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Peter P
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2005 Jul 12, 3:43am
... They don't see each other. They only see what they want to see. They don't know they're in debt.
Peter P
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2005 Jul 12, 3:49am
Needless to say my favorite is P/E ratio. I will even look at a convincing forward-looking P/E ratio.
How about astrological indicators? I have not heard anyone here quoting them yet.
And how about “common sense†?
Nah, if they don't "see the debt" they're sure as heck not going to see "common sense."
Right now my favorite indicator is the mortagage/rent gap.
I'd have to say, as far as leading indicators are concerned, the price-to-rent (a.k.a. "PE") ratio is also my favorite, followed by the HAI and price-to-income ratio.
Peter P
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2005 Jul 12, 4:28am
How about this ratio:
Let i be the 30-YR FRM interest rate
Let p be the price of the home
Let r be the annual rent of a comparable home
Ratio = (p * i) / r
This ratio is similar to "mortagage/rent gap" but it counts only the cost of money (interest).
Peter P
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2005 Jul 12, 4:47am
Fake P, the ratio is for comparison only. Those fees, tax, and deductions are more or less constant over time for the same home anyway. I do not want to have a complex buy-vs-rent calculator. I do have a formula though.
Peter P
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2005 Jul 12, 5:41am
Is this a sign?
Anonymous said...
I posted a while back about two condos for sale in my building. One went up for sale before Mother's Day, the other shortly after.
The original list on the first one was $705k. The second one came on the market at $620k. After about a week the $705k listing came down to match the $620k. So $620k went down to $599k, and the other followed suit a few weeks later (btw, these units are almost identical). So last week the first unit lowered their price to $587k. Both had open houses this weekend and from what I can tell nobody showed up (these are both down the hall from me). Now the first unit has lowered their price to $575k as of today and it is listed as "hot NEW listing." The last sucker to buy a unit in my building paid $575k. This is where it gets interesting for me - will their be a greater fool or will this one have to sell for under $575k?
These units are located in the top school district in Northern CA. They used to sell within 1-2 weeks of going on the market. The media can say what it wants about the bubble, but I am seeing evidence first hand.
12:37 PM
Peter P
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2005 Jul 12, 6:31am
weather has been nice though
How about a waiver to acknowledge that weather can change due to global warming?
Was that before or after the one waiving the buyer's right to actually see/inspect the house before buying?
Peter P, your formula should include HOA and property tax and income tax deductions to be more accurate.
Fake, here's a Rent vs. Buy calculator that includes those items:
tinyurl.com/bkecn
Peter P
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2005 Jul 12, 8:30am
Jack, inflation is well contained, not by the FED but by the process of globalization. The simple true is that so long as wage inflation is tamed, inflation is not a major factor in house prices.
Oil prices belongs to the global commodities demand competition group. Inflation in this category behave like taxation. It will have deflationary effects on housing.
Can you tell me more details about the causes of inflation in health case and education? I am not too clear about them.
Finally, the inflation of house prices is irrelevant because we are in a bubble. There is no rent inflation.
Peter P
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2005 Jul 12, 8:32am
BTW, there is nothing wrong about using rent in the calculation of CPI. But I have problem by doing so AND over-promoting the benefits of homeownership at the same time.
Peter P
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2005 Jul 12, 8:40am
House prices are high because people KNOW that money isnt going to be worth anything very soon.
Why not commodities? You get huge leverage and great liquidity.
Peter P
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2005 Jul 12, 8:54am
I am AFRAID to sell the house, because all that cash doesnt translate into “security†like the house does.
Who told you to sell your house?
Jack
I don't just think it's the boomer generation wanting a home, it's wanting more than one home. What's really sickening is the few I know who buy second or third homes and then give one to the kids as an "investment."
Peter P
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2005 Jul 12, 9:15am
I agree that we have some imbalances in health care and education. My question is, where are the additional costs going to? Lawyers? Government?
Will the extra costs have inflation-like effects or are they a simple wealth transfer?
I am no economist either. Economics is a voodoo science at best. :)
Comments 1 - 18 of 153 Next » Last » Search these comments
Signs... Everywhere you look, it's possible to see the Signs that something is not quite normal in the housing market today. Depending on where you stand on the Housing Bubble debate, the signs you see might be positive or negative indicators. Your "signs" may not be that significant to other people, and vice-verca. But everyone has their own favorite "market indicators".
What are yours?
Is it Y-Y/M-M price indexes? Is it price-to-rent (PE) ratios? Y-Y/M-M Sales Volume? Price-to-income ratios? The CA/national HAI (Housing Affordability Index)? Foreclosure rates? Total/available housing inventory? Mortgage lending standards? Levels of new housing construction? Level of speculator activity in the overall market? Shifts in the types of mortgages being issued? GSE debt levels/ share of the market? Overall levels of media "chatter" about the Bubble and/or number of recent articles & interviews on the subject?
What are your favorite "market indicators" and why? Are they leading or trailing indicators? Why? Discuss.
HARM
#housing