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Talking stocks, trading, and investing in general - Page 688

post #10306 of 11182
Quote:
Originally Posted by the shah View Post

I knew a guy whose uncle was buying properties cash left and right. This guy decided to be like uncle, except he had no cash on hand so was getting mortgages left and right. This was in 2006 or 7. Needless to say, he defaulted on a bunch after 2008. So I guess if you wheel and deal in houses, market timing can be everything teacha.gif

Black Swan events usually hand a fair number of people their asses. teacha.gif
post #10307 of 11182
Quote:
Originally Posted by brokencycle View Post

Yes, there is seasonal and regional variances.  If you look at the numbers, regardless if the state is among those that are growing the fastest, such as Washington, or among the average states, such as Minnesota, you'll find that if you had bought at the top in 2007, you would be back to even today, so a 10 year holding period seems to be relatively safe.

The ones with the more rapid increases in price also had the most rapid drops.  Turns out some markets are more volatile than others.  It doesn't mean because there are regional differences that the long-term ownership isn't a pretty safe bet.

Not sure where you're drawing an inference about safety, I was challenging the notion that there aren't substantial dips out there to buy. When you look at regional markets there are bubbles and depressed markets all the time. If you're thoughtful, you can find an entry point somewhere.

If I were a buyer? West Virginia. Once it's head emerges from its ass, should eventually become the home for the priced out DC crowd much like Santa Cruz has welcomed those fed up with Silicon Valley.
post #10308 of 11182
I know folks who work at federal agencies and commute from West Virginia, but that's because they already owned there and cant sell. Because it's west Virginia. There's a whole in between

@piob yup the event certainly was damaging, but I meant to add that if you're wheeling and dealing in houses on a 1-5 year timeline you can still stand to lose out depending on timing, no?
post #10309 of 11182
Quote:
Originally Posted by brokencycle View Post

Yes, there is seasonal and regional variances.  If you look at the numbers, regardless if the state is among those that are growing the fastest, such as Washington, or among the average states, such as Minnesota, you'll find that if you had bought at the top in 2007, you would be back to even today, so a 10 year holding period seems to be relatively safe.

The ones with the more rapid increases in price also had the most rapid drops.  Turns out some markets are more volatile than others.  It doesn't mean because there are regional differences that the long-term ownership isn't a pretty safe bet.



http://www.fhfa.gov/DataTools/Downloads/Pages/House-Price-Index-Datasets.aspx#qpo


I would say so.  Look at the inflation adjusted graph I posted.  About the only time you would have lost money on a 10 year ownership is 1910-1920.  Maybe if you bought in 2000 or 2001 too.

Shiller took a look at US housing for the entire 20th C. -»

"You might be more interested to know that the average annual home price increase for the U.S. during the whole 1900 - 2012 period was only 3.1%/year -- just a shade better than the inflation rate of 3.0%/year."

And yeah Topeka vs Manhattan etc etc but still way lower than most think (or behave wink.gif )
post #10310 of 11182
Of course, there are the untaxed dividends of rent not paid (less the cost of maintenance, etc.). If you buy more than you need, that percentage won't be high, but it is still there.
post #10311 of 11182
Quote:
Originally Posted by SirReveller View Post


Shiller took a look at US housing for the entire 20th C. -»

"You might be more interested to know that the average annual home price increase for the U.S. during the whole 1900 - 2012 period was only 3.1%/year -- just a shade better than the inflation rate of 3.0%/year."

And yeah Topeka vs Manhattan etc etc but still way lower than most think (or behave wink.gif )

 

Why 2012?  There have been four years of recovery.  Why not 2000?  Or 2015?

post #10312 of 11182
Quote:
Originally Posted by the shah View Post


@piob yup the event certainly was damaging, but I meant to add that if you're wheeling and dealing in houses on a 1-5 year timeline you can still stand to lose out depending on timing, no?

For sure but that's "wheeling and dealing" vs. just taking on a primary residence.
post #10313 of 11182
'Coz that was the best article I found on it :P

Add 70bps for endpoint bias. Still stinks.
post #10314 of 11182
Quote:
Originally Posted by the shah View Post

I know folks who work at federal agencies and commute from West Virginia, but that's because they already owned there and cant sell. Because it's west Virginia. There's a whole in between

@piob yup the event certainly was damaging, but I meant to add that if you're wheeling and dealing in houses on a 1-5 year timeline you can still stand to lose out depending on timing, no?

Nowhere did I mention a commute to dc - I would bet a viable DC satellite economy forms there so commutes become minimal, or hell a high speed rail.

There were tons of properties in DC in the 80s you couldn't give away, and now look.
post #10315 of 11182

I'm convinced.  I'm going to give up my mortgage, and go live in a studio apartment for $400 a month, and I'll put my $800/mo in the bank earning zero percent (the extra I would have spent on my mortgage) until I can save up enough to buy my house in cash.  That way no bank is holding me hostage.  In 21 years, I'll be able to afford a $200k house, which if we assumed a 3% average inflation, would be a $100k house today, so as long as house prices don't appreciate and my rent doesn't go up, I'm golden.

post #10316 of 11182
I had the basement flood to the tune of a $10K foundation repair a few summers ago. Landlord footed the bill. Of course did I build a sick clubhouse garage? No, my friend who owns his house did that.

Repairs v pride of ownership.

Lots of pros and cons to tally, some non-financial.
post #10317 of 11182
Quote:
Originally Posted by brokencycle View Post

I'm convinced.  I'm going to give up my mortgage, and go live in a studio apartment for $400 a month, and I'll put my $800/mo in the bank earning zero percent (the extra I would have spent on my mortgage) until I can save up enough to buy my house in cash.  That way no bank is holding me hostage.  In 21 years, I'll be able to afford a $200k house, which if we assumed a 3% average inflation, would be a $100k house today, so as long as house prices don't appreciate and my rent doesn't go up, I'm golden.

In Europe this is pretty common. Many don't acquire any kind of property until late into their 30's. Ask GreenFrog about it, he's the resident expert on Spain.

As I mentioned above, the savings would go into some vehicle able to earn a return. And $800 a month isn't much to save. For a $200k house the savings rate would need to be about 2k a month, in which case it's a 4-5 year cycle. That outright purchase would save you $150k in interest for the lifetime of the mortgage - almost the price of the home itself. The mortgage ladder is a sucker's game.

A home purchased outright gives you the ability to move there, continue saving and perhaps purchase a rental property outright in another few years. Now you are earning a return + savings which means you can repeat this cycle numerous times while it accelerates. This is exactly what my father did, who retired at 53 and has never worked a day since. His properties eventually get passed to me, instead of all life's work being siphoned off to a bank.

Another example is my 27 yo brother in law. Instead of buying a house, he bought a duplex. Then 2 years later he sold and bought a 4 plex. That property already earns him a return and he lives for free in a 1br apt. At 27.

Back to your point, if all you can really save is $800, the more intelligent path might be to bring a down payment that can easily be converted into rental income in the face of hardship. So for example if the property is rentable for $800 a month, you'd need create a mortgage that is somewhere below that. Rough math says a $50k down payment would do it, followed by a full on pay down until the property is owned outright.
post #10318 of 11182
Quote:
Originally Posted by idfnl View Post


In Europe this is pretty common. Many don't acquire any kind of property until late into their 30's. Ask GreenFrog about it, he's the resident expert on Spain.

As I mentioned above, the savings would go into some vehicle able to earn a return. And $800 a month isn't much to save. For a $200k house the savings rate would need to be about 2k a month, in which case it's a 4-5 year cycle. That outright purchase would save you $150k in interest for the lifetime of the mortgage - almost the price of the home itself. The mortgage ladder is a sucker's game.

A home purchased outright gives you the ability to move there, continue saving and perhaps purchase a rental property outright in another few years. Now you are earning a return + savings which means you can repeat this cycle numerous times while it accelerates. This is exactly what my father did, who retired at 53 and has never worked a day since. His properties eventually get passed to me, instead of all life's work being siphoned off to a bank.

Another example is my 27 yo brother in law. Instead of buying a house, he bought a duplex. Then 2 years later he sold and bought a 4 plex. That property already earns him a return and he lives for free in a 1br apt. At 27.

Back to your point, if all you can really save is $800, the more intelligent path might be to bring a down payment that can easily be converted into rental income in the face of hardship. So for example if the property is rentable for $800 a month, you'd need create a mortgage that is somewhere below that. Rough math says a $50k down payment would do it, followed by a full on pay down until the property is owned outright.

 

So you think my best course of action is to lower my standard of living by moving into a less expensive apartment to save for a house I can already easily afford just so I don't have to a sucker to the bank?  Maybe I can really save money by moving into the assisted living facility with my mom!  You think my best course of action is to stop paying 3.5% interest (which is effective less because of the tax deduction) on a 30 year note while putting money in investment accounts averaging 7-8% gains just so I don't have to be a sucker to the bank?

My life's work isn't being siphoned off by the bank.  I pay almost half my income to income taxes at various levels, my mortgage payment is less than 20% of my income.  Who is really siphoning off my life's work?  

 

I looked at duplexes - the only ones in my price range were shit holes filled with less than desirable tenants in a crappy part of town.  When you walk into an apartment that has six adults living in a three bedroom duplex that rents for $800/mo, they're all home, and they have massive big screen TVs in every room, you think "maybe I don't want to deal with that."  But you're right, I'm poor, stupid and bad with money.  If only I was born into a family that I could have inherited property from! 

post #10319 of 11182
If you don't have a home, how can you open up a home equity line of credit?

That's just not the millenial way...
post #10320 of 11182
Quote:
Originally Posted by otc View Post

If you don't have a home, how can you open up a home equity line of credit?

That's just not the millenial way...

 

Quote:

The Discover report found that 51.3% of those homeowners between 30 and 34 (who have owned for three years of more) have taken a home-equity loan out against their home. Only 29.4% of those between 35 and 44, 19.9% of those between 45 and 54, 25.7% of those between 55 and 64, and 22.3% of those 65 and older also said they took out a home-equity loan against their home.

 

The results come from a survey of 1,428 consumers, conducted earlier this year. The survey didn’t cover the dollar amount of the loans.

The most popular reasons the youngest group took the loans were vacations (43.3%) and emergency cash (41.8%), followed by home remodels (41.1%), medical expenses (36.2%) and weddings (31.2%). For the other age groups, debt consolidation and home remodels were the top responses.

 

That's worded a bit funny to me.  So half of homeowners between 30-34 have taken out a home equity loan.  Of that half, almost half did it for a vacation, so 25% of home owners between 30-34 borrowed money against their house for a vacation?  1/6 of that same group borrowed money for their wedding?  That's impressive.

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