Bulldog0156
Well-known member
Exactly why I decided to get out of the multiple rentals market.If you were to invest the same $40k in the S&P for 33 years it would worth $687k using. 9% return. S&P average is higher than 9%.
Housing Appreciation and Inflation: Future Outlook?
- Thread starter Sytes
- Start date
ismith
Well-known member
Also have to factor in inflation itself.
BigHornRam
Well-known member
Bet it had more to do with the tenets.
westbranch
Well-known member
He has a point.
SAJ-99
Well-known member
That's my point, it doesn't have the return everyone seems to think. I'm not saying it is bad, it just depends on how you look at it. Buying a house probably has a better return than renting, but you aren't going to get rich. We tend to get caught up in the big numbers and forget it is 30years of compounding.
BHR's scenario from a rent vs buy perspective
-$40,000 price = $8,000 down, $32,000 mortgage
-He locked in P&I payments of $257 for the next 30 years plus RE taxes and insurance, which would have increased over that time.
-He would have paid $60,000 in total interest (and had many opportunities to refi lower.
-Sold at $350,000 (which we keep saying is "inflated", and it may be)
-Take 3% RE commission off, so $339,550
-30 yr annualized compounded return is 7.4%, but we left out any maintenance expense (new roof, new HVAC, all the little stuff that breaks).
-A 30yr US treasury bond in mid 1992 yielded around 7.5%.
Maybe the person who buys today and locks in a payment of $1800 will look back and think it was a steal?
The entry level homes DR Horton is building around here start at about 1500 sq ft and $280/sq ft. That doesn't even count having to furnish the thing. I spent most of my youth in an 1800sq ft home that had, at times, 6 people. I think starting expectations have changed.
Although it is a great deal of many family's net worth, I don't look at your primary home as much of an investment. Doesn't really matter if you bought it cheap and it appreciated a bunch in value, because when you sell and cash out you're going to have to get right into something else to keep a roof over your head, and it likely could be just as costly. Only way your home pays off big is if you downsize a bunch or relocate to a much lower cost of living area. I guess there's also the piece of mind that a paid for home could cover a great deal of end of life expense.
If you want to invest for profit in real estate, secondary homes, rentals, land, commercial RE, etc. are likely to be better ways to pocket some cash. We've done well with midwest farmland that spits out a nice return every year from cash rent and has substantially increased in value, while providing a place for recreation as well. Also have a lake home in a prime location that has doubled in value in about 12 years. Any of these items could be cashed out without affecting our primary living situation.
If you want to invest for profit in real estate, secondary homes, rentals, land, commercial RE, etc. are likely to be better ways to pocket some cash. We've done well with midwest farmland that spits out a nice return every year from cash rent and has substantially increased in value, while providing a place for recreation as well. Also have a lake home in a prime location that has doubled in value in about 12 years. Any of these items could be cashed out without affecting our primary living situation.
I think this is key.
Owning a home outright or close enough to re-fi enough to have a $0-low monthly mortgage spells far greater retired latitude than mortgages of today deducted from pension (if former employer offered) and IRA/TSP "income".
noharleyyet
Well-known member
Fellow I know in the DFW metro specializes in high end stone outdoor kitchen/features/patio/pools. He's been building custom homes for himself for the last decade & half, but flips them just after or before he finishes them. 90k pickups, expensive deer leases, and too much golf has me thinking he has to keep the kite airborne.
BigHornRam
Well-known member
What could go wrong with this grand idea?
abcnews.go.com
Harris to propose up to $25K in down-payment support for 1st-time homebuyers
It's part of her economic agenda she will unveil Friday, her campaign says.
SAJ-99
Well-known member
I knew you and I could agree on something. Neither side has a monopoly on stupid ideas. 'Tis the season for promises. I write it off as political promise never meant to be kept. I know she has a lot of economist on staff that are going to tell her it won't do squat for housing affordability, or budget deficits, obviously.What could go wrong with this grand idea?
Harris to propose up to $25K in down-payment support for 1st-time homebuyers
It's part of her economic agenda she will unveil Friday, her campaign says.
Forkyfinder
Well-known member
- Joined
- Dec 13, 2023
- Messages
- 2,055
Why do democrats embrace price controls? What else could it be besides virtue signal?
Paul Krugman (whos quite the leftist) even acknowledged that rent control has the opposite of intended effect.
SAJ-99
Well-known member
Dems have some history to fall back on. Plenty of houses were built with Federal assistance after WWII. So the idea isn't crazy, just bad. Why do republicans embrace tax cuts when it just gives billionaires another billion? My simple answer is each side has to buy votes.
The housing market is getting some supply relief in urban areas, which will help overall. But I am not sure home builders are going to ramp up new builds. There is no incentive to do so. They can keep high prices high by maintaining a steady rate of supply. I still maintain the core problem is people owning multiple houses, Air BNB, etc.
Rent Growth Slows as Additional Multifamily Units are Completed - Forest Economic Advisors, LLC
More new multifamily units were completed in June than in any month since the 1970s.
getfea.com
BigHornRam
Well-known member
Bad sign when the Washington Compost is blasting your economic policy proposals.
longbow51
Well-known member
- Joined
- Feb 17, 2023
- Messages
- 1,015
Did I time travel? Is this 2008?
ismith
Well-known member
Yep, but much worse.
Nick87
Well-known member
I hope not.
Nick87
Well-known member
We just started a 15 house subdivision last week for "habitat for humanity". Not being torslly sure what they were all about personally. It's adjacent to a pretty nice subdivision built in maybe the early 2000's. Surprisingly the neighbors I've talked to are all for the new neighbors. The little I've read seem like it's a worth while program.
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SAJ-99
Well-known member
Nah. Just a bunch of Millennials finally being asked to leave the boomer parentsā basement. The kid got told this before and blew it off. He thought he would outlive them and inherit the house, but the parents are serious now say āyou have to be out by the time we get back in 3 weeks from the lake houseā.
BigHornRam
Well-known member
My socialist/ communist older brother has spent most of his life living at home. My parents didn't do him any favors. One summer, my folks decided to tour the USA in their 5th wheel. My brother thought it would be okay to revert the yard back to a native prairie while they were away, ie not mow the lawn. Parents were pissed when they pulled in the driveway!
BigHornRam
Well-known member
Good article.
www.strongtowns.org
The Housing Market Is a Bubble Full of Fraud, and Itās Going To Pop
The U.S. is in a massive housing bubble fueled by widespread fraud. With banks incentivized to look away and Wall Street and Washington incentivized to keep housing prices artificially high, a bottom-up approach is the only hope for bringing sanity back to the housing market.
www.strongtowns.org
