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Old 08-01-2008, 08:00 AM   #41
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Not to worry. Instead of 2 adults and 2 kids, there will be a landlord with 8 adult male renters. Plenty of cashflo to handle the mortgage.

Even though this is against municipal codes in most places, I see it happening every day.
Ha,
I agree with you, but not in the HOA developments where your "allowed" to paint your house one of three shades of beige, or can only plant certain bushes in designated places. In this area there are loads of these types of developments.

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Old 08-01-2008, 08:30 AM   #42
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Near my old neighborhood there are plenty of freshly minted gated communities stuffed full of 2500+ square foot 5 bedroom homes that you can pick up in the $210-240k range.

Population is about 40% hispanic and 40% indian, mostly agriculture work.

With two half decent incomes, thats quite doable.
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Old 08-01-2008, 09:20 AM   #43
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Ha This was his/her stated parameters. I don't think it is so unusual. I think it's a good reason not to be invested in the stock market. I'm affected now because I'm trying to do some real estate financing and the rules are changing by the minute just because of some perceived problem! Otherwise, I don't see a positive or negative effect except for the little bit I'm in the market, but I'm buying at a discount, right? And I do realize that in the big picture, blah, blah blah but if it wasn't this wouldn't it be something else? I'm curious.

And this affected me? How?

Not in the sense that it makes a difference in my investments.

Assume I hold 100% cash, I own my own home, and I have no plans to sell in the immediate future (e.g. 20 years).
OK guys (and girls ) - I'm the one that started this "quote" which has been copied and discussed through certain responses to the OP's original question.

While it could apply to "my life", I wanted to be more "broad based" in context. What I was looking at was not those folks that are in the accumulation stage or the "investment experts" represented on this fine forum but rather the currently "mature" indivudial that may be impacted by this current "news".

That indivudial (and I'll use some of my relatives as an example) are either from the post-WWII generation, "boomers" that are entering retirement (or in retirement, like me ), but have the same "financial profile". That is those who are "risk adverse" - either that they have a pension (hey, some still do!) or those (like my BIL who "invests" in GIC's).

They are a conserative group. While they may complain about the rising price of anything, they are not willing to give up the "security" of a cash "investment" (regardless of what it may be, a GIC, MM, CD, etc.)

Include myself, who while understanding that the "market" will probably overcome inflation (in the long term), but understanding that I am also in the group that has no debts (e.g. no mortgage/note, CC, or any other loans) the question still remains does the current "turmoil" in the RE market really affect me?

I can say that the folks that I know (relatives and "others) that are in the same age/financial cohort as me, don't necessarily get affected by the current RE "flux".

Yes, as some have alluded to, it may impact you if you have investments in RE developers, home improvement centers, etc. True. But (speaking for me, since I know my portfolio), these are not "major components" of my investments. Like many others (who belive in "owning the market") I (along with my DW) have our portfolios very "broad based" (much like playing roulette). Sometimes one part of the market goes down - while another goes up. I never place a "straight bet" in roulette (at 35-1 odds). I always split it. Sometimes I win - sometimes lose. But like the market, I've done OK.

As far as my "short term cash bucket" (e.g. 3-5 years gross income), I do have this "in play". That means that the market (be it RE or investments) have a time to "balance out" returns. As far as RE, I remember having a home in the '80's when the market was "hot" - then in the early '90's it turned around. This RE market is no difference.

Again I say, what does it really mean to me (and other "old retired folks with little/no debt"). Hey, if you're young and still trying to "leverage" the market (in the short term), it may make a difference to you. I use the term "short term" since I've sold four homes over the last 35+ years, and yet have not recorded a "loss" ...

- Ron
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Old 08-01-2008, 10:14 AM   #44
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From the late Twaddle not quite a year ago,

“Who, besides a few speculators, actually gets hurt from the popping of the bubble?

If you're a wannabe new home owner, lower prices are obviously good for you.

If you own a $500K home, and you've been eyeing that $1M McMansion over at the next cul de sac, what happens if both of you get cut in half? You sell your place for $250K less, but you upgrade to the McMansion for $500K less. You save $250K in the end!

Let the popping commence!


Personally, I think the subprime-backed paper fiasco is overblown. It may blow up a few more hedge funds (I think one in London blew today), but shouldn't affect the economy. The thing to watch, IMO, is consumer spending and the reverse of the wealth effect.”

Twaddle, you still out there? Come home.
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Old 08-01-2008, 10:44 AM   #45
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Housing snapshot from my county for Feb and July of this year...average, median and days on market. Looks like we're still losing a little ground...homes are still selling in the ~4 month range though.
Attached Images
File Type: jpg housing feb 08.JPG (22.3 KB, 1 views)
File Type: jpg housing july 08.JPG (21.5 KB, 2 views)
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Old 08-01-2008, 11:01 AM   #46
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So the median price on Single Family has dropped 5% and condos are UP 6%. I thought you were in one of the "reportedly" hardest hit areas. Where's the crisis?
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Old 08-01-2008, 11:07 AM   #47
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Well, we're off about 35% since the 2005 peak.

Theres a particular model of house in my subdivision that was selling in the low to mid 600's two years ago, right now there are three for sale for $420, 490 and 520. No takers.

The median homes in my old neighborhood went from the 150's in 2001 to the 250's in 2003 to the low 400's in 2005 and are now selling in the low 200's. Now thats a rollercoaster ride...
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Old 08-01-2008, 11:09 AM   #48
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Well, there was about a 15-25% drop prior to february of this year...

Theres a particular model of house in my subdivision that was selling in the low to mid 600's two years ago, right now there are three for sale for $420, 490 and 520. No takers.
But didn't you buy within the last year or so at pretty much the alleged top of the market and yet you barely wrangled a 3-5% reduction on your assessed values?
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Old 08-01-2008, 11:16 AM   #49
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Nah, we bought after prices here had dropped more than 20%, plus I nailed the guy pretty good to get his price down. Knocked almost another 10% off.

I got about a 7.5% reduction in my property taxes. I could probably make an argument to get more than that, but its probably not worth my time.

Sooo...20 + 9 + 7.5...we're in the ballpark.
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Old 08-01-2008, 11:57 AM   #50
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Originally Posted by honobob View Post
From the late Twaddle not quite a year ago,

“Who, besides a few speculators, actually gets hurt from the popping of the bubble?

If you're a wannabe new home owner, lower prices are obviously good for you.

If you own a $500K home, and you've been eyeing that $1M McMansion over at the next cul de sac, what happens if both of you get cut in half? You sell your place for $250K less, but you upgrade to the McMansion for $500K less. You save $250K in the end!

Let the popping commence!


Personally, I think the subprime-backed paper fiasco is overblown. It may blow up a few more hedge funds (I think one in London blew today), but shouldn't affect the economy. The thing to watch, IMO, is consumer spending and the reverse of the wealth effect.”

Twaddle, you still out there? Come home.
this isn't subprime anymore, a lot of Alt-A and even prime rated bonds are doing very badly
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Old 08-01-2008, 01:06 PM   #51
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Ha,
I agree with you, but not in the HOA developments where your "allowed" to paint your house one of three shades of beige, or can only plant certain bushes in designated places. In this area there are loads of these types of developments.

Billy
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Very true Billy; I missed the "gated community" reference in your post.

Ha
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Old 08-01-2008, 01:19 PM   #52
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I've always wondered what the dynamics are between the resort and the residential areas. Do you think that there is a growing gap between the values?

Friday, August 1, 2008
Fewer resort homes sell, prices stable


Pacific Business News (Honolulu) - by Janis L. Magin Pacific Business News

Hawaii's resort real estate market is running along the same path as the rest of the residential market with fewer sales and stable prices.
However, at $1.65 million, the average price of a resort home is much higher than that of the average Hawaii residence.
Sales of resort properties were down 18.3 percent in 2007 compared to 2006 and are projected to drop further this year, by more than 21 percent, according to the second-quarter resort residential market report by local consultant Ricky Cassiday, owner and president of Data@Work.
"Part of the reason for this is that high-end buyers continue to spend, while low-end buyers do not -- thus, sales fall and prices rise," Cassiday reported. "However, if the high end softens, then prices overall will plummet -- and the same thing will happen if low-end buyers return, as their purchases will weaken the averages."

It's like they knew what I was going to ask. Interesting that non resort properties seem to be selling in the $400 sf area while resort properties are selling in the $900+sf area.
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