Here's how one screwed Miami condo investor thinks he's gonna break even on his depreciating debt-trap.

It's gotta suck for millions of investors around the country (and around the world) who bought debt-traps that only rent out for a fraction of what it costs to "own".

Negative cash flow on a depreciating condo or house is the worst of both worlds.

I liked this spreadsheet though. Oh, the optimism. Yup, the price is gonna go up, not down. Yup, rental income is going to ABSOLUTELY SOAR. And no, expenses won't increase - not at all!

Amazing. And sad.

Too bad this poor sap didn't do a spreadsheet BEFORE he bought his debt-trap. Too bad millions didn't bother doing a spreadsheet before they took out toxic loans or listened to realtors on commission.

And too bad that just because you put numbers on a spreadsheet doesn't make them true.

HP favorite target "Third Avenue Lofts" in Scottsdale Arizona now going for more than half off

HP'ers recognize this complex as one of the most obvious bubble-crazed towers of stupidity in Phoenix. So check out this firesale: Here's a 1000 square foot unit that old in bubble-madness 2006 for $895,000, now (trying to go for) only $395,000. And yet likely STILL overpriced based on its P/E ratio. Good god what fool (or fraudster) paid $895,000 just a few months ago? Someone without a calculator (or a realtor) most likely.

And how about those "21 reasons" again? HP has the one reason that really mattered: It's the P/E stupid. It will always be the P/E stupid. Not the pro athletes. Not the golf. It's the P/E stupid.

Here's what I wrote in October 2007 after doing the math, which might have seemed nuts to realtor-believers at the time:

"Seriously, these hilariously overpriced bubblerific units will see drops of 50% to 70% when all is said and done. Just do the math. It's the P/E stupid. It'll always be the P/E stupid."

And now, of course, it's happened.

I'd love to see the (lazy and REIC-ad-supported) Arizona Republic, maybe even Rolodex-of-Realtors Catherine Reagor, do a piece on the foreclosure madness at the Third Avenue Lofts. Every unit would no doubt have story - mortgage fraudsters, failed flippers, Scottsdale posers, cash-back-at-close con artists, realtor investors, and some pretty dumb sheeple who bought at the peak without any regard to the fundamentals.

$395000 LESS THAN 1/2 PRICE - LUXURY SCOTTSDALE, AZ CONDO

A FORECLOSURE STEAL!!! $455,000 PRICE REDUCTION FROM ORIGINAL PURCHASE PRICE OF $850,000 IN 2006 FOR QUICK SALE! QUALITY UPSCALE, MODERN, 1 BEDROOM (1072 TSF) EXECUTIVE LOFT WITH 24-HOUR SECURITY, FULL-SERVICE CONCIERGE, UNDERGROUND/GATED PARKING AND MANY FINE AMENITIES

And then the sheeple started to figure it out - they would have been MUCH better off renting

Bubble Sitters and Bitter Renters rejoice. When the world was going mad, and listening to realtors on commission and their lies, you ran the numbers, you did your research, you found places like HP, and you did the right thing.

And you avoided the biggest financial mistake of your lives as home prices plummet and the costs of home 'ownership' are now not just your mortgage payment and fees, but the devastating leveraged monthly price declines in the thousands or tens of thousands.

There will come a time when "owning" will be the right thing to do again. It could be a year from now, it could be ten years from now, we just don't know.

How will you know? Because it'll be cheaper to own than rent. Because the historical price-to-income and price-to-rental-yield ratios will return. Because you could buy a place and rent it out for positive cash flow. Because people will be disgusted with real estate. And because lying realtors on commission will be back to flipping burgers or turning tricks.

Those who rent instead of own look smarter these days - no worries about falling prices, maintenance costs

There was a time when it was simpler. That is, when it cost less to own than to rent. Ten years ago, according to Moody's Economy.com, the average annual cost of owning a home - including mortgages, taxes and maintenance costs - was $10,231 nationally, compared with $13,090 for renting.

Then things changed. Owning became more expensive than renting in the first quarter of 2004, and that trend has persisted. In the second quarter of this year, nationwide, the average annual cost of owning a home was $17,707, compared with $15,721 for renting.

"In the last four years, rent became a four-letter word. No one wanted to rent. They looked down upon it . . ." said Larson. "I think a lot of people just assumed buying makes sense. They drank the Kool-Aid and unfortunately are finding themselves now in a tough spot."

"I just saw a lot of people around me buying things that were risky," said Raneri, who recently signed another one-year lease for a rental in Baltimore. "I just don't think it's a wise idea to be buying something when you can get it for $100,000 or $200,000 less two years later."

Article: "Now That Housing Has Soured, Renters Are Glad They Didn't Buy". Yup. Damn right. It's the P/E stupid. It's always the P/E.

Fact: It's significantly cheaper to rent than "buy" today.

Fact: Renters today don't face the risk of massive asset price depreciation.

Fact: The housing crash won't be over until it's cheaper to "own" than rent again.

With the housing-market slowdown, tightening mortgage-lending standards and rising home foreclosures, renters are more easily answering the question: "Why rent when you can own?" Such a question was common during the housing boom, when homeowners, happy with the gains their homes were making -- at least on paper -- would urge non-property-owner friends to join the party.

..Home buyers who bought at the top of the market can find themselves with high mortgage payments for an asset that has lost much of its value. With the housing market in flux, it makes sense to hold off on buying, renters say. Now, these renters are asking, "Why own when you can rent?"

Housing-bubble blogs like Housing Panic and Housing Doom are full of anti-ownership sentiment from renters. Some renters are resentful they can't afford to own in pricey cities, while others are bitter that speculators drove up housing values in their markets. Some are irked that naïve buyers who bit off too much mortgage are calling on lenders and government for bailouts when, all along, they could have held off on buying a place.

Is there enough blood in the streets and failed flipper desperation to begin making insulting 50% off offers on unwanted homes?

When everyone's buying, it's time to be selling.

When everyone's selling, it's time to be buying.

So is it time?

I don't think so (look to Japan) but if I were back in the States I'd be making some crazy low-ball offers to see if any of 'em stuck. As long as the home would be cash-flow positive from day one, with a yield of at least 8%, and the selling price was based on 2001 or prior comp.

Plus it would just be fun to see the reaction as people come to understand that the fundamentals DO matter, that homes DO have a P/E ratio that must be respected, and that incomes DO relate to prices.

So, anyone itching to low-ball? Anyone doing foreclosures?

Or is buying now, even at a low-ball price, still catching a falling knife?

CHICAGO - Home sellers are not automatically turning up their noses at offers that come in far below their asking price these days as prices stagnate and the inventory of homes for sale remains elevated in many markets.

But buyers who do ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real estate professionals say. Further, buyers need to effectively explain why the price of a home should be lower.

That's what Pat O'Heron did recently when buying a home in Ann Arbor, Mich. He was able to negotiate a steep discount with a seller who relocated for a job, in a neighborhood that had two years' worth of inventory on the market.

Before he even made an offer, the asking price had already dropped by about $80,000, he said. After O'Heron made his case why the cost should be even lower, he eventually bought the home for $270,400, with about $11,000 in other credits. The net price ended up being $115,000 below the initial asking price.

Any questions? There shouldn't be.

When real people can no longer afford homes, real people stop buying homes.

Sorry investors. Sorry flippers. Sorry realtors, mortgage brokers, homebuilders and assorted REIC.

This Ponzi Scheme is over.