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Old 05-01-2011, 02:55 PM
 
4,182 posts, read 6,167,723 times
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While the stock market continues to surge upwards, real estate (i.e. residential RE) is stuck in a rut. See the latest Case Shiller report: http://www.standardandpoors.com/serv...obnocache=true
In Los Angeles, for example, home prices have declined 2.1% from 2010. SF is down by 3.5%. SD is down 1.8%. Overall, RE is way down about 20% from the 2005 peak. Houses are the only asset class that's still down. Stocks have already recovered. Bonds are paying such low yields (i.e they are expensive) and are at risk of substantial decline if interest rates go up and inflation picks up. Gold is at all time highs (nominally anyway). Cash is paying 0% interest. Real estate is the ugly duckling here.

In the spirit of buying low and selling high, it seems to me that selling stocks to buy a house in CA (if you are interested in CA) is the rational thing to do at this time. A friend of mine did just that. He sold a chunk of his stocks couple of weeks ago and paid cash for a house in Miami. Another friend is picking up on foreclosures in Sacramento.
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Old 05-01-2011, 03:13 PM
 
5,113 posts, read 5,466,050 times
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Quote:
Originally Posted by ndfmnlf View Post
While the stock market continues to surge upwards, real estate (i.e. residential RE) is stuck in a rut. See the latest Case Shiller report: http://www.standardandpoors.com/serv...obnocache=true
In Los Angeles, for example, home prices have declined 2.1% from 2010. SF is down by 3.5%. SD is down 1.8%. Overall, RE is way down about 20% from the 2005 peak. Houses are the only asset class that's still down. Stocks have already recovered. Bonds are paying such low yields (i.e they are expensive) and are at risk of substantial decline if interest rates go up and inflation picks up. Gold is at all time highs (nominally anyway). Cash is paying 0% interest. Real estate is the ugly duckling here.

In the spirit of buying low and selling high, it seems to me that selling stocks to buy a house in CA (if you are interested in CA) is the rational thing to do at this time. A friend of mine did just that. He sold a chunk of his stocks couple of weeks ago and paid cash for a house in Miami. Another friend is picking up on foreclosures in Sacramento.
The stock market and other areas have not recovered. The minute the Fed's stop QE2 (printing money) you will see a big crash and burn. Home values in California will not increase anytime soon and will be on the decline for the foreseeable future.
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Old 05-01-2011, 03:15 PM
 
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,958 posts, read 20,949,935 times
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There's 6 decidedly different real estate markets in my little county alone. Some are looking good as a place to buy, some are just OK.

Real estate is local. But if you believe the best time to buy is when prices are low, this looks promising in some places. If I had cash at this point, I'd be a buyer.

Your mileage may vary.
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Old 05-01-2011, 03:27 PM
 
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Personally I'm bullish over CA's prospects. Real estate here will recover, thanks to cash/affluent payers who would rather live in nice weather and interesting geography than in other parts of the US. Who are these cash payers? Which demographic group actually has the disposable income today to be able to afford to buy CA real estate?

Looking at data from the Census Bureau and Federal Reserve (Survey of Consumer Finances), it is obvious that Asians have the highest per capita income and net worth of all demographic groups in the US. Cash-rich Asians like CA. The warm climate reminds them of Asia. Plus they already have a strong historical presence here. CA is also physically close to Asia, where global economic growth and wealth is being generated, and will continue to be generated over the next few decades. This wealth will spill over to CA via trade and immigration. Hence, despite current economic problems, long term demographic trends point to a CA renaissance. Low cost of living states like Texas, Alabama, Mississippi, etc just don't resonate emotionally with Asians the way CA does.
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Old 05-01-2011, 03:53 PM
 
4,182 posts, read 6,167,723 times
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Census bureau shows the following median household incomes for 2009:
1. Asians = $65K
2. whites = $51K
3. Hispanic = $38K
4. Blacks = $32K

http://www.census.gov/prod/2010pubs/p60-238.pdf

As the saying goes: "follow the money".
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Old 05-01-2011, 03:59 PM
 
167 posts, read 227,237 times
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The stock market may be going up, but that doesn't mean the economy is getting better.
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Old 05-01-2011, 04:15 PM
 
2,093 posts, read 4,314,440 times
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Just look at the unemployment rate in California.

If you want to buy a house, do so because you need a roof over your head. Do not buy a house as a primary investment.
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Old 05-01-2011, 04:57 PM
 
4,182 posts, read 6,167,723 times
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Unemployment rates go up and down. The economy changes all the time. The thing that never changes is geography (at least not on the human scale of decades and centuries). For the foreseeable future, CA will be geographically proximate to Asia. And CA will have pleasant Mediterranean type climate and an interesting landscape. Affluent Asians (and other people with money) will prefer to live in CA over other parts of the US due to these physical factors which are independent of unemployment rates, tax laws, regulations, and other perceived economic disincentives. Real estate is about location location location. You can make the Sahara desert the most tax friendly place in the world (zero taxes, no business regulation, low cost of living, whatever). Nobody will want to live there and call it home if they can help it.
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Old 05-02-2011, 03:14 AM
 
4,455 posts, read 9,788,408 times
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Not even sure what point you are trying to make.
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Old 05-02-2011, 04:56 AM
 
Location: Columbia, California
6,664 posts, read 28,836,632 times
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I think this would be a good time to purchase as prices are down as well as interest rates. I see values stabilized and doubt they will go any lower. Interest rates will only go up.
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