patrick.net

May 6, 2021 at 5:37 pm

Is it possible to have a live debate between you and Patrick(patrick.net) on real estate futures?
This will help us understand two sides of “real estate” as investment.
Reply

I have lost the will to argue the point.

If it's cheaper to rent, then rent.

If it's cheaper to buy, then buy.

There are variables you have to guess at (like how long you'll be there, interest rates, etc) but you can pretty much do your projections here:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Patrick says

I have lost the will to argue the point.

If it's cheaper to rent, then rent.

If it's cheaper to buy, then buy.

There are variables you have to guess at (like how long you'll be there, interest rates, etc) but you can pretty much do your projections here:

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Come on, If You give up most everyone will.
(+ You are semi retired now so can strongly argue without pangs of employer)
The housing is "deliberately" made expensive for serfs.

I know the people in Bharat's big city can neither afford to buy or rent.
How price increases are not some "magical" enriching of society, But instead a path towards slavery of mortgage.

I know some people say, why not leave bay area and go anywhere else, This is happening all over. I did some research in Austin/Dallas prices are increasing very fast.
(Base price may be low, But also the salaries of people)

@patrick
This is the real estate industry's evil plan to take housing outside of any normal people range and may be become "rent consultants" for rich like in Manhattan...Better regular income than booty for one off sale.Elites exchanging real estate are less likely to haggle on commissions.
Look at some of statements TO SCARE PEOPLE.
Josh Dickinson seems like snake oil salesman.
https://www.sfgate.com/realestate/article/2021-05-east-bay-real-estate-overbids-hot-market-16151227.php

When a house in Berkeley sold for more than $1 million over its list price in late March 2021, it was covered in media outlets across the Bay Area, including this one.

Josh Dickinson, the founder of real estate agency Zip Code East Bay. “When my clients see a house for $1.9 million they’re almost conditioned to think it'll go over $3 million in Piedmont or North Berkeley.”

“Even we don't know as savvy agents. We don’t know when the thing is going to go bonkers,” he said. “We just try to let the market do its thing.”

Dickinson said one of the bids on the Berkeley home included free one-week stays at an Airbnb in Tuscany for the next 10 years

Dickinson has also seen plenty of offers over the years that include stock options from major tech companies and a few that have included a glut of airline miles.

farmer2021 says

14 real estate crowdfunding projects across the heartland of America.

I haven't heard of these. Care to elaborate a bit on them, and what returns + capital requirements are like?

aside - that's some nice passive income. good job.

Hircus says

farmer2021 says

14 real estate crowdfunding projects across the heartland of America.

I haven't heard of these. Care to elaborate a bit on them, and what returns + capital requirements are like?

aside - that's some nice passive income. good job.

I am still reading the article.
I found he is Asian, so His thinking will more match with Asian people who think real estate > stocks.
Ask chinese..

farmer2021 says

The housing is "deliberately" made expensive for serfs.

Well, yes, of course.

Especially by subsidizing mortgages, because most people cannot see that increasing the amount of money available for a house will drive up the price of the house, negating the subsidy.

But what can really be done? I wrote a little book, I ran a website. This is small compared to "pussy power".

It's not PC to say, but I think the biggest single factor in overpriced housing is a wife's demand for a house no matter what the cost. No house, no nookie.

And the whole establishment knows this and uses it against the public for profit. Things will change when women change, which is probably never.

Patrick says

farmer2021 says

The housing is "deliberately" made expensive for serfs.

Well, yes, of course.

Especially by subsidizing mortgages, because most people cannot see that increasing the amount of money available for a house will drive up the price of the house, negating the subsidy.

But what can really be done? I wrote a little book, I ran a website. This is small compared to "pussy power".

It's not PC to say, but I think the biggest single factor in overpriced housing is a wife's demand for a house no matter what the cost. No house, no nookie.

And the whole establishment knows this and uses it against the public for profit. Things will change when women change, which is probably never.

You hit the nail.
I don't wish this upon myself or my kids, But "depression" was a good lesson for Americans.
It showed them how to be self-sufficient and turn this country into real super power.(NoW it is just fake one)

I hate "bit-coiners" talking about money without moving their ass from chair. This is fake economy.

Patrick says

It's not PC to say, but I think the biggest single factor in overpriced housing is a wife's demand for a house no matter what the cost. No house, no nookie.

This is undoubtedly a major factor.

It’s a battle that the husband eventually loses...

BayArea says

Patrick says

It's not PC to say, but I think the biggest single factor in overpriced housing is a wife's demand for a house no matter what the cost. No house, no nookie.

This is undoubtedly a major factor.

It’s a battle that the husband eventually loses...

Yes, this is why a great kitchen can sell a house, and none of us men will ever be allowed to have a urinal in the bathroom.

The only thing attractive about (non commercial) real estate is that you can use credit to control an asset which may appreciate a little capital while providing some income (after taxes, hassles, repairs, disasters, tenants not paying, etc.)

Overall it’s not very good as investments go, but better than car collecting.

Before I do math, just consider the inherent risks of a 1. House 2. Stock mutual fund
A mutual fund is immune from fires, earthquakes, hurricanes, floods, lightning, termites, dry rot, falling trees, clandestine meth labs, etc.
A single stock in the fund could go to zero value and it affects the fund 1% or less.

I can use an example.
We had a summer house in Martha’s Vineyard which was built in 1964, with land=$30,000
Property taxes were high, in 1976 $12,000/year. They have risen since then of course.
Today Zillow thinks it’s worth $1.6 million.
If you invested $30,000 in 1964 in the S&P 500=$6.5-$7 million today.
If you had invested $12,000/year since 1964=$11 million today.
“But, you’re not counting the rent you can collect.”
I don’t count that because if you rent it out, you’re not enjoying your summer house are you?

Great analysis @clambo

Over very long periods of time, there just aren't any good investments.

Over very long periods, real estate rises just a smidge over the rate of inflation. Stocks over very long periods return about 1% over the inflation rate.

We've been in a period of about 45 years of ever decreasing interest rates. This has boosted the values of both these asset classes.

During this time corporate tax rates have plummeted, giving an extra boost to stocks.

Now it is possible that interest rates could continue to go down (in other parts of the world there are negative interest rates) and it is possible for corporate income tax rates to go down more, or even to go negative.

Patrick says

I have lost the will to argue the point.

If it's cheaper to rent, then rent.

If it's cheaper to buy, then buy.

It's not even the same market dynamics anymore.

I would add to what Patrick said, if you can afford to buy a house, and it didn't turn into a bidding war, and you can swing the payments
Then buy it, any bubble pressures not with standing.

Today is different than the double ought bubble, not because Housing only goes up and never comes back down. Because we know that's hogwash .
The issue is, government, bank shadow investors, all colluding to hide foreclosed inventory, sell it to Rental Investors, or just outright destroy them to keep them from affecting the Real Estate market. There are greater challenges for waiting out the bubble to return to expected normal values. .Too much artificial manipulation.

clambo says

The only thing attractive about (non commercial) real estate is that you can use credit to control an asset which may appreciate a little capital while providing some income (after taxes, hassles, repairs, disasters, tenants not paying, etc.)

Overall it’s not very good as investments go, but better than car collecting.

Before I do math, just consider the inherent risks of a 1. House 2. Stock mutual fund
A mutual fund is immune from fires, earthquakes, hurricanes, floods, lightning, termites, dry rot, falling trees, clandestine meth labs, etc.
A single stock in the fund could go to zero value and it affects the fund 1% or less.

I can use an example.
We had a summer house in Martha’s Vineyard which was built in 1964, with land=$30,000
Property taxes were high, in 1976 $12,000/year. They have risen since then of course.
Today Zillow thinks it’s worth $1.6 million.
If you invested $30,000 in 1964 in the S&P 500=$6.5-$7 million today.
If you ...

@Clambo, This looks like extreme case as some houses in bay area on other end were extremely profitable.
As @Tenpoundbass said , There is too much housing manipulation happening and it is not true "market"... Now which way this will go, Not sure as central planning run its course.(Even extreme central planning like USSR took decades to get exposed)

@Farmer2021 The Bay Area may be the extreme case.
The risk and tax expense and regulations still make it unattractive to me.
My friend owns a building in Fremont.
It's on top of the Fremont Someday it's toast.
His tenants won't pay him but the government prevents him from evicting anyone.
Since he complained to me about still owing property tax my net worth has increased a shitload with less risk.

clambo says

@Farmer2021 The Bay Area may be the extreme case.
The risk and tax expense and regulations still make it unattractive to me.
My friend owns a building in Fremont.
It's on top of the Fremont Someday it's toast.
His tenants won't pay him but the government prevents him from evicting anyone.
Since he complained to me about still owing property tax my net worth has increased a shitload with less risk.

See this also government intervention.
Example: Tomorrow Govt may come with regulation that any "stock gains" are taxed 80% as it was easy money.
what will you do?.. You can say that it is easy to quit stocks compared to real estate, But if all try to quit at once the value will go down.

I think Govt laws to own your primary residence are quite attractive still.
All the people I know in real estate like to buy investment property in red states as it is generally cash positive and laws are more pro landlord.
At the same time due to local NIMBY culture, Nowhere it appreciated like bay area.

It will be interesting to see what happens to housing prices, and rents in particular, once evictions start in earnest.

Is your land income all based off renting shelter? If any of it derives from more stable forms of income like farming, and you can physically protect it if you have to, then you should be fine. But if it's all dependent on people renting it at the current prices, you might want to diversify out of fiat paper, or enjoy the ride while you still can.

If you aren't aware of how our financial system works, haven't read Griffin, and see no problems with giving things to people who haven't put in the labor to earn them, or collecting interest on paper created out of thin air, then your fall will be HARD. But take hope! There is still time for the open-minded to learn and protect themselves, but it's now or never.

But you should probably just dismiss me as the doomer conspiracy theorist that I am. I'm sure you saw covid coming, with mask mandates, and GMH's(genetically modified humans). I'm sure you knew 1/4 of the workforce would go on permanent unemployment, and at least as many business's would shutter. And I'm sure you can tell me why this is all a natural part of healthy, vibrant economies, and how prices will never go down again.

Misc says

Over very long periods of time, there just aren't any good investments.

I pulled a 10x with Binance coin.

I am in enormous paper profits on BTC, ADA, LTC, ETH etc. Depends on your long term definition.....pulling those gains within 1-2 years is amazing. Mind blowing amazing.

@Farmer2021

What REITS are you investing it? I am looking to allocate some play money/high risk investments to REITS.

I have been holding ABR and APLE and added a lot to my positions during Q1 2020.

farmer2021 says

@Clambo, This looks like extreme case as some houses in bay area on other end were extremely profitable.

This is so silly.

My partner and I were amazed when I a 1972-built 1350 sq ft 4/2 home on 6k sq ft lot around the corner from us on a busy road in the wrong school district in East SJ was listed for 850K , then removed from listings in less than a week.

We both knew the bullsh*t: it was already sold as a pocket listing before it was listed at an artificially low price to entice more FOMO buyers to engage with the ®ealtors.

Sure enough, weeks later Zillow said it sold for 1.02 M. That establishes the new tax bill. The effective rate in our neighborhood is about 1.2% for such an assessment, with all manner of various and sundry junk fee assessments added. That comes to about $1200 per month.

According to Zillow, this sh*tshack will be expected to collect $3500 per month for rent. If you say so, homie. I am skeptical. It's a 49 year old house, in "average" repair state for the 49-yr old neighborhood. I should know: I live in the same floorplan of same tract, around the corner (ie, not on the main road).

I dunno Who The F*ck these morons are. Certainly not savvy investors. If they paid all cash (doubtful); zero maintenance and repairs (more doubtful); forego earthquake insurance (oh yeah, I live there, I know: it's a drained wetlands. Can you say, soil liquefaction zone? (check the geologic maps, indeed we are on that type of geology)); if they pay for no flood insurance (it's less than 100 ft from a flood control levee, and on the flood maps); and no property management fees; if they pay the same homeowner rate (ie, not landlord rate) for fire insurance; if they keep the place rented every month, every year, and never miss a payment from a tenant,..... if they do all those penny-wise stuff, they'll net just a bit over 1% per year on their $1 M cash deal.

This is not a savvy investment. It's a stupid investment. In fact it's not even an investment. It's just stupid. At least, if a Hipster investor pissed away his $1 M on crypto or GME, there's no expenses.

If they borrowed to buy it to live in it, then they are paying one hell of an "ownership premium" for the privilege of ownership.

Of a 49-year old sh*t shack. On liquefaction geology. In a flood zone. On a busy road. In the wrong school district of the wrong side of town.

Bitcoin says

@Farmer2021

What REITS are you investing it? I am looking to allocate some play money/high risk investments to REITS.

I have been holding ABR and APLE and added a lot to my positions during Q1 2020.

I am not investing in REIT.Sorry can't be much help.

Here is about "farmland" in California and I would share with you.

I like land but It is very expensive anything you look at.
California agriculture land is touching highs like 40k per acre and if you have grape vines etc. now nobody want to rent it more that 300$ a acre while it was $700 some time ago.Same for almonds and other crops and as water table recedes govt regulations may force you to fallow part of your holding.

Overall Sikh farmers have ruined the agriculture land economy due to their lust for holding land causing price appreciations.
White farmers are much smarter as they are offloading their uneconomical assets to Sikhs.
If the crop prices rebounds and we have lot of rains , Sikhs will do very well and become even bigger force in California agriculture.. otherwise lot of bankruptcies on horizon... and White farmers will be buying land from them at 50c a dollar they got... and will prove wiser.
... Time will tell..

The below paragraph is core issue of unnecessary longing... This is no different than @patrick said about house, kitchen and wives... which is ruining residential market.
(The retail space/malls or other commercial has been in downward spiral for long due to online shopping and COVID exacerbates it)
https://www.hcn.org/issues/53.3/south-agriculture-despite-discrimination-and-drought-punjabi-americans-farm-on-california
Recently during a phone interview, he became solemn as he spoke of depleted aquifers and empty dams even after rainfall. “It’s getting harder and harder. It’s not the same agriculture that my dad, my grandfather and my great-grandfather were doing,” Bains said. “But no matter (whether) it’s Punjab or California or anywhere, Punjabis will never quit farming. It’s in our DNA.”

I think that anyone who can clearly see what lies in the future essentially tires of his (or should I say "their") role as "Cassandra du jour."

Let's remember - no one believed Cassandra (which was part of her curse), and when Troy was sacked she was taken as a war bride for the victorious Mycenaeans. IOW, it brought her nothing but frustration and ultimately rape at the hands of the very danger she warned against.

farmer2021 says

White farmers are much smarter as they are offloading their uneconomical assets to Sikhs.

Ahem, sir, I think you mean "locals" vs "immigrants".

It's like with the sales of SFH here in the Bay Area.

B.A.C.A.H. says

farmer2021 says

White farmers are much smarter as they are offloading their uneconomical assets to Sikhs.

Ahem, sir, I think you mean "locals" vs "immigrants".

It's like with the sales of SFH here in the Bay Area.

Yes sir, You got that right.
Whites are much smarter and there is reason they ruled asians.
Chinese/Japanese are even more idiotic than Indians/Sikhs when it comes to real estate.
Whites are marrying asians, So not sure which thinking will win.(Wives are asian mostly, so I have some idea which way it will go)

farmer2021 says

Whites are much smarter and their is reason they ruled asians.

I grew up here. Not all "locals" are whites. Some of them are even ethnic Asians from long ago waves of immigration.

B.A.C.A.H. says

farmer2021 says

Whites are much smarter and their is reason they ruled asians.

I grew up here. Not all "locals" are whites. Some of them are even ethnic Asians from long ago waves of immigration.

Do they have same obsession with real estate?
As a Sikh I know Sikhs are conned worldwide for their "lust for land".
See example below:
https://www.aljazeera.com/features/2013/2/21/georgia-farms-face-indian-invasion
Georgia farms face Indian ‘invasion’
Thousands of Punjabi farmers have bought land in distant Georgia lured by cheap prices, angering some locals.

farmer2021 says

Do they have same obsession with real estate?

They are locals. Assimilated into the local culture. They are Americans. One of them is my partner, whose ancestors came to the US before even some of mine from Europe and Quebec.

There's also generations of Latinos like that too. Just as American as any whites. Maybe I am related to some of those, too. Local kids, all races. All Americans.

So many recent immigrants you refer to bring their values here, view our country through the lens of where they came from, and project those values onto the US (not just coveting land, but also the racist notion that locals are all whites).

B.A.C.A.H. says

farmer2021 says

Do they have same obsession with real estate?

They are locals. Assimilated into the local culture. They are Americans. One of them is my partner, whose ancestors came to the US before even some of mine from Europe and Quebec.

There's also generations of Latinos like that too. Just as American as any whites. Maybe I am related to some of those, too. Local kids, all races. All Americans.

So many immigrants bring their values here, view our country through the lens of where they came from, and project those values onto the US (not just coveting land, but also the racist notion that locals are all whites).

"not just coveting land, but also the racist notion that locals are all whites"
This is true though. US is primarily white country and white christian culture as dominant force. This is new low for "humanity" that telling the truth is now somehow considered racist.
There is also nothing racist in saying that "Asians have obsession with land and real estate". It is also true.
Also true is that Whites ruled asians in 19th and 20th century. Admitting "colonialism" is also not racist.

B.A.C.A.H. says

farmer2021 says

White farmers are much smarter as they are offloading their uneconomical assets to Sikhs.

White everything seems smarter. Have never seen a stupid white lives matter protest where the top guys get rich collecting from dumb white people chanting "white lives matter".

Bitcoin says

B.A.C.A.H. says

farmer2021 says

White farmers are much smarter as they are offloading their uneconomical assets to Sikhs.

White everything seems smarter. Have never seen a stupid white lives matter protest where the top guys get rich collecting from dumb white people chanting "white lives matter".

Yes but whites also colonized India and other places. They looted Bharat and caused famines.
They also showed extreme stupidity causing two world wars and killing millions of their own people.
The truth is always centrist for every community, One sided reporting is always propaganda.

farmer2021 says

They also showed extreme stupidity causing two world wars and killing millions of their own people.

True, that was dumb....no reason for germans to kill americans, or americans to kill japanese etc.
World wars are unnecessary all together. Just invest in drones and high tech killing machines to eliminate Muslim terrorists in the middle east and illegals at the border.

Bitcoin says

farmer2021 says

They also showed extreme stupidity causing two world wars and killing millions of their own people.

True, that was dumb....no reason for germans to kill americans, or americans to kill japanese etc.
World wars are unnecessary all together. Just invest in drones and high tech killing machines to eliminate Muslim terrorists in the middle east and illegals at the border.

I think CCP is building them to do target practice on "Americans". May be you will call them "smart" for helping elect China Joe.
East Asians also handily beat Americans on IQ tests likely by promoting vegetarianism in US like Muslim invaders did through Hindooo agents.
https://www.bloomberg.com/news/articles/2021-03-17/china-s-combat-drones-push-could-spark-a-global-arms-race
Combat Drones Made in China Are Coming to a Conflict Near You

Our IQ has been on the decline along with average hight as whites are replaced.

RC2006 says

Our IQ has been on the decline along with average hight as whites are replaced.

Americans can look at plight of Bhartis if they let invaders "set the agenda" in their country. Antifa/Feminism/PETA seems like "Hindooo" to me... a destabilizing cult created by invaders and hidden as native.
I hate colonialism, So would not like to see revenge colonialism of whites by "Asians".

We should move forward as more equitable world.

farmer2021 says

We should move forward as more equitable world.

Not going to happen until certa8n groups stop spreading division for profit and power.

RC2006 says

farmer2021 says

We should move forward as more equitable world.

Not going to happen until certa8n groups stop spreading division for profit and power.

Yes but this is historical fight. dividers and uniters are always among us.
I think the best everyone can do now is to defend "whites" as they seem to be under attack in spite of everyone saying "white privilege".(This doesn't mean not calling out overly racist white people .. which is tiny minority)
There is "white privilege" but not for working class whites.

This will help avoid pushback from whites which will eventually happen if we stay this course.
I know that elites want this division to happen, But it is not in favor of common man of any race.

farmer2021 says

https://www.bloomberg.com/news/articles/2021-03-17/china-s-combat-drones-push-could-spark-a-global-arms-race
Combat Drones Made in China Are Coming to a Conflict Near You

shit, thanks for sharing....Interesting.