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Average Joe's Take


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2007 Feb 21, 11:50pm   21,485 views  283 comments

by Patrick   ➕follow (59)   💰tip   ignore  

From a reader:

I am a renter and I have been thinking that is time to buy RIGHT NOW. What if the market goes up and sellers stop offering price reductions and paid closing costs to buyers. I understand that a lot of home buying and building in the past few years has been speculative. but that means nothing when you consider the fact that the stock market is purely speculative and stock prices still rise. Is that "funny money" when you have stock market gains? It spends the same, it puts food on the table. What's the problem with financial gain whether or not a market is in a "bubble"? Are you opposed to people making money? So when should I stop renting and start taking advantage of the 50% off housing sale? Why buy ever? If buying is 50% cheaper in the future wouldn't rent be even cheaper as well?

Wow, where to start with this guy? How about this:

  • The stock market is not purely speculative. You can measure the value of a stock by its P/E ratio and dividend, among other things. Houses have no dividend, only rental income, or savings on rent. And by those measures, houses are grossly overpriced.
  • If you win the lottery, great. But it's a lousy investment strategy. That's the problem with the bubble.
  • I'm not opposed to people making money, only to millions putting themselves at risk of bankruptcy and foreclosure, and being smug about it.
  • You should stop renting when it's cheaper to own.
  • If house prices go down, that does not necessarily mean that rents will go down. It may make sense to buy then.

Patrick

#housing

« First        Comments 277 - 283 of 283        Search these comments

277   Paul189   2007 Feb 25, 7:36am  

Idea for a new thread -

Rent in the city and own a house in the country!

278   SFWoman   2007 Feb 25, 7:49am  

Paul,

Sonoma County real estate dropped almost 10% the past year. Owning a place up there won't be as expensive as it used to be.

If I hadn't bought in the city ages ago I would probably rent a large flat in town and then buy a country place. I'd try to get into a nice building that lets you get long term leases and renovate. One of my friends sold her house and rented a really nice four bedroom apartment on Nob Hill, renovated the bathrooms and kitchen, has a country house on Fisher's Island (the New York one, not the Florida one), and will stay in that rental until she dies.

279   B.A.C.A.H.   2007 Feb 25, 8:36am  

It sounds to me like what SUDs is saying is that a little bit of spare cash or spare income burns a hole in the pockets of working class people. It's not cool, and it's not hip, to save it conservatively.

It is the liquidity trap on a micro-scale.

280   FormerAptBroker   2007 Feb 25, 8:43am  

theotherside Says:

> Suds, Very smart rebuttal….although the bubble believers
> will very shortly start calling a troll or a real estate agent
> or worse a Casey Serin….

I don’t think that Suds is a troll, I really think he is a guy from India that does not know much about Real Estate or Investing, but I do think that theotherside is a Realtor hoping to convince people that buying a home is always a good investment…

281   Peter P   2007 Feb 25, 8:56am  

New thread: Just who are the willing buyers?

282   Bruce   2007 Feb 25, 5:24pm  

I plead laziness (besetting sin) and an unwillingness to consider an MIT publication to have erred in this way. Evidently Himmelberg and friends do in fact conclude there is no affordability crisis.

As with Forbes, I expected better.

283   astrid   2007 Feb 26, 12:25pm  

Academic publications are quite fallible, esp. outside of the natural/hard sciences. Otherwise, how can one explain the prevalence of campus Marxist and those Che T-shirt wearing drones?

« First        Comments 277 - 283 of 283        Search these comments

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