patrick.net

This is a great video, and worth watching.

There is a lot of denial going on in Real Estate today because of what has happened to the market place since 1998.

The 1990s were certainly a great time to buy property. We have had nothing but volitility, and exhuberance ever since.

It's just hard to predict how far our government, or governments globally, will go to prop up property prices, and save the banking industry as we know it.

He owns 2 houses. Enough said. No excuses.

golfplan18 says

Despite the fact that house prices crashed, wiped out millions of loanowners, and wiped out the illusory equity of an entire generation, people persist in believing owner-occupied housing is a good investment. Most people believe house prices appreciate 5% to 10% or more each year and by simply owning real estate they can become wealthy. It doesn’t work that way.

I would like Shiller to explain why my house inspite of a housing crash is worth 4 times more than it was 25 years ago. That is 6% growth compounded every year. The same goes for everyone else I know who purchased in Southern California.

Raw says

golfplan18 says

Despite the fact that house prices crashed, wiped out millions of loanowners, and wiped out the illusory equity of an entire generation, people persist in believing owner-occupied housing is a good investment. Most people believe house prices appreciate 5% to 10% or more each year and by simply owning real estate they can become wealthy. It doesn’t work that way.

I would like Shiller to explain why my house inspite of a housing crash is worth 4 times more than it was 25 years ago. That is 6% growth compounded every year. The same goes for everyone else I know who purchased in Southern California.

Because the worth of your house gets conflated into the worth of the land it sits atop of, silly. Your house decays over time, and requires upkeep and maintanence. The land that's included in the piece of real estate, is what appreciates. Your house depreciates.

errc says

Because the worth of your house gets conflated into the worth of the land it sits atop of, silly. Your house decays over time, and requires upkeep and maintanence. The land that's included in the piece of real estate, is what appreciates. Your house depreciates.

So the structure depreciates, while my investment appreciates.
A 6% bottom line return with tax benefits would be a no brainer.
Therefore Shiller is dead wrong. Would that be right?

If a person can afford a home at current cost using a fixed rate mortgage then why not? When it is time to retire their housing expense will be minimal if not non-existent. Plus rent rises. That monthly mortgage payment will stay the same. I live in SF Bay area and have paid close to 220K in rent over the last 10 years.