« First « Previous Comments 89 - 128 of 185 Next » Last » Search these comments
There is basically zero correlation between interest rates and nominal house prices.
Look at Orange County, which has tracked with San Jose and other coastal areas of CA:
Over the past ~30 years, US inflation is 100%.
Over the past ~30 years, OC/US median household income is up 100%.
Over the past ~30 years, OC home values (in expensive areas) are up 200%.
The math does not add up. Oh wait, it does. Interest rates have dropped from 10 to 4%, making a payment cheaper and the overall purchase price higher. I don't care if it has been discussed to death; that does not make this an invalid argument.
becuase it is split adjusted. your 4.68M is more like 700K. There was no 26 bagger in Apple in the last 5 years, more like a 5 bagger (with dividends)
Yo need to revisit your math basics!
becuase it is split adjusted. your 4.68M is more like 700K. There was no 26 bagger in Apple in the last 5 years, more like a 5 bagger (with dividends)
Yo need to revisit your math basics!
Who cares, Apple is no 26 bagger the last 5 year. It was 180 ish back then, or 25 or so split adjusted + lots of divdends the last 2. don;t need to count the dividends. It is a 4 bagger with cash dividends banked.
For example you do not buy a plane because you travel, or a hotel because you vacation.
thing is, traveling is a temporary consumer demand.
housing is different; we all need a secure place for our stuff regardless of our situation, and that's not something the Invisible Hand can currently provide outside of purchase or lease of a home of some sort.
At the extreme edge it is possible to create a serviceable home out of an RV, but that is pushing things and certainly not for everyone, and doesn't work at all outside of designated campgrounds and otherwise camping-friendly areas.
The dynamics of housing in the US has been relentless rent rises, more relentless in the better (higher-wage) areas.
What my parents rented for $300/mo in El Cerrito now rents for $2000, $500 more than inflation. 150hrs of (pre-tax) minimum wage work in 1974, 222hrs now. Same story in Salinas, what was $400/mo in the late 70s is pushing $2000/mo now. What I rented for $700/mo in LA in 1991 now rents for $2000/mo.
While the past can't predict the future, clearly the current status quo is biased towards a rising cost of living in housing.
How can it not, when there's so much debt tied to that valuation?
Shows we still have a $2T debt overhang, and our rising population isn't helping matters:
The bulls telling me it's a great time to buy does zero good when purchase price of SFR is 6.5x income+, but apt rents are 25% of take home(even condos are 4.5x income). Even in the 2009-2012 timeframe, if I bought, it would be an area I wouldn't have wanted to live long term but I'd be perma stuck there(homes were still $350-600k).
I just viewed a 3/3 2400 sq ft fully modernized upgraded home built in mid 90's in Henderson, NV(nice suburb of Las Vegas) listed at $239k
Scare tactics aren't necessary. I have 457 account. Retirement with no house payment, no state income tax, and $1200/yr property tax. I think my backup plan is pretty sweet. It would be nice not paying rent, but as far as what i can afford? Meh. And this way I can retire in 13 years at 55, rather than at 70.
Also FWIW, the great time to buy in LA was not 2009-2012....I know 3 people who bought in LA suburbs in that time frame. One was a professional who bought a middle range townhome. The other two had incomes in the mid to high $100's, bought modest homes in modest neighborhoods, and likely had the highest household incomes in a several block radius.
The time to buy in LA was in the 90's when interest rates were higher, but prices were low, particularly in the middle of the decade. Prices in some ok neighborhoods dropped to $130-175k, even in an are like west LA or Lakewood. Unfortunately I was in college until 1996, and by 2002, house prices had permanently eclipsed what I could afford, even with an income quite above average.
The bulls telling me it's a great time to buy does zero good when purchase price of SFR is 6.5x income+, but apt rents are 25% of take home(even condos are 4.5x income). Even in the 2009-2012 timeframe, if I bought, it would be an area I wouldn't have wanted to live long term but I'd be perma stuck there(homes were still $350-600k).
You hit the nail on the head. I think for a lot of people on this board who rent, it's not that we don't want to buy necessarily, it's that we can rent for much less than the cost of buying. I don't want to be cash poor...I like renting because I have more disposable income to save/invest or handle unexpected expenses along with the flexibility to move for my career or whatever other reason.
The bulls telling me it's a great time to buy does zero good when purchase price of SFR is 6.5x income+, but apt rents are 25% of take home(even condos are 4.5x income). Even in the 2009-2012 timeframe, if I bought, it would be an area I wouldn't have wanted to live long term but I'd be perma stuck there(homes were still $350-600k).
You hit the nail on the head. I think for a lot of people on this board who rent, it's not that we don't want to buy necessarily, it's that we can rent for much less than the cost of buying. I don't want to be cash poor...I like renting because I have more disposable income to save/invest or handle unexpected expenses along with the flexibility to move for my career or whatever other reason.
That is the case initially in high priced areas, but as time goes by the rents keep increasing while mortgage payments remain mostly flat and eventually almost disappear.
All you need to do is go back 20 years. Your conclusion would have been exactly as it is now, but those who bought homes are sitting pretty.
Think longterm.
The time to buy in LA was in the 90's
Yep, the last time a SoCal bubble burst back to a more realistic point. The 2010 drop in prices was not a bubble bursting. The banks and their cronies in government would have none of it. Now we are 10% from a full recovery and the economy is marching forward full steam...or something like that.
All you need to do is go back 20 years. Your conclusion would have been exactly as it is now, but those who bought homes are sitting pretty.
Think longterm.
As I stated earlier in this thread, there is nothing to support the idea that the next 20 years will be anything like the previous. In housing, when the government and banks manipulate the market, 20 years is not a "long-term" vision.
INVESTMENT101: Past performance is not a guarantee of future potential.
That is the case initially in high priced areas, but as time goes by the rents keep increasing while mortgage payments remain mostly flat and eventually almost disappear.
All you need to do is go back 20 years. Your conclusion would have been exactly as it is now, but those who bought homes are sitting pretty.
Think longterm.
But we don't want to live in crappy old homes just so we can own them. What's the average time people spend in a house if they own? Like 5-7 years? The best way to make your method work is to stay there for over 10 years, but then you've spent that 10 years in an old, small house with lots of maintenance.
All you need to do is go back 20 years. Your conclusion would have been exactly as it is now, but those who bought homes are sitting pretty.
Think longterm.As I stated earlier in this thread, there is nothing to support the idea that the next 20 years will be anything like the previous. In housing, when the government and banks manipulate the market, 20 years is not a "long-term" vision.
INVESTMENT101: Past performance is not a guarantee of future potential.
You know what can be guaranteed? People from all over America and the world will continue to flock to the most desired places. Coastal California is way up there on the list. Given that scenario, prices must increase in the long run.
Think longterm.
But we don't want to live in crappy old homes just so we can own them. What's the average time people spend in a house if they own? Like 5-7 years? The best way to make your method work is to stay there for over 10 years, but then you've spent that 10 years in an old, small house with lots of maintenance.
That is not thinking long term. You make sacrifices in the first few years to better enjoy the rest of the years.
You know what can be guaranteed? People from all over America and the world will continue to flock to the most desired places. Coastal California is way up there on the list. Given that scenario, prices must increase in the long run.
That's what everyone said in 2005. Direct quote from a mortgage banker: "soon California will only be doctors and lawyers!!!"
When a location becomes prohibitively expensive, its desirability wanes. You can't support a metro area of 20 million with massively overpriced housing.
That is not thinking long term. You make sacrifices in the first few years to better enjoy the rest of the years.
A few years? More like 10. I'd rather invest the difference in stocks/bonds, have the disposable income for emergencies, and wait til I can afford to buy the house I really want or wait until parity is reached with rents.
You know what can be guaranteed? People from all over America and the world will continue to flock to the most desired places. Coastal California is way up there on the list. Given that scenario, prices must increase in the long run.
That's what everyone said in 2005. Direct quote from a mortgage banker: "soon California will only be doctors and lawyers!!!"
When a location becomes prohibitively expensive, its desirability wanes. You can't support a metro area of 20 million with massively overpriced housing.
Housing itself must change over time. In California we have small houses with small lots compared with the Mid West. We have lots of condos that take up very little land. Manhattan does not even have small houses on small lots. They have no houses anymore. Coastal Cal especially San Francisco is heading in that direction.
Housing itself must change over time. In California we have small houses with small lots compared with the Mid West. We have lots of condos that take up very little land. Manhattan does not even have small houses on small lots. They have no houses anymore. Coastal Cal especially San Francisco is heading in that direction.
For sure. If these necessary changes make a median Fullerton house increase 3-fold to $1.5 million over the next 25 years (like the previous 25), I will toast you a bottle of expensive Champagne (because I will be a rich fucker too).
or wait until parity is reached with rents.
Not sure where you live, but I have been in Orange County for 33 years. The only time I have actually seen parity with rents was in early 2012. It took a great recession to achieve that, and that too for a very short window of opportunity.
You have parity in Nevada, Arizona and other nearby states.
Housing itself must change over time. In California we have small houses with small lots compared with the Mid West. We have lots of condos that take up very little land. Manhattan does not even have small houses on small lots. They have no houses anymore. Coastal Cal especially San Francisco is heading in that direction.
For sure. If these necessary changes make a median Fullerton house increase 3-fold to $1.5 million over the next 25 years (like the previous 25), I will toast you a bottle of expensive Champagne (because I will be a rich fucker too).
Your'e on dude. How about the "Olde Ship" in downtown Fullerton? It's an authentic British Pub. I hear downtown Fullerton is a wild party town on weekend nights.
Your'e on dude. How about the "Olde Ship" in downtown Fullerton? It's an authentic British Pub. I hear downtown Fullerton is a wild party town on weekend nights.
haha ok. so if not 1.5M, you're buying the bottle because I will have taken your advice and still be in debt...ha.
Fullerton downtown is not crazy like a college town, but a good second. I didn't know you were in OC. Where?
Not sure where you live, but I have been in Orange County for 33 years. The only time I have actually seen parity with rents was in early 2012. It took a great recession to achieve that, and that too for a very short window of opportunity.
You have parity in Nevada, Arizona and other nearby states.
San Diego. I know parity is a rarity and would be a hilarity, but I'd rather just wait til my kids are out of high school and then get a nicer place in Escondido or outside the Poway school district where I am now.
Look at Orange County, which has tracked with San Jose and other coastal areas of CA:
Over the past ~30 years, US inflation is 100%.
Over the past ~30 years, OC/US median household income is up 100%.
Over the past ~30 years, OC home values (in expensive areas) are up 200%.The math does not add up. Oh wait, it does. Interest rates have dropped from 10 to 4%, making a payment cheaper and the overall purchase price higher. I don't care if it has been discussed to death; that does not make this an invalid argumen
If the price growth were due to interest rates, you'd see it across the US, and not just in Orange County. You don't, however, indicating that growth in OC is more due to increased demand (people migrating west) than to any interest rate changes.
Toilet just overflowed.
A. Call the plumber
B. Get shit all over my hands and feet
C. Call the landlord 7pm Friday night
There is only one free and easy answer.
f the price growth were due to interest rates, you'd see it across the US, and not just in Orange County. You don't, however, indicating that growth in OC is more due to increased demand (people migrating west) than to any interest rate changes.
It's a fair argument but prices elsewhere are lower due to lack of demand AND lack of building restrictions. Just because prices have not kept up elsewhere is not a compelling logical step in my opinion. Not everyone is willing to mortgage to their eyeballs.
In California we have small houses with small lots compared with the Mid West. We have lots of condos that take up very little land.
See, that's why you need to come to NJ. We have large houses with large lots, and you can buy them for 1/3 of what you pay in CA...
Plus, we have propane!
We don't even have water. All we have is Mickey Mouse.
Based on the the average 5-7 move cycle, very few people make money on their "purchase". The renters in that time frame usually come out ahead.
An average of 6% annual appreciation will get you about 50% appreciation in that time frame. Enough for a healthy down payment to move up.
I told you, I'd sell you guys water... We had 8" of rain one day last week. I'll give the Patnet crew a special deal!
Just got the same offer today from my mother (Chicago). Gotta keep it in the family sorry
n average of 6% annual appreciation will get you about 50% appreciation in that time frame. Enough for a healthy down payment to move up.
What was the average in the early 90s after a small boom? From 2006 to 2010 after a boom? I made a spreadsheet with 5% appreciation in 2006 when my rent was increasing 5 to 10% annually. Then I bought. OOPS. Didn't walk away from that with a down payment. In fact I LOST my original down payment.
The bull argument is just that...bull. it's all the same as blathering bulls in 2005.
So again, the appreciation rate for homes was very similar to the general inflation rate.
But but but strategist said if I buy today I will have enough to buy up in 5 years. So if I buy at 500k now I will make 250k by 2019 and be able to buy 1M. Clearly Shiller is just a loser permabear
Toilet just overflowed.
A. Call the plumber
B. Get shit all over my hands and feet
C. Call the landlord 7pm Friday night
There is only one free and easy answer.
Update. Landlord paid maintenance to snake the house and seal the toilet while I watched football.
Renting sucks.
n average of 6% annual appreciation will get you about 50% appreciation in that time frame. Enough for a healthy down payment to move up.
What was the average in the early 90s after a small boom? From 2006 to 2010 after a boom? I made a spreadsheet with 5% appreciation in 2006 when my rent was increasing 5 to 10% annually. Then I bought. OOPS. Didn't walk away from that with a down payment. In fact I LOST my original down payment.
The bull argument is just that...bull. it's all the same as blathering bulls in 2005.
An average of 6% annual appreciation
6% is a pipe dream. You only get that in rare or short term situations. The average appreciation is in the 2% - 3% range, and when you factor in annual inflation, it's basically a break even at best.
6% in Coastal Cal has been the average for decades. With 4 % interest rates the home is as good as free.
Right after the boom, buying in 2006 you would have lost. Buying in early 2012 you would have gained. I was lucky and ended up with 60% after getting several town homes in Ladera Ranch in early 2012.
Credit goes to my wife. She practically made me buy them because she feels comfortable with a steady income (rent) as opposed to my feast or famine earnings. I owe her for us being financially independent and debt free today.
it's basically a break even at best.
Wait what you know math too???????
What was the average in the early 90s after a small boom? From 2006 to 2010 after a boom?
How's this?
Case-Schiller Index
The price of existing homes increased by 3.4% annually from 1987 to 2009
LOL. You guys know all the math tricks.
What if you used 1987 to 2007? Or 1987 to 2014?
Based on the the average 5-7 move cycle, very few people make money on their "purchase". The renters in that time frame usually come out ahead.
An average of 6% annual appreciation will get you about 50% appreciation in that time frame. Enough for a healthy down payment to move up.
What you forgot to calculate is that NEW house you move up to will cost you 50% more too...
Not in California for a comparable area unless the home is very old. Most of the value is in the land.
So, you're going to try and tell me if you made 50% selling an existing house, the new house in the same area didn't jump the same 50% in price?
It would jump 50%, most likely a bit bit more.
So, the net affect is that you didn't make much on your 6% great appreciation, since you have to pay equal or more for the next house?
I see what you mean.
Your equity would remain the same if you rolled it over to the next home.
Your loan would remain the same if the next home is the same price. Your loan would increase if you are moving up. Odds are, if you started with a 3.5% down on your entry level home, you may not have PMI on the next purchase, as you now have equity.
With 4 % interest rates the home is as good as free.
FREE? You do need a math class!!!
Odds are, if you started with a 3.5% down on your entry level home, you may not have PMI on the next purchase, as you now have equity.
Sorry but if moving "up" from PMI-loan to conventional is the American dream then America sucks
becuase it is split adjusted. your 4.68M is more like 700K. There was no 26 bagger in Apple in the last 5 years, more like a 5 bagger (with dividends)
Which is greater? 4.68M or 3.4M?
With 4 % interest rates the home is as good as free.
FREE? You do need a math class!!!
He's an economics major, give him a break!
Is that your wife in the background threatening you with great bodily if you don't go to bed?
And in a stupid quote to match your quote " Rent the house and invest the difference in the stock market"
damn you got me - I am realtor. LOL. Speaking of stupid.
the quote should be...buy at the right time and pay less to buy than to rent and invest the difference in the stock market. That's why I am doing. :)
I
With 4 % interest rates the home is as good as free.
FREE? You do need a math class!!!
He's an economics major, give him a break!
I was trained to be wrong. That's how I got an "A"
A good economist is supposed to be wrong.
« First « Previous Comments 89 - 128 of 185 Next » Last » Search these comments
http://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
#investing