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We should file a complaint with the town and fine those crooked low lifes right out of town!! That degenerate with his motorcycle waking me up all the time!!
Prices do not have to do anything. They will do what they will do. Anyone who thinks that they can predict the housing market, the stock market, the commodities market, or any other market is simply fooling himself.
This is particulary true for housing. Unlike the stock market, where each share of a company's stock can be assigned a market value at any time, housing is an imperfect market. That is, any particular home may be worth a lot more or less to an individual based upon that individual's needs and wants.
Actually I can. I cannot predict the timing. But I can look at the historical data, realize that housing bubble is what it is, a bubble. And the market will go back to its historical trend.
That is unless the recession goes ten year long and housing prices dip lower than its historic levels.
Since you are a professional, I recommend you read the relevant literature. Probably go over housing indices such as Case and Schiller. This will make you familiarize with the housing market overall.
We end up tying a huge amount of our wealth to a not-so-productive market.
I cannot agree more with you on this one....
No matter where you live, a house is supposed to be just that.... a place to live and raise a family. For the average working family owning a house on LI in a decent neighborhood with decent schools is a challenge at this moment, things were not like this in the past. Even though the 30% rule is just a thumb rule, there is a reason behind it.... which is tied to be able to manage your payments when you are unemployed... it also implies that maybe.... one can save more if just 30% of your income goes towards mortgage.... so that you can buy some time before you can get back on your feet....
If you take that ratio upto 50% or more.... like someone said, you are 2 paychecks away from disaster ... because most people I know have close to zero $$$$ left in the bank the day after closing yikes
Some might argue that hey when you retire are already a millionaire as you have spent the past 30 yrs in the house that is worth a million now.... but I would rather have more income at my disposable during my hey days than have a million at 65 !!
The laws of large numbers seem to show things always seem to migrate back to their historical norms... like water markets always seem to find their own level...the thing is so much has changed that im not sure what to think ....
for decades retires have counted on the proverbial 4% withdrawl rate to live on based on a 50/50 mix of equities and bonds and cash .. the markets always averaged 7% roughly for that mix and inflation 3%...
so much has happened and now we are going on 12 years without seeing that 7% average.. im not convinced these numbers will hold going forward from here anymore... id like to think the historical numbers will hold but remember those numbers are like driving and looking in the rear view mirror....
im planning my portfolio and investing based on less than 7% but im hoping the numbers hold as always
I think someone in this thread, and probably other threads, said that people tend to believe what they want to come true. Homeowners want to believe that housing will stagnate and start to rise slowly, buyers want to believe the prices should tumble some more and each tend to defend those positions that are in their best interest. But here is a question, don't bubbles usually need to deflate and hasn't this bubble not really deflated much. Obviously no one knows and markets behave in strange ways so anything can happen, but it seems like a split decision as to how many people think the market will continue to decline and those that think it will rise ... why do people think it will rise besides the rational that markets are strange, the majority it usually wrong, and you can never predict it?
For those who are homeowners and saw the steady increases from 1980 - 2000, or whatever time period prior to 2000 and there were minor ups and downs with modest gains, were the owners thinking 'boy my house is undervalued' all those years past. And then in the 5 years from 2000-2005 when things went crazy 30% a year and such, what were homeowners thinking then. Were they thinking 'finally my home is appreciating at a rate that it is supposed to'. I guess I am wondering if homeowners in reality think their homes are overvalued like most of the new buyers seem to feel or if they think they are valued properly, because most new buyers seem to be of the opinion that the prices are just not worth what you are getting. It would be like if all of the sudden used cars started to sell for 60,000 each, i would think my car was way overvalued as it ballooned up in price so rapidly with little actual change in the market conditions. Not a real great analogy, but i tried.
It would almost seem necessary the owners should feel their homes are overvalued unless prior to 2000 everyone was invested in home assets and buying into homes that they thought were well underpriced but I doubt they felt that way at the time.
The laws of large numbers seem to show things always seem to migrate back to their historical norms... like water markets always seem to find their own level...the thing is so much has changed that im not sure what to think ....
for decades retires have counted on the proverbial 4% withdrawl rate to live on based on a 50/50 mix of equities and bonds and cash .. the markets always averaged 7% roughly for that mix and inflation 3%...
so much has happened and now we are going on 12 years without seeing that 7% average.. im not convinced these numbers will hold going forward from here anymore... id like to think the historical numbers will hold but remember those numbers are like driving and looking in the rear view mirror....
im planning my portfolio and investing based on less than 7% but im hoping the numbers hold as always
Yeah, we indeed have seen the definition of long term investment change over the past year.... I mean a person who invested in 1998 is right where he was.... and 10 yrs was supposed to be really long term for stocks/equities.... right after the great depression though the market really took off.... that was spurred by manufacturing during the WWII era.... it will be interesting to see what comes to our rescue in the immediate future.
all i know is if i took all the money i threw in my 401k last year and bought beer i could have returned all the empty cans and had a lot more money...
so im proposing something new,,, LETS START A CITY-DATA 401 KEG PLAN FOR ALL OF US.... HA HA HA
Yeah, we indeed have seen the definition of long term investment change over the past year.... I mean a person who invested in 1998 is right where he was.... and 10 yrs was supposed to be really long term for stocks/equities.... right after the great depression though the market really took off.... that was spurred by manufacturing during the WWII era.... it will be interesting to see what comes to our rescue in the immediate future.
Actually im having a phone meeting next week with one of my favorite financial radio personalities and authors ray lucia..
i want to discuss the numbers his retirement financial calulator assumes and how that effects our long term planning going forward because we cant achieve those numbers the monte carlo simulations assume.
im a big believer in his buckets of money strategy and have a ton of questions for him.....
Actually im having a phone meeting next week with one of my favorite financial radio personalities and authors ray lucia..
i want to discuss the numbers his retirement financial calulator assumes and how that effects our long term planning going forward because we cant achieve those numbers the monte carlo simulations assume.
im a big believer in his buckets of money strategy and have a ton of questions for him.....
If you don't mind keep us posted on your findings....
Monte Carlo methods I believe are helpful to predict worst case scenarios (like right now for people who are retiring).... and it assumes an investor will stick it out, even in a bear market; that is often not the case.
I think someone in this thread, and probably other threads, said that people tend to believe what they want to come true. Homeowners want to believe that housing will stagnate and start to rise slowly, buyers want to believe the prices should tumble some more and each tend to defend those positions that are in their best interest. But here is a question, don't bubbles usually need to deflate and hasn't this bubble not really deflated much. Obviously no one knows and markets behave in strange ways so anything can happen, but it seems like a split decision as to how many people think the market will continue to decline and those that think it will rise ... why do people think it will rise besides the rational that markets are strange, the majority it usually wrong, and you can never predict it?
For those who are homeowners and saw the steady increases from 1980 - 2000, or whatever time period prior to 2000 and there were minor ups and downs with modest gains, were the owners thinking 'boy my house is undervalued' all those years past. And then in the 5 years from 2000-2005 when things went crazy 30% a year and such, what were homeowners thinking then. Were they thinking 'finally my home is appreciating at a rate that it is supposed to'. I guess I am wondering if homeowners in reality think their homes are overvalued like most of the new buyers seem to feel or if they think they are valued properly, because most new buyers seem to be of the opinion that the prices are just not worth what you are getting. It would be like if all of the sudden used cars started to sell for 60,000 each, i would think my car was way overvalued as it ballooned up in price so rapidly with little actual change in the market conditions. Not a real great analogy, but i tried.
It would almost seem necessary the owners should feel their homes are overvalued unless prior to 2000 everyone was invested in home assets and buying into homes that they thought were well underpriced but I doubt they felt that way at the time.
Congratulations to everyone who has posted on this thread! I have been here for about a year or so and IMHO this is BY FAR the most intelligent and thought-provoking to date (my opinion again!). Really very insightful from all angles from every point of view.
I think someone touched on the "emotional" POV of this buyers market: that buyers just dont think these houses are worth the prices being asked - - especially in an economy where nobody's job is safe. And if buyer's aren't going to come to the dance - - then nobody dances. Thus, the market maker in this environment is the Buyer.....not the seller. If buyers still think that 90% of these houses are not worth the price, prices have nowhere to go but further down.
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aaaaaayyyyyy
