Friday, April 13, 2007

SL's Water Cooler - April 2007 (part 2)

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Sippn said...

Interesting thoughts on residential real estate (owner occupied). Renters please ignore this.

OC register today (see link on side) per John Brynjolfsson, the inflation wizard at the Pimco bond traders in Newport Beach.

" The "investment" is separated from the "usage" component. In a somewhat facetious manner, I have argued that if they did not do this, house price increases should be counted as NEGATIVE inflation ... since the 66 percent of the population that owns, in effect, lives for free each month (as) their house appreciates by more than their mortgage payment! "

Of course you still gotta make the payment.

Sippn said...

All this as I was just thinking that inflation is really higher than govt measures, when you factor in quality of life issues, longer commutes, Sams Club vs Whole Foods/Nugget/Corte/Bel Air, etc.

I think the truly wealthy invest to keep a return above 15-20%, in order to beat inflation, buy homes as trophys no matter the costs or appreciation.

Middle/upper class investing in the purchases of their own homes provides a good, govt subsidized savings plan, also buy homes as trophys or as an indicator of status. Otherwise the money would get wasted on lifestyle.

Most of us have to promise not to borrow 97% of the equity out unless we have another retirement plan.

Gwynster said...

I saw this on the SacBee site

So we now have homeless people dragging off railroad engineers and beating them for no reason.

People react to economic stress in many ways. But normally they just beat their kids and spouses, not a random Union Pacific engineer.

It's like every wacked person from the BA migrated here.