patrick.net

Doug H.

Well,

It's me who's been telling my hubby that the market will crash. We have two children and I have no urge to buy - I prefer to rent in a better area (and school district) than I could afford to buy in. :-)

I think you will find that lots of people have babies without the benefit of owning their own house!

If she wants to nest, then tell her you'll move to a SFH instead of an apartment and you can buy giant wall stickers (that come off easily) to decorate the baby's room.

OpinionsPlease Says:

> Do you guys really think ‘upper middle class’ are
> those who can afford 1.5-2 mil?

Most people consider themselves as “middle class” and the people that make a little more “upper middle class” (so the truck driver that makes $35K will probably say that he is “middle class” and his boss that makes $50K is “upper middle class” just like the attorney that makes $275K will say he is “middle class” and the partners in his firm that make $1.5-$2.5mm are “upper middle class”)

> I mean, don’t you need to be making $500,000/yr
> and have another 500K+ in the bank to afford that?

It would be a good idea to be making $500K and make a big down payment if you are buying a $1.5mm home, but you can get in to a $1.5mm home these days for little down if you were making less than half of $500K (just over $100K each for a married couple).

How many genuine first time buyers are there in the market?

How much of the market is just people buying based on cashing in inflated RE equity from a previous home? Or buying a second home by borrowing against the inflated RE equity in a primary residence? Or buying with a huge loan/gift from parents, who borrowed against their inflated RE equity?

http://www.nytimes.com/2007/02/25/realestate/25cov.html?_r=1&oref=slogin&pagewanted=all

Another example of financial illiteracy from NYT.

The doctor in this story could practically pay his exorbitant rent from the interest on his down payment.

This doesn’t sound like the words of a bear!

House prices are going to fall, it’s that simple.

You're right! I'm right!

How?

If inflation soars to 8% (we gotta pay back China/Japan somehow) then house prices can stay the same and still "fall" (in a real way). Heck, even if they only appreciate at 7%, they'd still be "falling" (in a real way).

I'm a genuine first time buyer! Well, not really. I owned a duplex in college with my brother that we sold after we graduated.

And back in 98 I owned a house in San Leandro. But I sold it and rented in San Fran because it was way more fun!

(If only I'd rented it out and sold it in 2005, eh?)

But I am a first time home buyer in that I am not trading in any home when I wind up getting one.

eburbed,

That's assuming wage goes up 7-8% a year but nothing else goes up in price. The far more likely scenarios is that consumer price inflation will overtake wage increases, resulting in a squeeze on consumer durables such as housing. -- people can live with less house or even with, gasp, renting. It'll be more difficult to forgo food or medical care or Hummers. :)

That’s assuming wage goes up 7-8% a year but nothing else goes up in price. The far more likely scenarios is that consumer price inflation will overtake wage increases, resulting in a squeeze on consumer durables such as housing.

That's a fair argument. I was thinking that wages and consumer prices go lock step, but I could be wrong.

Of course, when Peak Oil comes, we'll all be screwed anyway. :)

"Of course, when Peak Oil comes, we’ll all be screwed anyway."

Maybe you! My boyfriend and I have a cunning plan to never use AC/heating, live 5 minutes from work/public transit, and buy from the local farmer's market (though baking/braising might spike our energy costs).

I'll be declared an enemy combatant before it's all over.

My bad! If wages and consumer prices go in step, then your analysis is correct - presuming tax neutrality. I got confused by my own self righteousness in regards to the wage increase piece.

Realistically, I don't think peak oil, if it occurs at all, would affect America that much in the long run. This country is hugely energy inefficient. A lot of consumption can be wrung out if the (higher) price is right.

So... if you assume we are headed for high inflationary times, then owning out right would be a good thing in retirement.

Realistically, I don’t think peak oil, if it occurs at all, would affect America that much in the long run.

Uh - how about "there will be nothing to eat"

If we ate more soy and less meat, if we buy locally grown veggies rather than air freighted Chilean whatevers, if we use less plastic packaging...there are a lot of relatively ways to cut energy consumption if this country was serious about it.

That’s a fair argument. I was thinking that wages and consumer prices go lock step, but I could be wrong.

Wages always lag inflation and if inflation takes off uncontrollably, we will most certainly have stagflation.

If we ate more soy and less meat, if we buy locally grown veggies rather than air freighted Chilean whatevers, if we use less plastic packaging…there are a lot of relatively ways to cut energy consumption if this country was serious about it.

Very true, this is called lowering your standard of living which is what many people will have no other choice to do. This is Peter Schiffs philosophy. He believes we will become a third world country and other countries will raise their own standard of living.

To all:

What are your retirement strategies?

Very true, this is called lowering your standard of living which is what many people will have no other choice to do. This is Peter Schiffs philosophy. He believes we will become a third world country and other countries will raise their own standard of living.

Hm, I don't think we'll be come a third world country - but I do agree our standard of living will decline, just as those in India and China ascend.

Is there such a thing as a 2nd world?

Wow... Peter Schiff's dad is a nutcase:

http://en.wikipedia.org/wiki/Irwin_Schiff

Claire,

The wifey, was commenting from a purely "female" response to the guys....fortunately, she and I are WELL past the diaper days.

I do have a son in SF but he is totally immune to the FB disease. :)

allah,

"Very true, this is called lowering your standard of living which is what many people will have no other choice to do."

To my mind: "No!" These choices do not significantly affect the quality of life. Just because our current consumption pattern is more wasteful and ostentatious does not make it better.

True lowering of standard of living would come when we can't afford to send our kids to the education they deserve, or if we can't afford to see our dentist, or if we have to work 80 hour work weeks to make ends meet.

Wow… Peter Schiff’s dad is a nutcase:

http://en.wikipedia.org/wiki/Irwin_Schiff

His father isn't a nutcase, he was screwed over by the government. You need to do some more research on it. He was actually too smart for the IRS. He was the first to realize that taxes were not required by law. The IRS put him away without a fair trial. I give him credit for trying to fight the system!

Go check out his fathers website www.paynoincometax.com

I have this book of his and everyone in America should have it too.

"He was the first to realize that taxes were not required by law. The IRS put him away without a fair trial. I give him credit for trying to fight the system! "

I'd like to take this moment to tell the DOJ, the IRS, and any other government agency out there, that I completely disagree with the above view point. As Wesley Snipes recently found out, there are very serious and firmly established consequences to being "too smart for the IRS."

I’d like to take this moment to tell the DOJ, the IRS, and any other government agency out there, that I completely disagree with the above view point. As Wesley Snipes recently found out, there are very serious and firmly established consequences to being “too smart for the IRS.”

Yes, and Irwin Schiff is suffering those consequences.

There's nothing "too smart" about putting one's self in legal jeopardy due to failure to pay taxes.

Irwin wrote a book called "Federal Mafia" that was the only book ever to be banned by the government. After the book was banned, Irwin put the book up on his site in electronic form for free. He wants everyone to read it.

OpinionsPlease Says:
Quick survey/question. Do you think it’s harder to buy during an upcycle or a downcycle?

Whatcha think?

The definition of 'harder' partly depends on how much the banks are willing to lend you in the cycle also. In a downtrend after a huge uptrend, they are more likely to be thinking prudentially. Therefore, it might be harder to borrow enough, or they may require more security (lower LVR).

The other thing that might make it 'hard' is supply/demand -- how many reasonable quality properties are on the market? Are people rushing to sell before the bubble bursts, or as prices are sliding? In which case supply may well outstrip demand. Therefore it would be easier to buy in a soft market as other buyers hang back, waiting for further falls, and sellers are desperate to sell as high as possible.

It would be 'harder' for you in the long run if you caught the poor little bouncing cat's dead body halfway down and paid 30% more than next year's deflated price...

There’s nothing “too smart” about putting one’s self in legal jeopardy due to failure to pay taxes.

Astrid, when I say too smart, watch this video...2 and a half minutes into it you will see Irwin Schiff. He was the first one, many others have been fighting this since.

allah,

I'm quite aware of the tax-dodgers' arguments and I think they're absolutely ridiculous. Every soverign in history has retained the right to tax its citizenry and I'm very thankful for the fact. I don't harbor any illusions about exactly how brutish and short my life would be without said soverign.

“He was the first to realize that taxes were not required by law. The IRS put him away without a fair trial. I give him credit for trying to fight the system! ”

There's always some pseudo-libertarian nut who wants to overlook the fact that taxes pay for roads, trains, schools, hospitals, street lighting, firemen, police, teachers, nurses, doctors, and a whole lot of other public goods which constitute what we essentially call 'civilisation'. If you want roads, you're going to have to raise the money to build them somehow. However, I would probably object to my taxes being spent on a military machine which is costlier than the rest of the world's combined... but I suppose there are other, more targeted ways to protest that legally and produce better targeted publicity...

There’s always some pseudo-libertarian nut who wants to overlook the fact that taxes pay for roads, trains, schools, hospitals, street lighting, firemen, police, teachers, nurses, doctors, and a whole lot of other public goods which constitute what we essentially call ‘civilisation’. If you want roads, you’re going to have to raise the money to build them somehow. However, I would probably object to my taxes being spent on a military machine which is costlier than the rest of the world’s combined… but I suppose there are other, more targeted ways to protest that legally and produce better targeted publicity…

Well, I don't want to hijack this thread with the income tax law; I am just saying that the IRS hasn't been able to admit that paying taxes is the law but rather voluntary. Did you see Sherry Jackson who was a former IRS agent who said "show me the law"? Irwin Schiff was the first to fight it, that is all I was pointing out.

I agree that some of the funds go to building roads, etc. but not all of it and I think that alot of the funds are finding their way into high government officials pockets.

allah,

The US tax system, just like US legal system, is not something you can opt into in part. You either live under its rules and its protection, or you move to a different soverign (or you could raise a mercenary army and take over a small Latin American country as a tax haven) that suits your taste better.

I absolutely hate how a large part of my tax dollar is spent by the current federal government and I'm seriously considering moving out of this country, but I would not shirk on my legal obligation to the US government. It's unethical and it's very dangerous to my health.

The US tax system, just like US legal system, is not something you can opt into in part. You either live under its rules and its protection, or you move to a different soverign (or you could raise a mercenary army and take over a small Latin American country as a tax haven) that suits your taste better.

I think this will soon happen. There are some that want to overthrow our government. One thing I hate about the gov is the way they devalue our dollars; money we have saved all our lives. This is total bullshit and totally unfair!

One thing I hate about the gov is the way they devalue our dollars; money we have saved all our lives. This is total bullshit and totally unfair!

Stop whining and get a loan! :)

Not financial advice.

Well, I don’t want to hijack this thread with the income tax law; I am just saying that the IRS hasn’t been able to admit that paying taxes is the law but rather voluntary. Did you see Sherry Jackson who was a former IRS agent who said “show me the law”? Irwin Schiff was the first to fight it, that is all I was pointing out.

Right, the federal govt omitted to somehow make it a legal requirement to pay income taxes, whereas they succeeded when it comes to murder, theft, spitting in the street and jaywalking. Very careless of them.

Irwin Shiff used the legal defence that he was insane and delusional by the way, and it seems he has a had a number of 'fair trials'. If paying income tax is declared to be 'optional', then what would happen? Everyone would make an individual decision to opt out, and there go the roads, schools, etc etc. I'm not saying that Federal, state and local govt are spending the money wisely, but if govt didn't exist, it would be necessary to create it -- and how do you pay for the machinery of govt? Taxes in one form or another have been around for centuries, and the penalties for not paying them are usually quite severe. I would like more democratic input into the way that money is spent (after all, you are the flagship model of 'democracy and freedom' there, aren't you? showing the light to the rest of the world), and you can demand accountability from your govt as a formally democratic institution. An active media would act as watchdog, you would hope.

Here is a nice piece buy Sherry Jackson

erm, allah, that piece doesn't make much sense, and she shows herself to not be in the loop on thinking about the funding of public goods. the arguments she makes are a bit like the ones MLMers make to justify why MLM works so well -- when you analyse the claims and look at the big picture, it breaks down. however, she may have a point about the zealousness of the IRS in the US in chasing amounts owed, yes.

Irwin Shiff used the legal defence that he was insane and delusional by the way, and it seems he has a had a number of ‘fair trials’.

Don't believe everything you read, there are two sides to every story, take a look at this

Wages always lag inflation and if inflation takes off uncontrollably, we will most certainly have stagflation.

Wages also cause inflation. Their relationship is quite interesting.

I also do not buy the argument of house prices adjusting via inflation.

Let's get real. Our wages will not keep up with inflation. Outsourcing is not a temporary fad. Now that outsourcing leveles have stabilized, salaries in BA have started adjusting after remaining stagnant for ~5 years. This does not mean that salaries from now on will start adjusting with inflation.

Wages also cause inflation. Their relationship is quite interesting.

Let’s get real. Our wages will not keep up with inflation. Outsourcing is not a temporary fad. Now that outsourcing leveles have stabilized, salaries in BA have started adjusting after remaining stagnant for ~5 years. This does not mean that salaries from now on will start adjusting with inflation.

I agree.