As a person that holds a Degree in Economics but refuses to participate in the “spin world” of the current fed administration. I can’t begin to explain how RIGHT ON your statements are. The numbers are so out of whack it’s not funny. Personally I believe if the fed starting doing what it’s supposed to the Economy would crash to earth like a lead balloon. Because of this they’re trying to play the spin game to bring things in line gently. It a big gamble that has a very good chance of failing.

Shadash

Ps. Wonder what happened to M4 data? Hmmm….

The writing is on the wall and BB can’t stop this runaway train. My big question is why are the stock and bond markets telling opposing stories?

It seems the Fed is trying to avert total panic in the markets. Add to that the underlying election coming up. Alot of opposing spin from the so called economist and financial media.

The Fed’s job is to protect the economy, not to protect individual asset prices.

Gee. And I thought the Fed’s main job was to defend the dollar.. My mistake.

“Ps. Wonder what happened to M4 data? Hmmm…. “

Not sure what M4 data is. But I know the M3 Data — all savings of US Dollars went out the window March of 2006. I guess we don’t care if the dollar drops in value, just that we “inflate” ourselves out of our deficit.

“My big question is why are the stock and bond markets telling opposing stories?”

The stock market in the last RE crash during the late 80s to early 90s (roughly 89 to 95) rallied after an initial sell off. The investors went from buying every RE property to selling RE and buying stocks. Unless we have a horrible recession, the stock market should rally even if the housing market crashes. This of course underminds the potential hit on GDP by the loss in consumer spending.

Finally the main stream meia has caught wind of the problem with liar loans! The following clip is a story that was done by CBS in San Francisco on a special called 30 minutes.
Could have gone a little deaper, but this is a great start!!!!

http://cbs5.com/30minutes/loca.....05029.html

guys do you realize that the financial experts at Moodys are forecasting only a 5% drop for Los Angeles and that too through the last quarter of 2008. That’s only going back about 6 months over the next 2 yrs.

Does it make sense to wait that long to realize a 5% gain? By that time interest rates may be quite a bit higher so actually you may end up paying MORE. Take those factors into account.

Moody’s forecast

Why not keep an open mind and realize this may not come down as much as you wish. Reality and what you wish for are two different things

As I’ve said earlier there are many attractively priced condos on the market right now especially from new builders. If you can’t afford SFH, these condos are the best way to get into the market right now.

RE King Pin is sounding like a garden variety realt-whore.

Next stop tunnel bunny status.

Does it make sense to wait that long to realize a 5% gain? By that time interest rates may be quite a bit higher so actually you may end up paying MORE. Take those factors into account.

I’m watching ‘Pending Sales’ at sandiego.houserebate.com and it looks like they have gone to zero for the month of September..

Rents are rising quite substantially. My rent has gone up 10%, it’s ridiculous!

Doesn’t this mean locking in a fixed payment even if it is interest only on a say 7/1 ARM is a good idea? At least your payment will be fixed for the next 7 yrs. while the rents will just keep rising like crazy!

In 7 years I would imagine even with 0 equity you could sell it for what you bought it for? Does this sound like a logical plan?

Right now the Smart30 loan program from Quicken Loans for a $350k condo would be $1,684. Taking tax advantages into account and assuming HOA of $200, and property taxes of $365 (1.25%) the total would be about $1800/mo. which is roughly on par with renting a similar place in this area. Yes, I don’t gain equity unless I pay more but I’m protected from payment fluctuation due to rising rents.

Anon,

You’re definitely not right about your numbers…

I checked quicken loans, and a 350K loan is going to be $1786.46. Plus 1.25% tax (or 1.8% for most areas nowadays with melloroos, but we’ll give you the benefit of the doubt), you’ll add tax of 364.58 per month, and insurance of $40/month (we’re being generous here)…

Next… it’s obvious you’ve never lived in a condo before, because dues are waaaaay more than you’re taking into account. Try $250/month to $400/month. Your before tax cash flow… $2,441.04 to 2,591.04… and that’s not even considering maintenance. After tax, expect to shave off about 25%…federal plus state.

A condo that rents for $1800 is going to be a very large 2+2 or a 3+2, and fairly nice at that. I know a number of people renting sfh’s in OC for that amount, not to mention quite a few nice homes in the IE for those willing to drive a little. For that kind of a condo that you could rent for $1800, the market price is more like $550K, not the $350 variety… I must assume you’re a homeowner who is posing/trolling for response since it’s clear that no condos are listing for that anywhere in the area that we are in… trust us, we know, many have been relegated to renting out of necessity, not choice. Taking the higher price into account, would mean a monthly nut of $3155 to $3305. Hardly worth the $1800/month tradeoff… and that’s not considering the move-in costs of the loan (probably close to $10K, and the realtor fees of moving out)… and it’s no small sum. On the other hand… 7 years is a long time and a lot of things happen between now and then. It might be a good bet, but there’s no guarantee like there was several years ago. It’s likely that in 7 years, prices will be lower than they are now… even considering what Moody’s says.

True, there are many people out there willing to thrown caution to the wind… I say there is a sucker bred every minute. Good luck to them.

john doe, thanks for the response. No I’m not a troll but I’m a bubble sitter for now but running out of patience, nothing seems to be changing at all and literally EVERY person I meet swears it’s not coming down more than 10% or 15% but in 5 years, who knows what to believe anymore!!

The figures from quicken loans was with 10% down. Although I’ve found a few sub 350k condos around here more are coming on the market. example is this: MLS S454535. This one is $369k but I’m assuming a 10% negotiation on the price is still reasonable given the buyers market.

As for the HOA, ZipRealty lists it. For the above property the HOA is only $185 but you’re correct I’ve seen it as high as $350.

It’s just a scenario that I put out there to see if it perhaps makes any sense. Also note that the Smart30 loan is not an Option ARM, it is a 30yr Fixed Rate mortgage with Options.

Equivalent condos in Lake Forest are renting for $1450/month. Check http://www.ocrealestatefinder.com.

It used to be that 350K was a lot of money and could have actually bought a fairly nice house.

Now, don’t get me wrong, that will probably never be like that again, but you could actually buy a small house (with an actual yard) in about 5 years for that price.

On the same token, nobody can talk you out of a purchase but yourself.

As a final thought…Lake Forest is marginal for South OC. It’s a future Panorama City of the county. I would really think twice about buying there… there is one saying that makes sense if you’re going to buy now anyway… you get what you pay for.