones, dead zones so although inexpensive, they're worthless as investments.

I know a guy here who bought a place in some hellhole and he flies back east there once in awhile to try to keep it up and deal with his renters, what a colossal PAIN in the ASS. But, he's a slumlord type so he may like it.

hydrocabron is swilling Koolaid I think.

There were numerous things Obama and Congress could have done in 2009 to try to stimulate the economy, Obama did the opposite.

The economy and jobs were the #1 problem, and what did Obama and Pelosi focus on? Changing our healthcare system.

This is the sign of a person who is an idealogue and not a good executive. The executive functions are 2: 1. choose which problem to solve in priority of importance 2. choose people who are qualified to help you.

Obama chose the wrong priority, health care, and ignored the economy. It's either his stupidity or it was intentional to keep the economy sucking long enough to get re-elected, I believe it's both.

New taxes, regulations were obviously bad for job creation.

Obamacare is going to further slow down the economy, it's 1. new regulations 2. new taxes 3. new bureaucracy imposed on us. Obamacare MUST slow down our economy, by what degree is a guess.

Since Obama took office, USA GDP has grown an amemic 2%. This will likely continue.

Many people who dislike Obama also are not too enamored of Bush, because BOTH wanted to grow government.

On balance however, Bush at least didn't raise taxes, rather cut them for inheritance, capital gains, dividends, etc.

I'll answer.
Some people like to perpetuate the myth that the Federal reserve can stimulate the economy because this doesn't require any political discussion.

If lowering tax rates is politically unpopular or impossible, these types can always say "the Fed stimulus", which of course now has been since 2008 or was it 2007? It's been a long time now and GDP still is anemic, 2% since Obama took office.

What the Federal Reserve can do is throw cold water on the economy in an effort to slow down inflation, but the converse is not true, the Federal Reserve can obviously not stimulate the real economy.

Why not? Because most increases of production and innovation have the ability to find capital and grow on their own or with private investment.

As mentioned above, Apple doesn't give a shit what interest rates are but TAX rates sure interest them.

clambo says

There were numerous things Obama and Congress could have done in 2009 to try to stimulate the economy, Obama did the opposite.
...

On balance however, Bush at least didn't raise taxes, rather cut them for inheritance, capital gains, dividends, etc.

Are you suggesting that Obama should have done the same things which Bush already tried? Because those did not stimulate the economy at all.

Eventually they'll run out of foreign buyers or cash buyers.

92 million people out of the workforce cannot qualify for a mortgage today.

86 million people actually working have houses or are tapped out.

People who don't get around much don't know that owning a house is optional but funny thing you can rent about anyplace you would like to live.

It's sometimes expensive to rent, but the freedom can be appealing.

My businesswoman grandmother rented houses since I can remember. She always had money. I found out later she lent my MD father some dough for our summer place. She had cash, he didn't. She of course could visit any time she liked forever. He had to deal with the problems and upkeep, taxes, etc.

U.S. real estate is safe. The value can never go to zero no matter what happens. You can lose it all in the stock market, but you'll always at least have the house.

The world just figured this out, so we're not even at the beginning of them buying it up.

If you didn't buy before 2012, and you're an American, then sorry, this Bud is not for you.