March 11, 2007

The result of the "what do you do, what do you make, what do you spend on housing" thread is...

It is liberating and empowering to be debt-free, 100% cashed out of the housing market, fully invested in income-producing accounts, and spending as little as possible on housing and living expenses.

Compare that to people who are spending 50%+ of their take-home pay on housing, living in a rapidly depreciating asset, stuck in a city they might not want to live in, who don't have enough money to enjoy their lives, and are racking up massive credit card debt just so they can look good to the neighbors.

Rejoice HP'ers! Rejoice bitter renters! Rejoice bubble sitters! You figured it out. You hit the jackpot. The decisions you have made to get you to the point you are at today will last a lifetime.


Do what you want to do. Be who you want to be. Go where you want to go.

You are free.


AM Fence Sitter said...

Yup! I have everything I want and don’t buy what I don’t need. AAH! It’s so nice to have sold at the top and pay rent with the interest from the proceeds. I am so happy and proud to be a second-class citizen renter.

I have a difficult time containing myself when I tell people I rent and they give me that drawn down face look. To steal a line from the Marines: It’s so damn Hard To Be Humble..

Keith Thanks for HP! I truly love this place..

Frank said...

It must be terrible to be stuck in a city. I never quite loved where I am now and am moving in about 36 hours. I'm very happy I didn't buy or I'd be stuck here instead of moving to a more beautiful area.

Anonymous said...

It's beautiful. I wish others could experience what we do

Anonymous said...

I am loving my bitter renter lifestyle. San Francisco is wildly overpriced to try to buy, but has great (though not cheap) rentals and highly protective rent control laws. I live downtown in a cool apt, don't need a car, and have fun things to do at my doorstep. I also have no debt and saved well over half my income last year...

Once the credit bubble explodes, home values drop, and the thousands of new condos under construction here are finished (two or three years?) I will think about buying. Or maybe not!

Can I also say that HousingPanic, you are a genius and you called this thing from way back... This week's shake up in lending has been stunning and is surely a sign of the major home price drops to follow.

foxwoodlief said...

More of the "one shoe fits all" attitude. Not everyone is in debt, owes more on their home than their mortgage (many own them outright), have mortgage payments that are tax deductable with payments lower than to rent a place half the size. Many of us also debt free, no car payments, no kids, no student loans, 401K, pensions, inherited wealth, the list goes on.

Also not every place is California, Florida, New York or other extremely unaffordable places to buy a home today. Many places you can still buy within the historic mean and if you plan on living there for some time makes perfect sense to own rather than rent.

Also, I am still waiting for the bubble to pop. I still don't see it inspite of what "selective" facts are posted here. Now that I am back in Phoenix and totally agree prices are 30-40% too high I haven't found a single home seller willing to "return to the mean" to sell. Also builders are not giving massive incentives except on the outer fringes and where they can still make a profit returning to the mean for those areas and the time they bought the land (pre-bubble). The rest of metro area of Phoenix refuses to lower their prices by more than 5% and many of those discounts is still making money for their sellers.

Stop the hype, get real, and show the money. Where is the crash?

Anonymous said...

Living a simple life I can afford, which for me includes no debt at this point in my life, is truly a great feeling. No stress worrying about a mortgage I may never be able to pay back.

I'll buy a home in the future but not at the current prices.

I like to travel, be mobile and not tied to some day to day grind just to pay most of my income on a mortgage. Way to stressful. Way to much good stuff to do than worry about a mortgage.

Anonymous said...

i am free iam freeeeeeeeeee !
no banks calling
no lost late payments
no home insurance
no condo fees
no maintainance

i truly am freeeeeeeeeeeeee!
ah the air is good

Anonymous said...

Free, but surrounded by a bunch of screwed people who are going to send the crime rate through the roof.

Anonymous said...

Got an interest only loan, Before you know your house is gone
Don’t Worry Be Happy

Da Masta Card and Visa late, You try to negotiate
Don’t Worry Be Happy


All of Da payments due OOH OOH OOH

They come and take my Hummer Away, I guess I have to walk today
Don’t Worry Be Happy

There’s Chapter eleven 13 too! The laws have changed for me and you
Don’t Worry Be Happy


All of Da payments due OOH OOH OOH

Frank said...

My new rented (GASP!) home in Newport Beach CA:

Bought by owner/investor for $1.2M. Listed for rent for $3,950. Owner immediately lowered to $3,750 when I called to inquire. He agreed to $3,500 in return for my pre-paying the full years' rent in advance. And to top that loss he went through a realtor/MLS and is paying commission on the lease.

The house is now coming up in Zillow at $700k!!!!

Owner/investor plans to hold for the long haul as he believes prices are going to spring right back up soon. The reality is it will soon be at $500k when the 2007 foreclosure bloodbath slams So Cal. That's when I'll buy.

The kicker is that I looked at the same model (but much less upgraded) house up the street a week earlier that was listed for rent but the owners decided to try to sell it instead. They are firm at $1.2M (LOL!!!) and continue to waste their weekends having open house after open house week after week. They gave me a lot of attitude about the fact that I was looking to rent and not buy (the usual 2nd-class-citizen treatment) so I plan to walk over every weekend and say "Sold it yet? Oh ... too bad!!!"

It's good to be renting right now, and I really don't care that every ego-maniacal homedebtor thinks I'm some kind of common criminal for not "owning."

Anonymous said...

As the song goes ...

I was debt freee ...
when debt free wasn't cool.

It's a tough ride but I love my SWAN lifestyle. Our debt free ways means we can't afford an overpriced home despite a combined incomed of 150k yearly.

I wish I could live somewhere out of South Florida but I love my family and living near my elderly mother is worth the struggle. Besides, the rental is great and my kids are in excellent schools.

Keeping it local, the market in my immediate area did not "pop" it has been rapidly deflating. I am seeing 200K price drop in homes that were being fought over a year ago. And each week I see a new low in the market. Still way overpriced.

Florida, being the capital of idiots non-sevant, is now considering eliminating the property taxes and in turn raising retail tax to the highest in the land. As if all of a sudden all those homeowners are going to give up the dream of earning 200% on their home. Or, that all of a sudden this will mean everyone will get a raise or something and will be able to afford the existing 500K home even without the taxes! Only thing it means is we won't be able to afford the houses and we won't be able to afford living here. What a bunch of maroons!

It's like the fantasy that if we get rid of all the Mexican illegal aliens, the insurance companies, hospitals and caregivers are all going to cut us a break on our premiums. Right.

one-room-trailer said...

Well, yeah, it's nice to be free and all that, but i have a major probalem now that I've cashed out - where the heck do I hang my art collection???

Butch said...

I wouldn't do that end-zone dance just yet.

Let us not forget that we "JBRs" (Jealous Bitter Renters) are still trapped within the financial system that created this mess.

That money-market fund you thought was safe?

It's probably invested in Fannie Mae MBS.

Your bank?

Don't make me laugh. Your bank has less than 1% reserves to back all the loans--many to deadbeat homedebtors--that are outstanding.

Not to mention that the entire financial system is subject to systemic lock up thanks to hedge fund leverage, $400+ trillion in derivative positions, and investment bank exposure to the $10 trillion mortgage market.

And of course, the government is going to be looking at YOUR funds, YOUR gold, YOUR 401(k)/IRA/mutual fund, YOUR paycheck to fund the inevitable bail out of all the imprudent, deadbeat borrowers and their greedy, bankrupt lenders.

So, good luck to any JBR who believes they are just gonna kick back, fire up some popcorn and enjoy this show. Sorry, but you are gonna be dragged into this tragedy, like it or not...

Egyptian Real estate Agent said...

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Ahmed Anies
Egyptian Real estate Agent

Egyptian Real Estate BLOGGER
Phone: (002)+ 016 1334420

tmaioli said...

When the guys at work found out I was debt free they cold not believe it, I swore I was and they thought it was impossible to be debt free. It's not folks - IT CAN BE DONE - I don't need to impress with the car or clothes or anything. If I'm a geek, I'm a debt free geek.

Anonymous said...

Use your savings to buy 2008/2009 puts on the builders.

You will easily get a 250%-300% return.

Starting in late 2008, early 2009 as the builders start filing for bankrupcy. Use that money to purchase a brand new unsold home for pennies on the dollar, when their assets are auctioned.

Anonymous said...

Foxwoodlief, the problem is that the Boston-to-DC corridor and the Cali bubble zone are roughly half the nation's white collar workplace.

So in the sense, it's not like everyone works in Indianapolis, Dayton, or Omaha where the differential between owning and renting makes sense.

About half the nation's prudent buyers will be waiting a decade for the coastal bubbles to recede before jumping in. In the meanwhile, renting is the way to go.

Anonymous said...

YuK! I feel sorry for anyone forced to live in Phoenix. It is like the oC, with dirtier air, too hot, no beach and hicks.

Anonymous said...

I have no debt but wish I had bought a nice house about 6 years ago. For so many years I could not save enough to keep up with the appreciation, its nice to see it level off for awhile, so I can catch up a little bit.

Anonymous said...

It's going to get worse.

There is an article which will appear on many financial news sites about China diversifying out of dollars.

This means the fed will have to raise interest rates to get foreigners to buy treasury bonds and get better returns than other available investments.

This is just one more nail in the coffin of the American economy. Soft landing my ass. Hard landing my ass. It's going to be a crash landing. No bottom yet in sight.

Anonymous said...

Sold at the top, moved to india, put away lots of gold and silver bar, travel at leisure, settled in relaxed and enjoy watching the show unfold. Keith, your site rules!

TM said...

I wouldn't exactly say I'm loving the bitter renter life. I like the freedom and the comparatively low cost (in SoCal), but I sure would like to own my own home in the future (a sanely priced home, that is).

Crappy thing about the housing shake-up is that it is affecting the equity and bond markets, too. So, even though I'm not in the housing market, its meltdown will likely make itself felt in my other investments.

On the bright side, I did not have to sink myself into debt to make my investments, so I don't need to "service" them, and can ride them out.

Anonymous said...

REJOICE! I am a homedebtor making 100k who bought a pre-bubble 227k SoCal home, never refied, or HELOCd or traded up! I can afford to take my family to Hawaii in March! My brother in law makes 40k and bought a 400k home so he wont be going! REJOICE!

bozonian said...

Lets be conservative and estimate the current value of the average Los Angeles house is 500,000 (see )

Let's guess there are 1,000,000 houses in Los Angeles.

Let's assume a 50% loss of value before the crash is finished. That would be 250,000 per house.

250,000 times 1,000,000 is 250,000,000,000 or 250 Trillion Dollars of value lost.

Does anyone have any idea what the loss of that much value does to a nation's economy?

And keep in mind, this is just Los Angeles. The outlooks for San Franciso and New York are probably much worse.

Any questions?

TM said...

Oh, but I forgot to mention, don't think for a moment that the rest of us won't be saddled with the macroeconomic costs incurred by this financial Dance of the Dipshits.

Remember, homedebtors are victims, Banks are too valuable to allow to go under, and it will somehow be nobody's fault that crappy mortgage-backed securities found their way into conservative funds and retirement pools.

bozonian said...

Oops. 250 billion. Sorry, I lost track of zeros. Well you try it then.

Joey Wadd said...

Also not every place is California, Florida, New York or other extremely unaffordable places to buy a home today. Many places you can still buy within the historic mean and if you plan on living there for some time makes perfect sense to own rather than rent.

Sure, you can live cheap... in some fly-over Red State(tm) hell.

California sucks, please do not come here. You would not like it. You wouldn't like Oregon or Washington either.

keith said...

I wonder if there's a blog for in-over-their-heads homedebtors who spend more than they make and are saddled with a crushing ARM mortgage

Anonymous said...

Keith Said...

"I wonder if there's a blog for in-over-their-heads homedebtors who spend more than they make and are saddled with a crushing ARM mortgage"

sure...kind of...It's called the MLS.

Mort said...

joe wadd sed:

California sucks, please do not come here. You would not like it. You wouldn't like Oregon or Washington either.

No duh, like tell us something we don't know already dude. Idiot.

Anonymous said...

Where should we put our money now?

Small Hat

FlyingMonkeyWarrior said...

Where should we put our money now?

Small Hat
Into Swiss Franks and under your matress. te he

DM-1976 said...

I bought my house just before the boom started and paid 160k. It peaked at about 440-460k and is now about 390-410k. Am I worried about my 130k mortgage at 6% fixed? Not one bit. Is it better for me to be a renter? Nope; I can't rent a place this nice for what I pay. Although cutting almost an acre of grass is starting to get old... I can live with that.

The only CC debt that I have is at 0% intrest and any time I use a CC that's not interest free I pay it off when the bill comes.

You'd be surprised how many people are out there that are not in any trouble at all due to the bubble. Somewhere around 30% of the houses out there are owned free and clear. Then there are a good number that are like me with a sensible mortgage and plenty of equity.

There are going to be people that loose everything, but most of us home owners will be fine.

This whole bubble thing reminds me of a great quote. I can't remember who said it, and it referres to the stock market, but I think it applies. "Bears can make money, Bulls can make money, but Pigs get slaughtered" If you were a pig and used up all your equity or you bought that McMansion to make up for your little package then you're a pig and are likely headed for slaughter.


SeattleMoose said...

The survey confirmed that the average HP'er is educated, well-off, and market savvy.

Whereas the typical RE "professional" is......

Anonymous said...

One reason housing prices blew thru the roof is the cheap money the goverment cranked out enabled tax cheats drugdealers flakes and other assorted scum to buy a house with nothing down and a no doc loans thereby pushing the price up for the real american working class and their children ,forclousure coming great

Anonymous said...

...and something interesting from Susan Bies who is a Federal Reserve governor.

SeattleMoose said...

Butch said..."So, good luck to any JBR who believes they are just gonna kick back, fire up some popcorn and enjoy this show. Sorry, but you are gonna be dragged into this tragedy, like it or not..." are 100% correct. I get sick to my stomach just imagining president Hillary saying "we are all in this together" and "help your fellow man". The artificially imposed sense of "community" will be imposed on us as a sick type of Robin Hood pathos.

Those who are financially prudent and who have conservatively lived their lives will be "robbed" to save all the: infestors, dimwits, crooks, FBs, GFs, etc.

While those at the top (FED and financial "elite") will get away scott free. They almost always do.

I say start "redistributing wealth" from the top down as it is our so-called "leaders" who got us into this mess. I'll bet that flabby-lipped GreenSpan has a nice nest egg. In the name of accountability let's start with him and work our way down (Cheney's wealth has increased by an order of magnitude since taking office).

This country would be completely different if the results of "leadership failure" came with the job. It is a pretty nice gig if when you do well your bank account swells but if you do bad....someone else (us) pays for it.

Where is the oversight and regulation that allowed the most massive mortgage fraud in the history of the U.S.? We have all these so-called "regulatory agencies". There should be a massive firing of the agency leadership across the board...but all I hear is our "leaders" giving cya service to locking the gate after the horses left the barn years ago. Where is the outrage and media storm?

It is now time to play....punish the innocent and absolve the guilty.

Anonymous said...

kept refusing to go into debt, and was outbid for ownership, by borrowers, at every attempt, who borrowed my money, that was "eaRNING LESS THAN ADMITTED INFLATION every year, and the borrowers now want, or need 100"s of percents of profits, tax free for the same years, admitted inflation was 3%, and now i hardly can fathom the taxes or rents on their "new" appraisals and assessments, or afford to buy, what i lent them

Anonymous said...

never play cards with someone using funny money

showmenouns said...

As a renter I shouldn't even put a nail in the wall without permission.

But today I did, and the police didn't break down the door.

I pay about half of what I would if I owned this small apartment, in a very nice area in Milford Ct. Glad I'm saving 1150 per month (plus homeowners association fees).

showmenouns, I'm very impressed by one's list of belongings, especially if they're bought on credit.

hahaha said...

Let's see how much SoCal RE is worth in 10 years when it looks like Mexico City. Have fun living next to the 18th Street Gang and MS-13 when the next race riots start. They're just hard working immigrants coming here for a better life. What right do we have to keep them out?

Anonymous said...

South Orange County, California. The land of the overfed white male whose day consists of cutting of minorities on the roads and not stopping for no one. Too bad if you are a on the road when he is on the road. God help you.

Crazy ass Aisan Drivers in Irvine, California. God, they scare me to death the way they drive.

White trach Newport Beach punks in their fast cars, loose plastic women (great breasts, though), the same tight capri pants, gold toe rings, same crappy sunglases. Lots of injections, too. Love them.

And there are the sweet as end time loving Christians who are just plain wierd. Ever go to Foothill Ranch on a weekend night. It is like in the twilight zone. Frustrated tight-assed Jesus Freaks looking for rough house with the Satanic Buddhists. Megachurches abound, the freaks are everywhere.

Everyone just loves Israel and hopes Israel bumbs the crap out of Iran. Jesus will return soon after that.

Paul Crouch, Benny Hinn... they are good people.

Orange County is a backward cousin of Los Angeles. LA sucks as well. Nothing to do in Orange County. Malls everywhere, the kids the lost and freaking out. You wonder why the drug use is so high in OC. I am surprised Meth is not more of a problem. I am glad it is not.

Orange County is crappy. Pick up a copy of the leatest luxo magazine and see the beautiful people of Orange County where their luxury goods. You'll throw up immediately.