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EScroogeJr (< 20)

does anyone still believes in renting?



March 04, 2008 – Comments (8)

Well, here comes the moment of truth. Bernanke just confirmed that prices cannot fall, because as soon as they try to fall, the renters will obediently pay more taxes to prop them up. Now, how does it feel to pay rent to your landlord and then to pay the principle on your landlord's mortgage? Will you ever find another fool in the coutry who still wants to rent and bail out and pay taxes on renting and bailing out and put his few remaining dollars into savings which become worthless faster than they accumulate? Tomorrow morning, even the last sceptic will run to the bank and ask for the largest loan he can get, any term, any fees, any conditions, and that still will not get him anywhere because realtors will no doubt replace the stickers today in the evening.

Buy TOL. 

8 Comments – Post Your Own

#1) On March 04, 2008 at 12:22 PM, EScroogeJr (< 20) wrote:

sorry, here's the link 

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#2) On March 04, 2008 at 3:12 PM, QualityPicks (26.56) wrote:

"Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," Bernanke said.

What a great incentive to be delinquent and irresponsible. What about those that are being responsible and paying their debt, why shouldn't they get principal reductions? I would sue the banks if they did this and I was a responsible payer.

Renters and savers get screwed seems like you are saying. But buyers at ridiculous high prices get screwed worse don't you think? ;-)

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#3) On March 04, 2008 at 4:09 PM, leohaas (29.35) wrote:

"Bernanke acknowledged this idea might be a tough sell to lenders."

No lender would agree to this. After all, the lenders are in trouble already.

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#4) On March 04, 2008 at 5:59 PM, SpecBear (31.40) wrote:

I'm renting now, and will continue to do so until some semblance of sanity returns to the mortgage market.  I live in San Francisco.  Last I checked, the median home here was going for around 10x median income.  My landlord is effectively subsidizing my housing.

Right now Bernanke's idea is just a suggestion, so I'll be renting for a while longer.  If this idea gets upgraded from suggestion to being government mandated policy, then I'll be one of those people lining up at the bank to get the biggest loan possible.  The problem is, that loan isn't going to be very big since the bank will actually be concerned about whether I can repay it.

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#5) On March 04, 2008 at 7:25 PM, abitare (29.90) wrote:

I rent, but I bought some investment property, pre-real estate bubble (1999) that I still own and will will keep.

The discount to rent is 50% in DC. Home values have fallen about 20% here in a year. Ben cannot change that, because they are still building and building and building everywhere.

The medium family home has fallen $100k in LA, CA. Yep, it is alot cheaper and smarter to rent.

You are -900 points. Specbear is #1 and a renter at +7900. I am renter at +3800 (six months). Maybe we understand something you and helicopter Ben do not? 

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#6) On March 05, 2008 at 12:59 AM, EScroogeJr (< 20) wrote:

Quality, it's a matter of perspective. The price can be ridiculously high if you pay it, and ridiculously low if you can get someone else pay it for you. By that standard, the homebuyers of 2005-2006 are getting a ridiculously low price:)

leonhaas, the lenders will be happy as long as the bill is on the taxpayer.

abitar, if you expect to buy at zero premium over renting, I'd venture to say it's about as likely as Ron Paul joining the Communist Party.

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#7) On March 05, 2008 at 7:16 AM, abitare (29.90) wrote:


I bought two properties that were positive cash flow at the date of purchase with less then 5% down payment in a beach community.  So I would guess your knowledge of real estate is about as good as your knowledge of stocks.

Japanesse real estate has declined for 18 years straight and was cut in half. Helicopter Ben is walking the same path. HB  can lower the rates to zero, the bubble has popped and will not likely reflate for decades.


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#8) On March 05, 2008 at 12:20 PM, EScroogeJr (< 20) wrote:

abitar, I said that it will never happen again, which is different from saying that it never happened before. There is a cliche that people who say "it's different this time" are always wrong. But there are always some cases when things are different this time. There was a time when Buffett sold stocks with PE of 3 to buy stocks with PE of 2.

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