Re: Earth Hour... (pong MarkB)

(Let's hope you catch this in time)

On May 4, 10:58 pm, Mark Borgerson <mborger...@xxxxxxxxxxx> wrote:
In article <marek1-A72D5A.19183504052...@xxxxxxxxxxxxxxxxxxxxxxx
[edit]

I agree with your analysis. I'm not sure that price drops in the
next two years will be that drastic. Unless they shut down
the university or HP and a couple of other companies go
bankrupt, we probably won't have any worse economic news
than we've already had. We never had the bubble where HPI
was 30 to 50% above the income index, so I don't think
we'll see the drastic declines either

Your claim helps me to introduce another point: Housing is unique from
other commodities in that we seem to be comfortable with it being tied
to regional income. Compare and contrast to, say, the computer
industry. Or food which has become more affordable over the years.
In other cultures, it's not uncommon to see the opposite where food is
expensive but housing is dirt (pardon the pun) cheap.

This is partly because people today view housing as a financial
investment. In the past, people had a different love affair with land
in that it was their source of income itself (farming) or an
ancestrial heritage to be defended, and similar to the present, an
emotional place that people put their stuff and experienced life
changing events on.

This is important because there's no logical reason that housing
should be a commodity directly tied to income and I'll go into them at
a later time here. Stay tuned.

On the other hand, note that price fluxuations before the bubble era
were more or less flat matching... inflation. Like I said. No 8
percent increases, per year, forever. Your market went up for a time
and is now flattening out meaning current buyers would not enjoy that
kind of growth.

At the time we bought our house the HPI in Corvallis was 63. It's now
195. That's about a 6.5% appreciation rate. I think that's better than
the inflation rate. It's almost exactly the ratio by which our
house has increased in value.

And tulip performance in Amsterdam in the 1600's was fantastic for a
similar window. SO WHAT?

Real estate trends nationally and in many other markets experienced
growth rates like yours or better and now times have changed. Yes?
I'm explaining to you the fundamentals responsible for this growth.

My point is that double inflationary growth is unsustainable beyond a
30 year mark hence projections from the past 30 years into the future
are unrealistic. 3 bedroom homes cannot all be only bought by
millionaires in the future. A correction will be necessary.

Not necessarily all at once, though. You could also see housing
prices increase at a percent or two less than inflation until
incomes catch up.

This is referred to as a "soft landing" and the geniuses that went to
Harvard and other blue blood schools were predicting it back in 2006
for the national home market.

This scenario only works if (increasingly) smart buyers (such as
me :-) are willing to buy homes that cost more than it does to rent so
we can lose money over 20 years to bail out homeowners who bought at
the peak. What do you think my answer is to that?

Agreed. Hey, I'm not saying it's impossible for someone to get in on
the ground floor of a great price uptick from demand. As you show,
however, the person really has to be in on the ground floor going back
several decades.

Either that, or they have to be planning ahead for several decades.
By the time my son is in that position (probalby another 10
years) it may be a good time to buy real estate again.

Yeah, but somewhere else. That's my point. The days of 8 percent
growth for your area are over. Done. Finito. Want to make a side
bet?

It was only 6.6 percent---according to the app you pointed out.
The 8.8% expectations were probably in the areas who are now
sliding off the bubble. We're only coasting slowly down the
hill. Don't know how far we are from the bottom yet.

You're getting hung up on the 6.6% versus 8.8% number. My point is
that any deviation from the inflationary index, up or down, requires
correction and most corrections tend to overcorrect somewhat. I was
impressed and surprised, I'll admit, but the last bubble going up as
high as it did and the effects of this were world changing. We took
out the Bank of Iceland! We even took out the Russian economy!
That's pretty cool just thinking about it. (Hmm, do you think Ronald
Reagan could have used this in leau of a military buildup? :-)

Let's consider the roller coaster: It starts out with a slow coast
down the hill after that "tick tick tick" sound is done. What happens
after that?

In the case of Hawaii, it is probably because the cost of living is
the highest in the US. Add to that the difficulty of finding a job
there and you have all the prerequisites for a fall in demand.

Non-sequitur. You had justified price increases based upon people
wanting to live in your area. Now it turns out that you see that
OTHER areas have limits when housing ceilings are reached. Gee, do
you think that this could apply to your area or are you in a different
area of the space-time continuum?

What non-sequitur? People want to move here because the environment
is nice and cost of living is lower than Southern California.

Er, it's difficult to justify price increases when the desirability of
your location is affordability... That's like a paper mill
relocationg to your area because you have such nice, clean water. :-)

I lived in Southern California and I know about the joke about how
many Oregonians it takes to change a light bulb: 4. 1 to change the
light bulb and 3 to keep the damn Californians from "sharing the
experience." Of course, as you know, that factor is being undercut by
SoCa's massive real estate correction.

On the other hand, other factors impact affordability besides real
estate prices such as taxes (Da Terminator isn't doing so well on that
in California) and economic desirability. California is looking a lot
like Mexico lately. Sadly, you might be on that same path in 30
years?

As I pointed out earlier, real estate is all about location, location,
location. Hawaii has pluses and minuses. The climate is excellent,
but the cost of living is high. That probably doesn't bother
millionaires, but it does affect people buyinng $250K houses.

You said later though: "It's just a saying. Sort of like quoting
Seinfeld. ;-)"

Even millionaires, Mark, don't want to overpay for real estate (although
the fun "Million Dollar Listing" program does have some with more money
than brains.) Hawaii shows that even millionaires aren't willing or
possibly able to throw away infinite sums of money on real estate even
for the right "location". To steal from Lloyd Bentson, I know Hawaii,
I'm best friends with Hawaii, but Corvallis and Vancouver, you ain't no
Hawaii!

[Hawaii military personnel investing in RE]
I don't see how this disproves my point that an area simply being
desirable justifies 8% increases forever. Trends continue, until they
don't!

True---but that doesn't mean you necessarily change from +8% to -30% in
a few months. Granted, hysteria MAY cause that in some places, but not
everywhere.

Unless it was hysteria driving the prices up in the first place!

"Real estate always goes up!"
"Location, location, location!"
"They aren't making any more land!"
"It's a HOME so you can't judge it as an investment!"
"It's the perfect investment!"

It's like a guy with beer goggles at 2AM promising a girl he'll marry
her if she'll sleep with him. What do you think he feels like at
10AM?

Hey, where there are fundamentals to support a particular rise, as I
said, then the prices will stabilize better than others based upon
speculation (including from homeowners themselves.) You have work in
your area? Well, so does Northern Virginia!

"Stocks extended a broad rally all the way into the close in New York
Monday, as investors cheered the latest hint at a bottom for the housing
market."

From Forbes online today. It will be interesting to watch the housing
indices over the next few month to see how much of that headline
was hyperbole.

MarkB, are you serious? That a rally on wall street by people who
push a market up on one day from one report and down on another is a
sign of any long term trend? A long term trend for them is a half
day!

Sheesh! Didn't you ever see Trading Places?

What as surprise. Prices went up slightly in the spring, compared to
winter, like they have in general for the real estate market. It
proves that the bottom is here!

Great, let the knife catchers dump more money into a falling market.
Someone has to keep the houses warm for me when I buy in at the real
bottom...

And yes, us renters can add rooms. It's called moving. It's not
cheap (I figure it costs about a grand total for the truck and
cleaning up the old unit) but it's quite doable.

How far can you move for a grand? Moving the furniture and
belongings from our house would require two large vans. 3400
sq ft., 18 years and two teenage kids means a LOT of stuff
to move.

I used to like stuff but I've become less materialistic lately. I
realized I only use a few things on a daily, monthly, and yearly basis
and most just sits around gathering dust.

Anyways, I get a big truck here for about $60 to $200 a day total, and
craigslist for the movers ($80 an hour) and we only hire legal
residents. My wife works them hard and we give them a break and food
and a ride back to the train station. We get most of the work done in
a day and about 2 days in post work (moving the plants without
damaging them, cleaning up, etc.)

My point exactly. If they'd treated it as a home, not an investment,
and made plans for long term residence, the costs and benefits
might well be on the side of ownership.

And they could be not on the side of ownership. That's the problem
with wishful thinking. It's only good when some fool strikes it
lucky. Recently, that hasn't been the case for millions of people.

Bit has probably been lucky for millions of others---who sold their
homes in the last 6 years. At one time, they figured the largest
group of buyers for $300K homes in Southern Oregon was retired
people who had just sold a $700K home in California. Sell one,
buy the next for half price and live off retirement funds and
untaxed capital gains.

Only works when there are greater fools in Southern California willing
to pay those retirees off. That has dried up. Same works for stocks
too.

[kicking the renters out]
Here in Corvallis, it seems to be happening at about the same rate
as foreclosures on homeowners. That may be an anomaly, though.
We have one local landlord with dozens of units who has been
skimping on maintenance and is near bankruptcy.

In a healthy market where rents are in line with ownership costs, that
shouldn't happen that often.

I'm reminded of a scene in The Godfather II where Corleon's wife's
friend is being kicked out of her place for having dogs and a rent
increase and he asks the local slumlord "for a favor." One of my
favorite scenes. (I have a cat, so I sympathize.)

Want a fun ride? Check out real estate prices graphed on a roller
coaster simulator.

http://www.speculativebubble.com/videos/real-estate-roller-coaster.p=
hp

Did you check out this roller coaster? I think it's fun because it
shows how recent prices are so unrealistic.

Did you notice that the graph at the bottom of the page is playing
tricks with you. The bottom of the graph is at $60, not zero.
That helps exaggerate the changes in value.

Come now, Mark, you know that's how most financial graphs work along
with even scientific ones. Do you really want lots of white space in
the page?

In addition, I think it's useful to illustrate a key point: The prices
go up AND DOWN from an INDEX! This is important because you seem to
have only noticed the glass half full below:

It is also interesting to note that values went from 68 to 115
between 1942 and 1953---an increase of 86% in about 11 years.
Values also stayed at that level for most of the next forty
years, except for a bit of intermittent growth.

It is ALSO interesting that to note that values DROPPED by that amount
during and after WWI and your "growth" was really a RECOVERY BACK TO
THE INDEX! And that RECOVERY took about _30_ YEARS!!!!

Hmmm, I guess I shouldn't worry as Heidi tells me that if I don't buy
quickly, I'll miss out on the bottom eh? When the big, beautiful
balloon pops, the basket stays on the ground for a while and that
helps motivate buyers to push prices down that much faster. (When a
balloon pops, does it fall about at the same rate it rose?) Do you
get it back up in the air right away?

After a fall like that, in the past, people stayed away from real
estate as a "sure thing" and "location, location, location" for a good
30 years. And then their great-grandkids forgot (because they're so
much SMARTER than those silly people in the past, you see.)

I remember growing up when grandpa and others viewed "life insurance"
as an investment (we know that whole life sucks for that purpose) but
that was the best they had compared to their feelings about the stock
and real estate market. Also, another great investment were US
savings bonds for much the same reasons you pitched real estate to me:
tax exemptions.

More on this particular historical era, later.

Between 1997 and 2006, the price rose from 110 to 200. That's
82% in 9 years. The growth ratios are very similar. Who's
to say that the next two decades won't look like the 50s and
60s?

Few of them are around now, but perhaps you might want to talk to
people who lived from 1920 through 1950...

The key term there is 'speculative'. I'm not a real estate speculato=
r,
and I'm not terribly sympathetic to their plight.

Bullpatties, Mark. You have been claiming all along that you expect 11=
%
appreciation and you're not speculating?

Where did I say 11%, or that I expected it? I showed data for an
8.6% appreciation rate.

Why does that matter for the point we're making at hand? Does
expecting an 8.6 rate compared to 11 change anything? Or are you
quibbling?

Hmmm---tell me there's differnce between 8.6% compounded for 30
years and 11% compounded for 30 years---and I've got a bridge
for you in Brooklyn. Hint: the difference over 30 years
is about a factor of two.

And ~4% above inflation compared to, say, 0 is factor of infinity,
plus 1!

My point is not that such growth can't be sustained for 20 years
versus 40 but rather whether it will apply forever unless you think
humanity won't exist past that point. Or perhaps we can hope that
rather than rich Californian's with greater fools buying them out
moving into your area will sustain your prices maybe you'll get
spacemen who want to pay $2 million (adjusted for inflation) 2 bedroom
ranch. It's easy to believe in a lot of things if you think the world
doesn't exist outside of that time/space bubble.

You're not speculating that
more money is going to move in from elsewhere? (Yeah, the news is full
of the world showing how people have money to burn...)

No I'm not. As I've said, I don't expect to sell in the near future.

What does it matter? Does that validate any of your claims about the
investment value of real estate? It seems like you're just distancing
yourself from your own claims.

My claims are that the value you extract from real estate depends on
when and where you buy and sell. Saying that I don't intend to
sell soon is applicable.

I think you're defining "speculators" as selling "soon" after they buy
and happily sell at a loss rather than wait a while. In some cases,
that's true especially in a hyperactive market driven by speculation.
But expecting to make money simply for living in a home is speculation
of a kind. It's like expecting to get paid by someone for brushing
your teeth.

Ironically, true speculators often lose less than normal homeowners
since the smart ones bail out of a falling market faster and cut their
losses while old ladies like I told you before ride the market down
because they refuse to sell in a falling market and hope to wait it
out until it comes back. If you're young, that's a workable strategy
but if you're an old person who needs to retire now...

Indirectly, my CD dividends pay for my rent... So what?

If those dividends are paying your rent, then you don't get
to count the compound interest on your investment. Better
change your calculation of net gain from your investments.

I said "indirectly" in that the interest is positive income to be put
onto my balance sheet to offset losses from paying rent. Sheesh!

OK, I didn't expect that degree of indirection. I though you meant
that the interest went into your checking account then to the
landlord.

Pfft! If you think that "indirection" is money going straight from
one account into another, then you probably think it's magic when you
take milk out of the fridge and pour it into a glass. :-)

EEEK! That's like shopping while you're hungry!

LOL. Most people don't have the luxury of doing their
grocery shopping in the middle of the day----they're
constrained to shopping on the way home from work, just
before dinner! (Note that most people either buy or
rent because they need housing---they're hungry...)

Actually, no. Unless someone is being evicted or foreclosed upon,
they shop for new housing much the same way that someone shops for
food before their refridgerator goes empty.

Not true for married couples expecting children. Would you
want to raise two kids in a studio appartment? (It's not
hunger, but another primal appetite that brings that on!)

When your wife was expecting, did you wait for the fridge to go empty
before shopping? Or fill it up for 6 months for fear you'd run out?

Indeed, MarkB, consider my point above about how some societies treat
food the way we do housing! Because people here can be irrational
about housing, they sometimes do spend more on it because they're
"hungry" even if they needn't be. In answer to your question, I
wouldn't WANT to raise two kids in a studio apartment anymore than
you'd want to feed two children on a bag of potatoes and rice, but
could I SURVIVE in one for a month or two while looking for better
priced housing? Yes, I could I think.

People who are weak and get hungry quickly pay more for food just as
weak willed people pay more housing, rental and owned. OK.

In regards to food shopping: Good point there. It is hard to go
shopping just after eating at home (who wants to shop then?)

Since I work at home, I often go shopping on my lunch hour. Way
less crowded and shorter lines at checkout. It's only
5 blocks to Safeway, so a special trip for shopping isn't
a big expense.

I usually don't get hungry right after leaving work and when I get
home, I don't want to eat right away either. I like to decompress
with a cup of tea and watch some TV for a half hour at least first.
So for me, it's not a biggie to shop after work especially on a
tuesday when they stock the store and crowds are minimal.

Most shopping in our area, FYI, seems to happen on the weekends. It's
like the Day After or something.

Neither. How about: Real estate should be considered as a long term
(decades) investment with the benefit of providing housing.

But it doesn't really "provide housing", does it? You don't buy a
house and have it sit there. Even people who pay off their mortgage
still have to pay taxes and maintenance. They still have to mow the
lawn. I heard my father curse enough at various household maintenance
problems to know that houses don't "provide" housing! "Labor saving
devices my a**!" :-)

So, did he live in a tent in the back yard, or did he have permanent
housing? ;-)

My wife knew a lot of gypsies in Ukraine and it turns out their
religion says they can't "break ground" even to make a tent. They
have to live on wheels. THAT'S temporary housing!

My point is that an "investment" where you hope to get your money back
in taxes, mortgage, etc. in the future and then have to wrap YOUR life
around to avoid selling at a loss in a bad market and have to fix up,
whether a tent or a sawdust/plastic wood deck, doesn't "provide"
housing anymore than a car "provides" you with transportation or a
woman "provides" you with sex. :-) Do you get it?

There is no "free" lunch/housing/sex/transporation! You PAY one way
or the other and even if you play games with numbers (8.6 versus 11)
or slogans "location, location, location", or emotional justifications
"It's a home!", that doesn't change that fact. In some cases, people
make money when they get lucky but, hey, renters sometimes win the
lottery too. (That reminds me, I have to check that ticket when I get
home...)

If anything, I imagine that former would suck worse. At least with
stocks they don't stare you in the face daily with busted roofs and
plumbing...

Whoa up there. Why are you assuming that a homeowner will be more
reluctant to maintain a property than a landlord?

I didn't say that. What I said was that when stocks go down in value
they don't stare you in the face like your home.

Most homes don't stare you in the face with those things either.
If they do happen, you may be able to get them fixed faster than
if you have to wait on the landlord.

My point is that it's not my responsibility to get them fixed. I
don't have to spend my weekends at HomeDepot. Mark, one of the key
differences between my wife and I and many of our friends who recently
bought homes is that we have time to go on the weekends to enjoy shows
and events in DC while they are serving their master, their home. And
Heidi says I'm the serf?

There are stories, MarkB, about people who leave foreclosed or
underwater homes and do awful things like smear feces on the wall or
lock dogs and cats in the bedrooms and let them die. They're sick sick
people angry that they lost money on their home.

We hear the same stories about rental units here. People who trash
houses they own are likely bo behave badly with rental units also
if the landlord evicts them.

Ironically, landlords are better protected (or compensated) than banks
since they can demand a deposit. I paid my landlady 1st and last
month's rent + 1 month's deposit.

In addition, unlike a bank, someone who does that to an apartment can
definitely face criminal charges for vandalism. Landlords will tend
to take it more personally as compared to a faceless bank that just
writes it off.

I'm understanding though that is changing as more banks are ramping up
to go after these sickos.

[edit]
Remember that the definition of 'affordability' probably varies by
an order of magnitude from community to community.

The neat thing about exponential growth is that it outpaces anyone's
affordability. In 100 years or so, a 100K property in your region
currently would be 219 million dollars. Do you think only
ultra-multi-millionaires by then would move into your area? And even i=
f
they were, do you think they'd be willing to pay that much for a 2
bedroom ranch?

So what do you think will be the rent on that property? If property
isn't affordable to homeowners, how can it be profitable for
landlords?

Eeek! You STILL don't get it! Multi millionaires aren't going to
rent such a thing for that price either because it won't get up to
that point because that price, or rent, are unsustainable.

Non-Responsive change of subject. What will happen to rents if
prices for the landlord go up?

I am honestly not being non-responsive. I simply cannot answer your
question as stated. Have you stopped beating your wife?

I cannot predict whether rents will go up, or down for that matter,
simply because the prices for landlords went up. Look at it this way:
You bought your home for a certain amount and hope to sell it for more
later. You are hoping to make a profit based upon WHEN you bought,
not for HOW MUCH. Get it? It's based upon the MARKET.

If someone paid a lot of money for an asset that someone doesn't want
to rent, or buy for that matter, at that price then the transaction
won't happen.

I'm reminded of the joke of the boy and the lemonaid stand:

Man: Little boy, I would like to buy a glass of lemonaid.
Boy: That will be a thousand dollars!
Man: That's crazy! How do you expect to make money selling to people
at that price?
Boy: I only need to sell one!

That's really the mindset of a lot of sellers that somehow that
magical buyer will float along because THEIR property is special, they
paid through the nose for it, or that they love it so other people's
LOVE should make them pay that much.

I got a big chuckle out of Heidi's rationalizations that Japanese
businessmn would all flock to pay millions for P.O.S. 2 bedroom
farmhouses. Yeah, sure. Why live in Hawaii in a place on the beach
when they could live there?

You don't get a place on the beach in Hawaii for mere millions any
more. My brother in law's family made a lot of money developing
property in Kailua on Oahu back when the beach property was only
millions. Hong Kong expats may have ranked higher amongst their
buyers than Japanese.

http://honolulu.craigslist.org/oah/reb/1136701152.html
$599000 / 3br - Sandy Beachfront 3 BR home (Hapalua St, Ewa Beach, HI)

Did you check out the listing? That's a 1000 square foot house
on a pretty small lot. It was built in 1963 and is probably
single-wall construction (no insulation---but it IS hawaii!)
The washer and drier seem to be under a lean-to at the
back of the house. That older housing area happens to
be under the landing pattern for the reef runway
for Honolulu international. That's not as bad as the
military jets from Hickham AFB, though.

I lived in an apartment a few miles north of Ewa in
Waipahu. That part of the island is pretty hot and
muggy in the summer---you're shielded from the
trade winds.

Still, I guess there are bargains to be found everywhere---
even at $600/square foot!

Shall we assume that your claim that, quote, "You don't get a place on
the beach in Hawaii for mere millions anymore" has been disproven?

Interesting---but I didn't see any houses in the Willamette
valley. To modify a saying: "Read globally, invest locally".
Hmm, perhaps that's why the three most important factors
in real estate value are location, location, and location! ;-)

Do Hawaii, Miami, New York City, and Boston sound like locations where
people might want to buy properties to you? Hmmm?

Some people, yes. Not me. Cost of living is too much higher---
especially in Hawaii. Only Florida amongst the states has a lower
cost of living than Oregon--but I'm not sure that's true
in Miami.

Non-sequitur. Is it location, location, location or is there more
involved than just... location?

It's just a saying. Sort of like quoting Seinfeld. ;-)

I understand that Seinfeld is not to be taken seriously, but many
people really do take this saying seriously and believe that it
protects them from the basic fundamentals of economics.

Need, no. Want, yes.

So people WANT houses in Hawaii. Why aren't they continuing to go
up? Location location location, remember? People want houses in DC,
yet they are doing down. It's amazing, Mark! Even though people want
something, they won't just pay whatever the seller demands! If a
region gets priced out, they go elsewhere! Do you think that this
logic might apply to your special area also?

It certainly does. That' why people are continuing to come here!

People continue to come to my region. SO WHAT! Yet prices continue
to fall. Location, schmokation!

Hmm, new thought: It just occurred to me that as California real
estate prices fall that the dynamics that helped push up prices in
Colorado, the retiree housecashers, can afford to move back. It's
often argued by people justifying house prices that "markets are
local" but at the same time argue that somehow that external forces
that helped push up their market will continue indefinately.

MarkB, if the laws of supply and demand and mathematical exponential
growth don't apply to your area, good for you! Could you go to the
store sometime and tell Elvis hello for me? If Andy Kaufman is around,
ask him to give me a call too.

I'm a firm believer in the law of supply and demand. I have no
requirement for exponential growth. I'd be perfectly happy
if my property value grew at just CV * 1.05 * T where
T is time in years. The exponential part has happened---
deal with it.

Non-sequitur, again. It's not about me "dealing with it" or not.
It's about the market dealing with it and whether buyers are able or
willing to pay exponential prices beyond inflation.

It's happened before. (Late 40s) it will probably happen again.

Did the late 40's have an international monetary and real estate
crisis going on BECAUSE of a real estate fall? Your optimism is like
buying a condo in The Towering Inferno AFTER the fire has started!

As I pointed out, the rise in the 40's brought prices back up to the
index AND, I'll concede, a little above it (about 10% or so) where
it's remained wih ups and downs into 1997! That means that the index
rose TOTAL, over the course of a --->CENTURY<---- about 10% until the
start of the currently collapsing bubble. CHECK IT OUT!

So there you go. THERE'S your sustainable growth rate above
inflation: 1/10 of a percent or 0.1 percent per year. Or 0.2 percent if
you bought just before the 1950's. You aren't THAT old!

Note that when extreme corrections occur (and this is the most extreme
one in American history), they tend to dip downward a bit so I expect
prices to fall at least down to the base index (10% below the top of
the 1940's/50's) and stay there for a good 5 to 10 years at least.

So how to know when I've hit the bottom? Take the 1997 prices and add
inflation from there. But wait... I'm not talking about inflation in
terms of other costs going up (gas, food, etc.) but rather real
EFFECTIVE wages. If wages haven't risen that fast (and for many
people, they haven't) AND things cost more, that's less money to blow
on housing.

So expecting prices to correct back to 1997 in ABSOLUTE numbers is
that not far fetched.

When I buy my place and throw the housewarming party, would you like
to come?

Exponential growth happened and exponential loss also happened.

In your area. Not here---at least not yet.

Fair enough. But it's starting from what I read. "Your dam may have
exploded after a few cracks, but ours is different!"

[...]
I was just throwing out numbers to make a point that selling a "home"
at a peak and then rebuying after a correction has significant
savings. That's all. We can quibble over how much, but selling high,
buying low, do you need me to prove that?

Nope. Just make sure you account for the costs of the sale.
(moving, change in commuting time, etc, etc.)

Absolutely.

Actually, my wife and I are getting more karmically tuned since she
said something I was recently thinking: Condos tend to fall faster
than other properties and townhouses fall faster than homes, so she's
wondering if we should do a leapfrog: When townhouses hit bottom, grab
one of them for cash and live in it for a while. Then in a few years
(and we'll have time!), maybe grab a home when they fall down and
spend the extra money we'll have in savings to trade up.

As you point out, there are costs to moving, closing costs, etc. What
do you think?

For the record, I did a search and found 2 bedroom apartments in
Manhattan for 2K per month and sales listings going for 700K to 2
million.

Those are points. What are the stats for median rent and price?
If there's one $2K apartment, who gets it if 30 people want it.

I find it strange that the landlord doesn't just raise his price just
as homeowners in a rising market take bids and max out their
investment. Of course, in Manhattan there's rent control in some
places as you know.

It's headline news that Manhattan apartment rents are falling and
they're giving all kinds of perks to people to stay in their units
like rent decreases or one month's free rent to move in.

In addition, Manhattan is a very special market in that a sizable
percentage of it's population are renters (something like 50%.)

After all, wall street hasn't been doing so well. In
addition, get this, the HAMPTONS is also seeing hard times and
foreclosures. Even though they are prime locations. Or shall I say
prime locations, locations, locations!

The Hamptons are 20% millionaires and 80% support staff. It doesn't
surprise me that there are foreclosures.

These foreclosures weren't just servant shacks. There are
increasingly million dollar, nice, homes on the foreclosure auction
block.

[...]
OK. That's a month ago. Today the headlines were about hope in the
housing market.

Did the headlines mention the millions of foreclosures in the loop
already? That the government holiday foreclosure memoratum is over?
In addition, as you pointed out above, foreclosures tend to hit the
lower priced properties first which tends to create an impression that
housing prices are INCREASING since the properties moving at retail
value tend to be the higher ones. At least at first...

Just answer the question. Hypothetically, if you could get $300K (or
200K whatever) to rent for a while, would you do it? I'm curious.

Probably not. I've got enough money and $200K isn't a life-changing
amount of money. It would probably take a life-changing amount to
get me to move twice in a short time (Say $1 million). After all,
what would I do with that $200K, buy a bigger house? ;-)

I suppose you wouldn't go on a reality TV program and humiliate
yourself for the chance to win a quarter million then? :-)

regards,
PolishKnight
.

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