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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (104632)	8/24/2009 10:59:32 PM
From: Skeeter Bug	Read Replies (2) \| Respond to of 110194

>>Home prices did quite well in the rising rate environment of the 1970s<< one caveat is that it all depends on where one is investing. location is everything right now. i'll bet the starting price point relative to incomes in the 70s was about 60% lower than now. you have to know the details. housing is still well above the the "bubble" top in 1989 in many areas of CA. caveat emptor. >>and the gold/commodity bulls got decimated when things turned<< you mean after they made a mint? yes, when things go down, people lose money. but i recall gold being at an all time high in the late 70s - and that was your time frame, right? so people in gold made a mint. btw, i see deflation before the crazy inflation, so i can see gold much lower before it goes much higher. >>but prices kept rising for much of the 1980's.<< prices of what? gold? or houses? since gold went down, i assume you mean housing. housing came down in price as interest rates declined. >>Got to remember if cost of living double and interest rates go up to 10% you will have a corresponding rise in rents, incomes and costs to construct a home.<< i read somewhere that upwards of 90% of one's income in the great depression went for food. if we experience similar, there isn't much left for rent. and nobody will choose to starve to death to make their rent payment. >>If you bought property during this current period and locked in low fixed rate you are going to be sitting in the cat bird seat..<< i own a home and i'm locked for 30 years at 4.75%. i did that on purpose, because longer term, i think the value of the dollar goes to zero (and dollar denominated assets go insane). short to medium term, though, i can see my home taking another 50% haircut after the the 30% haircut it has already taken. then i will be buying two homes for every home you buy now - if you can stay solvent to keep the homes. >>Distressed RE investing<< distressed? prices are about as high as the inflation adjusted bubble prices of 1989. that isn't distressed - that is a long necked turkey the day before thanksgiving! caveat emptor. >>It is quite simple if you know how to do it<< simple like investing in tech stocks in 1999? >>but some hard work and expertise is required to find a house with more instant equity you can monetize if you choose than many people make in a year at their job or waiting for their big stock market payoff that might never come. You really think when we buy a house today for $35k that is worth easy $65k fixed up and rents for $700 if we choose to hold and that would require about $110k to build today even if the land was free we are really concerned with much else but do we sell for a nice profit or put into the long term portfolio with some low fixed rate leverage as the best inflation hedge on the planet?<< it depends on the area. i do have to say you've limited your exposure by purchasing so cheaply. that is smart. it still might not work out well in the end, but you have limited your exposure. >>Most of the risk is out of the equation now (except certain improved commercial and vacant land that I wouldn't touch at almost any price) and I am very happy to be one of the survivors.<< you seem to be approaching this in a smart way, but when the market goes, it can stun you how it moves. expensive turns into 3x expensive. cheap turns into 1/3 what used to be cheap. if you are fixing and flipping, you limit your exposure, too. iow, you won't get caught with 10 homes in a 50% move down.