patrick.net

Everyone's financial and professional situation is different thus without knowing your background I think its going to be difficult to give you an answer. I can only speak in generalities.

If you like the home and don't care about whether it gains or loses value, have a job that enables you to put 10-15% of your income into retirement after the mortgage is paid, have a somewhat stable position, 6 months to a year worth of emergency funds, and a decent amount already in retirement then sure- why not?

Its also going to depend on where you live. If you live in a less insane market like say- Texas or one of the Southeastern states where prices are still reasonable then that's going to be very different compared to a place like the Bay Area where prices in somewhat desirable areas are still close to bubble levels. We're talking a lot more money at stake in pricier areas. If you can stomach that- then sure.

But I think perhaps a better idea would be for you to talk to a financial adviser. They will be able to take a look at your finances, investments and get a good idea of what you can and can't do.

if you're asking about whether its a good idea based on uncertainty, well there's no guarantee against anything. Every financial decision carries risk.

Thanks. Actually we have rented in Manhattan for 37 years and are buying in Harlem. All that you mentioned is positive regarding us. We can afford it and our financial advisers approve. The issue is attitude. I can see how said it is for someone who is underwater and have to pay off a mortgage for more than the how is worth. This is less serious or maybe not serious at all. How does one think about "money" when one is losing it while having an enjoyable place to live. Maybe all I am asking is about changing one's attitude regarding "money" and "security. Thanks for the response.

Attitude is more of a personal opinion. We live in the Bay Area ( SF) and while we could also afford a house here my opinion is that the prices are too high and I personally like having a lot of money to play with. That and the house we rent is nice and its cheap and we're a bit too comfortable to move.

That said, if I were to buy I wouldn't care about what the house did as far as value. I will never view a house as an investment and as such it will never play a significant part of my financial health. In other words I am not counting on a house to take care of me in retirement. I know some people who do and for them the value of their house means everything. If you don't care about what the value does then its not really part of the equation.

Either way, good luck with whatever you decide.

A financial adviser is no magical elixir to help you decide your financial fate. I would concede that there are many fields out there that you shouldn't undertake yourself. I wouldn't perform open heart surgery for one... But personal finance is not open heart surgery. By far the biggest issue with financial advisers is they have conflicting interests. Their entire industry depends on you "investing". Of course they are going to tell you to invest . Oh they may tell you bonds are safer than stocks or whatever else is the prevailing "knowledge" of the time, but they don't know jack. They just follow the financial newspapers and websites like anyone can. Or some preset formula handed down by the real people in charge. Best of all they charge you for the privilege.

The OP was asking about how to feel good with ones decision to ride the market down not how to decide if you can afford it. That's what we call rationalizing. It's either a good financial decision or its not... and sometimes you won't know till its all over. Just like any decision in life you have to weigh the pro's and con's. Only you know the value you place on having a home. If you feel the pro's out weigh the con's (loosing value), then you should be fine.

Thanks. I see the wisdom of your not buying, particularly when you like living in a house and have lovely ones to rent and enjoy. I also see how different it is living in the Bay Area and in Manhattan. Finding a condo, building, and "hood" that suits one is not easy. I also am retired and have to take a certain amount out of retirement even as my wife continues to work, we are first time buyers and can use the interest deduction well. Value is an attitude whereas money is merely in a bank....attitudes are more fluid than cash. The value of a prudent and decent attitude makes whatever money one has in the bank more valuable even when that money is "merely" a home one lives in well.

good advice. My accountant is one adviser, the one I listen to the most who advises fixed rates over ARM and knows my whole financial circumstance with no vested interest. The loan officer of course does have a vested interest, but in light of what I learn from my accountant, his loans are easily selected. The broker of course is the most biased, as yet he lives two blocks away and has lived in the neighbor for 15 years and in Manhattan for longer. Of course, my advisers still have to pass the test of your prudent advice. Thanks

Trend lately is to rent and retire somewhere outside of CA. Living expenses are much lower outside.

Living off 1000 a month social security ( minus 300 for medicare from that). Its not doable in CA. This place is a bubble.

Thanks time are very difficult particularly when retiring.

Yup. Lots and lots of people are choosing to retire away from expensive areas. My folks live in NC where I am originally from and the amount of people moving there-particularly from the East Coast- is staggering. Not so say I don't blame them since a 200k house there might as well be a 600k house in Cali or NYC. Then again many move there without fully understanding or knowing that its like beforehand. As someone who has lived in the South and both coasts things are very different in each location. I can deal with those differences since I sort of did the opposite and moved from there- not to there ( the SE).

But as I grow older place is becoming more and more important. I think its absolutely fine to rent in an area and buy in another. We could stay in Cali for another 10-15 years and semi-retire elsewhere and so so by the time we're in our 40's. Or we could continue to save and one day buy here. Who knows?

All can say about people moving somewhere to retire- you'd probably be wise to rent for at least a year or so to get a feel for the place. Doesn't hurt to take some trips to those places before you move too. I've done that myself and all of the places I went- including Austin- which is constantly placed on a pedestal as this sort of "New California" was way different than I expected. I'm not sure if I would move there. Oh- it stays 90+ degrees for months.

As far as financial advisers, well they're like anyone else. There are good ones and bad ones. Mine seriously talked to me on his day off- on Sunday- and all we did was talk about economics, which was fascinating. All he ever does is buy tried and true conservative stocks and so forth and slowly but surely builds wealth. He- like myself- does not care about eh value of his house and bought it with cash. We share a lot of the same beliefs- in that the market generally goes up 7-8% a year over the long term. I consider him an honest person who enjoys what he does and would trust his advice.

As far as retirement, well the general saying goes these days that you will need around a million dollars accumulated- not including the house. Assuming you live from age 60-100 ( not unheard of) that equals out to be $40k a year, which is fine if you have everything paid off and live frugally. If you live in an expensive metro, probably the amount should be more like 1.5-2 million since the COL in those areas are higher.

right on. You are doing well. And you are correct the greener the pasture the more one should rent. This is why we are staying near where we have lived most of our lives, we get a completely new neighborhood (Harlem) but in the same familiar locale (Manhattan). And it is expensive and not immune to serious declines.

nothing is guarantee in this life, but

if you are confident in your own capabilties, if you hold a good job, you work hard, you make yourself worthy to the company, then at least you can have some peace of mind on income source.

if you have decent savings for down payment, decent savings for retirement, decent savings for emergencies

if you have very good FICO score, meaning you are very
responsible consumer

if you know yourself, your limit, your living budget that you feel comfortable, not what the bank/loaner/advisor tell you,

if you have been searching/studying the house market for a long time, and finally you can find a decent place that you see yourself enjoying living inside,

then right now, with the low mortgage rates, it is one of the best times to buy a home, even in this horrid economic times.

I am not a realtor or involved in any aspect of house selling.
I am just neutral, unbiased.

james.shafland says

Is there a prudent way of thinking about buying; buying and still enjoying one’s home even as one knows the market is dropping?

Look up and determine pre-bubble years prices say 1996-97 and factor in inflation say ~ 30-35 since. That would be a low risk price to purchase today.

http://www.housingbubblebust.com/OFHEO/Major/NorCal.html

wise responses from everyone. One note, this first how has as 25 year tax abatement, and so the taxes are absurdly low for 20 years and the building is built, well, like a Volvo, if I can use your car analogy. I am been on a learning curve, slow as it may be, for several years and do not trust any senseless thing. However, even the most blatant lair does say some truthful things. Since we are getting a 15 year fixed at below 4%, we are doing well, but your point about paying too much is well noted. The most important thing about buying is the actual price of the house, everything else is significantly less important. To judge whether or not you are paying too much one must have some comparisons to make. Here all of the units are selling just below asking price and half of the 13 are sold. Buying on the way down means having a chance to get what you want, but at a price above the bottom, but of course the house you wanted, was bought before the bottom came.

Therefore, knowing what you need and want, is more important that knowing what you can afford, but knowing what you can afford trumps what you want, if not what you need. So far, these responses have helped me clarify my issue regarding buying now. So far I am encouraged to continue to move toward closure, but I also see where I could have seen that it was not a prudent decision just by these comments.

I guess "location, location, location" is just another way of saying "want, need, afford".

and you are right on!

15-year @ 5% fixed? Ding.
Harlem, in the Greatest and one of the largest Cities in the World? Ding.
Multiple forms of Public Trans within a few blocks? Ding.
Plentiful kinds and supply of jobs? Ding.

The terms are good, the location is good, and most likely, you will see a stable price for the next few years, and then it will at least appreciate relative to inflation.

If you view it as a storehouse of wealth and a place to live, you will do well. It may even surprise you by the time your mortgage is paid off.

james.shafland says

I guess “location, location, location” is just another way of saying “want, need, afford”.

3 Rs..

Requirements
Resposibity
Repayment of obligation

actually it is better than that the APR on 15 year fixed is ~3.9%---thanks for the encouragement!

Yep exactly. There is a way to enjoy your home. Certainly. It's a place to live.

I never expected a large percentage of people that respond here to various comments and questions. To make money in Real estate. I look at things with a different viewpoint. People that sat in their houses. When they had gobs of equity. Without cashing in on that makes me sick.

However. It made a lot of people feel good to just know they had that equity. When there was equity of course.

Now of course its just a place to live. You don't have to shuck your house of course. Just because your in negative equity. Some people hate negative equity. Its a drag on their life when they go to make a house payment. It's not only is it a place to live. They are stuck there as well. Because of negative equity Thats just a note of caution.

Some people transfer. Want to move for various reasons. Hey some people are happy where they are negative equity or not. They don't plan on moving. So negative equity dosen't mean much.

I look at a house as a way of making money. I don't like putting money in a lenders pocket. When I can work out things to my own advantage. Not much of a life when you are sweating your shirt off. Trying to pay a lender back.

If it makes you happy, then do it. You bought an engagement ring and what did you get out of it financially? Nothing but it made you happy, at least for now. If you want to make a monetary decision, prices will drop and wait it out. The only concern could be that we face a currency and banking crisis shortly and then things could get bad. If you can't get a loan, you can't buy a house and then are subject to landlord rents. With inflation and people having difficulty in get financing to buy a home, you could be shut out. It is happening now. To lock in at 4.15 percent and know what your mortgage, aka rent, is going to be can be secure. Plus you get a tax deduction and not from renting. If you plan on starting a family and if you find something that makes you happy, I would go for it. interest rates are only going to go up at some time and the fall in price will offset the rise in rates. If you are not going to move for 20 or 30 years, show me someone that can tell me what the future holds then and I can sell you a bridge in Brooklyn that crosses the East River.

Interesting...I just an article about Harlem housing in the NYT.

http://www.nytimes.com/2011/06/10/nyregion/in-harlem-buildings-reminders-of-a-bubble-and-a-collapse.html?pagewanted=1&_r=1

If it makes you happy, then do it. You bought an engagement ring and what did you get out of it financially? Nothing but it made you happy, at least for now.

No offense, but this borders on terrible advice.

We too are looking for the perfect sized shoe that fits. What we're terrified of is buying prematurely. While we know that we'll have to jump in at some point, the idea is to buy when your closer to the bottom.

All I know is the lower the price is, the faster it can be paid off. I don't care about the monthly payments as much as I do the overall amount owed. A good year, or two affords great opportunity to pay down substantially. If prices come way down, then you might be able to pay off in 5 to 10, or outright.

It's not the time to buy, unless the shoe really fits and you know that you're not going to need a replacement. Being a contractor, I drive and drive and evaluate homes on a daily basis. Our perceptions of value have been seriously skewed. I see homes today that are boxes built like crap and they're still commanding top dollar.

To me, it's all about having something sizable that reflects the value and the lifestyle. About 70% of the homes in California are so overvalued that it's pathetic. Southern California in general is a crumby area. The supply and demand crap along with location, location, location mindset is pathetic. The more you want it, the higher the price will be. Hell, it's as bad as oil and I do agree that location is important. Who wants to live in a bad neighborhood. It's just that the values associated with some of these neighborhoods are unearthly.

I'd rather have something that both physically and visually represents my investment as opposed to something that only has location stamped onto it and looks like shit, or is as small as a dog house. I'll travel for that. It's worth it in the long run, especially if at some point you're going to retire.

My personal search goes on and on. I'm still waiting to see the light at the end of the tunnel. I still haven't found my perfect fitting shoe either. All I know is that saving today, makes tomorrow more affordable and tomorrow will be so inflated that we'll all be lucky to survive, at least until we all adjust and accept the new inflated standards.

What upsets me is that you never own your home 100% even when it's paid for 100%. Don't pay the taxes to "The Fed", which is owned by private banks that got our bailout money and, well, they'll simply take your home from you. THE GOVERNMENT = "THE ROMANS".

My wife and I waited on the side lines for 5 years. We finally bought in december when rates hit 4.00% for a 30 year fixed. We wanted to get our life going as we arnt getting any younger. Sure ideally you time the market and make out like a crook but you might be too old to appreciate it by then. Back when I was 23 and single I splurged my savings on a then brand new model Z06 corvette which was 50 large and I paid cash. Before that I had a 500hp MKIV Supra twin turbo. Every financial expert would have said I was making a huge financial mistake. But guess what I had the time of my life. Picking up hot dates in a brand new yellow 50k car as a 23 year old and driving the wheels off. What other time in my life would I have enjoyed such a car more? When I'm having a mid life crisis and can comfortably afford it? Yea right. I can tell you that as a now 30 something I worry more about the headaches of speeding tickets and simply dont have the same enthusiasam to rock out with my c@@k out. Life jades you and thats a fact. Now I'm more interested in living comfortably then trying to live out some unfulfilled child hood fantasy.

I think buying a house with your new wife/family is much the same way. An adventure you wont quite appreciate as much once you are older. Now that doesnt mean you should put yourself in financial jeapordy but rather to buy something you can afford long term and are perfectly fine with being upside down on. In my case I was paying 1550 a month to live in a lux apt here in socal. That was for 1br/1ba 650 sq ft. Nice place but misserably small. Lived there for three years and couldnt take it anymore. I bought a bit of a fixer in an executive community for 450k after lots of negoition over the cond. All the comps are 600+ but its a buyers market. My mortgage + tax + ins is 2500. But I will now get a big refund thanks to mort interest deduction. So I could lease a 5 series and live in a sardine can or spend the same and live in 4x the space in a good naighborhood. No brainer decision. Not putting my life on hold to time the market perfectly. My house is prolly worth 20k less now as the market gets uglier but who cares I can afford it and my wife and I are many times more comfortable and happier. Sure I could have rented a similar house for about the same money with none of the liabilities but i would also be at the renters whim. Owning means you set the house up exactly how you want it and dont get a notice from the renter that your rent is going up or he wont renew your lease and have to move because he is selling or foreclosed on. Also the best thing about owning a house is hedging inflation on housing costs. With an inflationary policy going back
100 years you can assume rents will go up and your monthly mortgage will be repaid with ever less valuble dollars. If you can afford the payment and love where you live so what if the book value drops another 50 percent. In many areas houses are getting close to or better then equv rents at current rates. Likely we wont see a big move down in houses until rates go up in which case mortgage payments will stay similar. But remember big rates mean big inflation which means eventually your mortgage could cost the same as a night out with your wife. So if you are okay with staying put for a long time and being upside down I still think its perfectly fine time to buy in most areas.

My isn't this a change of pace around here!

I've been clicking on this site off and on for five years, so I had a sense of what was coming when I bought my first house end of summer 07. I was renting the house when the worm turned, and the guys that owned it were stuck over levered and with the loan environment beginning to crumble, I was able to fast forward back to early 00's price (20% off their final listing after sitting on the market all summer). I don't even live in a bubble area, but housing peaked everywhere. Was fortunate enough to "test-drive" the house first as a renter and I knew it and its faults top to bottom. Interest rates dumped from 7.125% down to 5% by 01/01/10, so I re-fi'd. had some friends that worked construction/flooring/carpentry that have needed help, (one rents a BR from me), trade me dirt cheap labor. It is a lot to make the monthly nut but all the intangibles compared to local rents (AFTER MORT INT DEDUCTION) its actually been better dollar-wise then when I was renting the same place(dirt cheap). I'm hedged all ways, because worst case scenario is I move out and rent the place to someone else, and then I rent something cheaper.

Even in the so called "horrid" economic times, everything is still relative, and it is what you make it. Hands down the best financial decision for me to make was to buy, however that is contingent on MID, if that goes away, maybe not as great of an idea. And in my personal opinion/situation, so long as you don't overpay and overstretch your way into something, once you lock into a mortgage, you stop worrying about the price tag of your primary residence. Unless you plan to sell it, or lever against it, you root for further declines to dampen the property tax increases. Or at least, I do,,,,,,,

I have never seen so many try to justify their decisions before in my life. I have followed this list for years now, from the rise to the disaster. I saw both ends coming ahead of time, and although stayed clear of real estate entirely before, during and after I had to view from that early vantage point if the masses would do as predicted. I can see now after all that is in front of their faces few get it which means they never will.

The answer to the why of this fiasco is contained in this statement below, and says everything about the mess most American's are in now for buying into this type of mind-set, "...there is a certain security in owning which is also characteristic of a middle class." How sad to me this all is to watch unfold.

Solver very true. Many of these houses are crap that are not ment to last just like an automobile. But hey it's good for everyone. In many countries Euro-peen. They build houses out of granite. They last for centurys. Handed down generation after generation. The crap here you have to fix and fix. Stuf that was not ment to be used in a house.

Hey if it lasted they couldn't keep burning you. Hey its like the old anti-freeze trick your the insiders you know-others don't. Yet your getting screwed in 3000 other ways.

A European would look at your houses and say I'm not living in that crap it could fall in or a good sized storm could take it out. Very true statment for those of you who travel, ask the people that live in the well build houses.

I agree with the counter-statment on the engagment ring there are ways to come out ahead always. It's not about making others feel good. Like the guy you bought the house or the ring from. It's about being prudent and doing the best you can for you and your''s

Plenty of granite in this country by the way. Don't use any other material. Your children and your childern's childern and their decendants will all have a place to live on their favorite ground. No tornado or any other storm will take it out. The drywall you won't be using will not be rotting and render the house useless. Don't go any other place to find the granite. We have more than enough here. You will create thousands of jobs. Not to mention the people that will have to learn to work in granite. No more mortgages. No more business cycles.

You can make your cars last for 20-25 years also. See the stuff your buying and the stuff they are making your stuff out of is crap to begin with. It just dosen't last. I would love to live in a truly independent country. With a truly happy people. With things that last. So they don't have to go chasing after money. To pay for the crap that just busted, wore out, fell in, stopped working.

They release the next computer chip very slowly. The next model of anything. Don't be stupid. Demand they give you whats going to last to begin with. They probably won't do it of course. Just find someplace else or some other people to work with.

Thanks for all of this discussion. I never expected any. I realize from the preceding responses just how difficult it is for me to write well and think clearly, especially when we all are in different "mindsets".

I am old, retired, had some job my whole life from the 3rd grade delivering news papers, and the same job for the last 40 years, until I retired. Saved 20% each year for retirement, always rented, wasted too much money on silly things, and am now at last "buying in these horrid economic times", but not without economic personal means to afford the purchase. I am finally settling down just as the global economy is falling apart and it is worrisome even when I am well off.

Yet each respondent is of a certain age, in a certain employed circumstance or retired or unemployed, and each is in need of some form of security even if it is feeling secure in not buying a home and not being middle class or living in a stone house. [BTW this building our new condo is in, as I said, is exceptional, solid and well built with prefab concrete between apartments, but not granite alas.] Our security lies in our mindset. If we are not at home there, where?

"This fiasco" of course is us and our sense of "feeling" secure is merely how our minds are set or rather tick. I also have friends living on farms and self sufficient. I could not be secure like they are secure. Many of you said as much by saying "go for it" or " do what you and yours feel is best after doing all of the homework you can do". However, no amount of preparation can eliminate all risk.

I suspect what is true for all of us, is that no matter what our mind set, we are all along for the ride and the seas are rough and getting rougher. Good Luck to you all.

I am renting at least for a while. Even though the banks approved me for 800k mortgage in the bay area, I started a new job a few months ago and given how unstable companies are these days, it makes ZERO sense for me to buy until I have been at the job for at least 4-5 years. Even then, a company can terminate you at the drop of a hat with little severance provided. Plus when you buy, you lose money by dropping thousands in the down payment and closing costs. Just this amount for a new home in the bay area would pay for my apartment or condo rental for at least 2-3 years.

Special K says

We wanted to get our life going as we arnt getting any younger. Sure ideally you time the market and make out like a crook but you might be too old to appreciate it by then

Special K says

who cares I can afford it

Did your realtor told you that?

Special K says

Not putting my life on hold to time the market perfectly

You can rent the same house and not miss anything.

I think you are fine cuz you did yor math. :)

The value of a house lies in whether it puts people where they need to be. Much of the discussion in public automatically defaults to the picture of the suburban/exurban houses, where cheap gas put people where they needed to be, regardless of where they started each morning. The end of cheap gas is the end of the value of those places unless the people are repurposed to match local conditions, or the local conditions change to match the people (or, of course, unless cheap gas is replaced with another cheap transport mode). Most bedroom communities are hard pressed to support themselves on the available skillsets and resources, and there lies much of the fear and confusion of local governments these days. Cities seem stronger because they have more inertial resources to draw upon for now, but unless the suburbs and exurbs manage to repurpose away from cheap gas, the cities will decline also. Any house buying decisions should keep this in mind, and we all have some of the responsibility (response -ability) to be an active part of repurposing our communities and maintaining the interdependencies with other communities as necessary to compensate for coming changes that we can predict with minimal conscious effort.

James, best wishes on your new home. It appears you're in a situation to ride out any market gyrations and enjoy your home. Of course some posters here will insist it's not your home, it's the bank's. Hogwash.
I bought in 2009 for 40% off its previous bubble sale in 2006. Then I spent 100K+ remodeling. I plan to live here until I retire in 13yrs. I hope to sell it then for what I paid, and wouldn't be surprised if its market value dropped 10- 20% first. I suppose it will bother me watching that drop, but I'll just have to enjoy my beautiful home even more.
A note to 'commonsense' who foresaw both sides of the bubble; bully for you, hope you continue to enjoy the sidelines.

I understand. Mr. Shafland. That is true. Not to mention the expertise that is needed. I have seen Granite houses in Wisconson. On the lake mostly. The reason they build those like that is because of the flooding and wind. No insulation to replace. The one shortside is the drywall. Something I can do without being told to . True some places have better granite than others.

It takes an expert to be able to work in that of course. On the seaside cool in the summer and warm in the winter. When the roof is done in granite forget about it. Never has to be replaced. All the outbuilding and guest house-too. Not to mention the swimming pool!! It costs now. However if it became the norm the price would come down.

Too bad there are so many off- topic posts here.
And worse, repo4sale is allowed to moronically try to boost himself.

Once people get over the idea of a house being an investment, it's as easy to justify as buying a car. Many people buy cars every few years and accept the fact that their trade-in is worth thousands of dollars less than they paid. I once bought a three-year-old Saab for about half it's MSRP and by the time I sold it three years later, it had declined $30k from the original price! So if we accept that our mortgage payment is a fixed cost for many years and that at some point, we may have to sell at a minimal gain or even a loss, it's no big stretch to justify the purchase.

Of course, in purely economic terms, it may make more sense to rent for all the well known reasons. But the same can be said for buying a car. Some argue that car ownership is a waste of money and that we should take public transportation or that we should buy a used car and keep it until it dies, etc.. True, but if someone accepts they're going to lose money overall but it's worth the convenience or luxury or whatever, then all is good.

Basically, we are human and we don't live our lives by what is quantitatively best for us, but what makes us happy.

commonsense says

“…there is a certain security in owning which is also characteristic of a middle class.” How sad to me this all is to watch unfold.

The question is,...

who are you without "owning" a home? Are you the same person or not?

This thread is really about justifying attachment to things that are not real IMHO.

@Katy - that is *not* the question here. Are you the 'same person or not' if you gave up all *your* possessions? Or do you post here from a convent or monastery? What physical things are real? What is existential? Is it all a dream? Did you respond the topic?

I've been looking around for a home in San Diego for quite a while now but changed my mind recently after realizing how unsettling not just the whole housing market but the whole economy still is.

Some say the economy has started to stabilize and it is just the housing market that is lacking behind. I love to believe that and would go ahead and buy one if that is indeed the case. But, I'm not too sure about that any more. I think things could very well and very quickly change from bad to worse for all we know.

David Rosenberg, chief economist at Gluskin Sheff & Associates, says there is a 99% chance of another recession by 2012. Speaking on Bloomberg Television's "In the Loop," he also discusses fiscal policy and banking regulation. (Source: Bloomberg)

SEE THE VIDEO HERE: http://www.bloomberg.com/video/70808782/

http://globaleconomicanalysis.blogspot.com/2011/06/rosenberg-says-99-chance-of-another.html

Selected Quotes

Bloomberg: How Certain are you that we may be headed for a recession.

Rosenberg: I think that by 2012, I would give it a 99% chance. I say that because as an economist, you have to be part historian. When you have a manufacturing inventory cycle recession, they are usually separated 5 years apart. But when you have a balance sheet recession, credit contraction, asset deflation (for example residential real estate), the downturn tends to be separated every 2 to 2.5 years. ... Economists call this a soft patch. It's not like this is a soft patch. Basically, when all the stimulus is gone, you get to see what the emperor looks like disrobed. It's not a pretty picture.

No Double Dip

Rosenberg goes on to say it's a second recession, not a "double dip" and more stimulus is coming once the "Fed sees the white eyes of the economy".

Given that there is no incentive in Congress for more stimulus (nor should there be), Bernanke will have a tougher time, this time, unless there is a significant drop in oil and food prices.

SJ says

I am renting at least for a while. Even though the banks approved me for 800k mortgage in the bay area, I started a new job a few months ago and given how unstable companies are these days, it makes ZERO sense for me to buy until I have been at the job for at least 4-5 years.

I'm in my early 30's and have never managed to stay at any job for 4-5 years. In fact, I'm on job No. 7 since I moved here 11 years ago. Its a sign of the times and one that many in my age bracket have come to expect: Long term employment at any one company is more or less a has-been. This first and foremost is another reason I am very hesitant to buy in the Bay Area.

Arnold Layne says

@Katy - that is *not* the question here. Are you the ’same person or not’ if you gave up all *your* possessions? Or do you post here from a convent or monastery? What physical things are real? What is existential? Is it all a dream? Did you respond the topic?

OK wants and needs wants and needs. I'll let my little blurb stand. it was a nudge to think out of the box. A little Zen is needed in times like these IMHO. just trying to help really.

james.shafland says

Is there a prudent way of thinking about buying; buying and still enjoying one’s home even as one knows the market is dropping?

yes for some , no for others, mostly a big ???
It really depends IMO on personal level of wealth today, personal level of risk today, future goals, Location of purchase, what you think you want today, your dreams today. thing is this stuff changes from time to time,.. it doesn't stay the same for us over the years.

what did you want in high school? college? after your wedding?,.. after a divorce? once the kids leave?
we all just want to be happy really,..right?. but we define what makes us happy differently at different times of our lives.

I think we all forget this sometimes.