As soon as I saw this thread, this is exactly what I was going to post...you beat me to it...well played.

 

+1. Can't believe it took that long.

 

$500k in index funds
$100k to play around with in stocks
335xi w/Procede on some HRE C20s (an investment in my happiness)
and the balance to drop a down pay on a condo...

 

i dont understand 1/2 the things you guys are saying, besides 2 chicks at the same time...Peter-man.

 

Now is a horrible time to buy a house. If you bought a house in the Bay Area your monthly carring cost would be double what you could rent it out for.

They may have gone down 100k but they have another 40% to go before they are in line with the historical averages of the Bay Area.

http://bayarearealestatebubble.blogspot.com/

The latest post in that blog explains it in a manner that everyone can understand.

 

my parents bought our house in the mtns in 1998 for $200K and its worth $550K

but city folk are too dumb to realize how nice it is to have your own land, not to mention a kick *** commute.

 

It’s not worth $550k until someone buys it from you. It does have a perceived value of $550k.

 

yeah well thats just going off what offers my neighbors were getting. a year ago...
with crappier houses...on smaller lots...and harder to get to

 

blah blah blah. I was never a big fan of this argument. His house has some value, and it's in the Santa Cruz hills. If people don't offer his parents at least $550k, then obviously they wont sell because they know they can get higher.

 

Ya but prices are going down. I’m just curious to see if people start bragging on the way down. Around here its "I bought at 650k and I’m at 1.25 now." When that unrealized equity is gone no one is going to say "My house was worth 1.25m at one point, but it’s only at 700k now."

The same thing happened with the stock market bubble in the late 90s early 00s. When people were up they wouldn’t shut up about it. Once they realized these companies weren’t actually worth what they were paying for it, they shut it and lost cash. The nice thing about housing is that most of the earning was unrealized value.

Meaning that most people won’t actually lose money, they will sell at a lower price but purchase the next place at a discount as well. Those who are in trouble are the people that bought between 2002 and 2005 in most areas. The people buying now might be getting a perceived discount, but the real "deals" won’t be found until 2012. This is when lending and pricing fundamentals will be back in line with historical norms.

The reality is housing can only maintain growth with income growth. It will ebb and flow with the markets but should never get as out of line as it is now. In the Bay Area we earn enough to maintain a median house price of roughly 350k. Right now we are at 600k median.

If you don’t buy this, go do some research, you will notice that all the data supports my argument (kYLEMtnCRUZr this is not directed at you, just a general statement for everyone’s knowledge).

 

That wasnt an arguement, it was a statement.

Read the above, thats an arguement. My point is, houses arent worth what people currently think they are.

 

If I had a million dollars I probably just got done paying taxes on the 2 million I used to have.

 

+1. I surely cannot wait for the housing market to return to normal. I'm still astonished that it went as high as it did and that ppl actually bought into it. The number of ppl that bought homes they simply could not afford is staggering. I mean you had 2-3 families pooling together just to buy 1 home for the sake of "home ownership". In a traditional market, home ownership makes a ton of sense and in the long run, it is more lucrative, but in the bay area market where housing prices are 9-10x the median income, it simply IS NOT SMART to buy such a home. What happened to the rule of thumb that the purchase price of your home should only be 3-4x your yearly income? You mean to tell me the average bay area family rakes in 150-200k yearly?

 

This thread should have ended at coke and ******.

 

This is what I would do...

1. Purchase a house in Tahoe.
2. Take some time off and travel the world.
3. Put money in a high yield CD and some money in mutual funds.
4. Purchase other investment properties.
5. Max out Roth IRA every year.