patrick.net

He's basically repeating basic Econ 101. Houses have for the most of their history seldom made good investments if you compare them to other forms of investing. That isn't to say that you can't get rich investing in houses, but more that you'd be rich(er) if you invested elsewhere.

I don't think the car analogy holds much water as a car can be considered technology and a house is a commodity like a gallon of petrol or an oz of gold.

Schiller has a point in depreciation. Houses do depreciate when you compare the prices of new builts and existing ones with similar sq ft and features in the same area. So, he could be right from the point that you may not get much capital gain (average nationally) in near, medium terms. However, if you can sell those investment with zero capital gain 5 years later, there are still considerable fixed income generated from the rent. That's the major difference between houses and cars. Another question to ask is: if houses are not good investments, what's better? Stock? I rather flip houses than flip stocks. JMO.

Mobi says

if houses are not good investments, what's better? Stock? I rather flip houses than flip stocks. JMO.

companies generate profit.
houses do not.

owning the entire stock market over the long term is a reasonable form of investment.

if you want to flip/day-trade/get-rich-quick (as your quote seems to be implying) that's an entirely different story and requires a different set of skills.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

edvard2 says

A consistent upwards projection

My 401k begs to differ..

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.

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

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.

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.

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.

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...

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...

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!

http://www.pie-mag.com/articles/2459/spain-s-2011-house-prices-down-6-rents-still-in-free-fall/

http://news.kyero.com/2013/01/28/home-rental-prices-in-spain-fell-by-4-7-in-2012/

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2CB8KFfL3tw

Spain Bitch!

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

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

You proved nothing, as usual.

Circle jerking is a sport here!

Copyright 2013

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.

Raw says

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

Fuckoff!