I'm famous! (Real Estate Related)...

tabs · 05-26-2006, 01:26 AM

OHHHHH BOY...Now your gona be rich cause ya didn't buy a house.....

Didja calculate that the cost of renting might increase by that 4% per year increase in inflation?

Also did Ya account for the increase in Equity in the house vs renting...

tabs · 05-26-2006, 01:47 AM

When U make a payment a portion of the money is applied to principle....that would increase your equity stake if everything is equal...

tabs · 05-26-2006, 02:09 AM

Wayne I'm not going to fault anything you did...you have my blessings as a matter of fact...you have played this game very well...

Your going to have to rent for the next 3 years or so.....then start looking for something U like in your price range....remembering the old adage about never trying to buy at the absolute bottom. By that time your probably gona want outa SO CA...

Don Ro · 05-26-2006, 09:54 AM

Quote:

Originally posted by Wayne at Pelican Parts
Charles Hugh Smith used one of my analysis in his blog:

http://www.oftwominds.com/blogmay06/inflation-housing.html

Good stuff. I've got 4 books published, but it's still exciting to see someone else publish and quote your ideas...

-Wayne

Congrats, Wayne.
Thanks for that link.
Both links are very informative.
I'll be paying more attention to renting vs. owning from now on.

Jeff Higgins · 05-26-2006, 10:35 AM

Carefull, Wayne. Steve Martin in "The Jerk":

"The new phone book's here! The new phone book's here! This is the kind of spontaneous publicity I need! My name in print! That really makes somebody! Things are going to start happening to me now."

RoninLB · 05-26-2006, 10:49 AM

Nice presentation.

TerryBPP · 05-26-2006, 10:49 AM

Quote:

Originally posted by Wayne at Pelican Parts

2- just about everyone in the world believes that the market will remain flat, or enter a downturn.

-Wayne

I thought it was supposed to be the chaotic bursting bubble? Here is South FL prices have just quit rising, and maybe a %1-5 decline. The bottom has far from fallin out.

Nice job on the quote.

EdT82SC · 05-26-2006, 10:57 AM

Also houseing values did appreaciate in 2004 and the first half of 2005. In So Cal the March 2006 prices were higher then the March 2005 prices. Though March 2006 was 0.2% lower then February 2006. It's hard to predict the top and bottom of the market. If you get it wrong then that analysis is way off.

For example a $400,000 house bought in early 2004 in So Cal is probably worth $460-480K now. So now that $75,000 loss from renting is much lower or even a gain.

Plus I feel safe with my fixed mortgage. My mortgage won't go up. Rents will go up. They have dramatically gone up in the last 7 years, and continue to rise now even when property values are starting to drop.

tabs · 05-26-2006, 11:17 AM

Terry U have watched toooo much TV....in the REAL world things don't happen or get resolved in 30 to 60 minutes....the decline in RE is going to take years and years to rebound.

Come back in 5 years and tell us if RE has declined or not...things usually have an inverse relationship...the faster and higher it climbs the the lower it will go and the longer it will take to resolve.

turbo6bar · 05-26-2006, 01:26 PM

I recall the percentage of Orange Co. loans were skewed 70% in favor of option-arms. There are very few 30 yr fixed. Next stop is 80 yr fixed, where you buy a house before you are born, and pay it off a few months before you die. It is a small price to pay for SoCal's 20% yearly appreciation rule.

jyl · jyl's Garage

http://www.dqnews.com/RRCAARM0306.shtm

"In February 51.9 percent of all [California] home buyers financed their purchases with an ARM, down from 63.7 percent in January, 68.7 percent in December and 70.9 percent in November, according to DataQuick Information Systems."

People are moving away from ARMs. The interest rate delta between ARM and fixed is not large, and maybe lenders or borrowers are wising up.

I still cannot believe Greenspan advised Americans to use ARMs in March 2004. Barely four months before he started raising the Fed Funds rate. What in the world was he thinking?

M.D. Holloway · 05-26-2006, 11:38 PM

Why Cali for Pelican Parts? Does it off some advantage? I know it is a beautiful place, Southern Cal is to die for but to have a business there? And to live there? I can think of about 15 other places in the country that would offer up a better overall gig for family and business.

The cost to live is just stupid high, and for what really?

RoninLB · 05-27-2006, 06:56 AM

Quote:

Originally posted by jyl

People are moving away from ARMs. The interest rate delta between ARM and fixed is not large, and maybe lenders or borrowers are wising up.

I still cannot believe Greenspan advised Americans to use ARMs in March 2004. Barely four months before he started raising the Fed Funds rate. What in the world was he thinking?

Without doing any research I'd guess that the purpose was to maintain strong economic activity in the US and maintain the value of the dollar relative to foreign currencies?

Today.. as the current housing market will probably lead to lower consumer spending this difference, hopefully, will be made up by increased exports and lower imports. For that to happen the dollar must decline on the international markets. It's possible to maintain the value of the dollar at home with price stability and become more competitive in the global markets. It's the Fed's current job to engineer a monetary policy for all this to happen.

The lag between a policy shift to economic impact is always debatable. Allowing markets to gradually shift and adjust is more approprate than radical market change. A 1% Fed Funds increase within 3mo is radical. This happening would whack consumer spending.

It's all about maintaining stable US economic growth. I watch GNP and job creation as this Fed dance gets confusing within market psychology both locally and internationally.