« previous   misc   next »

House Investment Is A Fad


By bgamall4   Follow   Thu, 7 Feb 2013, 1:02am PST   1,723 views   24 comments
Watch (4)   Share   Quote   Permalink   Like   Dislike  

http://www.businessinsider.com/robert-shiller-home-investment-a-fad-2013-2 Shiller made my point, and more. Housing is an illiquid trap for savings. The more is obvious, style, technology, make older houses less appealing than new ones.

Comments 1-24 of 24     Last »

zzyzzx   Thu, 7 Feb 2013, 1:16am PST   Share   Quote   Permalink   Like (3)   Dislike     Comment 1

bgamall4 says

The more is obvious, style, technology, make older houses less appealing than new ones.

I can think of a lot of unappealing things about newer houses.

Bigsby   Thu, 7 Feb 2013, 2:20am PST   Share   Quote   Permalink   Like   Dislike     Comment 2

bgamall4 says

The more is obvious, style, technology, make older houses less appealing than new ones.

Perhaps you should tell that to all the buyers in London, Paris...

C Boy   Thu, 7 Feb 2013, 9:54pm PST   Share   Quote   Permalink   Like (2)   Dislike (1)     Comment 3

Bigsby says

bgamall4 says

The more is obvious, style, technology, make older houses less appealing than new ones.

Perhaps you should tell that to all the buyers in London, Paris...

There are no houses in Paris. Just apartments, co-ops, and condos.

EInvestor   Fri, 8 Feb 2013, 2:32am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 4

In 30 years a renter will have NOTHING of value. In 30 years a home owner will have a FREE and CLEAR house worth ATTEAST
TWICE the value of his purchase price. During these 30 years a home owner would have paid total, including 20% down payment, mortgage payments, maintenance, insurance and taxes approximately same as a renter because rent would have increased a lot during 30 years.

dublin hillz   Fri, 8 Feb 2013, 3:00am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 5

Bigsby says

bgamall4 says



The more is obvious, style, technology, make older houses less appealing than new ones.


Perhaps you should tell that to all the buyers in London, Paris...

Many people in europe live in accomodations that are comparabale with american university dorms . . . in a lower tier.

carrieon   Fri, 8 Feb 2013, 9:34am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 6

Don't forget everyone is a renter, even if you own a home. Your Property taxes is proof you are renting the land. If you don't believe me, avoid paying your property taxes (rent) and watch what happens.

New Renter   Fri, 8 Feb 2013, 10:30am PST   Share   Quote   Permalink   Like   Dislike     Comment 7

robertoaribas says

donjumpsuit says

Ridiculous.

If I own a $500k home for 30 years, I pay the following.

~100k down payment.

If I buy a few 30 year bonds at 3.5%, I can double that.

If I buy a house and borrow $400k at 3.5%, I pay 237k in interest over the course of that loan, and 180k in taxes.

On those metrics alone, I pay around the same amount in carrying costs as the house is worth at time of purchase (~500k to purchase a 500k house).

Historically home values are flatlined with inflation.

clueless analysis... Do you think your rents will flatline for 30 years?

do you really think your home won't appreciate in 30 years? my home that is worth well over 300K today sold for 30K in 1969...

The New York Times rent vs buy calculator might teach you something...

If wages are flat or drop over the next 30 years why not?

Bigsby   Fri, 8 Feb 2013, 11:34am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

dublin hillz says

Many people in europe live in accomodations that are comparabale with american university dorms . . . in a lower tier.

Many people? Many people live in beautiful houses and apartments in locations that plenty of Americans dream of.

bgamall4   Fri, 8 Feb 2013, 11:57am PST   Share   Quote   Permalink   Like   Dislike     Comment 9

EInvestor says

In 30 years a renter will have NOTHING of value. In 30 years a home owner will have a FREE and CLEAR house worth ATTEAST

TWICE the value of his purchase price. During these 30 years a home owner would have paid total, including 20% down payment, mortgage payments, maintenance, insurance and taxes approximately same as a renter because rent would have increased a lot during 30 years.

You cannot compare the last 30 years with the next 30 years. Housing is more volatile now as the borrower gets the risk, not the lender.

bgamall4   Fri, 8 Feb 2013, 11:58am PST   Share   Quote   Permalink   Like (2)   Dislike     Comment 10

robertoaribas says

Yawn. Nope, wages will go to zero and we will all wear loin clothes and live in cages... I bought a cave though, so I'm way ahead of the game. And I look freaking great in a loin cloth!

care to point to any time in history when wages didn't more than double in 30 years?

We never had free trade and globalization like we have now. Past performance is no guarantee of future success.

ELC   Sat, 9 Feb 2013, 11:45pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 11

robertoaribas says

I ride my bicycle 15 minutes to my job from my 1968 home... I can walk to the grocery store and coffee shop I like.

And let's not forget the college girls. That should weigh heavily in the walkability score! :)

Mick Russom   Sun, 10 Feb 2013, 2:28am PST   Share   Quote   Permalink   Like   Dislike     Comment 12

The banking cabal and the oligarchical collectivists like wage slaves that are rooted and stuck to a property. That way work environments can be abusive and unpleasant and the super high costs of moving and RE transaction keeps the wage slaves in place. Renting is also great societal control. Renting allows wage slaves a bit more mobility but either way most end up paying for a roof over their head in perpetuity. Wage slaves who own and then pay off are faced with rising taxation as well. Renters of course underwrite the landed gentry and any reale state taxes are passed to those renting.

Id sad to see how a an advanced nation with some regions full fo relatively smart people cant even manage to keep the basics and basic cost of living under control. All this in a society driven by disposable income, tons of this money is tied up in keeping rain off your head.

Mick Russom   Sun, 10 Feb 2013, 2:30am PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 13

robertoaribas says

. I ride my bicycle 15 minutes to my job from my 1968 home... I can walk to the grocery store and coffee shop I like.

Yes, as long as your quality of life is high and the rest of the wage slaves have to commute, sit in traffic while you collect rent from them, yes, everything is good right. You living well and all of them suffering means everything is good right? And you come here to brag.

Strange person.

thomaswong.1986   Sun, 10 Feb 2013, 9:28am PST   Share   Quote   Permalink   Like   Dislike     Comment 14

donjumpsuit says

However, I live in the Bay Area, where they aren't building more homes.

rubish.. people has been saying that for the last 3 decades, and to everyones surprise new developments out of the blue spring up. at the most extreme case, SF city, the area which borders 280 and new Ball Park, many would not even imagine all those condos and apts.

So now Candle Stick is being torn down.. what will go up.. the same examples keep repeating time and time across the 9 counties of SFBA.

thomaswong.1986   Sun, 10 Feb 2013, 9:33am PST   Share   Quote   Permalink   Like   Dislike     Comment 15

donjumpsuit says

Because people in the bay area definitely buy a home with 30 year old everything, get in multiple bidding wars for it, and end up paying several thousand dollars over list.

multiple bidding is more common after 2000, but not so before. Frankly the typical buyer/seller bidding was somewhere between the higher sellers asking and lower buyers offer. Therefor it was common advertised price was never the final price.

Of course everyone turned in bubble heads after 2000.

thomaswong.1986   Sun, 10 Feb 2013, 10:03am PST   Share   Quote   Permalink   Like   Dislike     Comment 16

SFace says

San Francisco population 1950 750K

San Francisco population 2013: 850K

60 years, 100K more people in an area that added 4M people. That's basically no new supply. The Candlestick point project will do nothing.

the population overall in CA has gone down to single digit growth.. so even with people having babies.. the population is migrating out more and more for the South.

charts of new development ...

http://patrick.net/?p=1221620

lostand confused   Sun, 10 Feb 2013, 10:27am PST   Share   Quote   Permalink   Like   Dislike     Comment 17

Well, I know people in the bay area who bought homes for 30 or 40k a few decades ago in pretty decent areas-ok east bay mostly. But many are locked in at the old tax rate too. The current bubble is a fad-more like the gold rush boom and bust mentality. But many people have "stuck" gold and many went bust too. Lets see how long this reality lasts. Who knows with the FED-this may go on longer than what most think.

thomaswong.1986   Sun, 10 Feb 2013, 10:31am PST   Share   Quote   Permalink   Like   Dislike     Comment 18

SFace says

While CA added 23M new residents, San Francisco added 100K in the same timeframe. A long winded way of saying no/not enough new homes built.

how many went to the burbs.. OH do cheer up.. more units going up to make your city look better.. isnt that what the RE shills want and have been saying all this time. Or did you bet the wrong way and may not reep those huge fabled gains you were expecting.

David Losh   Sun, 10 Feb 2013, 11:15am PST   Share   Quote   Permalink   Like   Dislike     Comment 19

donjumpsuit says

However, I live in the Bay Area, where they aren't building more homes.

As I recall the Mission District of San Francisco is very run down. How about we bull doze the entire area and make a mix of affordable housing, apartments, and cheap condos?

Everyone in the United States thinks they are so special when all we have to do is bull doze, and build up, like they did in Shanghai.

Now in China the price of property continues to go up, but fewer people can afford to buy. There is a crash in there some place, but here, we have plenty of dirt to build on.

C Boy   Sun, 10 Feb 2013, 12:04pm PST   Share   Quote   Permalink   Like   Dislike     Comment 20

SFace says

Or 15M to 38M from 1960 -2010

While CA added 23M new residents, San Francisco added 100K in the same timeframe. A long winded way of saying no/not enough new homes built.

Sounds like nobody wanted to move to San Fran.

NYC- 1980: 7,071,639 2005: 8,143,197

bgamall4   Sun, 10 Feb 2013, 3:53pm PST   Share   Quote   Permalink   Like (1)   Dislike     Comment 21

SFace says

San Francisco population 1950 750K

San Francisco population 2013: 850K

60 years, 100K more people in an area that added 4M people. That's basically no new supply. The Candlestick point project will do nothing.

Sorry, on this I agree with Wong. The house prices in SF are a massive bubble supported by big finance. Same in NYC.

How much of a premium people will want to, and be able to pay in the future for SF real estate is debatable.

David Losh   Mon, 11 Feb 2013, 12:00am PST   Share   Quote   Permalink   Like   Dislike     Comment 22

SFace says

You have Any idea how much that will cost to buy out thousands of owners

I'm not suggesting buying out anyone. The land owners should be able to figure out that they can make more with higher density per square foot.

mell   Mon, 11 Feb 2013, 12:44am PST   Share   Quote   Permalink   Like   Dislike     Comment 23

SFace says

Agree with Thomas' wrong facts. Lol. I get it, high price means bubble and cheap is a deal. The result must be all wrong. I lived in a new build, its overrated. Location always matter more. Take it for what its worth.

While housing unit increased 15% in 50 years, downtown office space alone increased 350% from 25m sq ft to 85m sq ft. That doesnt include r&d expansion. This is just plain housing shortage.

Not necessarily. SF has not had shortage of office space for rent since the crisis. But if you can rollover your debt for less than inflation you will take your time renting your units out. Why wouldn't you? Most of the lease agreements are long-term (3-5 years at least) so it really matters what price you get from your tenants. I agree that location is what's mostly driving the price (you may attract better talent if you are in SF vs the peninsula), but there is no doubt that prices would be significantly lower if interest rates hadn't been close to zero for such a long time.

edvard2   Mon, 11 Feb 2013, 1:08am PST   Share   Quote   Permalink   Like   Dislike     Comment 24

zzyzzx says

I can think of a lot of unappealing things about newer houses.

Me too. A lot of the newer homes are little more than manufactured units slapped together with fiberboard and staples. Back home in NC they're throwing these things up as fast as they can. The result? fugly plastic sides houses.

bgamall4 is moderator of this thread.

Email

Username

Watch comments by email

home   top   questions or suggestions? write p@patrick.net