Robert Shiller Destroys The Idea Of Investing In A House


By noshow   Follow   Thu, 7 Feb 2013, 11:07am   2,345 views   45 comments
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http://www.businessinsider.com/robert-shiller-home-investment-a-fad-2013-2

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  1. edvard2


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    6   1:10pm Thu 7 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Nobody wants to believe it, but stocks over the long term are a better investment and has been for well over 100 years. There are far more people who become millionaires simply investing in a broad range of stocks than those who bought houses.

  2. Vicente


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    7   1:11pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    robertoaribas says

    Call it Crazy says

    ..."Adam Johnson also noted that this was in line with Shiller's assessment that real U.S. home price appreciation from 1890 to 1990 was just about 0 percent. This is explained by the falling costs of construction and labor."

    So, If I had bought entire blocks of San Franciso after the earthquake, they wouldn't be worth anything today? interesting!

    Land, yes, Buildings no.

  3. Mobi


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    8   1:13pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Houses do generate fixed income just like company profits. I do not hate long term investment in stocks but it is just my opinion that stocks are generally overvalued at this point. That is why I suggest short term trading rather than long term holding on stocks. It is just my peronsal opinion but not a financial advice since I could be wrong. I will wait until stocks are cheap enough to buy and hold.

  4. edvard2


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    9   1:32pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Mobi says

    Houses do generate fixed income just like company profits. I do not hate long term investment in stocks but it is just my opinion that stocks are generally overvalued at this point.

    Opinions seldom make good investments. If you look at the long term trend, stocks have tended to return around 7-8% annually- again over the long term. That might not sound like much, but give it 30-40 years and the effects of compounding could very easily make someone a millionaire by the time they retire.

    I say this because I have family members where this totally happened, where all they did was invest maybe 10% of their income in boring 401ks and mutual funds, and when they were 60 they were set. They didn't buy houses, gold, or stuffed animals. They just invested in plain old fashioned stocks.

  5. gbenson


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    10   1:41pm Thu 7 Feb 2013   Share   Quote   Permalink   Like (2)   Dislike  

    Stocks are just a frigging high frequency casino at this point. Unless you are able to trade in milliseconds, you are going to get the gross end of the stick.

  6. Mobi


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    11   1:45pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Stock gain was choppy as a function of time. Most of the recent gain came from 82-00. Will a bull market like that comes back in the near future? I kind of doubt.

  7. Mobi


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    12   1:48pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    gbenson says

    Stocks are just a frigging high frequency casino at this point. Unless you are able to trade in milliseconds, you are going to get the gross end of the stick.

    You can simply buy the S&P index and do not fight with the machine. But that assumes it does not come up with a big crash, which may take years to recover.

  8. edvard2


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    13   2:32pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Mobi says

    Stock gain was choppy as a function of time. Most of the recent gain came from 82-00. Will a bull market like that comes back in the near future? I kind of doubt.

    Blur your eyes for a minute. What do you see when you look at the chart you posted? A consistent upwards projection and one that has been doing so since 1902. Are there ups and downs? Sure. But as I said, the trend has gone up over the long term and done so at a fairly reliable clip. Its all about averages. If you were to compare a chart like this to a chart of how real estate has performed over the same period, you'd see the difference.

  9. Mark D


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    14   2:43pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike (1)  

    who says buying a home is an investment? he's arguing a point no one has made. what a pointless article.

  10. Hysteresis


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    15   2:49pm Thu 7 Feb 2013   Share   Quote   Permalink   Like (2)   Dislike  

    robertoaribas says

    Hysteresis says

    companies generate profit.

    houses do not.

    good grief. Do you think before you type? what the hell do you call rent?

    the context of the article was clearly as a primary resident being an investment.
    shiller even said rentals were a sensible investment.
    i know you can't read, like to argue and call people names because you have nothing better to do, so i'm not sure why i bother explaining.

    anyway, i guess you're back on my ignore list.

  11. Nobody


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    16   3:04pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    What? My house was an investment? How could that be? I am just going to live here. This is what happens when the immigrants who can only see the real estate as an investment and have no respect for people or human rights come here in mass.

  12. gbenson


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    17   4:11pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    edvard2 says

    A consistent upwards projection

    My 401k begs to differ..

  13. dublin hillz


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    18   4:16pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    It is a mistake to compare primary residence to perfomance of stocks/bonds/mutual funds. The primary purpose is to compare expected lifetime housing costs. Speaking of which a typical apartment in bay area is now over twice as much as in the 1990 and a typical market value of an owner occupied dwelling is twice what it was in 1990 which is consistent with theory that housing appreciated with rate of inflation in the long term. I believe that it's only appropriate to compare historical returns of real estate with stocks/bond/funds for investment properties, not primary residences.

  14. SoftShell


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    19   8:46pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    How much did Rover pay??

    robertoaribas says

    I moved to the south bay in 1987. Hermosa beach specifically. I shared a 2 bedroom really crappy little apartment on manhattan ave, right off the beach, my share of the rent was like 450, or 500 + 1/2 the bills

  15. Raw


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    20   9:13pm Thu 7 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Call it Crazy says

    ....."As usual, Shiller was reluctant to declare that home prices had bottomed. He explained that the housing market is a speculative one and that there's no telling which way prices would go tomorrow. He also explained that there wasn't much reason to believe that home prices would appreciate back to levels seen during the last cycle."

    He is saying two different things in the same paragraph.
    I think he personally believes home prices should be crashing, not skyrocketing as they are.
    He understands numbers, not human emotions.

  16. Mick Russom


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    21   9:28pm Thu 7 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    robertoaribas says

    good grief. Do you think before you type? what the hell do you call rent?

    rent is what most of you pay off your subsidized loans with.

  17. Mobi


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    22   11:01am Fri 8 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    edvard2 says

    Mobi says



    Stock gain was choppy as a function of time. Most of the recent gain came from 82-00. Will a bull market like that comes back in the near future? I kind of doubt.


    Blur your eyes for a minute. What do you see when you look at the chart you posted? A consistent upwards projection and one that has been doing so since 1902. Are there ups and downs? Sure. But as I said, the trend has gone up over the long term and done so at a fairly reliable clip. Its all about averages. If you were to compare a chart like this to a chart of how real estate has performed over the same period, you'd see the difference.

    I did not argue that housing is better investment than stock generally. What I care is the entry point. I want to wait till the next pullback to decide entering the stock market or not. Also, it is not fair to compare nominal price inflation between stocks and housing since you can leverage in housing with much less risk.

  18. thomaswong.1986


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    23   11:16pm Fri 8 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    Mobi says

    since you can leverage in housing with much less risk.

    you might want to re-check recent history on that 'less risky' move...

  19. thomaswong.1986


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    24   11:18pm Fri 8 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    robertoaribas says

    . Down the street, there were 2 bedroom 2 bath condos in Redondo for under $100K.

    lol!

    no wait.. that cant be true..everyone says CA especially SoCal was always really really expensive.

    how else could those surfers afford that crazy lifestyle...

  20. iwog


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    25   11:54pm Fri 8 Feb 2013   Share   Quote   Permalink   Like   Dislike   Protected  

    thomaswong.1986 says

    Mobi says

    since you can leverage in housing with much less risk.

    you might want to re-check recent history on that 'less risky' move...

    He's right. You're wrong. A home that earns $2000 a month in rent but can be financed with an 20/80 mortgage with a PITI of $1400 is almost entirely risk free.

    In fact compared to a 50/50 leverage in the stock market, it isn't even close. A person out on full margin in the stock market is a moron by comparison, especially if he doesn't have the cash to handle margin calls.

    What you are attempting to misdirect the conversation with is real estate speculation at the height of the bubble, a situation which no longer applies to the vast majority of the United States. Since there is no such thing as a margin call in real estate, and rents are almost always stable or climbing, an investor can simply wait out a bad market even if it takes 10 years.

    Of course nothing in life is risk free, and there's always the possibility of catastrophic collapse in the real estate market, however if this happens then being leveraged in stocks cannot help you. You're twice as fucked as someone holding title to real property. Or did you forget 2009?

  21. yup1


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    26   11:59pm Fri 8 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike (2)  

    Raw says

    He understands numbers, not human emotions.

    Yeah that is why he wrote a book called Irrational Exuberance

    http://www.irrationalexuberance.com/

    He is explaining it is all about emotions and that the numbers don't add up and you are arguing he doesn't understand emotions.

    Dumbass!

  22. iwog


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    27   12:16am Sat 9 Feb 2013   Share   Quote   Permalink   Like (3)   Dislike   Protected  

    yup1 says

    He is explaining it is all about emotions and that the numbers don't add up and you are arguing he doesn't understand emotions.

    Dumbass!

    Robert Shiller doesn't understand emotions, in fact he's a really shitty guru. I have no idea why people worship him or even give him one shred of credit for financial advice.

    "Often people ask me whether I coined the term irrational exuberance, since I (along with my colleague John Campbell and a number of others) testified before Greenspan and the Federal Reserve Board only two days earlier, on December 3, 1996, and I had lunch with Greenspan on that day. I did testify that markets were irrational"

    ~ Robert Shiller from his book "Irrational Exuberance"

  23. yup1


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    28   12:19am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike (1)  

    iwog says

    and rents are almost always stable or climbing, an investor can simply wait out
    a bad market even if it takes 10 years.

    Of course this is only if you follow your extremely short version of history. Rents have collapsed at various times in history during financial crisis.

  24. iwog


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    29   12:20am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike   Protected  

    yup1 says

    Of course this is only if you follow your extremely short version of history. Rents have collapsed at various times in history during financial crisis.

    Show me a single example and support it with actual data. I think you're wrong, but I'll give you an opportunity to show otherwise.

  25. yup1


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    30   12:21am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike (3)  

    iwog says

    Robert Shiller doesn't understand emotions, in fact he's a really shitty
    guru. I have no idea why people worship him or even give him one shred of credit
    for financial advice.

    Pull up the same graph for the Nasdaq fuckface, and then go join the other dumbass!

  26. yup1


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    31   12:25am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike (3)  

    iwog says

    Show me a single example and support it with actual data. I think you're
    wrong, but I'll give you an opportunity to show otherwise.

    The Great Rent strike of 1932. I will let you google that yourself FlammingFuckFace! You might want to check out what is happening with rents in Spain NOW also.

  27. iwog


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    32   12:29am Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    yup1 says

    iwog says

    Robert Shiller doesn't understand emotions, in fact he's a really shitty

    guru. I have no idea why people worship him or even give him one shred of credit

    for financial advice.

    Pull up the same graph for the Nasdaq fuckface, and then go join the other dumbass!

    No problem:

  28. yup1


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    33   12:31am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike (1)  
  29. iwog


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    34   12:32am Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    yup1 says

    The Great Rent strike of 1932. I will let you google that yourself FlammingFuckFace! You might want to check out what is happening with rents in Spain NOW also.

    You mean a temporary rent strike in a few apartment buildings in the East Bronx? That's not an example of rents collapsing and it is certainly not an example that indicates a market failure or even a trend. Try again.

    yup1 says

    Spain Bitch!

    BTW I don't really care what is happening in Spain. Conditions here are radically different. Besides it's only a decline of 8%. That wouldn't even make a dent in the example I gave.

  30. yup1


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    35   12:35am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    I guess that is because what is happening in Spain is what would be happening here without the Fed.

  31. yup1


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    36   12:37am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    To say Robert Shiller does not understand human emotion when he wrote a book on it is pretty fucking clueless.

  32. iwog


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    37   12:38am Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    yup1 says

    To say Robert Shiller does not understand human emotion when he wrote a book on it is pretty fucking clueless.

    I already proved that Robert Shiller was a fool in 1996 when he told Alan Greenspan about irrational emotion driving the stock market. Usually when you fail that badly, only morons give you a second chance.

    You can write a book on quantum mechanics, but it wouldn't really mean anything would it.

  33. yup1


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    38   12:45am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    You proved nothing, as usual.

  34. KILLERJANE


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    39   6:42am Sat 9 Feb 2013   Share   Quote   Permalink   Like (2)   Dislike  

    Circle jerking is a sport here!

    Copyright 2013

  35. buy short term


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    40   9:46am Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    I think the political climate is what will make the housing market appreciate in at least the short term future. Most polls show that the majority of people consider jobs to be the most important need of the country. However, 4 years of priming the pump and a depreciating dollar hasn't done much in that arena where demographics, world trade and overpriced domestic labor costs have worked against creating domestic jobs. So the only option that the president has is to divert attention away from his failures by pushing things like gun control, immigration and domestic consumption like houses.

  36. Raw


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    41   10:10am Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    yup1 says

    iwog says

    Show me a single example and support it with actual data. I think you're

    wrong, but I'll give you an opportunity to show otherwise.

    The Great Rent strike of 1932. I will let you google that yourself FlammingFuckFace! You might want to check out what is happening with rents in Spain NOW also.

    You had to go back 80 years during the "great Depression" to try and prove your point. Not very convincing.
    *** Posts with profanity like this need to be automatically deleted.

  37. iwog


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    42   2:28pm Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    Most real estate investors know that rents are relatively stable. "Rents never go down" is a cliche that is not strictly true, however it is close enough to make intelligent decisions about buying rental property.

  38. yup1


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    43   7:23pm Sat 9 Feb 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Raw says

    *** Posts with profanity like this need to be automatically deleted.

    Fuckoff!

  39. Dan8267


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    44   7:38pm Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike  

    iwog says

    Robert Shiller doesn't understand emotions, in fact he's a really shitty guru. I have no idea why people worship him or even give him one shred of credit for financial advice.

    I don't look to him for investment advice, but he seems good at macro-economics. Based on the graph below, I would have to agree with Shiller's 1997 conclusion that the market was irrational and overly exuberant. Of course, markets can remain irrational longer than you or I can remain solvent.

    I'm glad someone is thinking about the big picture. We can't all be chasing the quick dollar.

  40. iwog


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    45   9:23pm Sat 9 Feb 2013   Share   Quote   Permalink   Like   Dislike   Protected  

    Dan8267 says

    I don't look to him for investment advice, but he seems good at macro-economics. Based on the graph below, I would have to agree with Shiller's 1997 conclusion that the market was irrational and overly exuberant. Of course, markets can remain irrational longer than you or I can remain solvent.

    It was a 1996 conclusion. Anyone investing that advice was slaughtered.

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