Post: #26

Trying to predict macroeconomic trends isn't really the best way to make this sort of decision. I would just do a cash flow analysis and figure out how long it's going to take you to get back your initial investment and start earning profit. If you're worried about the market, just run a few different scenarios.

Also, what are you going to do with the house? If you're planning to live in it, then resale value won't mean that much. If it's an investment, even if sale prices drop, the house still has rental value.

Post: #27

(09-06-2013 05:17 PM)el mechanico Wrote:  If hedge funds are buying up the houses that will create the bubble??

Not necessarily. These hedge funds are flush with cash, and with low interest rates they didn't have many options for good yield. So they started buying houses in Vegas and elsewhere, a lot of them foreclosed houses, fixing them up and renting them out and are making 20% yields.

I thought of doing the same a couple years ago, but could never pull the trigger. They bid the houses up and the opportunities are probably gone now.

http://therealdeal.com/issues_articles/h...at-a-time/

Post: #28

I don't know when, but my spider sense says housing will go down again. I think the housing crash brought real estate back where it belongs. Its like my dad questioning why I "throw away" 2k in rent every month. Its not like the past few decades were houses almost always went up in value. The simple answer is Id rather save and buy a nice condo cash money when they come back to earth.

Id be interested in seeing a chart of historical average income to average house price. I think this chart would confirm my beliefs. Recent buying in my opinion was people trying to get in "low". But low is relative. Its only low compared to the ridic 2007 prices.

Post: #29

(09-06-2013 05:41 PM)j r Wrote:  Trying to predict macroeconomic trends isn't really the best way to make this sort of decision. I would just do a cash flow analysis and figure out how long it's going to take you to get back your initial investment and start earning profit. If you're worried about the market, just run a few different scenarios.

Also, what are you going to do with the house? If you're planning to live in it, then resale value won't mean that much. If it's an investment, even if sale prices drop, the house still has rental value.

This. If you want to worry about macro trends and/or make money off them, that's entirely separate from what you should do in relation to your own housing situation. You need a place to live, and as long as you have a way to pay the rent or mortgage, that's what determines your own personal "bubble".

I'm not worried about a crash because I have a fixed mortgage on my residence, and plan to live in it for many years to come. So I don't really care how its market value changes from year to year, as I'm deriving benefit every year from having a place to live. For me, my primary residence is primarily about lifestyle (location, amenities, etc) and not an investment.

I think people are mixing up micro and macro here a bit.