Readers’ Questions Answered

by Millionaire Mommy Next Door on January 12, 2009

in Mailbag

Are you still renting? Will you ever buy a home again?

Yes, we’re still renting. We’ve been renting since we sold our last home in May 2003 in anticipation of the housing market crash. As home prices plummet in today’s market, we’re watching the price-to-rent ratios. When this number drops once again to long-term historical norms, we’ll consider buying. I have been keeping my eye out for real estate bargains. Cash is king in this market, and we have plenty of cash sitting on the sidelines. I’m watching the fundamentals and ratios that indicate housing affordability. I expect housing prices to continue falling for at least the next year or two. (A common consensus appears to expect an additional 15-20% national average price drop.) Therefore, I’d need to find a seller anxious to unload at a steep discount to convince me to buy today.

Eventually, we’d like to build our own home again. We’ve been collecting photos and ideas for our “dream home”: we’re envisioning a not-so-big (1500 sq. ft.) house filled with interesting architectural details, lots of natural light, cheerful colors, renewable resource products, off-the-grid energy, and perhaps enough room for a pony and a few chickens in the backyard.

In the meantime, we’re looking to downsize into a mere 230 feet… on wheels! When our current lease expires this summer, we’d like to travel the country for awhile in an RV. (Anyone selling a used 28′-29′ Airstream with rear bedroom and mid-bath?)

How is your portfolio currently invested?

Since my investment style is to follow momentum trends, I’ve been moving out of stock mutual funds and into cash since early 2008.  86% of our investment portfolio is parked in FDIC-insured banks; the balance is invested in a variety of Upgrader funds. When the markets show upward momentum again, I’ll move my cash incrementally into the new market leaders as they emerge.

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