Real Estate Market / Inflation / Recession / Depression (credit, loans, broker)

[Bagz]

http://www.papereconomy.com/ChartIma...g?KxRx=0x03431

Thanks for the website... good information with lots of positive aspects. Looks like some areas have larger risk than others. Apparently California isn't alone with high housing prices. Things are looking good for Colorado. If you consider real estate a long-term investment (over 15 years) you have done pretty well for yourself in any market at any time. (especially if you consider the opportunity costs compared to renting.) If you will be relocating every two years, I hope you get paid enough to throw your money to the landlords. Get a 15 year loan and pay it off. Even if the price drops in half, you will be better off than had you rented. If you go by history, the more likely case is that you will become very wealthy.
Not sure I would want to buy a long term investment in an area with lower risk and lower rewards. I guess it depends on whether you view real estate as a long term or short term investment. Personally I see it as long term and would prefer the riskier stuff (probably because I have 20 years till I retire.) Everyone's situation is different, so I wouldn't tell everyone on a forum not to invest in a certain region right now based on this graph.

[Shuffler]

Originally Posted by sterlinggirl

That might just reflect the decrease in the value of the dollar Shuffler. If the dollar drops, the dollar value of the multinationals goes up even if the true value of the companies remains flat.

Agree with you on that. I also agree with Bagz...I'm on a fixed rate 15yr loan on my house that I'm on track to pay off well ahead of time. I never bought my house as a short term investment vehicle to finance stupidity, as so many have apparently done. Breaking news on Fox is that the Feds have another 17 financial institutions lined up for investigation...meanwhile the Dow is up 300. Maybe I should list my house 'across the pond' and get some wealthy Frogs to pay top dollar...

[multitrak]

i paid cash for my house in ok and it's up 20% in 3 years. but i would rent month by month in the denver area until i can low ball some poor soul who's motivated by fear and a cash offer. rent's not too important for me since my companies pick up the tab plus i don't need the mortgage deduction. and oh yeah, like i mentioned before, my businesses and i are debt free. markets and reasons continually change, so like ya said, there's really not a single pat simplistic answer cuz each person's mileage may vary...

[Bagz]

Originally Posted by sterlinggirl

That might just reflect the decrease in the value of the dollar Shuffler. If the dollar drops, the dollar value of the multinationals goes up even if the true value of the companies remains flat.

That's great news. That means that as the dollar gets weaker, our retirement income gets stronger. Wait till I tell Grandma. She will be grinnin' ear to ear.

Future's so bright...

[multitrak]

Originally Posted by sterlinggirl

If the dollar drops, the dollar value of the multinationals goes up even if the true value of the companies remains flat.

or it might be as simple as a short covering rally ignited in the stock index futures...stock market lows are generally made during times of pervasive fear...

EVERYONE is short this market. Just look at the most popular ETFs -- they're all Ultrashort funds. When the market can string together some positive news, this market has the potential of snapping back.

And when it does, it may be hard.

Falling knife or opportunity? You make the call. - BloggingStocks

[MileHi5]

Many people on this forum currently favor the option of renting rather than investing in a home. I'd be interested to know your thoughts on what other investments you see as less risky than real estate.

We are getting set to move from NZ to Colorado next month and at this stage prefer to buy our own home. If we go down the renting road, it poses the problem of how to keep our hard earned money safe in such a volatile market.

In NZ, with interest rates so high, having money on term deposit at over 9% pa is a damn good safe option. Not so in USA with interest rates falling - another .75 points today.

Your thoughts?

[Charles]

Originally Posted by MileHi5

In NZ, with interest rates so high, having money on term deposit at over 9% pa is a damn good safe option.

Can you keep your money in NZ at 9%? (Heck, Can I get a guaranteed 9% in NZ?) What am I doing with equity funds if I can get a guaranteed 9%?

[MileHi5]

Charles, Yes seems like a simple safe option. However, our NZD is so strong against the greenback at the moment and most experts agree that it is very overvalued. Our dollar could easily devalue 9% against the USD and we would be back to zero return.

The NZD attracts carry trade because of the high interest rates, however as world markets are volatile, people become nervous holding minor currencies and drop it. We saw a big decrease in the value on the NZD when the subprime fiasco hit even though NZ wasn't directly implicated. Our dollar does up when the Dow goes up and it goes down when the Dow goes down.

You lose over 6% taking forward cover on the exchange rate to protect it for a year, and with tax on interest, it no longer seems so attractive.

[Bob from down south]

Originally Posted by Charles

Can you keep your money in NZ at 9%? (Heck, Can I get a guaranteed 9% in NZ?) What am I doing with equity funds if I can get a guaranteed 9%?

And so the dollar carry trade was born...

As I step back and look at the big picture, I note that even after today's rather odd 400 point increase, the Dow is only a few percent ahead of where it was in 1999.

On Friday we had a major investment bank fail, and known waves of $billions in bad Alt-A and Pay Option Arm exploding mortgages waiting in the wings to soil the banking sector's already sagging balance sheets further. None of that has changed, and when the euphoria of today's big hit of credit crack wears off, we're still where we were. Lehman reports a 53% hit to quarterly profits with God-knows what still hiding in their off-balance sheet septic tank, and the street cheers like they discovered a way to turn water into oil.

In the long term, gravity still wins. We're a long way from out of the woods.

But for now...crank it up, dudez!
"Tonight we're gonna party like it's 1929..."

[Bideshi]

The market has spiked after each rate decrease, but for only a day or so and then down it goes further. The drugs aint workin no mo.