patrick.net

AD says

https://www.yahoo.com/lifestyle/sellers-4-9-million-house-195454362.html

Lol, the image on the Yahoo link is unrelated to the actual house. Yahoo shows this:



Actual house, from https://www.businessinsider.com/baby-boomer-home-value-price-retirement-tiny-home-palo-alto-2025-1



So they invested $63K in 1975 and the house now sold for $4.9M. Let's compare that to the stock market:

Me: How much would 63,000 invested in the stock market in 1975 be worth in 2025?

ChatGPT: If $63,000 was invested in the stock market in 1975 and grew at an average annual rate of 10%, it would be worth approximately $7.4 million in 2025. This is an estimate based on average returns. The actual amount could vary depending on the specific investments, market conditions, and timing of the investment.

Patrick says

Me: How much would 63,000 invested in the stock market in 1975 be worth in 2025?

Rent vs Buy calculator on NY Times
1) lowest purchase price setting is $75,000
2) assume a monthly rent of $390.63 and round up to the lowest rent price setting of $400 (based on a price to (annual) rent ratio of 16)
3) other assumptions are 100% down payment (cash buy), 30 years of owning the home, 0% down payment, 7% home annual appreciation rate, 5% rent annual inflation, 10% annual return for stock market, 3.5% annual inflation rate, etc
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Patrick says

So they invested $63K in 1975 and the house now sold for $4.9M. Let's compare that to the stock market:

Me: How much would 63,000 invested in the stock market in 1975 be worth in 2025?

ChatGPT: If $63,000 was invested in the stock market in 1975 and grew at an average annual rate of 10%, it would be worth approximately $7.4 million in 2025. This is an estimate based on average returns. The actual amount could vary depending on the specific investments, market conditions, and timing of the investment.

If they made above average money and didn't refi they probably had the house paid off by 1990. They then have a minimal tax and insurance bill and they can invest money into funds for the next 35 years.

Buying the house in this case is 100% better than renting if you own that long. 401k started right after that purchase date, so if they contributed to that after '78 they could be growing money tax free for decades. (Yes eventually they pay taxes, but could do Roth conversions along the way).

If my family bought that house I'd have well over $10M in assets and probably likely $25M, house included. Key in all this is just living in the same house for that long which for whatever reason is hard for a lot of people. And yes I'm building, so yes hypocritical.

Getting rid of most housing costs (loan) is the biggie. Once that's done you make bank. I'd say less then 5% of renters invest if it's lower than owning. Very few have that discipline. And the roof over your head ALWAYS needs to be paid for as a renter and you can be booted with notice out of nowhere or at the end of a lease.

Renting is fine, not judging. But paying for the roof over my head every month and not having the ability to stop it would give me massive anxiety. I can pay off a house. Renters are paying the taxes and insurance and probably their own insurance, so that's a moot point.

Patrick says

How much would 63,000 invested in the stock market in 1975 be worth in 2025?

First of all, unlikely they had $63k lump sum to buy those stocks, as they likely got a mortgage for the home. Secondly, they would be paying rent if they did not buy a home. In this case, the buyer would be paying just over $500/mo P&I for 30 years, even less if they refinanced (mortgage rates were 9% in 1975). By 2005, the loan would be paid off and that house payment money could be applied to that 10% stock market investment, which would total about $380,000 by 2025. Now add to that the difference during the loan period 1975-2005 where rents would greatly exceed the house payment and put that into the 10% stock market. And to be fair, during the post payoff years of 2005 to 2025, one must add in not just that $500 former mortgage payment but investing the difference of that $500 and what the rent would have been.

The initial price of the house put in the stock market is irrelevant in a rent versus buy comparison. The comparison needs to be made between mortgage payouts and rent payouts. If over that period rents were lower than mortgage, rent would be better if the savings could be invested to bring a return higher in value than a paid off house. Very unlikely. In the case of that $63k house, the renter would have a box full of receipts for his increasing cost of rent payments over 50 years while the buyer would have a paid for house plus about $1 million in stocks.

HeadSet says

The initial price of the house put in the stock market is irrelevant in a rent versus buy comparison.

It is a matter of conducting an analysis of alternatives (AoA) as far as rent versus purchase a home for different scenarios such as 100% down payment , or X% down payment with remaining (100-X)% mortgage

The NY Times rent vs buy calculator is very comprehensive such as accounting for rent inflation, home maintenance costs, equity, etc. which addresses your comments.

Patrick's Housing Trap argument bears a lot of merit as far as the opportunity cost of purchasing a home when the S&P 500 reliably returns +10% annually versus annual inflation of ~3.5%.

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AD says

Patrick's Housing Trap argument bears a lot of merit as far as the opportunity cost of purchasing a home when the S&P 500 reliably returns +10% annually versus annual inflation of ~3.5%.

Actually, that would be a comparison between putting money in a bank versus buying stocks. Rent versus buy may favor rent if one plans to move after a few short years but almost always favors buying if one stays in the house 10 years or more. Remember, the only money that should be included for stock investment comparison is the savings from rent versus mortgage payment.

HeadSet says

AD says
Patrick's Housing Trap argument bears a lot of merit as far as the opportunity cost of purchasing a home when the S&P 500 reliably returns +10% annually versus annual inflation of ~3.5%.

Actually, that would be a comparison between putting money in a bank versus buying stocks. Rent versus buy may favor rent if one plans to move after a few short years but almost always favors buying if one stays in the house 10 years or more. Remember, the only money that should be included for stock investment comparison is the savings from rent versus mortgage payment.

Yes Patrick wrote:

"So they invested $63K in 1975 and the house now sold for $4.9M. Let's compare that to the stock market:
Me: How much would 63,000 invested in the stock market in 1975 be worth in 2025?"

So his comparison was

(1) $63K to buy a home in 1975 with "100% down payment"

VERSUS

(2) invest $63K as a lump sum in 1975 in a S&P 500 index fund (Vanguard S&P 500 fund started Aug 1976).

One way to examine the above is based on whether to (1) invest as a landlord or (2) invest in S&P 500

the cap(italization) rate would apply for option or alternative (1) in addition to the average annual appreciation in the real property's value , for a townhome in the Florida panhandle the cap rate now is around 4.5% and the annual appreciation rate is around 4%

or another way is to examine based on whether to rent a home or to buy a home and run multiple scenarios with the very comprehensive NY Times Rent Vs Buy calculator such as different down payment amounts, different durations of living in the purchased home, etc

my original post #6029 was based on living in the home for 30 years

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HeadSet says

Remember, the only money that should be included for stock investment comparison is the savings from rent versus mortgage payment.

Which no one does for the most part. If you're looking for rentals it's going to be cheap because you can't afford to own. So the likelihood of "investing" the savings is low. You're generally broke.

We own and max out Roths and 401k's every year since we've owned. I wish we did with HSA's as we get older, but my wife's company doesn't offer it. It's the reverse with most homeowners that they still invest.

Data is skewed because a large amount of inner city folks being bums on food stamps and SSR. Urban areas make the situation look worse than it is in large numbers. Cut them out and 80-90% of Americans own their home. Where as 80-90% of renters won't put $1 into savings.

I'm a rural white guy. I don't know a single person that rents. I wouldn't hang with that crowd if being honest. Renting in cities at a young age makes sense. I did it. Also bought a building in Chicago. But if you can only afford a rental in the cornfields you sure as shit are broke and probably divorced with deadbeat kids. So my opinion comes from a different part of the country. Not much around here like that and easily avoidable.

WookieMan says

HeadSet says
Remember, the only money that should be included for stock investment comparison is the savings from rent versus mortgage payment.

Which no one does for the most part. If you're looking for rentals it's going to be cheap because you can't afford to own. So the likelihood of "investing" the savings is low. You're generally broke.

I agree as the bottom 40% are forced to rent and do not have any savings leftover to invest in the S&P 500.

But Patrick is alluding to the top 10 or 20% who have a lot of savings after paying living expenses, and they chose to rent and heavily invest the savings in the stock market.

Recall one recent post that showed the top 10% spending 50% of personal expenses (living expenses and discretional expenses) in the USA.

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US is short 4 millon homes

(NewsNation) — The housing supply gap continues to persist, with the nation short nearly 4 million homes.

While new home construction picked up last year for the first time since 2016, the housing gap — the shortage of available and affordable housing — totaling 3.8 million remains, according to a new analysis from Realtor.com.

The analysis found that more than 1.6 million homes were completed in 2024, the highest level in nearly 20 years.

https://www.mypanhandle.com/news/the-us-is-short-nearly-4-million-homes

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AD says

US is short 4 millon homes

I'm adding one. Doing my part.

Xiden kept Housing Inflated by paying mortgages for defaulting FHA "Subprime" 43% Debt:Income ratio Hoebags and Gimmegrants, keeping them in houses.
https://patrick.net/post/1383964/2025-03-13-fha-shennanigans-how-xiden-regime-kept

165,000 Florida Homes for sale.
Florida housing supply rises to 7+ months not seen since Financial Crisis.

"But it's just Florida!" Nope. Nashville is seeing all-time record concessions (free months of rent) and 20-30% rent drops in the past year. Reason being that builders are now having their 3-5 year construction loans come up for renewal at double the rate. They're desperate to improve vacancy rates.

Meanwhile in Texas, home builders are now charging $30-40k LESS for homes in the SAME development that were in phases completed in 2023-2024. Same exact models, brand new, going for LESS than the same model built a year or so ago.

I suggest homeloaners and landlords panic and continue to lower their prices to market, before other homeloaners and landlords take your buyers and renters. Cut prices right now! ;)

WOW. The vaunted Jan-Apr boom never happened and boy is Palm Bay crashing, Central FL tanking too. Seeing massive cuts.

Not only are the 1960 Space Race specials collapsing 10-20% in the past few months, but the 80s-90s ones too. Builders have cut another $20k from the same models when I last looked a few months ago.

Keep poundin' em down, they're still wayyy over priced.

The Great Demographic shift has begun. It's inevitable, or as a Hegelian would say, capital H History.

"Did you sell your home yet, Mr. Wallace?"
"Yes, when my neuropathy and my bad knee got worse after my 67th birthday, I couldn't climb the stairs. I simply had to sell my 2 story house for something more manageable. I had hoped to retire in it, but I just couldn't get upstairs."


Knock house prices down
Oh yeah
Knock them down
Knock 'em to the grooooound!
https://www.youtube.com/watch?v=Ct1FhmJmgh0

Also, we need a Constitutional Amendment banning Any Fed Revenue, direct or indirect, from being used to shore up State Pensions.

Illinois and California have to tax it's own citizens to pay their promises.

Illinois' unfunded pension liability is $140B, and 100% of it must come from Illinois. Raise those sales and income taxes, Pritzker, they're wayyy too low.

AmericanKulak says

Illinois' unfunded pension liability is $140B, and 100% of it must come from Illinois. Raise those sales and income taxes, Pritzker, they're wayyy too low.

That's Chicago's debt. IMRF which most government employees pay into is at 97% funded. TRS is lower at about 47% funded, but a lot of teachers pay into IMRF. A lot of teachers have retired dragging it down as well. It will balance back out as they die. Which they will in the next decade or two.

Chicago/Cook County needs to take care of itself. No state rep regardless of party will vote for statewide increases outside of those districts in that area. No help coming from the rest of the state. Chicago and Cook County has to raise taxes. All bigger cities are in this situation. No different than Detroit. The state didn't and shouldn't come in and save bad pensions because they were irresponsible.

As usual get out of urban areas now while it's relatively cheap. I wouldn't live in a town over 20k population ever again. Hard in certain states and with jobs, but it's a miserable existence. 2-5k population max is all I'll live in if it's not tropical and retired.

AmericanKulak says

Keep poundin' em down, they're still wayyy over priced.

The Great Demographic shift has begun. It's inevitable, or as a Hegelian would say, capital H History.

"Did you sell your home yet, Mr. Wallace?"
"Yes, when my neuropathy and my bad knee got worse after my 67th birthday, I couldn't climb the stairs. I simply had to sell my 2 story house for something more manageable. I had hoped to retire in it, but I just couldn't get upstairs."

I would have looked into a stair lift so I could live in the 2 story home. Take out a reverse mortgage if needed to finance the stair lift purchase.

As far as the great demographic change, there will have to be ways to cater to a large population of senior citizens. This will allow them to remain in their homes as long as they reasonably can, which impacts the real estate sales market.

Companies like Visiting Angels will have to innovate and come up with new ideas to support their clients who live independently in their homes, and do not have children to help them with their daily needs like going to the doctor's office or shopping at a local grocery.

I noticed rentals are cooling down such as in Austin and Miami:

https://www.zillow.com/rental-manager/market-trends/austin-tx/

https://www.zillow.com/rental-manager/market-trends/miami-fl/

https://www.zillow.com/rental-manager/market-trends/orlando-fl/

AD says

As far as the great demographic change, there will have to be ways to cater to a large population of senior citizens. This will allow them to remain in their homes as long as they reasonably can, which impacts the real estate sales market.

No one should be building 2 story homes anymore. Make the lots bigger and build ranches. I hate regulations, but 2 story homes are hideous and should be banned. Fire/EMT scanner at work and it's all old people falling during the day. It's literally every 5 minutes. "Older male fell down the stairs, he's breathing but needs an ambulance."

Thinking of this I might pipe in an outlet on the stairs to the basement for a lift that is 40 years out. Laundry is upstairs, but at 80 I probably don't want to fall down the stairs to watch a movie/show if there's anything not totally gay by then.

WookieMan says

AD says
As far as the great demographic change, there will have to be ways to cater to a large population of senior citizens. This will allow them to remain in their homes as long as they reasonably can, which impacts the real estate sales market.

No one should be building 2 story homes anymore. Make the lots bigger and build ranches. I hate regulations, but 2 story homes are hideous and should be banned. Fire/EMT scanner at work and it's all old people falling during the day. It's literally every 5 minutes. "Older male fell down the stairs, he's breathing but needs an ambulance."

Thinking of this I might pipe in an outlet on the stairs to the basement for a lift that is 40 years out. Laundry is upstairs, but at 80 I probably don't want to fall down the stairs to watch a movie/show if there's anything not totally gay by then.

For those "stuck with 2 floor homes like townhomes" , there should be solutions like stair lifts.

This ensures senior citizens are not forced out of their homes and forced to sell during a bad real estate market. This also will not cause an oversupply of homes being sold by senior citizens.

Also the reverse mortgage is another option for them to help them remain in it.

In addition to this, senior citizens living independently at home can get a monitoring device:

https://www.seniorsafetyreviews.com/life-alert-cost-comparison-review/

I like this LifeFone option since it has the call center contact you each day to ensure you are okay.



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I strongly believe that much of the shenanigans we've seen in the past couple of decades are about trying to flood the zone with refugees to avoid a housing crash due to Demographics.

Not just in the US, but in Europe as well. It's the reason for not only the number of Refugees, but for the speed and unwillingness to halt or discuss it.

For the obscene bailouts, and now, the FHA paying of mortgages to avoid foreclosures

There have only been 2 times in the Nation's history where there has been a pronounced decline in housing prices on a nationwide basis.

The first was the Great Depression and the second was the GFC.

In one case we let about 3000 banks fold up and people lost everything. The other we poured trillions into the banking system at the expense of everything else.

If housing prices were to decrease on a nationwide basis again, I would suspect that the government (Fed included) would send out "free money" to inflate the situation away.

AmericanKulak says

I strongly believe that much of the shenanigans we've seen in the past couple of decades are about trying to flood the zone with refugees to avoid a housing crash due to Demographics.

Not just in the US, but in Europe as well. It's the reason for not only the number of Refugees, but for the speed and unwillingness to halt or discuss it.

For the obscene bailouts, and now, the FHA paying of mortgages to avoid foreclosures

And Canada. Especially Canada.

But the other reason is the need for more workers to support retirees. And in Canada & Europe, their Healthcare systems.

This is why we need to move off of funding FICA programs from workers to a broad-based consumption source, like a VAT.

Misc says

There have only been 2 times in the Nation's history where there has been a pronounced decline in housing prices on a nationwide basis.

19th century. Ppl were leaving for the West and that suppressed much of East property values.

DeportLibtards says

This is why we need to move off of funding FICA programs from workers to a broad-based consumption source, like a VAT.

And terminate health insurance, a huge ripoff. Pay cash. Remove big hospital and big pharma and insurance pricing power.

HeadSet says

First of all, unlikely they had $63k lump sum to buy those stocks, as they likely got a mortgage for the home. Secondly, they would be paying rent if they did not buy a home.

@HeadSet the NY Times rent vs buy calculator takes all that into account.

AmericanKulak says

And terminate health insurance, a huge ripoff. Pay cash. Remove big hospital and big pharma and insurance pricing power.

They lobby hard to prevent any of that from happening. Look at the number of medical industries among the top lobbyists:

https://www.opensecrets.org/federal-lobbying/top-spenders

This is an argument for publicly financed Congressional campaigns, so people can get elected without selling out.

I'm hoping Trump starts a trend as far as making reforms to the medical insurance industry such as through Medicare and Medicaid.

https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/

College, health care and housing costs have skyrocketed over the last 25 years , hopefully demographic trends like high school seniors more wanting to go to trade school than college will help gradually reduce the inflation of college costs



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I cherish the American invention of the 30 year fixed rate mortgage. No other country on earth has them. Thar's because our forefathers didn't trust bankers a lick.

Everywhere else the mortgages are variable rate after just a few short years.

Misc says

I cherish the American invention of the 30 year fixed rate mortgage. No other country on earth has them. Thar's because our forefathers didn't trust bankers a lick.

Everywhere else the mortgages are variable rate after just a few short years.

Seems we have the 30 year because of govt interference in the mortgage markets.

DeportLibtards says

Misc says

I cherish the American invention of the 30 year fixed rate mortgage. No other country on earth has them. Thar's because our forefathers didn't trust bankers a lick.

Everywhere else the mortgages are variable rate after just a few short years.

Seems we have the 30 year because of govt interference in the mortgage markets.

Fixed rate mortgage for entire term, good. 30 years, not so much. In average and above average interest rate environments, one winds up spending more on interest than the cost of the house. Self discipline to pay off in 15 years is required, or taking a 15 year out to begin with. Having a maximum threshold of 25-30% of income going towards housing expenses is important to ensure you don’t wind up house poor.

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Scroll down at https://www.zillow.com/research/market-heat-index-34054/

and notice that most zip codes are in Florida for "buyers market"

Panama Ciy Beach, FL is not in the list of "buyers market" as its down about 10% from its all time high price set in 2022:

https://www.zillow.com/home-values/71975/panama-city-beach-fl-32407/

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ForcedTQ says

Self discipline to pay off in 15 years is required, or taking a 15 year out to begin with.

30 years 100% of the time. At minimum round up the payment monthly and toss even more at it when you have extra cash or a bonus.

You live life once. I wanna do cool things for myself and family. A 15 year makes no sense. Save and pay cash or buy though other means. A mortgage loan is not the only way to get a house.

Just the beginning. Florida is doing the usual spike and drop. Lots of people got called back to work in person back up north, or tired of Florida, or are done with hurricanes, or had it with condo boards and insurance costs.

WookieMan says

No one should be building 2 story homes anymore. Make the lots bigger and build ranches. I hate regulations, but 2 story homes are hideous and should be banned. Fire/EMT scanner at work and it's all old people falling during the day. It's literally every 5 minutes. "Older male fell down the stairs, he's breathing but needs an ambulance."

Whether they build them or not, much of the US housing supply is two story. Some folks have their laundry or main bath upstairs and it's too much bother.

AmericanKulak says

WookieMan says

No one should be building 2 story homes anymore. Make the lots bigger and build ranches. I hate regulations, but 2 story homes are hideous and should be banned. Fire/EMT scanner at work and it's all old people falling during the day. It's literally every 5 minutes. "Older male fell down the stairs, he's breathing but needs an ambulance."

Whether they build them or not, much of the US housing supply is two story. Some folks have their laundry or main bath upstairs and it's too much bother.

My problem with 2 story is the setback and easement areas. Your yard is useless. Even at 41 I'm not going upstairs to bed. I'm talking subdivision houses as well with less than 1/4 acre lots.

I'll show a drone shot of my house once done to show everyone at some point. Then I'll drone some of my neighbors houses to make my point. 2 story houses shouldn't exist. Since the 90's they've become ugly as can be with tiny lots.

I've been skeptical that any plan to repurpose federal lands could yield much housing, but this
@WSJ
analysis is making me more optimistic.

1) "About 47 million acres, or 7.3% of all federal land, falls within metropolitan areas that need more homes."

2) "Developing even 512,000 acres of the Bureau of Land Management’s lots could yield between three million and four million new homes across western states such as Nevada, Utah, California and Arizona, according to a preliminary analysis by the American Enterprise Institute, a Washington, D.C., center-right think tank."

Of course, not all of that land will be suitable for housing. Some is already in use, and others may be too far on the outskirts of MSAs. But the impact could still be significant.

The secretaries of HUD and Interior are partnering together on a project to identify federal lands suitable for housing and then fast-track development -- with an emphasis on affordable housing.

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https://x.com/jayparsons/status/1901989397178044571

DeportLibtards says

California

It may create incentives for retirees to sell their homes near the job centers and move an hour east so that they'll still be close to family and/or whatever else is keeping them in California.

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https://youtu.be/WgSgvPVOJMw?si=5cVzM8FhbZCNdOpy

Looks like rentals n multi are in in loss, anyone know what reit/stocks this might impact. Or reit / stocks prices already baked in.

Florida
https://youtu.be/6frcm2NlN3I?si=tOGsg_7LZQ6hTDTv

KgK one says

Florida

yeah Florida : https://www.zillow.com/home-values/71975/panama-city-beach-fl-32407/

Misc says

I cherish the American invention of the 30 year fixed rate mortgage. No other country on earth has them. Thar's because our forefathers didn't trust bankers a lick.

Everywhere else the mortgages are variable rate after just a few short years.

This came about during the "Great Depression" of the 1930's. Prior to this economic crisis, most home and farm loans were 10-year balloon loans (interest only until maturity, upon which the principal was due), fully callable at any time. When the banks started going under in the early 1930's they called these loans, starting with the borrowers who were one payment away from paying off their loan. In the Depression environment, many of these "almost free" debtors lost it all so that the banks could realize maximum recovery on their loans. The deadbeats who had almost nothing paid off were the last to be financially destroyed.

The power of the 30-year mortgage is not that it's 30 years, but it's un-callable. No bank can make you pay back a loan faster than you are contractually obligated per the amortization schedule.

FYI some countries have 100-year mortgages - but they are not dischargeable in bankruptcy, and IIRC are incumbent upon heirs.