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Unaffordability is in more places than the coasts


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#1 Chilidawgz

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Posted 21 December 2006 - 06:46 AM

http://video.google....3...96098&hl=en
Anything can happen...what's happening now?
No one can forecast the future. No one.

"Again, this is all based on some trivial elementary school arithmetic."
(The individual in the quote was giving his opinion on TA...way too funny smile.png
That comment made me smile and spit out my coffee)
 
“To speak out against the madness may be to ruin those who have succumbed to it.
So the wise on Wall Street nearly always remain silent.
The foolish have the field to themselves, and none rebukes them.” (J.K. Galbraith).
 
 

#2 greenie

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Posted 21 December 2006 - 10:54 AM

I used some of the same metrics as this guy. Cost to rent ratio of the house I was renting (recently sold), was 387. Ideally, it should be 120. So, I expect Bay area house prices come down 70%. In fact, when the pendulum swings too far on one side, it always goes equally on the other side. Therefore, my expectations are a bit optimistic.
It is not the doing that is difficult, but the knowing


It's the illiquidity, stupid !

#3 OEXCHAOS

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Posted 21 December 2006 - 12:19 PM

Rents can go up, of course, to meet a decline in prices. Don't forget that the banks are government regulated, too. That means that if there's enough of a problem that catches the politicians eyes, and there's political benefit (Home? Apple pie?), you can bet that they'll change the equation with the stroke of a pen. It's not a level nor fair playing field. Also, like stocks, you can get prices to fall part of the way to "fair value" and then inflation will correct the rest. Sort of like the P/E fair value problem that uber bears had with the S&P. They swore it was going to crash much lower to get "cheap". I said, it'll fall pretty hard, but then earnings would rise to bring P/E's down to fair value. Thus far, I've been right. Take your pick, the simplistic, disasterous correction or the complex, slow, and less painful correction. Which is more likely? Which is what the powers that be want? Mark BTW, that was a nice little video. About the first education presentation on video that I've seen. We'd be in a lot better straights if the average Joe would put pencil to paper on this stuff. M
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#4 greenie

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Posted 21 December 2006 - 12:49 PM

Also, like stocks, you can get prices to fall part of the way to "fair value" and then inflation will correct the rest.


Mark, I am trying to predict the future, not past. Inflation has no place in my book.

Take your pick, the simplistic, disasterous correction or the complex, slow, and less painful correction. Which is more likely?


Every average Joe I talked to expects slow and less painful correction, if at all. So, I guess it is more likely, because markets always behave like what average Joe's expects, right ? :)
It is not the doing that is difficult, but the knowing


It's the illiquidity, stupid !

#5 OEXCHAOS

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Posted 21 December 2006 - 02:03 PM

Exactly how are you performing your survey? Investment types are freaked out, I'd guess, from what I read here. Average joes? I'm not sure what they think. I'll bet a lot don't care because they're not going anywhere anyway--no good can come from thinking about it. I'm not at all sure how folks are reacting and I guess it matters where you are. I've got an offer out on some property myself and I'm not worried in the least. In fact, I'm thinking that we're going to be looking pretty good in a few years. I'm not at all so sanguine about other areas. I'm suggesting (over and over again) that it's a pretty big moving target and there's a lot of ways things can play out. To pretend that inflation is "inconceivable!" well, I do not think it means what you think it means...;) Basically, your confidence in your predictive ability is a potential deteriment to your investment performance. The economy and it's effects is/are harder to predict fully than the stock market, and the stock market leads the economy, by and large. I've said it before and I'll say it again, you're putting your investment cart before your horse. You're making yourself interesting as hell to listen to at cocktail parties, but I'm thinking that it's not making you any money in the market and that it may do just the opposite. And, I'm not saying "everything's coming up roses", but confidently predicting utter disaster is a sucker's bet. It's Ok to be prepared for the worst, but you'd also better be open to things being much, much better than many expect. M
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