Good information.

We will be purchasing a primary residence.

Interesting info Todd... the part about people being more conservative. Here's my thoughts. 40 years ago - people bought a home in order to raise a family. Maybe it had an unfinished basement or upstairs area - and the idea was to buy it and add living spaces in those areas as their family grew.

Houses were never bought to flip. Houses weren't bought hoping/wishing/dreaming that you could refinance it and take cash out every other week. Houses were bought as HOMES. The primary goal was to have it paid off by retirement age or earlier. The goal was to have a fixed monthly payment where you knew that eventually your salary would increase and your payment wouldn't.

While we'll probably never return to those days again... they were based on the correct assumptions. Home ownership was about security. It was about living in the neighborhood that you wanted to raise your family in - and then retire in. Things have changed and we're all far more mobile... People don't go to work at the factory and retire with a gold watch and a pension after 35 years of service... I get that.

But if the house is a primary residence... and you plan to make it your home. Then buy something were you're comfortable payment wise... neighborhood wise... and that you can look into your crystal ball and imagine the backyard that you will finish off with a nice patio and you can see yourself on the rocking chair enjoying your neighbors and a Mai Tai. Eventually you'll sell it... but for the 10 years or more you live there - you want to APPRECIATE the home - rather than worry about appreciation.

My Father in Law (God rest his soul) used to tell me about the house they bought in Portland right after he graduated medical school... his house payment was $300 a month and they worried about how the hell they were going to make that payment. As a Doctor his salary grew and they paid the house off as fast as they could. They raised 9 kids in that house... he passed away early - but the house that was bought for 57K - was sold for 500K and a far smaller house was bought that fit a now empty nester. The difference was invested and the income used to supplement other retirement income sources.

THAT was what people were talking about when they said they "made money" on their house.

Great right up Greg. I agree 100%. My wife and I grew up in the Bay Area. I loved it growing up as a kid but it changed, I grew up, met my wife, and we had kids. Next thing I was thinking about was good schools for my kids.
My wife and I started researching areas in California with the best public schools, family environment, and homes within our budget. When we found the area that we wanted to raise our kids we drove up almost every weekend and drove through just about every neighborhood. No joke!! Literally every neighborhood and walked many many homes.
Long story short it became a 5 year plan. Never found the exact house we wanted so we bought a lot and 3 years later I built the house of our dreams. Best move we ever made.

Here is what I can tell you based off of the commodity we sell which is packaging. Right now we are down at least 30% possible 40% compared to last year at this time with a few of our customers. These customers are directly tied into housing market and new housing starts. So it's a fairly good gauge since our customers sells to plumbing wholesalers, Home Depot, Lowes, Menards & Ferguson Plumbing supply.

The odd part is I was at a Supplier Conferences last week with one of these customers and they were telling us how the housing market is up 6% but all of us suppliers at the table and at dinner agreed that there sales with this customer were down significantly and that the going forward forecast was almost non-existent. So much so that we will be asking for Po's to scrap material that we have on hand in some case for almost a year.

Take it for what it's worth but in 2006 we saw this trend and so did all of the box suppliers and if your not buying boxes your not selling your finished goods. Right now lead times for us are 2 to 3 days on corrugated boxes which was previously 2 weeks or greater.

Wow that's really interesting. I love those types of leading indicators Marty. The real on the ground stuff that does mean something. And it can be the legal "insider trading" material if you know what to do with it. :)

The other subject is all of these Venture Capital company's buying Business's for Insane amounts of money. When is the bottom going crash with these guys and have a ripple effect on the Market ?

One factor that must not be missed is the security of the new owners since the collapse. The days of the pinkie swear are long gone. Meaning, people getting loans with no job or skin in the game. They are well qualified, many with a large down payment, many all cash. Many of the conservatives have come out in droves.

Where I'm going with this, when the fundamentals are right, you have the luxury to time the market. If you move away, the rent covers the note. Your rate doesn't balloon in 5 years. You put enough money down where you can sell the property at a loss.

Every market is different. I do think to many have a jaded perspective due to the collapse in the rear view mirror. I was one of them for quite some time.

As a Gen Y or whatever (we're 30), I can say that I am in NO WAY interested in buying a home right now, even if we could afford. We briefly looked at buying a condo, because Rent$ to Loan$ (even with 3% FHA down) were about even; but I bet we would be in Mariana trench within 24 months.

The Bay Area is oozing with greed right now, so I am choosing to be fearful. Bidding wars against overseas buyers may provide an adrenalin rush that software engineers would otherwise never experience, but I'll pass on the fun.

^^ I like that thinking and concur.


In response to Todd's comment of tighter credit, I thought this was funny and relevant.

http://www.bloomberg.com/news/2014-1...refinance.html

And this is the guy pulling the strings. :bang: :lol: