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Now all that money is earning interest in treasuries, we’re paying less on a cash flow basis to live in a house about 100 times better than the old one. We had wanted to sell the last few years and buy a better house, but the market went up so fast we got priced out of upgrading, and in disgust just sat tight and now, will wait it out. Life is good, Mr. Bach …

But it doesn’t matter Rise, because if people were telling the truth, they would be stating what is being stated here regardless of whether they own or not. If you own a home and hope it keeps its value but it isn’t going to what are you going to do? Lie?

Are you going to do what the realtors do, and try to paint a rosey picture while RE agents sell houses with interest only loans knowing that the guy who buys will likely get screwed? Or will you do the right thing and warn the guy that he is getting in on the end of a federal reserve sponsored ponzi scheme?

A BBB site on the East Coast warned of aggresive pushing of expensive follow up seminars by the speakers. To his credit, David Bach supposedly was the only speaker not pitching anything (besides his free book). The negative Amazon reviews on his book basically said it wasn’t any new advice. The automatic thing was his angle. He doesn’t appear to make up stuff like Kiyosaki, but as the dissection of his recent Yahoo article shows, he seems to be really naive.

Ok, here goes. Yes, statistically homeowners are better off than renters, for the simple reason that disciplined renters who save money eventually buy into the real estate market, have some equity, and thus become the aformentioned homeowners!! Since it’s human nature to want to become a homeowner, and not a renter, this nugget is completley bullshit.

Secondly in the most overheated markets SF Bay Area, NY, etc, there is a little thing called rent control. I just looked at the approved rent increases over the past 5 years - and guess what 3.6% max! In fact the 2005 allowable rent increase is only 1.9%! http://www.oaklandnet.com/government/hcd/rentboard/index.html So where the 5% number comes from I’ve no idea.

If you were to invest the difference between the crazy 5% rent increases this dude refereneces, and the allowable increase of 1.9% (and assuming the annual rent increases remained around 2%) you could easily afford a home with substantial equity in a very short period of time. Thus making you one of the rich homeowners - specifically by renting!!!

People who pick fairy numbers and present them as reasoned arguments make me sick, since it’s basically a shell game and genuine people will get hurt.

People seem to forget that if great returns are a sure thing, it implies 0 risk. IMPOSSIBLE.

http://philip.greenspun.com/materialism/early-retirement/where-to-live

read about the homeowners vs renters part: the former are BORING!

“Modoc is California’s only county where the median price of a home has stayed so low for so long. It is the least expensive nook in one of America’s priciest states, a place where home buyers live out the pluses — and many of the minuses — of that elusive concept, ‘affordability.’”

“In Los Angeles County, $100,000 will just about cover the traditional 20 percent down payment for a median-priced house–certainly not the whole building, yard and garage. In Orange County, it’s about 80 percent of a down payment, and in Marin County, the most expensive housing market in the state, it’s less than two-thirds of what’s needed.”

http://www.chicagotribune.com/classified/realestate/realestate/chi-0602050202feb05,0,1364792.story?coll=chi-classifiedrealestate-hed

I was a homeowner. I sold last year in August with the intention of buying a larger home (went from 3 bedrooms, trying to get 4). Unknowingly, got priced out of the Laguna Niguel area where I was trying to buy (kept on getting outbid / multiple offers ) and eventually couldnt afford the home we wanted unless we went Interest Only. Coming from a Finance related job I said NO WAY!

Well, I am now renting and waiting it out and can only thank the blogs like Socals and Bens from keeping me informed and giving me enough ammo to show my trigger happy home wanting wife that it is not time to buy…

Yeah, I’ve personally noticed a bias in those that I know who are homeowners too ( I still cant convince my father in law even though he has read the articles - some kind of emotional thing like the dotcom irrationality). Others I speak to regularly with homes do understand, like my carpool friend who just put his home on the market.

Do yourself a favor and THINK about what is really going on right now. You are witnessing the biggest credit bubble of all time. You and all your friends will remember these years of irrationality. Probably will tell your grandkids one day.

Good luck to us all.

I admit I have not been reading this blog that long, only since Nov/Dec 2005. But I’ve been reading it faithfully and I don’t agree that this blog has taken a pejorative tone regarding FBs.

Moreover, it’s been very illuminating for me as a renter who would like to buy but has been shut out of the market by the skyrocketing prices in Northern NJ. I’ve always suspected that the run up in home prices has been investor driven and to a degree that is correct. But it has also been driven by the average Joe who appparently has been jumping into home ownership uninformed and who leverages himself to the eyeballs to pay these stratospheric prices as well as by the plethora of “funny money” mortgages available to allow him to acquire so much debt. And he does this to achieve the good ole’ American Dream of home ownership, without fully understanding the risks and costs involved. And it appears there are plenty of unscroupulous people who profit from these situations and unabashedly nudge the naive and vulnerable to the financial precipice.

Learning about how many people in this country are in real trouble financially has allowed me to take heart and feel optimistic—at some point in the not too distant future I will be able to capitalize on the increased housing inventory and the sellers’ increased need to sell–quickly– to get out of a bad financial situation. What, you say? Take heart at someone else’s misfortune? Not at all! It’s not personal, it’s business. Price drops are the only way I’ll get into the housing market. I don’t want to see people go into financial ruin; I just want prices to come down so i can afford a house.

I agree that if SocalMtgGuy was a homeowner, his views might be different. But what does that prove? If I remained in Michigan rather than moved to NJ 15 years ago then some of my financial or world views might also be different. So?

Actually , I think that the renter is in a better position to be less biased. Since he has less personal financial worth bound up in the decision, he doesn’t have to worry about Cognitive Dissonance influencing his opinions.

I’ve personally noticed a bias in those that I know (understandably a biased sample!) who are homeowners. They tend to think that there is no housing bubble and they encourage me to buy something now. I keep reminding myself that my friends have all purchased housing in NYC recently and are understandably loathe to consider their property values decreasing and will not appreciate my exuberance at seeing evidence that there is a bubble and it is collapsing.