tag:blogger.com,1999:blog-11719208.post2137990811366854662..comments2023-11-05T04:36:14.223-08:00Comments on The Mess That Greenspan Made: The return of the dismal duoTimhttp://www.blogger.com/profile/16530974968126497397noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-11719208.post-3478625830256933412008-08-18T10:38:00.000-07:002008-08-18T10:38:00.000-07:00Dear friend, Wonderful .Accept my sincere thanks...Dear friend,<BR/> <BR/> Wonderful .<BR/>Accept my sincere thanks and appreciation<BR/> <BR/> <BR/>John ,<BR/> <BR/> <BR/>http://www.dirking.net<BR/> <BR/>Jobs – companies – real estate – engineers – petroleum companyAnonymoushttps://www.blogger.com/profile/11074256390967038483noreply@blogger.comtag:blogger.com,1999:blog-11719208.post-8180030550014196912008-08-04T06:34:00.000-07:002008-08-04T06:34:00.000-07:00The question isn't whether now is the time to buy ...The question isn't whether now is the time to buy a house or live in your van under a bridge.<BR/><BR/>The question is whether you should BUY a house today or RENT a house until prices move further.<BR/><BR/>It's a financial question. It's not an emotional question about how you FEEL about a house.<BR/><BR/>That's the exact mistake the Smith duo made in rationalizing their decision to buy at the peak in CA.<BR/><BR/>Your principal obviously is NOT always safe in a house. That's the whole point right now! It's called a housing CRISIS because people are losing their financial shirts due to DEPRECIATION.<BR/><BR/>If you have $500,000 cash available to "park" in something, you might decide to park it in a house.<BR/><BR/>If you did that recently, you lost 30% and you've watched your "investment" go down to $350,000 in value. If you sold now, you'd lose about $150,000.<BR/><BR/>In order for the house to come back UP to $500,000 from the new value of $350,000, it has to go UP by 43%. (It's always farther coming back up than going down.)<BR/><BR/>So, even if house prices have hit bottom (fat chance!) and will climb at a more normal 5% per year rate, it will take about 7-8 years for your house to BREAK EVEN.<BR/><BR/>This is ignoring all costs of ownership - which are substantial.<BR/><BR/>Compare that with renting and PARKING your money in a CD paying 4%. While your house was going down 30% and you're waiting 7 years to get back to even, your CD has been earning 4% a year or about 30% over that same time. And, there's no out of pocket costs to owning the CD.<BR/><BR/>Or, you might park it in gold or some other commodity. While the return isn't guaranteed, you'd have the potential for some real appreciation.<BR/><BR/>But, that's the whole point of this question. WHERE do you put your money? Timing is EVERYTHING!!<BR/><BR/>There are many emotional reasons to buy a house. But, this web site is more about the rational aspects of the American economy. The housing crisis is a HUGE part of that and we can thank Greenspan for the current mess.<BR/><BR/>The Smith duo is a PERFECT example of how supposedly intelligent people do dumb things because we are all emotional beings. It's hard to be logical when self interest is involved. That's why you can't trust anyone's advice if they have an interest in your decision. (Think REALTOR)<BR/><BR/>The Smiths are just another of the endless examples of people who can't manage their own lives but are all too eager to tell you how to live. We see this in spades with public officials.<BR/><BR/>Hopefully, others can learn from the many examples of stupidity (such as the Smiths) exposed here on this web site from people who, logically, should know better. Greenspan is, of course, the best example of this concept.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-42583771783024823992008-08-03T17:14:00.000-07:002008-08-03T17:14:00.000-07:00Well, in answer to the question of whether now is ...Well, in answer to the question of whether now is the time to buy a house, that would depend on the reason for your buying a house. If it's not to live in it, then no time, not now, not ever, is the right time to buy.<BR/><BR/>A house is not an asset. An asset generates income. A liability generates expenses. A house, unless it's a rental property that produces more revenues than expenses, does not generate income. Rather, it's a capital savings (equity) account with expenses. Over time, the expenses incurred--taxes, utilities, maintenance, insurance, etc.--may or may not exceed the savings or equity accrued. A lot depends on the location and the fluctuations of the market.<BR/><BR/>Prices go up and prices go down. Realistically, that doesn't matter, not when it comes to buying a house. It doesn't matter because the reason why one buys a house is not to buy low and sell high (that is, to play the market). The reason why one buys a house is to live in it.<BR/><BR/>An older, well-maintained house in an established neighborhood with good schools is one of the safest places to park your money. But that's only if you intend to live in and maintain it for 20 or 30 years.<BR/><BR/>There will always be someone on the market for that kind of house, which of course is why these are the more expensive houses. It's not so much that they appreciate as it is they don't depreciate. Your principal is always safe in one of these houses.GawainsGhosthttps://www.blogger.com/profile/16719480047404817864noreply@blogger.com