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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ggamer who wrote (4676)	8/26/2002 12:36:26 PM
From: Tradelite	Respond to of 306849

ggamer.....I'm not a financial advisor, but if you even suspect you might have to sell your house within a year or two, I'd be saving all the cash I can raise in a safe place. The stock market is always a risk, even in the best of times, so if you don't have a lot of money to put into it, the money might be better off in your pocket/money market fund/GNMA fund/savings bonds/consult a financial advisor. If you had to sell quickly for any reason, you will need this cash. Good luck.

To: ggamer who wrote (4676)	8/26/2002 4:28:13 PM
From: deeno	Read Replies (1) \| Respond to of 306849

So it sounds like your trying to hedge $100,000. How about the Enron approach. Get a second on the home, one of those high cost 125% deals. pulling out about $150,000. use this money to buy a place in Texas or other banckrupcy protected state. If you lose your job, let the bank forclose on the property, head out on to Texas, file bankrupt (remember your homsteded!) and get another job. If the job in SF works out ok, the economy must be good, both houses will appreciate, sell the texas one off for a profit and use the proceeds to pay off the high second. Even if you only break even on Texas the costs of the expensive loan would be nothing compared to losing your 20% ;^D

To: ggamer who wrote (4676)	8/26/2002 5:59:27 PM
From: Paul Senior	Read Replies (1) \| Respond to of 306849

ggamer, I am seeing that your concern has several aspects: For the potential drop in your California home price, you might weigh puts on various California home builder stocks. I suspect you already have considered this. (I myself am long such stocks.) For the potential job layoff, you might consider selling short or buying puts on your company's stock. Sometimes, in the past, layoff announcements have propelled the stock up though, so it might be relevant to initiate positions well before this, and hope that the stock declines as the public becomes aware of business difficulties. Still, I can't ever see myself recommending this tactic: Betting against one's company is so...ugly to me. Instead, perhaps consider buying puts against a competitor public company. Since you say you've not a lot of money for shorting and you've no experience with puts, I'm not optimistic for your success in using puts effectively. Especially if we're talking making bets big enough to cover a $100,000 house price decline. (Obviously, jmo, I have no knowledge of anyone's luck, skill, knowledge. And since I don't do puts, my opinion is colored by that.) I've known people who've tried variations on the "Texas technique". Sometimes that has worked out after much pain and time. I don't like such schemes. I'd never counsel anyone to make an investment knowing that one tactic is to seek bankruptcy while sheltering assets from creditor's clutches, or just walking away from a commitment. The only way I've found to "hedge" in this situation (expensive home bought during booming housing market in iffy job market) is to bet on yourself. Protect your job situation by ensuring you have enough education (e.g. an MBA degree to fight off every other MBA) and enough training and enough networking to find comparable paying jobs. You don't say much about your personal life. If this is your first home and you are concerned about home values, your job tenability, etc., well, welcome to the club. Your best course of action might actually be to do nothing and just plod on like the rest of us. We've made it so far, and you will too. If you are a heterosexual single guy, one good hedge for you would be to seek out and marry a woman with a good job! All just my lurker's opinion. I'm no expert in ANY area discussed above (including marriage) Paul Senior, who has been wrong many, many times

To: ggamer who wrote (4676)	8/26/2002 10:01:32 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 306849

I'm not in the real estate business, but I have thought about your question quite a lot. I determined that the best way to hedge expensive BA real estate is to either 1) somehow acquire an office bldg in the bay area (reit or partnership) at 80s prices or 2) buy cheap, otm puts in cisco or another large BA employer. I likely won't do either of these, (they are imperfect, I know)... but the issue is the price of homes is artificially inflated thanks to the 90s internet bubble and appears to be working itself out- slowly, in the meantime you have to live somewhere, so what to do? There's a little too much money at stake to ignore market fluctuations here, imo. I know, a home is more than an investment... but thats if the price is reasonable to begin with. The townhouse that I am buying is very unique with a good size yard and panoramic views of the bay area. panoramic views? That wouldn't be in SF would it? Lizzie