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dunnross
2012 Jun 25, 8:34am
i dont want to go back and forth with this, but buying a house is a hedge against inflation like an equity. just a different avenue to diversify your portfolio. especially if its where you can live and raise your family.
Historically, real estate has been one of the worst hedges against inflation. This is because, real estate is tied to the credit markets, and as credit markets collapse, so does housing. At best, your house will be able to preserve its nominal price, but, nowhere close to the real price. If you want a good hedge against inflation, sell your house, rent, and take the proceeds from the sale and buy gold with it.
How many people buy a house and live in it for thirty years? The average American moves every 5 years. You get married have kids, relocate for jobs, get divorced then downsize when kids move away etc.
How many people can move and buy a new house while keeping the first as a rental?
If you plan on having a completely predictable life, same job, same neighborhood, same spouse for the next 30 go for it.
There is absolutely nothing wrong with buying. If however your life is a little more unconventional. Renting is great. I rent a great house, and I know I will not be here for thirty years but I am very relaxed. I do not worry about anything.
I like the flexibility.
PockyClipsNow
2012 Jun 25, 9:04am
Why is there almost no one from NY/manhattan on this board?
Super expensive area - more than Bay Area. Is it because NY is rent controlled and renters never ever want to own due to being subsidizes with rent control 4eva? I bet thats a large part plus too much CA talk on this board.
freak80
2012 Jun 25, 4:02pm
If you want a good hedge against inflation, sell your house, rent, and take the proceeds from the sale and buy gold with it.
But then you have to pay someone to store it safely. And if things really hit the fan, hope they don't just make off with it.
Me, I'm planning on hiding out with Apocalypsefuck.
Tangential but relevant: Charles Hugh Smith on investing in the housing "bottom" and the potential for rents to drop significantly in the near future:
http://www.oftwominds.com/blogjune12/housing-bottom6-12.html
If you want a hedge against inflation, buy stocks. Use mutual funds or pick some but it's easier with funds.
Stocks will defeat inflation, cash won't.
New Renter
2012 Jun 26, 4:14pm
Me, I'm planning on hiding out with Apocalypsefuck.
Me too - I'll be bringing the potatoes
History tells us that fiat currency has a 100% chance of failing.
How do you figure? Last I checked, pretty much all countries use a fiat currency. It looks to me like all non-fiat currency has a 100% failure rate and fiat currencies won.
Asset-backed currencies didn't "fail"; their holders had their non-fiat money forcibly converted into fiat money. That money retained its value until government-sponsored inflation started eating away at it (in literally every single case).
I think you're misunderstanding what it means for a currency to "fail". I suppose the (post-WWII) Deutsche Mark and French Franc also "failed" when the Euro came into being.
tatupu70
2012 Jun 29, 2:20am
I think you're misunderstanding what it means for a currency to "fail". I suppose the (post-WWII) Deutsche Mark and French Franc also "failed" when the Euro came into being.
OK--regardless of ones definition of a failing currency, the fact that every major nation is currently using a fiat currency is de facto proof that fiat currencies don't have a 100% failure rate.
Of course they don't. Swiss Francs are a perfect example of a great currency.
However, on the other hand, they are backed by a little gold aren't they?
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I dont understand why everyone on this site is such an absolute housing bear. Some even claiming to be renters for life.
History tells us that fiat currency has a 100% chance of failing. Buy now for a reasonable price in comparison to the rental market, go to sleep, and wake up years from now paying 2012 dollars with a fixed interest rate on your asset. With all of the debt problems and the Federal Reserve's commitment to printing money... i'd rather have things over cash...
We all have to live somewhere and pay to do so. Who here really believes that 30 years from now when my mortgage is paid off and I have an asset, that you will be in a better position renting and having no equity.
Unless... However, you have faith in those pesky greenbacks sustaining value over the long-term and not just a figment of our imagination of actually being worth something.
#housing