another economic bubble

[ScoPro]

Geeze....times change.

My brother bought a Crestview 2-1 (about 600 sq.ft.) on Piedmont in 1959 for $6,000....sold it for $9,000 in 1970. There was a farm over his back fence.

 

[Ramathorn]

I could've sworn Allandale was 300+ 4 years ago. Man, I'm pissed.

 

[Uncle Rico]

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[NoleHorn]

Nothing like painting everybody that uses ARM's with a broad brush.

 

[Uncle Rico]

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[NBMisha]

I also got a 5% 5 yr ARM last year, but am certain I will be selling in year 4. These are great for those who move for work at intervals less than 5 years.

 

[bozo_casanova]

NBMisha- I'm just curious, but what happens to you if (and I'm not saying this is likely) values go down or go flat through year 4 and the fed raises interests rates to control inflation, pushing mortgage rates up into the historically normal territory of ~9%?

 

[NBMisha]

BC
No problem with the question.

First of all, the house with this ARM is just part of an overall financial portfolio. That is, like you, I'm not dependent on this house being an investment home run to reach overall goals. My assumption, in fact, was that the market would be flat. I did not put my full equity from the prior house in Nor. Cal. in this one, partly related to that assumption.

As to the interest rate possibility, if the next job is overseas, I don't care about no stinkin' interest rate. Housing is a benefit in those assignments. If I, ahem, retire in year 4, then I have options. We have a condo in Austin that we can stage into for however many years until the interest rate environment becomes attractive. If that's an issue then.

If I get moved domestically, and have to sell and buy, and interest rates are high, then, so be it. I've done it 9 times before, in all kinds of interest rate environments, so its no big deal. Buying capacity fluctuates with interest, and you have to fit your life into this fact, period. We've had to step down a couple of times, big time.

But, we've saved agressively, and lived a long time in some real hell holes to enable savings, to have the capacity to be flexible in this year 4 thing, whatever the path may be. That is, its when you haven't saved enough or when you are considering buying too much that changes in interest rates and uncertainty in housing gains govern your life. That has been our situation in prior moves. Stay away from the edge of the cliff, and you dont' have to bee so so fearful. I know I'm speaking to the choir in your case. In fact, I really wish I had been as practical as you are now. I'd be retirng for sure, and before year 4.

 

[bozo_casanova]

NBM,
Thanks for your answer, and obviously it's very sound.

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[Uncle Rico]

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