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Thread: New home buyers?

  1. #46
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    Will be interesting, in a sick way, to see how it plays out. My money, so to speak, is on inflation being the bigger issue.
    From wikipedia:

    Deflation in Japan started in the early 1990s. On March 19, 2001, the Bank of Japan and the Japanese government tried to eliminate deflation in the economy by reducing interest rates (part of their 'quantitative easing' policy). Despite having interest rates down near zero for a long period of time, this strategy did not succeed.[4] Once the near-zero interest rates failed to stop deflation some economists, such as Paul Krugman, and some Japanese politicians, spoke of deliberately causing hyperinflation.[5] In July 2006, the zero-rate policy was ended. In 2008, the Japanese Central Bank still has the lowest interest rates in the developed world, deflation has still not been eliminated[6] and the Nikkei 225 has fallen over approximately 50% (between June 2007 and December 2008).

    Systemic reasons for deflation in Japan can be said to include:

    Fallen asset prices. There was a large price bubble in both equities and real estate in Japan in the 1980s (peaking in late 1989).

    Insolvent companies: Banks lent to companies and individuals that invested in real estate. When real estate values dropped, many loans went unpaid. The banks could try to collect on the collateral (land), but due to reduced real estate values, this would not pay off the loan. Banks have delayed the decision to collect on the collateral, hoping asset prices would improve. These delays were allowed by national banking regulators. Some banks make even more loans to these companies that are used to service the debt they already have. This continuing process is known as maintaining an "unrealized loss", and until the assets are completely revalued and/or sold off (and the loss realized), it will continue to be a deflationary force in the economy.

    Insolvent banks: Banks with a large percentage of their loans which are "non-performing" (loans for which payments are not being made), but have not yet written them off. These banks cannot lend more money until they increase their cash reserves to cover the bad loans. Thus the quantity of loans are reduced and less funds are available for economic growth.

    Fear of insolvent banks: Japanese people are afraid that banks will collapse so they prefer to buy gold or (United States or Japanese) Treasury bonds instead of saving their money in a bank account. This likewise means the money is not available for lending and therefore economic growth. This means that the savings rate depresses consumption, but does not appear in the economy in an efficient form to spur new investment. People also save by owning real estate, further slowing growth, since it inflates land prices. (interesting)
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

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  3. #47
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    Re: New home buyers?

    Quote Originally Posted by bucksfan View Post
    By the way, somewhere in this thread it appears I was quoted, but I have had no previous posts in this thread. It was probably a quote from bucksfan2 (I figured it would happen someday!), but just want to be clear that we are and always have been 2 different and AFAIK unrelated posters.
    That was probably me. When I put quotes from seperate posters in one post, I do the tags myself on the second and wrote your name -- sorry.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  4. #48
    The wino and I know bucksfan's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    That was probably me. When I put quotes from seperate posters in one post, I do the tags myself on the second and wrote your name -- sorry.
    Oh not a problem. I don't think #2 was saying anything out-of-line - probably made me look smarter. Just a good time to point out there are "2" of us...
    "I'm virtually free to do whatever I want, but I try to remember so is everybody else..." - Todd Snider

  5. #49
    2009: Fail Ltlabner's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    From wikipedia:
    That's all fine and dandy but you can't keep borrowing money to the point of unavoidable default and cranking out the greenbacks at breakneck pace without the effects of inflation heading it's ugly rear.

    Heck, it's not umpossible for us to see both deflation and inflation at different points over the next 5 to 10 years.

    Either way, it's going to suck for a lot of people for a long time.
    Last edited by Ltlabner; 02-26-2009 at 05:34 PM.
    a super volcano of ridonkulous suckitude.

    I simply don't have access to a "cares about RBI" place in my psyche. There is a "mildly curious about OBI%" alcove just before the acid filled lake guarded by robot snipers with lasers which leads to the "cares about RBI" antechamber though. - Nate

  6. #50
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    That's all fine and dandy but you can't keep borrowing money to the point of unavoidable default and cranking out the greenbacks at breakneck pace without the effects of inflation heading it's ugly rear.

    Heck, it's not umpossible for us to see both deflation and inflation at different points over the next 5 to 10 years.

    Either way, it's going to suck for a lot of people for a long time.
    Japan wanted to create inflation and couldn't.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  7. #51
    2009: Fail Ltlabner's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    Japan wanted to create inflation and couldn't.
    Zimbabwe figured out a way to do it.

    You're obviously convinced you know how this is going to play out. Bully for you.

    Whether it's deflation, inflation, stagflation, depression, recession or digression doesn't really mater. End result is not a lot of fun for anybody.
    a super volcano of ridonkulous suckitude.

    I simply don't have access to a "cares about RBI" place in my psyche. There is a "mildly curious about OBI%" alcove just before the acid filled lake guarded by robot snipers with lasers which leads to the "cares about RBI" antechamber though. - Nate

  8. #52
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    You're obviously convinced you know how this is going to play out. Bully for you.
    Convinced? Hardly. Recall me saying this:

    "Oneupper touches on a big argument right now: inflation vs. deflation. Its a tough call. Government pump-priming and low interest rates spell inflation but Depression and unemployment spell deflation.

    Interest rates might be forced up. But, at this point, they're not rising and home prices continue to fall -- rapidly. IOW, inflation is speculative and deflation is a reality."

    If anything, you sound more convinced than I.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  9. #53
    THAT'S A FACT JACK!! GAC's Avatar
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    Re: New home buyers?

    Quote Originally Posted by SunDeck View Post
    Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation. I've always liked having the time value of money working on my side.

    And there's no comparison, depreciation wise between a house and a car.

    Having said that, there are lots of situations where renting makes more sense, such as on the coast or anywhere at a time when housing prices are inflated to unreasonable levels. Lots of people would have been better off if they would have rented instead of buying lately.
    Very well said.
    "panic" only comes from having real expectations

  10. #54
    On the brink wolfboy's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    Zimbabwe figured out a way to do it.

    You're obviously convinced you know how this is going to play out. Bully for you.

    Whether it's deflation, inflation, stagflation, depression, recession or digression doesn't really mater. End result is not a lot of fun for anybody.
    It does really matter. There are big differences. Fortunately, it's a discussion for another thread. We don't have to work them out here.
    How do we know he's not Mel Torme?

  11. #55
    Waitin til next year bucksfan2's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    Zimbabwe figured out a way to do it.
    That may be the first and only comparison of Zimbabwe to Japan that I have ever seen.

  12. #56
    On the brink wolfboy's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    My bad, don't know where I got 26.
    I think someone else mentioned that they were 26 when they bought their home.
    How do we know he's not Mel Torme?

  13. #57
    2009: Fail Ltlabner's Avatar
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    Re: New home buyers?

    Quote Originally Posted by wolfboy View Post
    It does really matter. There are big differences.
    I know that deflation and inflation have different effects on the economy. I was just saying that whatever direction things go in doesn't really matter because either way is likely to be very challenging for the everyday Joe.
    a super volcano of ridonkulous suckitude.

    I simply don't have access to a "cares about RBI" place in my psyche. There is a "mildly curious about OBI%" alcove just before the acid filled lake guarded by robot snipers with lasers which leads to the "cares about RBI" antechamber though. - Nate

  14. #58
    On the brink wolfboy's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Ltlabner View Post
    I know that deflation and inflation have different effects on the economy. I was just saying that whatever direction things go in doesn't really matter because either way is likely to be very challenging for the everyday Joe.
    Agreed.
    How do we know he's not Mel Torme?

  15. #59
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    Re: New home buyers?

    Quote Originally Posted by wolfboy View Post
    Well, I'm a little surprised by the responses in this thread. I started this thread because I was interested to see whether anyone else was a first time buyer. If so, I wanted to see whether the stimulus/tax break played into the decision. If this thread is any indication, then there aren't many first time buyers out there.

    While I appreciate the input on housing, the economy, and life in general, it's a moot point. We put in an offer, they countered, we accepted. Every single consideration in this thread was weighed heavily by my fiancee and I. We feel completely confident that we've made the right decision. We also know that if we have not, we are prepared to live with the consequences.
    My wife and I bought our first house on January 23rd (before the stimulus was passed, so it wasn't an incentive for us to buy). We got an FHA loan, and only put 4% down. Even when things start to break and need repair, owning a 2800 sq ft (including finished basement) home in suburban Denver is going to be about the same price as renting one floor of a 1200 square foot house in suburban Boston. At our ages (36 and 34) we need to start building equity. It was a no brainer for us.

    Our rate was 4.875% fixed. Even though we'll be paying PMI for a while, that's still an effective rate of 5.5%.

    As you probably know, we're going to get an $8,000 tax windfall as a result of the stimulus. The credit applies to anyone who buys a first time home in '09.

    I guess the idea of the stimulus is for us to put that money into the economy and "stimulate things." Pardon us for not being patriotic, but 100% of that is going into savings.
    ". . . acquiring J. Blanton from Oakland for, apparently, Bailey/Cueto, Votto and a lesser prospect. I do it in a second . . . The Reds' equation this year is simple: Make Matt Belisle your #3 starter . . . trade for Blanton, win 85 or more, be in the mix all summer." - Paul Daugherty, Feb. 8, 2008

  16. #60
    Administrator GIK's Avatar
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    Re: New home buyers?

    Nice work, CC! Man, I wish I could see the future. Other than knowing the winning Mega Millions numbers, I would have waited to buy my first house until all this new legislation kicked in. Lucky dogs!


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