House-hunting 3.0

[changm55]

Well at this point... if chinas economy goes belly up they can emulate us and devalue its currency (oh the lord america will be jumping for joy if they even allowed the rmb to float let alone devalue it) like put their printing press on high gear QEX style... but i doubt that will happen... if they go belly up, they still have a surplus to squander first... i mean, just cause if we go belly up we drag the entire world along with it, doesnt mean we can look at others and be like, hey if THEY go belly up whats gonna happen?... at this point chances are, we will go belly up faster (we are accumulating way more debt faster then we can print money)

if china or europe or whatevers decides to fuck opec and start trading oil without using the USD, we are auto-doomed... we take this threat VERY seriously... just look at the few recent countries that tried to do that... we invaded them all (besides iran and north korea that is) and they werent even significant in the international market... if just ONE significant country does it and we allow it albeit not willingly, just watch how fast our USA stocks will tumble... gauranteed

For a $1 million house that rents for $4k, after paying:

Property taxes
Mello Roos
Maintenance
Property Management
Insurance

I'm calculating less than a 1.5% cap rate.  Wouldn't it be smarter to park your money in a CD?

Well in Asia, people buy homes for the appreciation, and not the cash flow.  ..I like Momos chart.  It's a pretty clear indication why Asian FCB's prefer to buy property in the US than their home countries.  According to the chart $1,852,000 apartment can only rent for $2,266 in Taipei.

And since Irvine is just an extension of Taipei...Does rental parity matter?

I would argue that appreciation will be limited with such a low cap rate.  Other areas of OC crashed harder and have more ground to make up, plus the ability to cover your costs with cashflow.  I guess as long as FCB's have money to blow, the greater fool theory still holds true, but what happens when the Chinese economy goes belly up?

 

[irvinehomeowner]

Are there even CDs that give you 1.5%?

i think they are like 15 year CDs

15 years... I think money in real estate might appreciate more than 1.5% in 15 years... that's only about $25k on $100k.

 

[Liar Loan]

Are there even CDs that give you 1.5%?

i think they are like 15 year CDs

15 years... I think money in real estate might appreciate more than 1.5% in 15 years... that's only about $25k on $100k.

I was just using a little hyperbole comparing Irvine rental yields with CD rates (near zero).  When thought of that way, it's easy to see just how ludicrous investing in Irvine real estate is.  Of course, what we are really talking about isn't investment, is it?

Strangely, Larry has another timely post regarding something we discussed on TI.

What?s the difference between speculation and investment?http://ochousingnews.com/news/whats-the-difference-between-speculation-and-investment

 

[momopi]

Cash-flow investors and cash investors are not the same.  A cash-flow investor is more likely to put 20%-50% down on an investment property, finance the rest, and make positive cash flow from rent checks every month.  A cash investor will buy the property with all cash, and is almost certain to have positive returns (however small it may be) from rent check because there is no mortgage payment.

 

[irvinehomeowner]

In the past, savers were punished... but in the future the savers will be rewarded. The dollar is strengthening and this will catch many off guard.

And the Dow won't hit 13k. Wait... it's at 14k.

Just clowning on ya' Panda!

 

[LAtoOC]

Savers are punished as long as inflation >> rates on FDIC accounts.

Fed wants people to invest in risky assets and reflate the bubble. It looks like they are finally winning.

 

[changm55]

please tell me ur reasoning behind the dollar strengthening

im just curious particularly with QEX... only way for the dollar to strengthen is having all other countries onboard with japan and brazil in printing mass money

if u mean "temporarily" or seasonal strengthen, ok sure... but long term im probably gonna be bearish on the dollar... my reasoning being... hmm... just for perspective, 2 months in QEX we already printed more money then the entire sequestration 70b dollar amount... so i truly believe this IS our govs solution to our trade and fiscal deficit... cause the more money we print the less we owe and the better our exports look price wise in the international market... but the more money we print, the higher real estate prices will go since most of the inflation seems to be transfering to real estate, and not commodities... (but then again, who knows... it just sucks mainstream/gov reported inflation indexes dont include real estate, so we will never truly know how much QEX is devaluing the dollar...)

If you can borrow $2million from the bank fixed at 4 % for 30 years and you have $2 million in cash, there soon will be an environment where you can safely yield 4% or higher.

In the past, savers were punished... but in the future the savers will be rewarded. The dollar is strengthening and this will catch many off guard.

 

[panda]

If i look the history of the dollar

1985 - dollar index 160 - Reagon's Plaza Accord
from 1995 - 2001  was Robert Rubini 's Strong dollar policy. In 1995 the dollar bottomed at 80 and rallied 50% to 121.29 in 2001. From 2001 - 2008, the dollar plummeted to 70.

World Chaos, I like to think differently from the herd and the herd thinks the QE infinity will take gold to $5000/ounce and dollar will be worthless. My track record has been very good in the Forex market. Long as i can predict the USD direction accurately most of the time, I can predict the other FOREX currencies with moderate success. It is a good time to go long on the Japanese Yen. 

If this is a real rate reversal of 33 years, I predict that the dollar strengthen. If there is a correction in the DOW of 10-15% from current levels the dollar will strengthen. I am watching the gold support at $1520. Once this breaks .... it is game over.

 

[changm55]

well i sure hope so... a strong dollar would do everybody a lot of good... maybe i wouldnt have to feel like im always a cheapass and on a budget again when traveling...

u think this reversal is gonna happen soon? or probably have to wait till the next administration?

 

[daedalus]

It is a good time to go long on the Japanese Yen. 

Maybe if your pocket is currently full of Cypriot Euros.  Is that a trade or an investment?  Japan has many of the same problems as the US, but more severely so--debt, lack of growth, demographics, etc.  I recently threw some of my lottery ticket money into YCS.  We'll see what happens.  They will hit the wall at some point and seem to be running out of lifelines.  I appreciate being a contrarian, but at some point you're just playing russian roulette against fundamentals.

 

[panda]

YCS - double shorting yen now? Yikes!..... 

Good luck, and may the force be with you.

It is a good time to go long on the Japanese Yen. 

Maybe if your pocket is currently full of Cypriot Euros.  Is that a trade or an investment?  Japan has many of the same problems as the US, but more severely so--debt, lack of growth, demographics, etc.  I recently threw some of my lottery ticket money into YCS.  We'll see what happens.  They will hit the wall at some point and seem to be running out of lifelines.  I appreciate being a contrarian, but at some point you're just playing russian roulette against fundamentals.

 

[panda]

World Chaos... the master of bonds, Bill Gross took a huge bet on shorting bonds back in June 2011. Even this newport beach billionaire bond king has his timing wrong... so did Jim Rogers. No one knows.. but the rates have only one way to go now.

I am under the opinion that rates will rise and not stay flat like this like Japan. The way i am taking advantage of this is taking as much loan from the bank as i possible can. Long as the rates rise moderately, I plan to borrow as much as $2 million from the bank fixed for 30 years. Hopefully in 30 years.. I will look back and be happy with my decision.

well i sure hope so... a strong dollar would do everybody a lot of good... maybe i wouldnt have to feel like im always a cheapass and on a budget again when traveling...

u think this reversal is gonna happen soon? or probably have to wait till the next administration?

 

[jayl23]

It is a good time to go long on the Japanese Yen. 

Maybe if your pocket is currently full of Cypriot Euros.  Is that a trade or an investment?  Japan has many of the same problems as the US, but more severely so--debt, lack of growth, demographics, etc.  I recently threw some of my lottery ticket money into YCS.  We'll see what happens.  They will hit the wall at some point and seem to be running out of lifelines.  I appreciate being a contrarian, but at some point you're just playing russian roulette against fundamentals.

I tend to agree with the notion that Japan is a big "bug looking for a windshield".
Of course, as with everything in life, timing is the key.

 

[socal78]

So, here all the economy talk is -- inside this housing search thread?? I was looking for you guys in the Economy & Finance section.

If anyone wants to join my N. Korea discussion and its impact on U.S. economy, please visit the thread here: N. Korea "delcares" War on South

 

[daedalus]

Every now and then the guy above doesn't have to wait too long after taking up residence on the street corner. 

http://www.reuters.com/article/2013/04/04/usa-markets-japanoptions-idUSL2N0CR1Q220130404?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews&rpc=43