DOW 23,000+ today?

[xr7]

Had a laugh yesterday, the inflation stories, interest rates on home loans nearing 4%! Panic City. The house I'm currently in I purchased with an assumable loan at 12%, the house we sold had a VA loan at 14%. I refinanced twice, 10% and 7.5%, every payment included a little extra for the principal and I didn't take any additional cash when I did the refi's. I had places offer really good rates if I took out 120% of my current principal, sorry, I prefer to fill in the hole not dig a deeper hole.

 

[Bill Pemberton]

When you have decades of really low interest rates folks forget that inflation has never really been static. I love your example because my wife and I were looking through some old papers and found a CD from the 80s that paid us close to 12%. Of course we had an FHA loan on our home at a special rate ( based on the maximum price on the house ) and it was 11.75%. I was selling new cars at 16-18% and used ones at 21% in Kansas and some States were allowed to charge even more. I don't want to see things get back to those insane days, but like you the " Sky is Falling " credo spouted by so many does get a bit humorous at times!

 

[302BOB]

When I bought my house in 1984, the interest rate for the mortgage was 13.75%....I refinanced a couple yrs later at 10%....and again down the road at 8%, where I pd off the mortgage at. Refi's are great to lower your payments, but you start from scratch all over again where most of your payment goes to pay the interest instead of the principle....Those days are over!!!!...now I just have to worry about the property tax every yr.....That's over $7K now......at least with a mortgage, the escrow taken out every month numbed the pain a little...........

 

[JDee]

When I bought my house in 1984, the interest rate for the mortgage was 13.75%....I refinanced a couple yrs later at 10%....and again down the road at 8%, where I pd off the mortgage at. Refi's are great to lower your payments, but you start from scratch all over again where most of your payment goes to pay the interest instead of the principle....Those days are over!!!!...now I just have to worry about the property tax every yr.....That's over $7K now......at least with a mortgage, the escrow taken out every month numbed the pain a little...........

In July of '81 rates hit 19.64% up here. I had bought my first house in '74 and was paying 7% mortgage, brand new 3 bedroom bungie cost me 40K all in, that was a pile of money then. Prolly a million dollar house today.
Had a buddy who built a new house while renovating an old one into apartments and he was paying 22% for short term money. Absolutely insane, a kind bank manager was the only thing that kept him out of banko land. Rates now are ridiculous, virtually free money. And yet the kids biznitch all the time about how hard it is for them......they have no clue.

 

[Grant 302]

It’s certainly not time to panic. MSM always puts weird spins on the ‘news’. But it is time to plan…for those who understand the roots of what happened in the ‘80s.

Not a big deal either…if you don’t plan on living another 7-10+ years.

 

[PaddyPrix]

And yet the kids biznitch all the time about how hard it is for them......they have no clue.

Not entirely a kid anymore, but were things like this back then?

Study shows San Diego now the least affordable city for home-buying in California

San Diego bypassed Los Angeles and San Francisco based on people’s income and the price of single-family homes.

www.cbs8.com

So do those trying to join the cool kid home club wait further for the bubble to pop and market to crash? Tired of paying stupid rates for a stupid house, that's all. Looking at the tax assessment for the previous place and I could pay their mortgage rate from a few years ago on plasma donations alone, but I can't be trusted with a loan because my credit score is only 790.

 

[Grant 302]

So do those trying to join the cool kid home club wait further for the bubble to pop and market to crash?

It’s not a bubble. Regardless of what you might read or think.

Regarding house buying…The main thing young people are lacking is: Cash. Your credit is ‘fine’, but getting a seller to accept *your* offer is likely to require cash. At least more than any reasonably close offers from other prospective buyers.

Unless the younger generation(s) change that…they’re generally set to miss out as both house prices and interest rates will (continue to) price them out of the market. Same goes for older folks who haven’t made the jump to ownership.

Housing prices may soften a bit. Sometime in there. But generally, not by more than the interest rates rise. So the monthly mortgage payment will still go up. And more of it will go toward interest vs principle.

 

[PaddyPrix]

Regarding house buying…The main thing young people are lacking is: Cash. Your credit is ‘fine’, but getting a seller to accept *your* offer is likely to require cash. At least more than any reasonably close offers from other prospective buyers.

Unless the younger generation(s) change that…they’re generally set to miss out as both house prices and interest rates will (continue to) price them out of the market. Same goes for older folks who haven’t made the jump to ownership.

Housing prices may soften a bit. Sometime in there. But generally, not by more than the interest rates rise. So the monthly mortgage payment will still go up. And more of it will go toward interest vs principle.

Yeah, kinda hard with most of us coming out of school with six figure debts that place a damper on things for a good 20 years. The average house price in the 80s was 40-50k, average salary was maybe 20, and while the inflation and buying power have changed some, it'd seem that the housing costs have gone up a few steps higher than then incomes. Just saying that the younger folk do understand that things have always been hard, it does seem as if the ends have moved slightly further apart.

... and I'll be the first to point a finger at Hoosier, for raising their prices. HOW DARE YOU.

 

[Grant 302]

I don’t mean to make light of the situation…but that’s why I’ve only had painful advice for anyone younger about home buying. Without enough cash flow, it’s difficult to make the burden of student debt minimal or irrelevant. But that’s probably the first thing anyone looking to home ownership or a ‘comfortable’ retirement should work toward.

I get what your saying about “the ‘80s”…but it was bad enough that it matters a lot to be more specific about the year. Things were very different between 1980 and say 1985. Or some time *after* Black Monday… things I remember well.

 

[Grant 302]

Only $3.8MM for a starter home here:

 

[RES_22]

And another $1M/yr give-or-take for consumables...!!

 

[PaddyPrix]

There is a ton of land right next to Buttonwillow for sale, something like $100k for 42 acres.

 

[TymeSlayer]

The market generally doesn't like inflation or war or civil or political unrest. Hedging you bet is a good idea but seems to me a perfect storm is brewing and gold is really starting to look attractive again.

...Chicken Little

 

[GB899]

what's a mortgage?.. it's been so long I can't remember.. lol... I had a CD that paid 13.5%.. got my first car with it when it matured right before my 17th birthday.. 1983, a long time ago... generally speaking anyone under say 40 years old hasn't experienced truly high interest rates and can't comprehend what it does to money... glad I am debt free. sad I am unemployed (but only a little)...

 

[PatrickStapler]

... and I'll be the first to point a finger at Hoosier, for raising their prices. HOW DARE YOU.

Goodyear just raised the prices of Bluestreaks also….

 

[Grant 302]

There is a ton of land right next to Buttonwillow for sale, something like $100k for 42 acres.

Trouble is…build a bunch of homes on it and the land value will still be $100k.

The market generally doesn't like inflation or war or civil or political unrest. Hedging you bet is a good idea but seems to me a perfect storm is brewing and gold is really starting to look attractive again.

...Chicken Little

nothing to hedge if you weren’t participating…but yeah, I hedge like my money matters to me.

but I have to be thankful for all and any Chickens Little out there. Opportunities, they create. Predictable, they are.

 

[xr7]

Trouble is…build a bunch of homes on it and the land value will still be $100k.



nothing to hedge if you weren’t participating…but yeah, I hedge like my money matters to me.

but I have to be thankful for all and any Chickens Little out there. Opportunities, they create. Predictable, they are.

My father-in-law always said that when the market dropped "stocks are on sale". Best we ever did was in the great recession, doubled contributions into wife's IRA, the companies HR people thought she was nuts. We had no debt so why not.

 

[Grant 302]

My father-in-law always said that when the market dropped "stocks are on sale". Best we ever did was in the great recession, doubled contributions into wife's IRA, the companies HR people thought she was nuts. We had no debt so why not.

That was the right thing to do. March of 2009, I started putting the 90% cash and bond position generated on 11/2/2007 back to work. My only regret was not making money on the way down. Promised myself that would never happen again. Did just fine in Feb-March 2020. Everything flipped back to a bullish stance between 3/24 and 4/6 after the Fed announcement on 3/23.

The fact the 90% cash/bond balance was almost 96% by ‘09 told me exactly how hard most people got hit.

As far as I’m concerned…anyone who advises against market timing can go suck an egg. lol.

 

[Grant 302]

Looking at the tax assessment for the previous place and I could pay their mortgage rate from a few years ago on plasma donations alone

Maybe look to buying something you can ‘afford’, but is not your residence and rent it out. Even if it’s in another state.
Then look to buying your primary residence some time in the future.
Gotta make some sort of feasible plan.

South (just) of 32k is a target. Somewhere just North of 4k for the S&P. Time will tell.

This was posted on 1/24/22…maybe just a lucky guess…

…not there yet, but this is where those two indices are today:

As usual, we’ll see.

 

[PaddyPrix]

Gotta make some sort of feasible plan.

…not there yet, but this is where those two indices are today:
View attachment 72849
As usual, we’ll see.

With that VIX spike, it'd almost seem like pretty far otm puts on the SPX and SPY are almost guaranteed money, and QQQ to a lesser degree, although I guess cash is always a position.