tag:blogger.com,1999:blog-13164186.post5426981544460620413..comments2024-01-27T19:26:32.604-05:00Comments on Bubble Meter: Bubble Meter Predictions RevisitedDavidhttp://www.blogger.com/profile/11169148764438565562noreply@blogger.comBlogger44125tag:blogger.com,1999:blog-13164186.post-31552812392593042402007-03-15T16:53:00.000-04:002007-03-15T16:53:00.000-04:00Lance said;"But how can this be?!?! Is it not the ...Lance said;<BR/>"But how can this be?!?! Is it not the same "fleabag hotel" it always was? (I.e., the owners haven't renovated it, have they?) How can they possibly expect to rent out the rooms there for more just because there has been an economic boom?!? Hasn't anyone told them that the BHs don't allow for any appreciation over "inflation plus 1%" UNLESS they do renovations? Ah, that's what happens when central command economies are no longer in vogue! Who would think that the "free market" should play a part in providing efficient allocations of limited lodging/housing facilities!?!?<BR/>;)"<BR/><BR/>Stop laughing at your own jokes. As we all understand, I said the price rises resulted from the oil boom (and lack of hotels to meet demand).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-88609442609100710472007-03-15T12:09:00.000-04:002007-03-15T12:09:00.000-04:00anon said:"Depends on where in Angola. Angola is a...anon said:<BR/>"Depends on where in Angola. Angola is an oil rich country, where the cost of living is astronomical. Try to get into a fleabag hotel in Luanda and it will cost you about $300 a night. Angola is not a good example. It has experience a significant boom, one driven by the boom in oil prices."<BR/><BR/>But how can this be?!?! Is it not the same "fleabag hotel" it always was? (I.e., the owners haven't renovated it, have they?) How can they possibly expect to rent out the rooms there for more just because there has been an economic boom?!? Hasn't anyone told them that the BHs don't allow for any appreciation over "inflation plus 1%" UNLESS they do renovations? Ah, that's what happens when central command economies are no longer in vogue! Who would think that the "free market" should play a part in providing efficient allocations of limited lodging/housing facilities!?!?<BR/> ;)Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-18120428133314524072007-03-15T09:53:00.000-04:002007-03-15T09:53:00.000-04:00Lance said:"I don't think you'll find that housing...Lance said:<BR/>"I don't think you'll find that housing prices went up 200% in Angola ..."<BR/><BR/>Depends on where in Angola. Angola is an oil rich country, where the cost of living is astronomical. Try to get into a fleabag hotel in Luanda and it will cost you about $300 a night. Angola is not a good example. It has experience a significant boom, one driven by the boom in oil prices.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-3384811490159576522007-03-14T18:28:00.000-04:002007-03-14T18:28:00.000-04:00Looking at sale prices of homes in Fairfax County ...Looking at sale prices of homes in Fairfax County (since Jan 2007,) it appears that homes are selling for 100 times 2006 taxes. Is this a new rule of thumb for buyers?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-17191403548810653462007-03-14T17:02:00.000-04:002007-03-14T17:02:00.000-04:00caveat emptor said...All three major stock indexes...caveat emptor said...<BR/><I>All three major stock indexes were knocked down about 2 percent.</I><BR/><BR/>The great thing about overall stock market declines like this is that they bring down the good with the bad, thus creating buying opportunities.<BR/><BR/>While many sub-prime mortgage companies are shutting down, there are high-quality, well-diversified financial companies with earnings yields that are double the long bond yield.<BR/><BR/>To paraphrase Warren Buffett, be fearful when others are greedy, and greedy when others are fearful.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-39430814416563994712007-03-14T14:13:00.000-04:002007-03-14T14:13:00.000-04:00Easy money leads to asset bubbles and easy debt- t...Easy money leads to asset bubbles and easy debt- throughout history this is a known outcome.<BR/><BR/>To all those who have said its 'different this time' have learned nothing.sleepershiphttps://www.blogger.com/profile/18164040606411038826noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-47988072091158449792007-03-14T11:52:00.000-04:002007-03-14T11:52:00.000-04:00James said:"Lance, even if people here disagree wi...James said:<BR/>"Lance, even if people here disagree with you, they should treat you with respect."<BR/><BR/>Ok ... Sorry if my last response to you was harsh. I should have phrased it in a way showing more respect for your views. I'll never agree with your decision to gamble with your home, but it's a free country after all.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-90758458490214645162007-03-14T11:47:00.000-04:002007-03-14T11:47:00.000-04:00Lance said . . .after the herd mentality "a la bub...Lance said . . .<BR/>after the herd mentality "a la bubblehead" has run its course . . .<BR/><BR/>ROTFLMBO . . .<BR/>herd mentality = bubblehead . . . <BR/>wow . . . just wow I don't know if there is anything I can say to respond to this insane thinking.<BR/><BR/>Herd mentality generally means those who just go by what everyone else tells them and they catch on to a good thing at the last second and propel it to the extreme. Considering that the VAST majority of people still believe that houses never goes down or "it will pop back up in a year" . . I doubt that BH are the herd.<BR/><BR/>No BH were the cast-off lone cow that saw greener grass . . a few more have come over but it is hardly a herd.<BR/><BR/>No lance. . herd mentality was 04-05, buy now or be priced out. . . housing prices being bid up and gone in days . . etc. That was the herd. Now when short selling becomes common, then we might have reached the other extreme.<BR/><BR/>I don't know it could get nasty . . .considering about 3 months ago there were only about 80 homes in foreclosure and now there are over 170+ in Prince William Co. (ala foreclosuredeals.com). This could get interesting.<BR/><BR/>Lance . . . what's the difference between "betting money on investments" and "betting" money that housing always goes up and taking out IO/ARMs-just to stretch to get that house . . . nothing . . well except that with a house you are HIGHLY LEVERAGED and stand to lose a lot more than "betting on investments" <BR/><BR/>The person who took out the 500k IO/ARM while making 80k is the herd who risked financial security for a house.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-9027177158402527692007-03-14T11:35:00.000-04:002007-03-14T11:35:00.000-04:00Anon said:"I get it. There's a bubble in the U.S. ...Anon said:<BR/>"I get it. There's a bubble in the U.S. housing market (and Europe and Asia and Australia...) but that had no part in price increases in D.C. proper. This is the one area that was not impacted by the real estate mania gripping the world. It's different here!"<BR/><BR/>I guess you didn't read (or at least understand) what I wrote. There are major changes occuring in how the world does business ... It's called moving toward a "pan-global economy". Part of that change is that those cities and countries most expected to benefit from the changes become more valuable as human resources (and their monetary resources) flow to them. I don't think you'll find that housing prices went up 200% in Angola ... But they did in places like London, NYC, western European countries, etc. where the movers and shakers of this new pan-global economy are most likely to be found. There's a lot of new wealth being generated out there in this new pan-global economy, and it alone will push up the prices of housing in those places where those controlling that new wealth do business and/or reside. That is simple economics. BHs like to pretend that prices went up simply because some imaginary "real estate industrial complex" manipulated them. What they conveniently forget is that without the people actually having the wherewithal to pay these prices, the price rises wouldn't have happened. And no, I don't believe for one sec that the so-called "easy money" loans could account for all that wherewithal ... or even a substantial proportion of it. To put things in perspective, almost all second homes and investment properties purchased of late have been purchased for cash ... and not borrowed money. Again, to put things in perspective, 40% of all primary residences out there are paid for (i.e., they don't have a mortgage on them.) Yes, I'll concede that easy access to loan money will have had the effect of raising prices higher than they otherwise would have been, but I think it is unreasonable (and wishful thinking) on the part of BHs to attribute all (or even the bulk) of the very high increases in prices to this. I think it is more reasonable to ask yourself: "What is the effect of the "easy money" now being enjoyed by groups such as the traders in London who were estimated to have received a total of $17 Billion dollars in Christmas bonuses alone this year?" The economists posting here are quick to point out the effect of something like 12% of all loans in 2004 and 2005 being from subprime loans. Why aren't they mentioning the effects of a group of people having an extra $17 billion dollars to spend in one city alone ... among the many cities/countries benefiting from the pan-globalization of the economy? What are the trickle down and spin off effects of such great wealth accumulation? And more importantly, what are the ramifications in terms of the vast redistribution of wealth in terms of who owns what percent and what that will do to housing prices in "desireable" neighborhoods/cities/countries? Come on. I've heard so much about the effects of a few otherwise disadvantaged folks being given a chance to own their own homes and how that has inflated the price of homes for everyone else. How about focusing on how this massive redistribution of wealth between the haves and the have nots has affected prices by a magnitude far greater than what a few paltry subprime loans to people buying bottom-of-the rung homes could possibly do.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-8624193238443268762007-03-14T11:21:00.000-04:002007-03-14T11:21:00.000-04:00Lance, Thank you for all the money.Lance, <BR/><BR/>Thank you for all the money.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-48275272200477721912007-03-14T10:47:00.000-04:002007-03-14T10:47:00.000-04:00if you didn't remodel your home, there's no improv...<I>if you didn't remodel your home, there's no improvement in "housing capital", so it should not increase in value much faster than inflation.</I><BR/><BR/>Keep in mind that the housing market, particularly in certain metropolitan in inner-ring suburban areas, benefits from an increasing population combined with a reluctance to increase housing supply. It's logical that under those circumstances, values would increase <I>faster</I> than inflation.dchttps://www.blogger.com/profile/08808067590437877111noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-32656153099046983342007-03-14T10:25:00.000-04:002007-03-14T10:25:00.000-04:00Lance: " the "house" always wins in the end ... "A...Lance: " the "house" always wins in the end ... "<BR/><BR/>And you ain't the house, Lance.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-74292847190188448822007-03-14T10:00:00.000-04:002007-03-14T10:00:00.000-04:00Anonymous said... ""The sky is falling! It feel a ...Anonymous said... <BR/>""The sky is falling! It feel a whole 2 percent! "<BR/><BR/>Oh good, Lance isn't concerned... I thought for a second there we might have something to worry about but since he doesn't think it is a big deal it is clearly a non-story.<BR/><BR/><BR/>Meanwhile... the real experts who aren't computer technicians who try to moonlight as global economy gurus remain unconvinced that all is well."<BR/><BR/>Anon,<BR/><BR/>The <B>REAL</B> experts will come back in today, tomorrow, next week, or next month and pick up valuable equities at discount prices ... after the <I>herd mentality</I> "a la bubblehead" has run its course.<BR/><BR/>Smart equity investors, like smart real estate investors and homebuyers, realize that <I>over the long haul</I> value doesn't get wiped away by the fickleness of short term "investors".<BR/><BR/>And James,<BR/><BR/>Btw, no, it's not my "money", it's my "home" ... You've never quite understood the difference between spending money on a home and betting money on investments, have you? I can't help but feel sorry for you (and your family) if that is the case, as you'll constantly be looking for that <BR/>"one better" investment you can make while risking the roof over your and your family's head. Good luck. I'll leave you with one piece of advice though ... <I>the "house" always wins in the end ...</I>Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-38304186334283456502007-03-14T09:35:00.000-04:002007-03-14T09:35:00.000-04:00Most of the value of a home is due to 3 things: lo...<I>Most of the value of a home is due to 3 things: location, location, and location.</I><BR/><BR/>Okay, Lance, I'll give you Logan's Circle. Now explain the 200% increase (that's three times the original value) in places like Manassas, Leesburg, even all the way out in West Virginia.<BR/><BR/>Or what about the 200% increase in formerly nice neighborhoods of DC? Are they all of a sudden three times as attractive?<BR/><BR/>What about the huge increases in the entire U.S. market? How does "location, location, location" hold here?<BR/><BR/>I get it. There's a bubble in the U.S. housing market (and Europe and Asia and Australia...) but that had no part in price increases in D.C. proper. This is the one area that was not impacted by the real estate mania gripping the world. It's different here!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-29640474271989653242007-03-14T09:24:00.000-04:002007-03-14T09:24:00.000-04:00Lance said:"If house builder's stocks are down, th...Lance said:<BR/><BR/>"If house builder's stocks are down, that probably mean they are in trouble and you can probably get a better deal from them. Their loss becomes your gain."<BR/><BR/>Lance,<BR/><BR/>It was not too long ago when you were arguing the EXACT opposite. You said that when times are great you can get a great deal because the sales rep for the home builder will be making more on his commission and so can incent the buyer with a slightly sweeter deal.<BR/><BR/>So, is it always a good time to buy or does one of these two scenarios favor the buyer?<BR/><BR/>My $0.02.<BR/><BR/>PS - Why are you cheering for the homebuilder's pain?MyTwoCentshttps://www.blogger.com/profile/10642606797401998999noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-3524701890977935282007-03-14T09:11:00.000-04:002007-03-14T09:11:00.000-04:00Lance,You've mentioned wheres the doom and gloom. ...Lance,<BR/><BR/>You've mentioned wheres the doom and gloom. Take a look at the news paper or watch the "local" news channel, ah' any channel will do.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-75041933056816849492007-03-14T08:38:00.000-04:002007-03-14T08:38:00.000-04:00We treat him with the respect he deserves, probabl...We treat him with the respect he deserves, probably quite a bit more...<BR/><BR/><BR/>“anon said: "With the coming tightening in lending standards ... "<BR/><BR/>Do you know something we don't know? What is your authoritative source for the "fact" that lending standards are going to be tightened? “ Lance July 1 2006<BR/>(I suppose Lance is about to admit he was wrong on this one)<BR/><BR/><BR/>“I hope you have a very long term lease on your home, you'll need it 'cause rents are what are starting to rise now. You think the rise in selling prices was something? Just wait till the rise in rents kicks in. Everyone I've been talking to says renters are desparate. It's 20 - 40 renters for each "for rent" ad placed in Craigslist. Rents are gonna go up up up! I hope you own a waterproof tent? ... and a little piece of land to put it on.” Lance June 29<BR/><BR/>“David said... <BR/>its just the start of the decline in the bubble markets. Much better deals are coming in the coming years."<BR/><BR/>You should put this quote up on the masthead of your blog (with a date of posting, of course) ... Something we can discuss in coming years ...” Lance June 28<BR/><BR/>(I agree, only lets get one of Lance's quotes to go next to it...)<BR/><BR/>“Or is it "bubblesense" to instead wish upon a falling star that prices will suddenly and magically fall even thought that has NEVER happened in US history before? "Bubblesense" ... I like that new word! It's aking to "Bubblespeak" and "Bubble-economics"! "You click your heels, wish upon a star, and all your dreams come true!" Ignorance truly is bliss, isn't it?!” Lance June 28<BR/><BR/>(never in history huh?)<BR/><BR/>“I have specifically said that in the short term (2 - 3 yrs?) I think condo prices are going to go down by as much as 15% on average and house prices stay where they're at, again on average.” Lance June 26 <BR/><BR/>(There we go, lets put this quote next to David's...)<BR/><BR/>“Also, our home-loan lending industry is one of the finest in the world. Having learned from the lack of controls and oversight back in the 20s, in today's controls and oversight see to it that very very few buyers who bought won't have been qualified to carry whatever their payments are capped at. I.e., when people get qualified for their loans, they get qualified using the highest interest rate that the loan can ever go to. For example, even if loan rates are 5% when someone buys and rates in general rise, the increase is capped at something like 10% ... and it is that 10% that the buyers would have been qualified at. And I don't believe for a moment that we have a substantial amount of loans out there where the lender was either fraudulent or just simpley didn't verify application information in accordance with either the law or good business practice. I could go on and on as to why the bubbleheads' chickenlittle beliefs are based on complete misunderstanding of many many things ...” Lance June 26<BR/><BR/>(This is one of my favorite Lance quotes... blinding stupidity mixed in with a great deal of arrogance. Oh yeah... and we are all of course waiting for him to admit he was wrong...)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-64458899425345508182007-03-14T08:34:00.000-04:002007-03-14T08:34:00.000-04:00We treat him with the respect he deserves, probabl...We treat him with the respect he deserves, probably quite a bit more….<BR/><BR/>“anon said: "With the coming tightening in lending standards ... "<BR/><BR/>Do you know something we don't know? What is your authoritative source for the "fact" that lending standards are going to be tightened? “ Lance July 1 2006<BR/><BR/>(I guess Lance is about to admit he was wrong about that huh?)<BR/><BR/><BR/>“I hope you have a very long term lease on your home, you'll need it 'cause rents are what are starting to rise now. You think the rise in selling prices was something? Just wait till the rise in rents kicks in. Everyone I've been talking to says renters are desparate. It's 20 - 40 renters for each "for rent" ad placed in Craigslist. Rents are gonna go up up up! I hope you own a waterproof tent? ... and a little piece of land to put it on.” Lance June 29<BR/><BR/><BR/>“David said... <BR/>its just the start of the decline in the bubble markets. Much better deals are coming in the coming years."<BR/><BR/>You should put this quote up on the masthead of your blog (with a date of posting, of course) ... Something we can discuss in coming years ...” Lance June 28<BR/><BR/>(I agree... lets scroll down a little bit to find one of yours to put next to it...)<BR/><BR/>“Or is it "bubblesense" to instead wish upon a falling star that prices will suddenly and magically fall even thought that has NEVER happened in US history before? "Bubblesense" ... I like that new word! It's aking to "Bubblespeak" and "Bubble-economics"! "You click your heels, wish upon a star, and all your dreams come true!" Ignorance truly is bliss, isn't it?!” Lance June 28<BR/><BR/>(Never happened in US history huh?)<BR/><BR/>“I have specifically said that in the short term (2 - 3 yrs?) I think condo prices are going to go down by as much as 15% on average and house prices stay where they're at, again on average.” Lance June 26 <BR/><BR/>(There we go... I think we should put this quote next to David's)<BR/><BR/>“Also, our home-loan lending industry is one of the finest in the world. Having learned from the lack of controls and oversight back in the 20s, in today's controls and oversight see to it that very very few buyers who bought won't have been qualified to carry whatever their payments are capped at. I.e., when people get qualified for their loans, they get qualified using the highest interest rate that the loan can ever go to. For example, even if loan rates are 5% when someone buys and rates in general rise, the increase is capped at something like 10% ... and it is that 10% that the buyers would have been qualified at. And I don't believe for a moment that we have a substantial amount of loans out there where the lender was either fraudulent or just simpley didn't verify application information in accordance with either the law or good business practice. I could go on and on as to why the bubbleheads' chickenlittle beliefs are based on complete misunderstanding of many many things ...” Lance June 26<BR/><BR/>That last quote is one of my absolute favorite Lance quotes... blinding stupidity mixed in with a lot of arrogance. Charming...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-2611612534724403912007-03-14T02:03:00.000-04:002007-03-14T02:03:00.000-04:00The housing bubble was pushed up mostly by the Fed...The housing bubble was pushed up mostly by the Fed's interest rate cuts in 2000-2001. The bubble has been pricked in part by the Fed raising interest rates back to normal levels (as well as other factors like housing affordability and a change in herd behavior).<BR/><BR/>The funny thing about Lance's explanation is that in the late 1990's, people came up with similarly convoluted explanations as to why stocks were worth such high prices. It's amazing how people can come up with ways to justify any financial bubble.<BR/><BR/>Lance, even if people here disagree with you, they should treat you with respect. In the end, the market's going to do what the market's going to do. It's your money on the table. Good luck.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-61158641103629665022007-03-14T01:35:00.000-04:002007-03-14T01:35:00.000-04:00"The sky is falling! It feel a whole 2 percent! "O..."The sky is falling! It feel a whole 2 percent! "<BR/><BR/>Oh good, Lance isn't concerned... I thought for a second there we might have something to worry about but since he doesn't think it is a big deal it is clearly a non-story.<BR/><BR/>Meanwhile... the real experts who aren't computer technicians who try to moonlight as global economy gurus remain unconvinced that all is well.<BR/><BR/>"TOKYO - Asian stocks plunged Wednesday after Wall Street chalked its second-biggest drop in four years and rattled already nervous markets worldwide. <BR/> <BR/>Overnight, the Dow fell 242.66, or 1.97 percent, to 12,075.96 amid concerns about U.S. sub-prime lenders, who provide mortgages to people with poor credit.<BR/><BR/>The tumble extended weeks of international trading turmoil rooted in deepening concern about a wilting global economy. Concern about U.S. sub-prime lenders and lackluster retail sales pushed the Dow Jones industrials down 1.97 percent overnight.<BR/><BR/>Investors continued the sell-off in Asia, where stocks in Tokyo, Seoul, Singapore, Hong Kong and Kuala Lumpur were all down more than 2 percent. Markets in Sydney and Shanghai lost about 1.76 percent and 1.85 percent respectively.<BR/><BR/>At the Tokyo Stock Exchange, the region's biggest bourse, the benchmark Nikkei 225 index fell 512.04 points, or 2.98 percent, to 16,666.80 points. Foreign investors who bought up stocks during the recent rally led the selling, traders said."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-8875951238586562732007-03-13T23:33:00.000-04:002007-03-13T23:33:00.000-04:00James said:"Most homeowners have just been living ...James said:<BR/>"Most homeowners have just been living in their home without remodeling it, and have seen its growth in value far outpace inflation. That's a bubble."<BR/><BR/>Most of the value of a home is due to 3 things: location, location, and location. As such, it matters relatively little if the home has been remodeled or not. The real increase in value comes from factors related to whether where the house/condo sits is desireable or not. DC is the perfect example of how things have changed for the better. The change in many neighborhoods has been so great to send the value through the roof based solely on the difference in the neighborhood. Take Logan Circle for example. 10 years ago there were shoddy looking auto repair shops where you now have Whole Foods. Instead of people sitting out dining al fresco at the sidewalk cafes on P St., you had bums drinking out of beer cans on street corners. Anyone who owned there are now living in a whole other world ... and the value of their property has gone up irrespective of whether they have remodeled or not. While this change is very visible in DC, there are other less noticeable changes occuring in cities like Washington and countries like the US that make their locations more valuable. These changes have to do with the transition from national economies to a pan-global economy. There is a lot of wealth being created and that wealth is flowing first to cities and countries important in the new scheme of things. That wealth causes the relative value of favored locations to rise accordingly. Houses/condos in these areas will go up in value because of their location irrespective of whether remodeling was done or not. So, no, that is not the illusionary incrase in value creation that you imply when you say bubble. This is real value creation.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-32259831570782068802007-03-13T23:28:00.000-04:002007-03-13T23:28:00.000-04:00You've done well on the housing market, but your r...You've done well on the housing market, but your recession prediction seems excessively pessimistic.<BR/><BR/>Intrade is giving only a 27% chance of a recession in 2007. Or at least that's the way the market betting is going.<BR/><BR/>In contrast, the Shiller market agreed with you last year that the housing markets were headed for a dive although the CBE is reporting somewhat higher figures (that is, smaller decline) for late 2007 housing now than it did some time ago.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-28198071800266990082007-03-13T23:23:00.000-04:002007-03-13T23:23:00.000-04:00This statement illustrates how you still don't und...<I>This statement illustrates how you still don't understand that buying a home is an expense and not an investment.</I><BR/><BR/>I thought this stupid statement was already torn to bits a while ago on another thread.<BR/><BR/><I>If house builder's stocks are down, that probably mean they are in trouble and you can probably get a better deal from them. Their loss becomes your gain.</I><BR/><BR/>Err.. which is it? Should I buy because a house is an expense or because home builders are getting f***ked and I can get a better deal? And what is to guarantee that they will not continue getting f***ked and I will get a better deal still in future?<BR/><BR/><BR/><I>And when you buy a house, you are not being equity in future shares of profit made from building a house. Not the same thing.</I><BR/><BR/>Huh?<BR/><BR/><I>And if you truely can't understand the difference, then you are probably ready to buy a house yet.</I><BR/><BR/>Not only did I not understand the difference, I didn't even understand what you are trying to say.<BR/><BR/><I>Buying a house is a complicated transaction. And not for those who get easily confused.</I><BR/><BR/>Ok. I get it now. Its too complicated. I won't buy. Thanks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-79100179040479983482007-03-13T22:45:00.000-04:002007-03-13T22:45:00.000-04:00Lance said...And is it a "bubble" when you get a b...Lance said...<BR/><I>And is it a "bubble" when you get a bigger raise one year than you have the other years before?</I><BR/><BR/>No, that's called inflation (i.e. cost-of-living adjustment) and an improvement in human capital (i.e. you gain work experience).<BR/><BR/>However, the housing bubble <A HREF="http://www.jparsons.net/housingbubble/" REL="nofollow">was not caused by inflation</A>. And if you didn't remodel your home, there's no improvement in "housing capital", so it should not increase in value much faster than inflation.<BR/><BR/>Most homeowners have just been living in their home without remodeling it, and have seen its growth in value far outpace inflation. That's a bubble.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-71496277220094759652007-03-13T20:28:00.000-04:002007-03-13T20:28:00.000-04:00MyTwoCents said... "Lance,As usual, this makes ver...MyTwoCents said... <BR/>"Lance,<BR/><BR/>As usual, this makes very little sense:<BR/><BR/>"(The whole 3 times salary rule of thumb is not worth much. It's your housing monthly costs as a percentage of income that matter in the end ... and that percentage has stayed constant over the decades.) "<BR/><BR/>The 2.5 to 3 times your salary rule of thumb is built around the lending industry practice of a debt-to-income ratio of no more than 36% and a loan-to-income ratio of no more than 28% (33% for aggressive borrowing)."<BR/><BR/>Nope, wrong rule ... The 3 times salary rule of thumb I was referring to was Robert's "you shouldn't pay more for a house than 3 times your salary" ... i.e., you make $50,000 per year, you shouldn't buy a house for more than $150,000.Lancehttps://www.blogger.com/profile/12216089306021385355noreply@blogger.com