Market crash: are we there yet ? - Page 4

TrueBlue · #31 (**permalink**) 08-10-2007

We resisted the urge to buy up, back a few years when home prices started to soar. Instead, I doubled my mortgage principal payments - paying off our house loan in less than 15 years.

A few months ago we had a mortgage-burning party - could have been reversed with a potential lender burning our arses over a McMansion mortgage.

On the other hand - I'm afraid to look into my online SEP/IRA portfolio.

bestfriend · #32 (**permalink**) 08-10-2007

Sapper - Thanks for connecting the dots. I am pretty dense when it comes to this stuff, but continue to learn. I just like to sail.

My house is at the low end of the market for this area and does not fluctuate very much. It came up in value to a not unreasonable price and will hold it for awhile. I am selling now and plan to sit on the equity for awhile to see what happens around here. Although i do not see a crash here as some predict. It may happen in the surrounding cities that are not so attractive to outside money, but SF is just too desirable. My cousin has lived here since 1971 and has never seen prices go down. Always a slow and steady increase. I could, however, see it stalling for a while. The panic that I do see has been created by the Real Estate agents and Mortgage brokers to stir up business and keep the money flowing. Right now, they are the ones that are in trouble, their jobs are at stake.

Cruisingdad · #33 (**permalink**) 08-10-2007

THe housing market is NOwhere NEAR correcting, in my opinion. I have seen both sides. I was in FLorida before it took off and at the beginning of the end. People there kept saying, "Oh... it has bottomed out." Whatever, dream on.

People are complaining about getting a 6.35% locked 30 year mortgage. COME ON FOLKS?!!! Many of you have been around a while. What was your first mortgage?? Mine was close to 10% (9.9 I think) and I thought that was good at the time. I think that is closer to reality than 5's and 6's. THus, people have gone the American way and bought the biggest house they could afford. What happens when those ARMS start to go up??? What happens if you want to sell? Nah, the housing market has not collapsed yet. It hasn't even hiccuped.

I place people all over the country. It is getting bad. People in CA that did not come from CA save for YEARS to get a house - then pay the majority of their income towards it. New Jersey, New York and Boston are about as bad. Many of those people from Michigan and Ohio and New York went to FL and bought "cheap" real estate to flip. THey are now holding the bad. If it comes down to losing your primary house or a flipper down in FL, which one do you choose?? THat is what is going on there. My best friend is a builder in Fl. It is not pretty. His wife is a real estate pro. They have NO buyers - just thousands of sellers and flippers that are upside down.

The complicating factor is not the cost of houses, it is the lack of increase in income. It has not gone up (at least in my profession... I doubt others are much different). However, if income jumps up to match a 400-500k starter house, you have considerable inflation too, which means higher interest rates and lowers the value of the home you can afford. Something, somewhere has to give. It can only be prices.

You have not even begun to see the end of it yet. THere are places that will not get hurt very badly, like Texas and other places in the mid west. THe will not get hurt because they hardly went up in the first place and the incomes of the locals still match the costs of the houses. Florida - you are in deep doo-doo. THose are primarily vacation homes and the income there DOES NOT EVEN COME CLOSE to matching what the houses cost.

And yes, if the housing market really crashes, it will take everything else with it. How can it not? If people struggle to make a house payment, they sure are not going to have money left over for little GI Joes or retirement. Much of the money in the US market is from US investors... not the big guys, just the you and me's. The only thing that has stemmed it has been the vast increase in the housing market... but that is dissapearing.

It is time to pay the piper on the recession. We have not paid for it yet.

THese are just my opinions... but I have seen this coming for a while.

bestfriend · #34 (**permalink**) 08-10-2007

What about those investing in things related to China and their market? I have several friends that are making a killing right now.

CD- I would have to agree with you about the outlying, not so desirable, and second home areas. Tahoe is on its way down. What you can see is that SFR's are coming down slowly. New Condos are staying stable, but that is because they were built with foreign money and they can afford to wait. New building plans have stopped or were canceled. What is being built now was funded and planned a few years ago. Again, more foreign money. Like I said in another thread, the problem is that we don't make anything anymore. We make money by selling each other stuff that is made somewhere else. A tourist economy.

camaraderie · #35 (**permalink**) 08-10-2007

I know some guys who made a killing in Tienanmin square too!

Greed is the rope capitalists will hang themselves by.
No personal comment intended BF...just making a point about WHERE we should not invest.

SimonV · #36 (**permalink**) 08-10-2007

Will all this equate to my Aussie dollar getting me a bigger and better boat in the US, I doubt it. We had the same here with the property market taking a tumble, some got hurt but the majority just held on and came out the other side with barely a scratch. Everybody will be looking out for themselves. Banks don t want to foreclose on the borrower they want them for the long haul, that’s where their profits are. Weather the storm, hold fast and the sun will come out.

bestfriend · #37 (**permalink**) 08-10-2007

No, I agree Cam. Just a small case and point: Both of my brother's cats were killed by that crap food they made over there. They were awesome 15 year old cats, and I don't like cats. What a waste and a shame. I try not to buy anything from china, but its hard not to BECAUSE WE DON'T MAKE ANYTHING!!!! China really pisses me off! I would not switch my funds to the china market, I would rather put it into stability and just take the 5%. I only have 12 years left.
My question is more to what is going to happen with their economy and how it will affect the market.

bestfriend · #38 (**permalink**) 08-10-2007

Quote:

Originally Posted by SimonV

Will all this equate to my Aussie dollar getting me a bigger and better boat in the US, I doubt it. We had the same here with the property market taking a tumble, some got hurt but the majority just held on and came out the other side with barely a scratch. Everybody will be looking out for themselves. Banks don t want to foreclose on the borrower they want them for the long haul, that’s where their profits are. Weather the storm, hold fast and the sun will come out.

Thanks for reminding me Simon, will call that guy about the Islander today.

Its still there.

ReverendMike · #39 (**permalink**) 08-10-2007

Not invest in China?! Come on, we all do it everytime we buy anything from toothbrushes to shrimp! I recently saw (another?) book about a family that tried to go without buying anything made in China. The reason it's 'book-worthy' is that it's almost impossible to do. Considering that foodstuffs from China are used without having to be designated as such on the label, the word 'almost' should be stricken from the previous sentence.
Also, not intended personally, Cam!

xort · #40 (**permalink**) 08-10-2007

Anyone care to guess what country has lost the largest number of manufacturing jobs in the last 10 years?