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Will real estate ever be normal again?

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Re: Will real estate ever be normal again?

#401

Post by eloisant »

bumby wrote: post #185
willis936 wrote: post #153

Earlier quoted context omitted.

Screw the apartment. You could save so much money living out of a van. I honestly don't understand this line of thinking. "Why do people even want [tangible good]?" If an explanation is really needed: it's nice to have a large, private space. People like cars in garages, a room for their work, a room to cook, a room to relax, a room to sleep, a room to store stuff, etc. Why do people bother with any of these things?…

I think this argument gets confused because some people refer to it as an investment/asset while others refer to it in emotional terms as a means to pursue happiness. They aren’t always the same thing.

It is kinda wrong to see your primary residence as an investment. You can't sell it unless you find a different place to live.

Re: Will real estate ever be normal again?

#402

Post by gigatexal »

I came here to talk or respond to folks against seeing homes as investments. Full disclosure I own a rental and over time as my finances allow it I hope to have a few if not 10 by the time I retire such that I can sell most if not all and have something to retire on. (Not all of my retirement is in this scheme, I've a 401k and a modest IRA).

The rental I have was once our main home. When we moved to Berlin we decided to hold on to it and rent it while we were gone in case we needed a place to come back to if our Berlin experiment failed. We bought it with all the savings we had at the time we got married with a For the average worker making less than 100k like me without prospects to make multiples of that number anytime soon (or ever -- I'm not that smart) buying a home -- if one is lucky enough to -- and maybe renting it is a good way to participate in the upside of home values and also to create some long term wealth when one does not have the luxury of joining an early stage start-up on it's path to being the next unicorn or making obscene salaries at a Netflix.

I fully understand that in doing so I add myself to the market of potential buyers and/or bidders for already scarce homes and with a business mindset I participate in the speculation that is raising home prices for would-be owner-occupied homes. I don't know how to balance that with my desire to have a well balanced approach to my finances which would consist of investments in stocks (401k via mutual funds), savings, and real-estate. The world is only getting more expensive and it behooves the rational person to diversify and seek all ways to keep up so as to not be left behind or without ample funds to retire on.

So you might see me as part of the problem but at least maybe now you see where I am coming from.

Re: Will real estate ever be normal again?

#403

Post by sokoloff »

willis936 wrote: post #157
GoOnThenDoTell wrote: post #116

Earlier quoted context omitted.

Sometimes you want to modify the property, renting precludes that

I'm not even 30 and have a strong desire for RO water and an EV. Nope, that is for a higher echelon of society.

If you’re already paying for the electricity and are willing to pay your landlord to have an electrician to install a 14-50R outlet in the parking area, I’d imagine most landlords would take that deal. That’s a cost that you’d pay even as a homeowner.

Plenty of people own EVs without owning a house. I own a house, but still almost always charged at work before COVID. As in “I’d plug in at home maybe 2x per year in total, because we mostly use street parking.”

Likewise, there are portable/countertop RO systems that can usually be installed with no permanent mods to the building.

Given a strong desire for those two things, they seem achievable.

Re: Will real estate ever be normal again?

#404

Post by zohch »

drdec wrote: post #173
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

Inflation can be good for young people. If you really think there will be significant inflation, go buy a house, borrow more than you are comfortable with it necessary. Inflation will make the debt easier to deal with in time.

> If you really think there will be significant inflation, go buy a house

You realize the amount of young people who have this option is very low and getting lower by the year? So ... what?

Re: Will real estate ever be normal again?

#405

Post by sokoloff »

refurb wrote: post #289
paulcole wrote: post #127

Earlier quoted context omitted.

I think people who parrot this line try to ignore the total cost of their mortgage being quite different from the purchase price of their home, property taxes, repairs, etc. As a lifelong renter, I’ve done quite well by keeping my rent low (my preference is studio/1-bedrooms in relatively dense urban areas) and putting extra money into the market. 30 years from when I started renting, I’ll have quite a lot to show fo…

Precisely. People really underestimate the costs of home ownership. You need to include everything like: 1) mortgage interest, 2) property taxes, 3) insurance, 4) maintenance, 5) opportunity cost of down payment, 6) transaction costs buying and selling. Clearly if you see major appreciation in the value of your house you'll clearly come out ahead of renting, but I've been in two situations (one while renting, one whi…

Most homes are bought with 5x or more leverage. In a year where the stock market is up 50% and houses up 20%, recent homeowners probably did better than renters, not worse.

Re: Will real estate ever be normal again?

#406

Post by eloisant »

AtlasBarfed wrote: post #239
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

It's a bubble. Let the prices crash.

That's what I heard when I bought my house 10 years ago. The 2008 crisis was supposed to put an end to the ever rising housing prices.

Now my house is worth nearly 2x what I bought it, I pay less in mortgage than I would in rent for an equivalent house.

I imagine we'll have the same discussion again in 10 years.

Re: Will real estate ever be normal again?

#407

Post by zohch »

aeternum wrote: post #75
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

As Adam Smith said, the true price of everything is in human labor. Inflation generally raises the cost/price of new labor at the expense of historic labor. Demand for labor is still high, the price will likely continue to increase. Housing is also not a great comparison metric because it was so perturbed by 2008. New unit starts dropped precipitously and still have not fully recovered: https://fred.stlouisfed.org/se…

> As Adam Smith said, the true price of everything is in human labor.

Cite?

Also who died and made Adam Smith's word synonymous with fact?

Last I checked the true price of anything is the price I have to pay to acquire it, which is incidentally more in line with Adam Smith's actual quote which was: "The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.". The price I have to pay to acquire something translates to money, that I gained through "toil and trouble" so to speak. Quite far from the true price of everything being human labour.

Re: Will real estate ever be normal again?

#408

Post by sokoloff »

runarberg wrote: post #163
uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

There is another option: The government could buy/build/offer public housing as an alternative to the free market. It was done in the past and in other countries and I see no reason not to do it now. The way I see it (and the way you put it) the free market has failed to provide housing to people, to an extend that there is no free market solution going forward. If the government (federal/state/county/municipal/etc.)…

That $400K house the county is selling. Is it a direct comp to the $1M house the other seller is offering? If it is, where’d the county get the land so much cheaper than the market? If they had a bunch of county-owned land from original incorporation, great, but is giving it away at that price (presumably via a lottery process) the best thing for residents of the county, or is $750K a more prudent use of the people’s resources?

Re: Will real estate ever be normal again?

#409

Post by 5754797 »

uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

>> Raise interest rates and stop printing.

This is the one in which the rich lose out. I welcome it. I hope ANZ pray for it.

I hope fervently didn’t very high inflation to smash the real estate market to nothing.

Re: Will real estate ever be normal again?

#410

Post by pbourke »

uejfiweun wrote: post #45

The Fed at this point controls the whole economy and they have two options: 1. Raise interest rates and stop printing. Crazy inflation stops, but asset prices crash and we enter a major recession or depression. The end result will likely be unrest and blood in the streets. 2. Do nothing, keep printing. Inflation picks up massively. The economy keeps humming along but young people, including myself, are permanently pr…

> It doesn't even really seem like any of the high paying jobs are enough to keep up with this insane market.

Compared to two years ago, it’s much more likely that you can get paid a coastal tech salary yet live in an affordable city. These still exist in America. Here’s one that I just pulled out of a hat: Ames, Iowa. College town. Median house price $265k, which you can have for less than $1k/month with a 30 year mortgage at todays ridiculously low rates. There are hundreds of places like this across the country. You don’t need to live in the Bay Area, Seattle, NYC or Austin anymore.

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