[ASAP]

Originally Posted by bagekko

I guess I would of picked that period for some things that don't show up in the stats; food was a lot more reasonable and eating out was reasonable with much better quality. Travel was much much cheaper travel, remember possible east to west for $300, north east to FL under $200. Back then oh how reasonable scotch and premium liquor was, would of bought cases of Yamazaki 18 if I knew it would go from $80 to $500 a bottle.

Not in MA/RI anymore, too lazy to up profile. Current house has almost doubled even with the slowdown to what paid 3.5yrs ago. 20yrs ago in RI/MA 5-600k got you a fabulous house, now it's 1M+ unless you want something 2-3 decades old.

I think if you think about folks that started in the early 2010s (as long as they had a good job), they kind of had it somewhat easy. Housing around 2010-2011 was just barely on a post recession rebound and prices were decent just about everywhere sans SFO, NYC etc. Cars were on massive discounts all over for years and there wasn't any significant inflation on anything that I can recall... This somewhat continued on until about 2017-2018, and then Covid came and just flipped the script entirely.

Fast forward to now... it's really hard to say what the future brings... especially for young people. Housing costs are at all time highs, unemployment is slowly rising, there is no real wage growth and there is a consistent focus on AI, outsourcing and margins... i think the true era of opportunity at this point has disappeared in this country. Just look at immigration in this country and where it's coming from... only poor countries / low skilled workers as the higher skilled workers see it doesn't make much sense to come here anymore. Not sure what needs to happen... but significant political reform needs to come to fix much of this and no one is willing to undertake this.... that or a massive recession reset needs to happen.

[Donatello.]

Originally Posted by bagekko

Almost 2 yrs ago I converted my traditional IRA to a brokerage IRA, I was shocked and happy when the traditional MF funds in it returned to even about 3 months ago, but about 40% of it is in stocks and ETFs which is more volatile but better off.

You can always do the same and try to do better than the MF companies.

I'll have to look into that. I have no idea what the difference is

[Donatello.]

Originally Posted by ASAP

i think the true era of opportunity at this point has disappeared in this country.

Sadly, that is true.

At some point, there will be corrections in all these markets here in the US. This COL is unsustainable. How much of a correction and when? Who knows. History says just wait. Those who choose to ignore history...

[bagekko]

Main reason I did it was for investment options not limited to the funds of Fidelity, even though I had to sacrifice the grandfathered employee share class. ETFs usually have lower expense ratios than MF. With almost all brokerage moving to $0 trades. Just wanted to play with more money on stocks, commodity ETFs, if you had the time you could basically day trade with your IRA.

Originally Posted by Donatello.

I'll have to look into that. I have no idea what the difference is

[bagekko]

Almost 140k miles, have owned it for almost 14yrs, have done RBs, suspension (not shocks/springs), coils, alternator, maybe water pump I think. Starter is needed soon, belt tensioners, and so much more that in most cars would happen 80-100k, aside from the RB & SMG issues it is a well built car. Of course the F8x handles better, stops much much better, power wise about the same. But the E60 is more comfortable and the M5 comfort sport seats are possibly the best seats BMW has ever had. I had a M4 6spd and now DCT, want to get back into a 6spd just cause thats who I am, rev matching manual is pretty cool, at one time I had 4 6spds 3 of which were M's, now down to 3 total.

Originally Posted by 440i6MT

Nice!
What mileage is yours sitting at? Just so I know what maintenance intervals to catch up on.

How would you say the f8x compares to the e60? I have my eye on an f80 manual 4-5 years down the line. Worth it owning both?

[440i6MT]

Originally Posted by bagekko

Almost 140k miles, have owned it for almost 14yrs, have done RBs, suspension (not shocks/springs), coils, alternator, maybe water pump I think. Starter is needed soon, belt tensioners, and so much more that in most cars would happen 80-100k, aside from the RB & SMG issues it is a well built car. Of course the F8x handles better, stops much much better, power wise about the same. But the E60 is more comfortable and the M5 comfort sport seats are possibly the best seats BMW has ever had. I had a M4 6spd and now DCT, want to get back into a 6spd just cause thats who I am, rev matching manual is pretty cool, at one time I had 4 6spds 3 of which were M's, now down to 3 total.

We've done enough
I'll cut it here, pleasure talking to you Buff Bagwell!

[chassis]

Originally Posted by Donatello.

Sadly, that is true.

At some point, there will be corrections in all these markets here in the US. This COL is unsustainable. How much of a correction and when? Who knows. History says just wait. Those who choose to ignore history...

What were the folks saying in the early 1980s after inflation had peaked, at a much higher level than the level at which it peaked last year?

From 1980-1990 the Dow delivered a 17% CAGR on a total return basis.

Unemployment had a 7-handle, on its way to 10%.

Is it worse now, or was it worse then?

[2000cs]

Originally Posted by chassis

What were the folks saying in the early 1980s after inflation had peaked, at a much higher level than the level at which it peaked last year?

From 1980-1990 the Dow delivered a 17% CAGR on a total return basis.

Unemployment had a 7-handle, on its way to 10%.

Is it worse now, or was it worse then?

Beat me to it. It was much worse then. I worked at a bank in the summer of 1981 (between years of biz school). Prime was really high and all the variable rate loans were super expensive. The bank was facing a real default problem especially on private planes, boats. My job? Call the borrowers, explain that their rate was about to go to 22% (from the 7%ish rate when they signed, which was bought down by the manufacturer for the first year), and before they screamed in the phone let them know we would fix the rate for them at a lower level (I think it was 12%).

What worked about that era was that wages, with a lag, generally kept up with prices, and opportunities returned as unemployment fell. Today we have such high immigration and offshoring opportunities, along with automation, so wages are not keeping up mainly in the low-mid income jobs. And entry-level or min-wage jobs are being eliminated by technology. In other words, there is a real squeeze at income levels where you pretty much have to rent (can’t fix the housing cost by owning). This is a problem already, and a major issue going forward if not corrected.

[chassis]

Originally Posted by 2000cs

What worked about that era was that wages, with a lag, generally kept up with prices, and opportunities returned as unemployment fell.

Agree. From 1980-1990 incomes rose on average 8% per year, compared wit 5% growth from November 2013 to November 2023 (latest data available).

In a smaller time window from November 2018 to November 2023, income increased only a bit more than 5% per year, through the pandemic and inflation bumpiness.

[ASAP]

Originally Posted by chassis

Agree. From 1980-1990 incomes rose on average 8% per year, compared wit 5% growth from November 2013 to November 2023 (latest data available).

In a smaller time window from November 2018 to November 2023, income increased only a bit more than 5% per year, through the pandemic and inflation bumpiness.

housing cost to income ratio has never been as high

we've never had prices as high as now COMBINED w interest rates as high

eductation wasn't remotely as expensive back then neither was health care

wage growth YoY was also higher... whe the economic scenario back then may not have been rosy, the inequality between haves and have nots was not even remotely as far off... this was also back when employers actually cared about their employees and gave out pensions

i personally know people that came here to the us in the 80s w nothing and become millionaires... their cousins today, wouldn't even remotely entertain the idea as the baseline is so hard to reach today

[BMW F22]

So question: is now a good time to buy a house (or another house)? I’m in NorCal and it’s just so expensive that I’m hesitant because I don’t wanna be house poor.

[440i6MT]

Originally Posted by ASAP

housing cost to income ratio has never been as high

we've never had prices as high as now COMBINED w interest rates as high

eductation wasn't remotely as expensive back then neither was health care

wage growth YoY was also higher... whe the economic scenario back then may not have been rosy, the inequality between haves and have nots was not even remotely as far off... this was also back when employers actually cared about their employees and gave out pensions

i personally know people that came here to the us in the 80s w nothing and become millionaires... their cousins today, wouldn't even remotely entertain the idea as the baseline is so hard to reach today

Has the state gotten more or less involved in the economy?
Phrased another way, has the market become freer and less regulated?

[ASAP]

Originally Posted by 440i6MT

Has the state gotten more or less involved in the economy?
Phrased another way, has the market become freer and less regulated?

Both...
From a corporate standpoint, far freer and less regulated... there is almost no regulations lol... corp taxes were cut, deregulation hit and all mergers were allowed to go thru.

From a govt policy standpoint, the governments use of the fed, printing money, interest rates and overall policy has benefited only the wealthy and govt bailouts, stimulus were utter failes for the common man.

Basically they got involved in what they shouldnt have... and didn't get involved in what they should have.

[2000cs]

Originally Posted by BMW F22

So question: is now a good time to buy a house (or another house)? I’m in NorCal and it’s just so expensive that I’m hesitant because I don’t wanna be house poor.

Depends on several factors, most important your ability to pay the mortgage today, but also inflation, local market conditions, etc.

In the 1970s, when we had persistent inflation and low growth (“Stagflation - stagnant economy with inflation), in growing markets like Calif (again, not the entire state but the major population areas and growth/expansion areas), you could buy a house and make more money in its appreciation over 2 years than your salary. It was common to buy in and trade up, but after only a few years if you hadn’t bought in already, you weren’t going to be able to.

New lending “products” emerged, like the variable rate loan (ARM - adjustable rate mortgage) and some with a fixed/variable (5 year fixed, then variable rate for 25 years). The idea was either your income would increase over the 5 years so you could afford the higher rate, or rates would come down and the variable would be affordable, or you’d get the appreciation and sell or refi. Quite a gamble, but it worked for a lot of people.

Those lending products are part of why it is hard to compare affordability between the 1970s/1980s and today. Different products, different down payment requirements, etc. Also housing stock has changed dramatically - what was a starter house in the 1970s is not on many peoples list today (too small, too old, etc). What we called McMansions in the 1970s are the starter size homes of today.

Point of this is if you want to own a house, there are ways to do it but you may have to compromise on size or location or whatever. And maybe it is a good time to get in and ride a wave of appreciation (inflation-driven, but there are some supply issues for housing as well). Just like you don’t start your career as IBM’s CEO, you don’t start with your dream house (or car, or…).

[chassis]

Housing supply is systemically tight across the country. This will continue for years to come, 10 years would be a guess. This means sell-side parties in housing production, ownership and operation have market power.

[Donatello.]

Originally Posted by chassis

Agree. From 1980-1990 incomes rose on average 8% per year, compared wit 5% growth from November 2013 to November 2023 (latest data available).

In a smaller time window from November 2018 to November 2023, income increased only a bit more than 5% per year, through the pandemic and inflation bumpiness.

My wife is an ESL teacher. She got a whole $1,000 salary bump for this year. 5% my butt.

I didn't get a 5% raise either.

Greed. So much greed out there.

[Donatello.]

Originally Posted by chassis

Housing supply is systemically tight across the country. This will continue for years to come, 10 years would be a guess. This means sell-side parties in housing production, ownership and operation have market power.

No way this goes on for another 10.

[Donatello.]

Originally Posted by 2000cs

Depends on several factors, most important your ability to pay the mortgage today, but also inflation, local market conditions, etc.

In the 1970s, when we had persistent inflation and low growth (“Stagflation - stagnant economy with inflation), in growing markets like Calif (again, not the entire state but the major population areas and growth/expansion areas), you could buy a house and make more money in its appreciation over 2 years than your salary. It was common to buy in and trade up, but after only a few years if you hadn’t bought in already, you weren’t going to be able to.

New lending “products” emerged, like the variable rate loan (ARM - adjustable rate mortgage) and some with a fixed/variable (5 year fixed, then variable rate for 25 years). The idea was either your income would increase over the 5 years so you could afford the higher rate, or rates would come down and the variable would be affordable, or you’d get the appreciation and sell or refi. Quite a gamble, but it worked for a lot of people.

Those lending products are part of why it is hard to compare affordability between the 1970s/1980s and today. Different products, different down payment requirements, etc. Also housing stock has changed dramatically - what was a starter house in the 1970s is not on many peoples list today (too small, too old, etc). What we called McMansions in the 1970s are the starter size homes of today.

Point of this is if you want to own a house, there are ways to do it but you may have to compromise on size or location or whatever. And maybe it is a good time to get in and ride a wave of appreciation (inflation-driven, but there are some supply issues for housing as well). Just like you don’t start your career as IBM’s CEO, you don’t start with your dream house (or car, or…).

Around here a McMansion that cost $500k or less before this bs started, is now double the price & a "starter" home that was $250k is now $500-600k.

[tgrundke]

Originally Posted by Donatello.

No way this goes on for another 10.

"The market can remain irrational far longer than you can remain solvent."

It was 5 years before the housing market began to recover after peaking in late 2007.

We're in a situation today where the vast majority of mortgage holders have rates under 4%, and the runup in values the last 5 years has been such that buyers cannot afford these prices and sellers aren't willing to take a loss.

Unless there's forced selling, expect this murky situation to continue longer than anyone cares to believe it can...

[chassis]

Originally Posted by Donatello.

No way this goes on for another 10.

What is "this" and what is the reason it doesn't "go on" for another 10?

[chassis]

Originally Posted by Donatello.

My wife is an ESL teacher. She got a whole $1,000 salary bump for this year. 5% my butt.

I didn't get a 5% raise either.

Greed. So much greed out there.

Sounds like tough sledding. It's just numbers. There are always left and right tails to all data sets.

[chassis]

Originally Posted by tgrundke

"The market can remain irrational far longer than you can remain solvent."

It was 5 years before the housing market began to recover after peaking in late 2007.

We're in a situation today where the vast majority of mortgage holders have rates under 4%, and the runup in values the last 5 years has been such that buyers cannot afford these prices and sellers aren't willing to take a loss.

Unless there's forced selling, expect this murky situation to continue longer than anyone cares to believe it can...

Agree. Supply tightness has little to do with interest rates. Underbuilding post-GFC combined with natural population growth has created tightness. This will take a long time to loosen, if it loosens.

It took 15 years to get here, 15 years to change it seems within the realm of the possible.