43% of home purchases are all cash
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Anonymous
Who are you addressing? |
Anonymous
Different poster, but I think she/he is addressing global "your". Hint is "nominal dollars", suggesting if US deflation occurs our homes will succumb to below the real value or cost. |
Anonymous
PP here. What I was saying in, even if Fed fails to fend off the next Depression, pretty sure they will manage to maintain the value of everyone's homes, at least in the sense that the number you sell it for will be less than the number you bought it for. What that number represents in real world true value; well that's the Trillion dollar question |
Anonymous
Beware of the poster(s) spewing economics-ish terms. S/he often (exclusively?) uses them incorrectly. Usual topics are QE3, the Fed and bubbles. Someone previously mentioned that this "next" bubble will be investor-driven. They then said it will be more like the tech bubble of 2001 than the recent crisis. This is probably correct. The 2001 recession and this more recent Great Recession are entirely different animals. That latter was credit driven. It looked ready to take down the financial architecture of our country, with truly disastrous consequences. The 2001 bubble was different. Tech companies, unlike banks, are not highly leveraged. And they don't stand at the center of just about all aspects of our lives. So, there is less contagion risk and almost no systemic risk. If the current housing bubble (which, for the record, I don't believe in) is investor-driven, then it follows that the bursting of this bubble will have almost no outsized effects upon the economy. Moreover, the presence of all-cash buyers makes the bursting all the more palatable. There will be no knock-on effects. The house goes underwater and the investor loses his stake. Contrast this with the previous crisis: the house goes under and because it has a mortgage on it that was bundled and sold to other financial companies, the default on the mortgage causes the mortgage-backed-security into which the mortgage was placed to lose money. The holder of the security has to post more collateral, which requires it to sell assets. Rinse and repeat. Complete credit contraction, almost completely stopping all investment (commercial and domestic). The data back up this story. This is, obviously, my opinion, but I am an economist (phd) working in the field. |
Anonymous
Why are so many people in this thread pretending that kids happened to them. They are a CHOICE. It's hilarious all the people who cry poor because their kids eat money for breakfast, lunch, and dinner. 
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Anonymous
Poo reading comprehension. No one is crying that kids "happened" to them. Instead, they're objecting to a childless person telling them how easy it is to save and that this advice remains insightful upon the birth of children. (It wasn't insightful before children and it sure as hell ain't insightful with children.) " "
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Anonymous
Hah, the poster spewing economics term is me. And I'm also the one who said that this current bubble is investor-driven and like the tech bubble. And I agree, it does not pose nearly the same systemic risk to the broader economy, but it does making buying a house a high stakes gamble for most middle-class buyers. I would be curious in what ways you think I am using my terminology wrong (though I do get my real and nominal). Not a PhD Economist by any means (different kind of scientist), but I did recognize the tech bubble and housing bubbles "before it was cool", so I have a little more accuracy than a stopped clock. I am a little skeptical you are a PhD Economist, as most that I know don't go around blaring their horn. Macro/micro? Finance/labor/??? And please don't say you got your PhD from GMU as then we'll have some beef, though they do make *awesome* music videos: https://www.youtube.com/watch?v=d0nERTFo-Sk |
Anonymous
That PP had a number of lucky breaks if they saved up $60k minimum by the time they were 24. Most likely no student loans, not graduating into a recession, I would guess some familial help in at least career planning, career networking, and maybe even seed money and safety net (ie lived at home for a while, which doesn't work as well for grew up in the rural south). |
Anonymous
| So whats the bottom line here - we should all sell before the market crashes? |
Anonymous
Plus combining households as early as 24 saves a lot of money. |
Anonymous
Hah, no timing the market is going to be almost impossible, and we can't predict what the Fed will do, they may continue QEXXX and support asset prices that way. They are already buy MBS, so they could expand their portfolio into more esoteric stuff (what if they started buying REITs in struggling housing markets for example; though I am betting Yellen will do some kind of new deal style job-linked bond purchase from municipals, she is kind of a maverick). But the long and short of it is, if you own, make sure you like where you are for the long term and can afford it even with moderate income shocks. If you buying, buy as modest as you can, or consider keep renting unless you are in it for the very long haul (10+ yrs). |
Anonymous
oh good. we did buy modestly (and sometimes regret it and want to move to a nicer place). but maybe the small mortgage payment is worth it. can't guarantee we will be there 10 years though.... maybe. |
Anonymous
True but at that age most people have roommates so that helps as well; you can live on a lot less as a single person (though I guess sharing a crappy two bedroom with four guys could make it hard to find your match -- and dating is expensive). Go good savings and retirement advice, marry early as you can ;P |
Anonymous
are schools good? what would make you want to move prior to 10 yrs? if its something manageable like making the kids share a room or a little longer commute, that's just life if things go under I guess. |
Anonymous
but i'm not an economist, so maybe we should see what the PhD advises us mortals do 
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