On Tue, 20 Sep 2005 07:50:54 -0400, DSK wrote:

So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough
to both pay off the home and provide a good financial return, wouldn't
he be better off living cheaper and investing that $5k/m?

Not if he is enjoying the life he is living. Who are you to say what lifestyle
NYOB would be 'better' enjoying?
--
John H

"All decisions are the result of binary thinking."

wrote in message
ups.com...

NOYB wrote:
"Shortwave Sportfishing" wrote in message
...
On Sun, 18 Sep 2005 17:42:30 GMT, "NOYB" wrote:

When home prices hit the outer stratosphere, the number of potential
buyers
admittedly shrinks. But the Naples luxury market is still in boom mode,
local agents say, despite forecasts of a housing bubble that some
predict
eventually must burst.

A slowdown?

You will get your turn and sooner than later.

It's already starting up here in NE.

I figure that once the NE slows, we'll soon follow. They'll be a
slowdown,
but never a correction. There are too many baby boomers looking to
retire
down here.

If the typical house in Naples becomes worth 5-7 times as much as a
typical house is worth anywhere else in the country, (and that is what
you seem to predict), those boomers will "look to retire" where it
won't take a nest egg of
$4-5mm just to buy a retirement cottage, and more importantly, where
taxes won't be taking a $30,000/year bite out of pension and social
security earnings.

It's a screw job. You live in a house that is valued at
$XXX,XXX,XXX.00, and you are free to sell it, but if you do and you
have no desire to start a new life in another portion of the country or
move into a beater you will be compelled to spend $XXX,XXX,XXX.00
*plus* to replace it. Put any value you want on the same property, $1
or a $100mm, and as long as you are *consuming*
the property every month by parking your butt in it that money isn't
really working for you. Meanwhile, the county tax collector comes along
and says, "Good news, NOYB, your house has doubled in value in the last
few years and so has the assessment. Here's your walloping bill for the
privilege of consuming a 7-figure house every month."

The Save Our Homes Act limits the increase in property taxes to 3% per year.


There's a reason that many of the more conservative (there's an
adjective you'll like) financial institutions *do not include* the
value of a personal residence when calculating net worth.

Did you check out "Extraordinary Popular Delusions and the Madness of
Crowds"?
(I particularly like the chapter on the Dutch tulip bulb boom and
bust).

You're comparing a tulip bulb to someone's primary residence?

"PocoLoco" wrote in message
...
On Tue, 20 Sep 2005 07:50:54 -0400, DSK wrote:

So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are
telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough
to both pay off the home and provide a good financial return, wouldn't
he be better off living cheaper and investing that $5k/m?

Not if he is enjoying the life he is living. Who are you to say what
lifestyle
NYOB would be 'better' enjoying?
--
John H

"All decisions are the result of binary thinking."


That is what is so absolutely funny about this thread........folks generally
telling NOYB how to lead his life and to have the audacity to think they
know what is right or wrong for him and his family.

On Tue, 20 Sep 2005 10:42:48 -0400, "*JimH*" wrote:


"PocoLoco" wrote in message
.. .
On Tue, 20 Sep 2005 07:50:54 -0400, DSK wrote:

So, who is actually the smart one here?


PocoLoco wrote:
NOBBY!

He's the one who will be pocketing the money while the rest of you are
telling
him how foolish he is!

If he can really afford a $5000/m home payment on an interest-only
mortgage, and is *gambling* that his home equity will rise fast enough
to both pay off the home and provide a good financial return, wouldn't
he be better off living cheaper and investing that $5k/m?

Not if he is enjoying the life he is living. Who are you to say what
lifestyle
NYOB would be 'better' enjoying?
--
John H

"All decisions are the result of binary thinking."


That is what is so absolutely funny about this thread........folks generally
telling NOYB how to lead his life and to have the audacity to think they
know what is right or wrong for him and his family.


And then they get ****ed and start calling names when NOYB doesn't change his
ways to correspond with the lives *they* want him to live. It's unreal!
--
John H

"All decisions are the result of binary thinking."

NOYB wrote:
wrote in message
ups.com...

NOYB wrote:
"Shortwave Sportfishing" wrote in message
...
On Sun, 18 Sep 2005 17:42:30 GMT, "NOYB" wrote:

When home prices hit the outer stratosphere, the number of potential
buyers
admittedly shrinks. But the Naples luxury market is still in boom mode,
local agents say, despite forecasts of a housing bubble that some
predict
eventually must burst.

A slowdown?

You will get your turn and sooner than later.

It's already starting up here in NE.

I figure that once the NE slows, we'll soon follow. They'll be a
slowdown,
but never a correction. There are too many baby boomers looking to
retire
down here.

If the typical house in Naples becomes worth 5-7 times as much as a
typical house is worth anywhere else in the country, (and that is what
you seem to predict), those boomers will "look to retire" where it
won't take a nest egg of
$4-5mm just to buy a retirement cottage, and more importantly, where
taxes won't be taking a $30,000/year bite out of pension and social
security earnings.

It's a screw job. You live in a house that is valued at
$XXX,XXX,XXX.00, and you are free to sell it, but if you do and you
have no desire to start a new life in another portion of the country or
move into a beater you will be compelled to spend $XXX,XXX,XXX.00
*plus* to replace it. Put any value you want on the same property, $1
or a $100mm, and as long as you are *consuming*
the property every month by parking your butt in it that money isn't
really working for you. Meanwhile, the county tax collector comes along
and says, "Good news, NOYB, your house has doubled in value in the last
few years and so has the assessment. Here's your walloping bill for the
privilege of consuming a 7-figure house every month."

The Save Our Homes Act limits the increase in property taxes to 3% per year.


There's a reason that many of the more conservative (there's an
adjective you'll like) financial institutions *do not include* the
value of a personal residence when calculating net worth.

Did you check out "Extraordinary Popular Delusions and the Madness of
Crowds"?
(I particularly like the chapter on the Dutch tulip bulb boom and
bust).

You're comparing a tulip bulb to someone's primary residence?


Yes indeed. During the Dutch tulip bulb frenzy, people became convinced
that tulip bulbs would continue to skyrocket in price, year after year.
Many people
actually *sold* houses, farms, businesses, and what not to invest in
tulip bulbs- and in some cases the proceeds from an entire home or
business proved to be enough to pay for just a single bulb. The 'bigger
fool' theory was in high gear: "It doesn't matter what I pay, the value
of this asset will always
continue to go up and there will be somebody right behind me willing to
pay much more for the same thing almost immediately."

Want to know how much the tulip bulb factor is right now in Naples? It
would be easy to figure out. For how much do houses similar to yours
*rent*, in Naples? Extrapolate a cap rate (return on investment) of 5%.
You get a break right now because rates in general and T-bills are
down- you would normally use 8-10% cap to evaluate a property. Now you
have a picture of what that property is worth based on the amount of
wealth it can produce in a given time period. Renters are a good
barometer in the real estate market becuase they aren't betting on
appreciation, merely paying for the basic economic function of the
house (shelter) every month.


IMO, it's a good time to hold onto matured positions or sell if the
cash in hand looks more attractive than the monthly cash flow. I would
personally be reluctant to buy as we close in on the inevitable market
correction. If prices merely stabilize, then there is some assurance
that the "value" is going to be sustainable. If prices at least
temporarily drop, as they have in many overheated regions during the
last couple of decades, it pays to watch for the apparent "bottom" and
buy then.


Some links:

http://www.stock-market-crash.net/tulip-mania.htm


this one is long, but wirtten by a guy who seems fairly conservative
and it is well thought out:
http://www.washingtonmonthly.com/fea...ace-wells.html

On Tue, 20 Sep 2005 14:10:33 +0000, NOYB wrote:


Excellent synopsis. So the only thing that will drive prices down will be
those folks who *must* sell because they can't afford the payment on an
investment that they can't rent out. That is precisely why DSK's idea of
rental properties makes less sense than dumping all the money into your
primary residence. When you live in the house, you can afford to ride it
out.

Don't misunderstand me, there are other forces at work. Just as the
overwhelming optimism is driving up the market, when reality sets in, the
pressures will be downward. Think, paying a note on house bought for $2
million, when the market says it is now only worth $500,000. There will
be quite a few unhappy people around who have to make some unpleasant
choices. Look, you bought your house to live in, on the water, in a very
pleasant town. Naples will retain value and will recover, but if I was
your brother, I'd wait a year. That $340K villa may once again be had for
$209K. Then again, it might be worth $700K, but *my* money wouldn't bet
on it.





I read somewhere
that speculators are a third of your market.

I've read up to 40% in some areas like Punta Gorda. It's much, much
lower
in Naples.

Nothing against speculators, but if they are in the market enough to
effect the market, it's a dangerous market. They don't really add
anything to the market, they just take from it.

They are definitely parasites on the housing and gasoline markets.

Harry Krause wrote:

Arrrgh! It's the Rainbow Bend:

http://rainbowbend.com/


Here's some photos:

http://rainbowbend.com/photogallery.htm


Remember, the motel is older, and not fancy, but it is comfortable and
there's plenty to do in the area. I caught one hell of a lot of fish
right in front of the place in one of the little Whalers. The chef
cooked up my catches for dinner, too.


Thanks Harry...
the idea of 'old Florida' style appeals to me.

"thunder" wrote in message
...
On Tue, 20 Sep 2005 14:10:33 +0000, NOYB wrote:


Excellent synopsis. So the only thing that will drive prices down will
be
those folks who *must* sell because they can't afford the payment on an
investment that they can't rent out. That is precisely why DSK's idea of
rental properties makes less sense than dumping all the money into your
primary residence. When you live in the house, you can afford to ride it
out.

Don't misunderstand me, there are other forces at work. Just as the
overwhelming optimism is driving up the market, when reality sets in, the
pressures will be downward. Think, paying a note on house bought for $2
million, when the market says it is now only worth $500,000. There will
be quite a few unhappy people around who have to make some unpleasant
choices. Look, you bought your house to live in, on the water, in a very
pleasant town. Naples will retain value and will recover, but if I was
your brother, I'd wait a year. That $340K villa may once again be had for
$209K. Then again, it might be worth $700K, but *my* money wouldn't bet
on it.

I've been on the fence on how to advise him. Part of me believes as you do:
that $340k villa will drop in price once a correction knocks the speculators
out of the market. But if I'm wrong, then where does he live? If he pays
the $340k now, and then it drops, he can just stay in it until it goes back
up again.

"Don White" wrote in message
...
Harry Krause wrote:

Arrrgh! It's the Rainbow Bend:

http://rainbowbend.com/

Personally, I'd avoid anything that has to do with "rainbows" in the Keys.
;-)


When you stayed there, how long did it take before you realized that it was
a gay resort?



Of course, it's worth a look just because of the complimentary use of Boston
Whalers.

On Tue, 20 Sep 2005 17:21:16 +0000, NOYB wrote:


I've been on the fence on how to advise him. Part of me believes as you
do: that $340k villa will drop in price once a correction knocks the
speculators out of the market. But if I'm wrong, then where does he live?
If he pays the $340k now, and then it drops, he can just stay in it until
it goes back up again.

Yeah, my Crystal Ball is a little cloudy too. It's a tough call, but
ultimately housing's real value is to live in, not to make money on. If
he can afford it, and he is planning to stay in Naples, then . . . maybe.
The values are relative to the market. He'll only take a big hit, if he
has to leave the Naples market. That is, provided, Naples hasn't been so
overvalued that prices don't recover. I don't see that happening. Naples
is a very nice town and it will cost a premium to live there. Myself, I'm
just reaching a cautious age where I would be very hesitant in that
market. Your brother, maybe he hasn't reached that age. ;-)