Why did I buy a house in 2006? Am I a complete and total idiot?

Ha! TIPS. Unbelievable if you think those will match inflation or protect you from a currency crisis. They already massage the inflation numbers (down). They will give you all of the TIPS you want. Endless supply and it's based on "their" definition of inflation...as they massage the CPI numbers. I think you meant to say gold/silver/oil and anything else that can't be conjured up out of thin air.

Why Oh Why? wrote:

I gave up on selling it, for a while, but lately I've been meaning to list it again, this time as a buy-owner instead of with an agent. I can ask 6% less without an agent. I'm going to list it in the MLS for a fee of like $300.

By the way, I never mentioned that the HOA fee was $270 when I purchased in '06 and now it's $470!!!! SUX!!!!

1. Remember that you will likely have to pay the buying agent a percentage. Therefore, savings of 6% is a high estimate.

2. Builders always apply for the lowest HOA fee that they can get by the regulating agency, if any, so that the community is more attractive to buyers. This is often unrealistically low. Only once the association members take a closer look at revenue/expenses do they realize this. And by then it's too late.

3. Senior Software Engineer: No need to be pompous about things. Congratulations for being smarter than most people. If individuals such as Timothy Geithner (Treasury) and Thomas M. Stevens (2006 President of National Association of Realtors) had trouble selling their homes after the market peak, then it's expected that regular folk would have trouble comprehending the situation and taking appropriate action.

"No need to be pompous about things. Congratulations for being smarter than most people. If individuals such as Timothy Geithner (Treasury) and Thomas M. Stevens (2006 President of National Association of Realtors) had trouble selling their homes after the market peak, then it's expected that regular folk would have trouble comprehending the situation and taking appropriate action."

I realize that things can get pretty complicated in the world of finance, but with respect to the price of houses, people really should've known better.

When you see the price of a house double and triple within a few years, you should think, "Hmmm, that doesn't seem right - let me do some research before making the biggest purchase of my life."

The masses didn't do that, instead they bought into the, "they aren't making anymore land." - "we've reached a permanently high plateau of prices" - "buy now or be priced out forever!"

People wanted to get rich quick. And they did. Until they didn't.

Yes, the best advice is to live in the home and make good use of your money in terms of consuming the benefits of shelter.

But there's little magic to home buying. Each time I have bought my homes I have refused to buy anything that is more than 3X my income. I assiduously followed this rule in 1995, and am months away from paying off a 15 year mortgage. Am I happy that my home was valued at 800k in 2007, and now is valued at about 650K? No, not really. But then again, I am not losing any sleep over it - debt is a monster, unless ingested in proper doses. And yes, having my home paid for makes retirement in 15 or 20 years a lot easier - what originally those in the mortgage market intended to do rather than speculate in real estate. Too bad the Government is propping the housing market up - it needs to come down so people can make the same rational buying decision I did.

Why Oh Why? wrote:

I put 20% down on a $250,000 house and now it is probably worth $140,000. And I've since married and moved in with my new wife, but I still have this house and now I can't sell it!

Anyone else as dumb as me? I actually let a real estate agent convince me in 2006 that the market wouldn't go down, even when I myself had my doubts.

FWIW: My best friend is a realtor. He has been trying to get me to buy ever since the day I met him, in 2004. According to him, it is always the right time to buy. (He doesn't say "it is always the right time to buy," what I mean is that he will tell you "now is the right time" regardless of when you ask him. He's a good guy--I don't think he's trying to bs me--and he's generally not dumb; I think this delusion must be a prerequesite to getting a real estate license or something (kidding of course, but sometimes I do wonder.)

Senior Software Engineer wrote:

I think you meant to say gold/silver/oil and anything else that can't be conjured up out of thin air.

Amazing that the real estate bubble was so obvious that anyone should have seen it in 2006, but you don't seem to notice the bubble forming in gold.

I never understood the rational that being $500,000 in debt(and growing 7% a year to boot) was a positive thing.

The average Jane would not think of shorting half a million dollars of Ford Motor company in the stockmarket why would she do it in the real estate market, especially if she only had 20 grand in the bank.

The potential loss when shorting a stock is infinite. The potential loss when borrowing to buy a house is the principal amount and/or the home equity. Much less risky.

"You don't seem to notice the bubble forming in gold"

Really? Bubble in gold? If the USA has all of its gold which I highly doubt, it's worth 270 billion dollars. That's like 2 months of federal deficit spending or about what we gave AIG.

This "might" help you understand:

http://en.wikipedia.org/wiki/File:GermanyHyperChart.jpg

http://en.wikipedia.org/wiki/File:Inflaci%C3%B3_utan_1946.jpg

Ashhead wrote:

He's a good guy--I don't think he's trying to bs me--and he's generally not dumb; I think this delusion must be a prerequesite to getting a real estate license or something (kidding of course, but sometimes I do wonder.)

Has nothing to do w/ being delusional. Has everything to do w/ where the real estate agents financial interests lay.

Blowing.Rock Master wrote:

The potential loss when shorting a stock is infinite. The potential loss when borrowing to buy a house is the principal amount and/or the home equity. Much less risky.

and it worked so well in the end didn`t it.

For over 90% of homeowners it's worked out fine. Are you saying you'd rather have an investment with an unlimited loss than one that's limited?

You criticize all the "idiots" out there for not seeing a 100% rise in real estate prices from 1997-2006:

http://yellowroad.wallstreetexaminer.com/blogs/wp-content/uploads/2009/03/case-shiller-chart-updated.png

Then you tell them to buy gold because of your hyperinflation fantasy, even though it has run up 300% in 9 years. There is a bubble in precious metals and your investment advice is about as credible as G. Gordon Liddy's.

"Then you tell them to buy gold because of your hyperinflation fantasy"

I don't understand what part you don't get about quantitative easing and massive deficit spending, but that's why I am doing well and most are not. I understand the big picture, history, and I watch what people/institutions do, not what they say.

In short, what I am saying is: "Wake the hell up and pull your head out of the sand!" It's over for the dollar and if you can't see that, then too bad for you.

If you think Weimar Germany or Peronist Argentina are accurate comparisons to the US, then the "big picture" you see must be a Dali.

So what currency will replace the dollar? The euro? France's debt is 247% of its GDP and Germany's is 189%. Their healthy compared to their Eurozone brothers. The pound? The UK's debt is 427% of their GDP. Or maybe we'll all just walk around with gold coins in our pockets.

I like this site:

www.dollarcollapse.com

"So what currency will replace the dollar?"

So you are basing everything on what can replace the dollar by comparing the dollar to other crappy currencies? So the USA gets an unrestricted out of control printing press with no consequences?

All fiat currencies are going down when priced in commodities...especially gold/silver since that's been real money for 5000 years. Also mandated in the constitution for good reason. Gold/silver has no liability attached to it and can't be conjured up out of thin air at will.

Why is this so hard to understand? Our bailouts, stimulus and deficits are running into the tens of trillions and yet somehow in spite of all that, the dollar will hold value and gold is in a bubble...unbelievable!

I never said the dollar will hold value, but we're one hell of a long way from hyperinflation.

There's also no certainty gold will hedge your dollar bet. The dollar fell 40% 1985-1995, gold went virtually nowhere during that time. What makes you think after a 300% run up gold won't crash like it did in the early 80's when inflation was running 15%?