Comments on: What to do? What to do? http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html Southern California is Experiencing a Real Estate Bubble like never before Sun, 21 Mar 2010 06:38:41 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Nick http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html/comment-page-1#comment-63057 Nick Tue, 01 Jul 2008 18:21:48 +0000 http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html#comment-63057 I'm very curious to see what you would suggest he do with his cash if he sold. I have a somewhat similar situation (although I'm living in the single property I own), and debated selling about a year ago but decided to hold the property, primarily due to my favorable long-term mortgage and fear of high inflation. Although I stood to make a sizable profit, I would have needed to find and move into a rental, and somehow preserve the value of the cash. Since moving is a pain and I couldn't think of good ways to preserve value in the face of inflation, I decided to hold. If you want to indulge my "pessimistic" (but not worst case) case, use 10% annual inflation and a 50% high-end tax rate in your investment projections. I'm <i>very</i> curious to see what investment(s) you would recommend for 200k cash given that scenario (including taxes), and a comparison to the house value after, say, 20 years (assuming the house is valued at your "value" number, but increases by the inflation percentage every year; eg: 360k is 2,421k after 20 years, assuming 10% annual inflation). I calculate that you'd need a >25% annual rate of return, before taxes, over 20 years on the cash to equal the gain on the house under those circumstances, but I admit I'm not thinking creatively. I'm looking forward to your analysis. I’m very curious to see what you would suggest he do with his cash if he sold. I have a somewhat similar situation (although I’m living in the single property I own), and debated selling about a year ago but decided to hold the property, primarily due to my favorable long-term mortgage and fear of high inflation. Although I stood to make a sizable profit, I would have needed to find and move into a rental, and somehow preserve the value of the cash. Since moving is a pain and I couldn’t think of good ways to preserve value in the face of inflation, I decided to hold.

If you want to indulge my “pessimistic” (but not worst case) case, use 10% annual inflation and a 50% high-end tax rate in your investment projections. I’m very curious to see what investment(s) you would recommend for 200k cash given that scenario (including taxes), and a comparison to the house value after, say, 20 years (assuming the house is valued at your “value” number, but increases by the inflation percentage every year; eg: 360k is 2,421k after 20 years, assuming 10% annual inflation). I calculate that you’d need a >25% annual rate of return, before taxes, over 20 years on the cash to equal the gain on the house under those circumstances, but I admit I’m not thinking creatively. I’m looking forward to your analysis.

]]> By: Chuck Ponzi http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html/comment-page-1#comment-63053 Chuck Ponzi Tue, 01 Jul 2008 15:57:52 +0000 http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html#comment-63053 Thanks, Missed that edit. Chuck Thanks,

Missed that edit.

Chuck

]]> By: Rich Wilson http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html/comment-page-1#comment-63051 Rich Wilson Tue, 01 Jul 2008 14:53:15 +0000 http://www.socalbubble.com/2008/06/what-to-do-what-to-do.html#comment-63051 I think you missed a sentence ending: "I can show houses in Orange County that currently" Great analysis though, thanks! I agree that people underestimate the economic effect of the baby boom moving through the system. Things will not be the same. I think you missed a sentence ending: “I can show houses in Orange County that currently”

Great analysis though, thanks!

I agree that people underestimate the economic effect of the baby boom moving through the system. Things will not be the same.

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