Is buying a house worth it ? Can these prices be sustained? (San Diego: rental market, HOA)

[Macro Trader 2.0-]

Originally Posted by hitman619

Could you explain why a majority of investors put their money in Real Estate?

Investors like to speculate in various markets, Stock Market, Real Estate Market, Oil Market, Precious Metal Market and etc. We all know what happened to those investors from 2003-2007.
Investors, especially those paying cash who got free money from the FED just distorted the real estate market.
Today prices are so inflated again that mortgage buyers can't support those prices.
What we had since 2009 is price inflation recovery driven by speculators not by end users. Mortgage applications are at all time low, homeownership is at all time low, first time home buyers are at all time low.
Americans simply can't afford to buy a home in their own country today. Most Americans live paycheck to paycheck. Most Americans do not have enough savings to survive 3 months without a paycheck.

What we have been going through since 2008 is Economic Perversion created by the FED. The bailout of Wall Street with taxpayer money. No true capitalist believes in that.

Interest rates at zero. The FED has tilted the playing fields. Responsible Savers in America have been absolutely destroyed since 2009 and the FED chose to support speculators, so called investors.
The FED got everything wrong that it could since 2009. Instead rising rates, the FED lowered rates to zero luring Americans into more debt, mortgage debt, car loans, personal loans and etc. This is criminal.
We, today, are not destroying debt. We are increasing debt. In our manic attempt to preserve the world we know, we are resisting the Law of Nature. We are trying so hard to preserve toxic debt that we have taken our eye off the road; and now we are lost.

Look out below. Resisting the laws of Nature leads to a punishment most severe.
We need higher interest rates -- we've needed them since 2001. But it will be no pleasant walk in the woods. We have a huge debt bubble that needs to pop and strong dollar + higher rates will begin to do this. But it will take years to get back to normal -- and housing will implode during this time.


Disclosure; I'm LONG US DOLLAR and SHORT HOMEBUILDERS. My favorite short is KBH, short since Summer of 2013.

Good Luck

[wac_432]

You'll never HAVE to upgrade. You can wait for the right market conditions.

Housing isn't unaffordable for the thousands of Chinese millionairs and their mistresses, kids, etc.

[1AngryTaxPayer]

Originally Posted by Pedro2000

It all depends on what you plan to do. It is pointless to say real estate will always go up and then realize that means the same thing for everybody else. So if your $650K house becomes a $1.2 Million dollar home in 5-10 years, but you plan on staying in San Diego, you gain absolutely nothing from your real estate going up. You sell your home and need to buy a $1.2 million dollar home that looks like the home you just sold. That is the reality.

Real Estate going up only means something if you plan on leaving the area and find a cheaper place to live. So if you buy today for $650K and it goes up to a Million bucks in 5 to 10 years and you plan on moving to the middle of nowhere Texas where you can buy a bigger house with a yard for $500K, you made a profit. Otherwise your house is just like a useless stock that is never going to be worth anything to you. Maybe your kids and grandkids will wind up selling it or renting it, but other than that, you as an owner have a nice asset that can never be sold for profit unless you actually leave for cheaper pastures.


So yeah, buying now and hoping real estate goes up only means something if you eventually plan to leave (move out of California for the most part.) Otherwise it's pointless to say Real Estate always goes up and ignore the fact your neighbors real estate also goes up at the same time and buying a new home means buying what went up, not what it was 10 years ago.

This is why people punch out and move somewhere else where they can buy a McMansion with cash for the small house they had near the beach. Any why everyone hates on Californians.

[Cardiff Kook]

Originally Posted by 1AngryTaxPayer

Any why everyone hates on Californians.

Haha probably true. Seriously though, I'm glad I bought my place a year ago because looking at the inventory now I would have been completely priced out of my neighborhood now. I picked up a nice chunk of equity this first year even though it doesn't really matter because I have no intentions of selling in the near future.

[DaCounselor]

"Real Estate going up only means something if you plan on leaving the area and find a cheaper place to live"

^^I disagree pretty strongly with this opinion. There is a huge benefit to locking in your monthly housing costs for 30 YEARS. Rents in good family areas in SD are sky-high and going up - IF you can even find a nice rental.

Equally as important is that if prices do keep going up and you are not in the game, prices can quickly and easily run away from you and get out of reach. I have plenty of friends who could not afford the homes they are in now if they were starting from scratch and trying to buy their home today with a minimal downpayment. Because they have owned for years, they now have significant equity and they can afford much much more home than someone with the same income but without an extra $500K to put down.

Renting is really not a very good long term strategy. How many wildly successful lifetime renters do you know?

I also question people who try to the time the market - any market. With real estate, you could have bought at the peak in '06 in a nice area and values are back up and already beyond those "peak" prices. You could have had the worst possible timing and still be up in value, not to mention you would be 9 years into paying off the property already. Not bad for the worst timing possible.

[Cardiff Kook]

Originally Posted by DaCounselor

Renting is really not a very good long term strategy. How many wildly successful lifetime renters do you know?

Damn, when you put it like that....kind of speaks for itself I suppose

[1AngryTaxPayer]

Originally Posted by DaCounselor

"Real Estate going up only means something if you plan on leaving the area and find a cheaper place to live"

^^I disagree pretty strongly with this opinion. There is a huge benefit to locking in your monthly housing costs for 30 YEARS. Rents in good family areas in SD are sky-high and going up - IF you can even find a nice rental.

Equally as important is that if prices do keep going up and you are not in the game, prices can quickly and easily run away from you and get out of reach. I have plenty of friends who could not afford the homes they are in now if they were starting from scratch and trying to buy their home today with a minimal downpayment. Because they have owned for years, they now have significant equity and they can afford much much more home than someone with the same income but without an extra $500K to put down.

Renting is really not a very good long term strategy. How many wildly successful lifetime renters do you know?

I also question people who try to the time the market - any market. With real estate, you could have bought at the peak in '06 in a nice area and values are back up and already beyond those "peak" prices. You could have had the worst possible timing and still be up in value, not to mention you would be 9 years into paying off the property already. Not bad for the worst timing possible.

I'm betting a lot of people that walked away from there place in 2008 (that could actually make a payment) wish they had it back now. It was only "under water" on paper.

[Macro Trader 2.0-]

Originally Posted by wac_432

Housing isn't unaffordable for the thousands of Chinese millionairs and their mistresses, kids, etc.

So you will rather have Chinese Criminals, Russian Criminals, or any other foreigners with shady past buying US Real Estate just so that prices don't come down and that Americans can buy a house in their own country??

Shamefull!!!

[Cardiff Kook]

Originally Posted by Macro Trader 2.0-

So you will rather have Chinese Criminals, Russian Criminals, or any other foreigners with shady past buying US Real Estate just so that prices don't come down and that Americans can buy a house in their own country??

Shamefull!!!

Calm down. Nowhere in his post does he say anything about his preference towards the type of people buying real estate here. He's simply stating a fact.

[Macro Trader 2.0-]

Originally Posted by GMUAlum08

Calm down. Nowhere in his post does he say anything about his preference towards the type of people buying real estate here. He's simply stating a fact.

The World is DROWNING in DEBT.
China is Deflating.
Europe is Deflating.
America will Deflate also.

You can buy 'GROWTH' by borrowing or stealing money from the future and spending it today. That's how we raise our standard of living isn't it?
The whole world is 'growing' (not growing) the same way. It's not real growth when its debt stolen from the future.

The central banks have failed in everything except transfering trillions to the richest people in the world, through stock market and real estate asset protection. And the tragedy is NOT over. Far from it.
Obama will be judged harshly by history, but for allowing Bernanke, and Yellen now, to offload trillions of future dollars from American taxpayers as gifts to banks and corporations all over the world. It has been the greatest theft of public money in the history of the world; and Obama sat on his hands and let the FED do it. Of course, John Kennedy was killed because he made the FED and the CIA his two main enemies (and then the mafia, which had lost Cuba to Castro as a third). If Obama had unloaded Bernanke, target Wall Street for reform, he would have been admired by history, but he would have watched America sink into depression, with probably no chance for a second term -- or he may have been assassinated, either picture of which caused him to turn America over to the banks.

Alot of pain to come, enjoy this manufactured illusion while it lasts.