patrick.net

Jack, past performance is no guarantee of future results. At the risk of dating myself, I remember in the late 60s early 70s when people where simply walking away from their houses because they didn't want to pay the real estate taxes on them. And this was in NYC!

The first question to ask yourself is why did your homes appreciate so much so quickly and your next question should be "when will that same situation present itself again". Only then can you make an informed decision. Hopefully this blog will help us all obtain better anwsers to those questions.

I'm not advocating going all to cash but diversifying. To a lot of people $600K would constitute a large part of their net worth. Losing 30-50% of their net worth in the short term is a big hit. Even if real estate prices remained fixed for the next 5-7 years, that 4.7% y-o-y inflation rate measured in Sept would quickly eat away at the value of your equity.

I admire your confidence in your position, but I for one would not bet "the whole farm" on real estate given the current conditions.

Finally, I agree that your house is primarily your home, but that would be little comfort for someone entering the housing market today.

So while it is understandable for most on this board to wish for a RE deflation, you’d better brace yourself if there is a general deflation for any prolonged period of time. Yes houses may be cheaper, but jobs and credits will be scarce. Or maybe you THINK you have more cash than others. Remember there are plenty of those who sold, even on this board, with cash hoard and waiting to get back in. Can you beat them to get the house you want?

I hope for a soft-landing but RE "deflation" is what I see. We have very little risk of board deflation with Helicopter Ben.

"flak Says:

...If it’s civil war, though, the boomers will win, since they have the advantage of numbers, and won’t start dying until the 2030s."

They may have numbers, but we have brain cells.

The Boomers smoked, snorted and propagandized-out most of their grey matter years, probably decades ago.

We Gen-Xers still have our wits about us. We've been saving them up
for the right moment.

That is our secret, our force multiplier in the guerrilla war against superior numbers of hippy-ass Boomers: street smarts, economic saavy and good old fashioned horsepower, baby: brain cells!

At least not 95 per cent of the time. (And not in my whole 52 years on Asteroid 144-X!)

Then again, we're even seeing craters priced at 10X the local median wage...
But, we know these craters are safe bets...nothing could possibly make them even deeper craters.

Bad Boomer, no Hummer! --Surfer-X

Good Boomer, bad B'mer! --Michael Holliday

Two sides of the same Boomer, materialistic coin, wouldn't you say?

That is not smart, if you want kids. Why tie having kids to home ownership? I don’t understand why the 20 something are so obsessed with home ownership. Don’t you see that is part of the problem?

Again, set the goal higher, let's be obsessed with jet ownership!

H.Z., well considering that inflation redistributes wealth of savers to debtors, robs us of our savings, financially favors those connected to the government, subsidizes short-term thinking at the expense of long-term planning, drives people into the workforce who would otherwise not be there of their own choosing and prevents the free market from raising our standards of living every year, we should all prefer the alternative. In fact, the natural tendency in a free market economy under a non-fiat currency has been for general prices to persistently decline. Here's an historical note:

"Throughout the 19th century and up until WWI, we were in a deflationary trend where wholesale prices fell 30% between 1880 and 1896 (1.75%/year) while real income rose by about 85% (5%/year). This deflationary trend was only interrupted during periods of major wars which were financed by printing fiat money."

In addition, inflation usually affects poor people or people on fixed incomes much more than wealthily people who have the resources to diversify or hedge against inflation.

It is true that loans are paid back in dollars that are more valuable than the ones borrowed but that is part of the risk one takes when deciding to borrow in the first place. What deflation does is provide a disincentive to borrow and an incentive to save. It means rewarding financial prudence and this is a good thing all around.

There is nothing inherently wrong with debt. It is certainly not the panacea you make it out to be however. All the current spending and debt accumulation may be creating an illusion of prosperity without the underlying reality. The new credit makes possible spending and investment that would otherwise be unsustainable (e.g. it creates bubbles). Unfortunately, many residents in the US have become debt addicts.

As for the rest of your post, I either misunderstand or you are just pulling this sh*t out of your *ss, I haven't figured out yet, but I'm leaning towards the latter.

"If you are thinking of buying a house….come over here….a little closer….I want to smack the shit out of you………or at least knock some sense into you so you don’t make the worst financial decision of your life."

LOL, allah, I knew there was a reason I like you regardless of our previous, um, disagreement.

I have met countless guys who view their wives as economic property; recently my wife told me two of her friends got the pump-out-another-kid-or-get-back-to-work threat.

I'd love to go on a "men are a**holes" rant after reading this. But not all men are, all you have to do is read the posts by Allah, Jack, Peter P, KurtS, Surfer-X --- do I need to go on to make my point? Lots of great guys out there who do value their wives.

There is that part of me that thinks the view described above is what us women get for demanding equality and somehow confusing going to work with being equal in the eyes of men. Obviously there are a lot of jerks out there who think that women should be responsible for the traditional housewifely duties and bringing home a paycheck. I've said it before and I'll say it again, are we really better off now that women work out of the home?

I know I've said it's great that women have choices, and some women really do benefit from the opportunities jobs afford them. But the SOB's mentioned here sound like bullies of the worst kind. I'd smack my husband upside the head if he tried to treat me like that. How's that for equal?

HZ says "Well I don’t give a rat’s ass about what you think."

Well I guess that settles who "is simply ignorant or short-sighted" then.

My goodness. What a thread.

For the record, all men are vile pigs. Some realize it, most don't.

Also, all women are utterly psychotic. Some hide it, most don't.

All in all, I'll take dogs...

Cheers,
prat

"Also, all women are utterly psychotic. Some hide it, most don’t."

Hiding it is entirely too tiresome an endeavor and leads to stomach ulcers anyway.

Hiding it is entirely too tiresome an endeavor and leads to stomach ulcers anyway.

_smile_

Fair enough.

Come here often?

Cheers,
prat

recently my wife told me two of her friends got the pump-out-another-kid-or-get-back-to-work threat.

What?

"Come here often?"

There's no polite way for me to answer that...

"recently my wife told me two of her friends got the pump-out-another-kid-or-get-back-to-work threat.

What?"

I believe he's actually talking about pimps who got too high and accidentally married their 'hos. So you see, if they're not birthing babies, they should be out there on the street earning their keep. Or something like that.

There's some shakey logic going on around here. (Mainly from me.)

There’s no polite way for me to answer that…

_smile_

Sure there is: Yes.

On that note, g'night all.

Cheers,
prat

Oh, by the way, housing is *way* overpriced right now...

"Sure there is: Yes"

Of course, straight-forward and honest! Why didn't I think of that?

Spoke to a realtor friend of mine that tells me her firm is refusing to list many homes because, in their opinion, the owners are asking for too much (and hence the home would most likely not sell).

I suppose that could explain why I'm seeing an increasing number of 'for sale by owner' signs in the nyc suburbs.

"Sunnyvale_Renter Says:

Aah, the boomers. I think the epitome of the boomers is that really fat guy who was in The Grateful Dead (we’ll be grateful when they’re dead lol). Sloppy, disgusting, self-indulgent, and unwilling to look past the next scoop of ice cream or cheap thrill..."

Yes! Exactly! That fat, self-indulgent, drug-addled, anti-establishment whore started his own Gerry Garcia ties and wine, etc. Not to mention the millions they made off those stupid skeleton and rose tee shirts, etc.

The Grateful Dead were a bunch of losers that laughed all the way to the bank while supposedly epitomizing the anti-establishment ethos of free love, transient lifestyle, smoke dope, etc.

Ben and Gerry are two other hippy-ass, hippie-turned-yuppie whores.

Silicon Vallley is full of them...Send all of their selfish asses to Chinese slave labor camps to see how the other half lives while they stuff their fat faces with food, dope, icecream, stocks, houses, cars, bicycles, etc.

You see that fat mound, the hairy, white beached whale out there in the sands of Santa Cruz? That's the average Boomer having "come of age"
enjoying the fruits of his fat pension. Meanwhile, back down Hwy 17, in the valley...the Gen-Xers languish, having been left to clean up the party after the music died, the disco ball rolled into space, and the lights came on.

Now I remember some of the stuff I've forgotten since I left the BA for Phoenix a few years ago. Some of the reasons why I was kinda happy to get away from the place I grew up in.

Update on that realtor friend... Just called to tell her I posted her news on this blog and she told me that one guy has threatened to sue her firm because they are refusing to list the home he bought through them only two years earilier for a profit of 10% when the average price has supposedly gone up nearly twice that since. lol.

recently my wife told me two of her friends got the pump-out-another-kid-or-get-back-to-work threat.

I have no idea how any rational person could feel they had to make such a choice. I mean, why not simply refuse, or leave, etc?

I don't mean to defend the troglodytes (generally, I'm with Prat on this one)...but...

The economic reality is that to maintain the lifestyle they have both chosen, it's often necessary for both parents to be working. And obviously birthing children gets the mother a pass for several months...but the burden ends up being borne by the father alone...

Which was more doable back when that was the standard. Wages were higher in terms of buying power, so it was reasonable to support three, four, five people on a single income. But that ain't the game no more.

Yes, it's a lifestyle choice (some would argue this is more driven by the female in the equation), but it's one they made together. Priorities change when babies are born, and that might be part of the woman's irritation at the "threat" (let's call it a request, or a reminder of mutual needs?), but there are often previous commitments (mortgage payments, car loans, etc etc) that don't change as quickly...

So maybe it's not as unreasonable as it sounds.

FWIW, this has zero resemblance to my personal circumstances, so I'm not rationalizing here. Doesn't mean it's true though.

Kids are like dogs, they need room to run around and stuff, not be all couped up in an apartment.

Some premium apartment complexes have acres of green space for kids to roam. Why does the space need to be private? A "private property" sign or a fence is not going to stop bad people anyway.

(overlapping seattledude, above)

And the right solution, in my mind, is a renegotiation of lifestyle choices which works for everyone.

But I've also met women who expect to be kept in the manner to which they are accustomed no matter what the externalities. Also men who depended for their material pleasures on the excess income created by sharing costs.

To Jamie's point: some people get married for truly mysterious reasons.

...and still other people just change.

"Why does the space need to be private?"

It doesn't. My kids barely even play in our back yard. They're always out at the public playground where there's a chance to play with other kids, even though we have a bunch of playground-like crap in our back yard.

I think we get trapped in narrow definitions of what we "need" to have kids. Yes, you can happily raise a child in an apartment (lots of people have done it), if you get over the idea that you have to have a SFH, and yes, you can take them to the park or the playground or just for a walk around the block to have fresh air. We've lived in a high-population-density townhouse complex with a kid, where we had only a tiny yard and always had to go to the playground or elsewhere to be outside, and we've lived in a regular suburban house. I think our bigger yard now mostly goes to waste. It's nice to have but not necessary. We still end up at the playground every day.

...

new thread! new thread!

do we really need a new topic? the threads have nothing to do with the topics anyway.

And Peter.. If the VP gets indicted on the 28th of Oct at 2PM EST (fingers crossed), will you rescind your concession? :-)

"And the right solution, in my mind, is a renegotiation of lifestyle choices which works for everyone."

Exactly.

And Peter.. If the VP gets indicted on the 28th of Oct at 2PM EST (fingers crossed), will you rescind your concession?

We will see... but I cannot take back a concession. It is so Al Gore. :)

Furthermore, his possible "indictment" was not even similar to what I had in mind.

"It is so Al Gore"

I (heart) Al. Am I the only one?

:-P

New thread: New thread

"This is frustrating for my generation because if I ever want kids, my poor wife would have to work not long after she had the baby because its so expensive now days to raise a family and a lot of families have 2 incomes."

Don't lose hope. Most families I know live on one income. Mind you, most of them do not live in the Bay Area, but it's not an impossibility. I know some families (who are have average incomes) living on one income in the BA too.

I (heart) Al. Am I the only one?

He is a likeable person. :)

“This is frustrating for my generation because if I ever want kids, my poor wife would have to work not long after she had the baby because its so expensive now days to raise a family and a lot of families have 2 incomes.”

You can always have kids later in life when you are more financially established. When we are too old to have kids biologically, there is always the adoption route. Blood has very little meaning to me. It is all about relationship.

Furthermore, his possible “indictment” was not even similar to what I had in mind.

True enough.

And maybe it would even be distracting from the real problems at hand.. But trigger events are often unrelated to the effects they cause.

Poor kids! Imagine being straddled with the responsibility of paying a mortgage at the age of 18! That has got to produce some very serious future psychological problems for that generation.

What kind of parents would risk their kid's financial future on a bet? That's despicable.

(Daycare - now daycare takes a real bite. Maybe those mothers who are being told to get back to work need to do some math.)

A lot of couples never really do all the math when it comes to kids and women going to work. Daycare, gas, lunch (unless you're smart enough to brown bag it), wardrobe/drycleaning and so on. You need to make sure at the end of the day you're taking home more than you're spending before the wife goes back to work. Once we had two kids it made no sense financially for me to work outside the home. Also, it's a lot less stressful on the whole family that we have the stability of a stay-at-home parent.

Yea babies are cheap, but wait until you get to car insurance and college. someone once quoted me $100,000 for raising a kid, good thing we didn’t about the cost when we created her.

I once did a discounted cashflow analysis, the net present value of raising a kid is close to -250K. (I forgot the assumptions.)

If you’re able to provide a warm bed and decent food and clothes and school books for a kid, that’s good enough. No McMansion required.

True enough.