So 14% real housing appreciation = 5% nominal home value decline. Now it makes more sense.

I typed in 1929 to 1940 into an online inflation calculator and got a -18.71% inflation rate…the tax rate also increased to 91% for the upper tax bracket (since the president thought raising taxes increased revenue, lol)

I’ll call bull"chocolate" on that as someone who left WA for Texas and received a 20% increase in salary and 1500 more square feet of house (3500 sf) for the same price that a 1200 square feet "chocolate" box gets here. I’m not a special case either. Salaries in Seattle, especially for IT workers, f–king suck compared to elsewhere!

Doesn’t make me a speculator!

Are you ready for the next leg down?

your point? who suggested it was the bright side? i pointed it out because it was surprising. but I guess you already knew everything. give me a break

Er, and in comparison to other things, e.g. inflation, a loaf of bread, which went up a lot more than that, how does that 14% of 10 years hold up? Methinks it does not prove the suggested bright side when taken in context.

And Alan, even if I was not priced out of the current condo market (even a 1BD apartment convert), I would look at it the same way as you do. I am not that far away with FHA financing and 3% down. In fact, I have had several “well meaning” finance people tell me I actually could “afford” a crackerbox. NOT

I also agree that the dictionary definition of “speculation” is being ignored by Mr. Bill to gain sympathy.

If you cant afford to get in the market you cant be considered a speculator.

Second,

Alan the reason prices are lower in Texas is because jobs in Texas pay a lot less then in WA. Plus the price of land in Texas is very inexpensive. There is so much vacant land there they just keep developing more communities. This non stop development just kills the resell market. In the Puget sound area land is not flat nor is readily available.

Yeah – but before I looked it up, I’d have bet they lost value. and I bet most other posters would have too.

From 70 in 1930 to 80 in 1940 = about 14% in 10 years – not that much

greater context, It’s good you asserting this will be the first global depression, because if I remember correctly, something like that happened in 1930ish.

Interesting to note: home prices seem to have risen during the great depression. who knew that?

My actual appraised value increased by 10.4% (since I just signed the refi docs on Tues).

FYI: I actually put more money down when doing my refi and now saving $300 bucks a month.

Is being risk averse the opposite of speculation?

No. This is a bone-headed debate. How many fairies can dance on the head of a pin? If a tree falls in the forest, and nobody is there to hear it, did it squish a squirrel? If you don’t buy a home, are you speculating?

If you adopt the mentality that not taking action is speculation, then everything that you do is speculation, and the word becomes meaningless. But the definition of the word is clear:

“Engagement in business transactions involving considerable risk but offering the chance of large gains, esp. trading in commodities, stocks, etc., in the hope of profit from changes in the market price.”

Is being risk averse the opposite of speculation?

After all, timing the market by not buying is also a form of speculation.

I don’t know that I disagree with that. I sold my house in 2006, could have bought something immediately – but decided to wait. So I’d say that I am definitely speculating that the market will go down. And I’m fine with that description. I don’t think there’s anything wrong with speculation – you just have to be a big boy if you get it wrong and not ask for a bail out (or welch on your loan).

If you’re priced out, I don’t think you can call it speculation. Hard to speculate when you don’t have any assets. Oops… scratch that. I guess it’s hard NOW to speculate with no assets – now that the zero-LTV loans are gone ;^)

http://tinyurl.com/ynqhnc

Equity is not money until the house is sold. And the sales price is determined by current market conditions. Easy financing increased demand. Supply was fairly stable. Easy financing going away, and ARM purchasers unable to refinance or handle their loan reset will both reduce demand and increase supply. Prices should go down, and so will equity, unless you time the market and sell at the peak.

After all, timing the market by not buying is also a form of speculation.

Oh no…you’re right! Now that I think about it, everything that I don’t do is a form of speculation!

I didn’t buy a lottery ticket last night. D’oh!

I haven’t been to Vegas in a while. Crap!

I haven’t converted all of my money to gold bullion and stuffed it in a Scrooge-McDuck-style vault in which I will be able to swim! Dammit!

Boy howdy…I need to get on top of all of these things that I’m not doing, and fast!

Meshugy said,

on August 9th, 2007 at 8:08 pm

If I invest my extra $1300/mo and get an okay 5% CD return over 10 years, I’d have $200K in cold cash. Hard to believe that investing in my crappy soon-to-be-condo or a SFH will yield that same return.

You never know…if you had bought two years ago you’d have nearly $200K more in equity right now.

I don’t think anyone who bought a low-end, $249k condo conversion like RG gave the specifics on has made $200k in the last two years. 80% appreciation?

today, every nation that uses credit is in the same boat that we are.

I wonder what percentage of the world’s debt is caught up in houses. how does that compare to gross product? how does that compare to Japan 1980?

Or I could have gone to Vegas put my $30k down playment on black 18 and have $1,050,000 right now. Your $200k is looking pretty paltry compared to that.

Now a decent condo is a different matter. That’s being hopefull that will come down harder, faster, and better. If they don’t they don’t. If that is speculation, then it is more like wating for things to revert to the mean, IMO.

Both are different than just waiting for a better deal. I also got my conversion notice last week for my Apt. No way will I buy my apartment and pay 2.5 times the “rent.” No one else in this smallish building is either.

rose-colored-coolaid said,

After all, timing the market by not buying is also a form of speculation.

However, I honestly think my money is no more at risk diversely invested in the market than it would be sunk into a recently purchased house.

You never know…if you had bought two years ago you’d have nearly $200K more in equity right now.

RG said,
As a side note, my 1200 sq ft (2BR/1.5BA/1 car garage) rental in West Seattle is going condo. I pay $1100/mo now to rent, but the purchase price is $294K, which equates to $2500/mo if I take out a 30yr fixed 2nd HELOC 80/20 at 6.625% (that includes taxes and HOA dues).

I think your new building owner will find that he’s arrived very late to the party. even with better appliances.

As a side note, my 1200 sq ft (2BR/1.5BA/1 car garage) rental in West Seattle is going condo. I pay $1100/mo now to rent, but the purchase price is $294K, which equates to $2500/mo if I take out a 30yr fixed 2nd HELOC 80/20 at 6.625% (that includes taxes and HOA dues). Why would I want to pay $1300/mo more to live in basically the same place (they will renovate and put in better appliances and fixtures upon condo conversion)? If I invest my extra $1300/mo and get an okay 5% CD return over 10 years, I’d have $200K in cold cash. Hard to believe that investing in my crappy soon-to-be-condo or a SFH will yield that same return.

King County / Seattle Times and Thurston County / Olympian mentioned in Ben Jones HBB today.

Seeing A Significant Slowdown

Good to see you up in our neck of the woods! I read your blog and enjoy it, but just this week I’m finally down to one stick of Caseyderm gum per day, heh heh!

George got that one right, but in the same breath, the scumbag refused to support taxing carried interest at the income tax rate (as opposed to the current, lower, capital-gains rate).

Consequence? Hedge fund managers make the bulk of their income as interest on the management of other peoples’ money (i.e. “carried” interest). Taxing this as income would force some very rich people to pay taxes at a rate on par with the rest of us working stiffs.

George’s excuse for such blatant pandering to the rich? “It would hurt small business” to tax carried interest as income, because carried interest is a tax tool for limited partnerships. Never mind that the practically the only partnerships who use the tool are hedge-fund managers, and the only reason that they do it is to escape income tax….no…if the law could theoretically apply to one small business, it simply must be bad.

Corrupt, corrupt, corrupt….

Anyone upset about that scenario is likely a speculator, and anyone not upset clearly isn’t (because 0.5% is not an investment). This helps separate people who are speculating from those who just bought recently instead of trying to time the market. After all, timing the market by not buying is also a form of speculation.