Real Estate Crash thread

[liv2ski]

Investing in the stock market is a lot different now than it was when your grandfather lost his shirt.

Lastly, paying off your house is not a guaranteed return. Your house can lose value.

Yup, it is always different this time until it isn't. In my 60 years on this planet and 50 in CA, real estate has done nothing but go up decade over decade with a few dips here and there. Our home was purchased for about $200k in 1985 and is worth about $2M now. Similar story with the rentals. The below is for all of CA. San Diego has doubled the below results as has any area within 50 miles of the beach.
If you like the stock market, have at it. Real estate has been very very good to me.

[MiddleOfNight]

Lastly, paying off your house is not a guaranteed return. Your house can lose value.

Sure the house can lose value. Local RE and the market seem to correlate to some degree, but I'm not sure what's safer.
Even if it were to be worth less than when I bought it, not paying the a monthly note will be pretty rad. That changes my quality-of-life picture pretty drastically. The soonest and safest I can get there is the goal.

I fully appreciate I need to go see a pro advisor.

[Conundrum]

There is something to be said for having your shit paid for and not owing anybody anything. That said, I was just offered more ownership in the company I work for and the money we had saved up went there instead of paying off the house. Hope that works out for us. I'm more in the no debt camp so it added some stress to my life and I don't like it.

[Name Redacted]

Yup, it is always different this time until it isn't. In my 60 years on this planet and 50 in CA, real estate has done nothing but go up decade over decade with a few dips here and there. Our home was purchased for about $200k in 1985 and is worth about $2M now. Similar story with the rentals. The below is for all of CA. San Diego has doubled the below results as has any area within 50 miles of the beach.
If you like the stock market, have at it. Real estate has been very very good to me.

That's great. Real Estate can be a good investment. Never said it wasn't. I also own multiple properties that have done well. I'll probably buy more when I can.

My point wasn't against investing in real estate. It is about paying off the debt (mortgage) vs investing. You could have paid that $200K off over 10 years or 30 years and the only difference would have been how much interest you paid on it, which under today's circumstances would not have been as much as you could make in the market. Now under the rate you might have had back then? Maybe not. At todays rates, it is not good strategy to pay low interest debt off faster when you could invest in other vehicles with better ROI. Forget the stock market, you could invest in more real estate if you wanted (and the bank would fund you). Although the RE almost everywhere feels a little over inflated right now.

[babybear]

Don't over extend yourself should be everyone's mantra, especially as you age.

this is what I keep telling myself
The pull to get a slightly larger house is strong. but now that I hit 40 yo I actually start to think about maybe wanting to retire early / reduce work rather than get into a higher mortgage.
really what I want is a larger garage lol

[Mazderati]

this is what I keep telling myself
The pull to get a slightly larger house is strong. but now that I hit 40 yo I actually start to think about maybe wanting to retire early / reduce work rather than get into a higher mortgage.
really what I want is a larger garage lol

Yes to this sentiment. Especially the Garage Mahal.

[schuss]

this is what I keep telling myself
The pull to get a slightly larger house is strong. but now that I hit 40 yo I actually start to think about maybe wanting to retire early / reduce work rather than get into a higher mortgage.
really what I want is a larger garage lol

Yep, our plan is to be paid off and pivot out of our current work when the kids hit college in about 10 years.

[Benny Profane]

Yup, it is always different this time until it isn't. In my 60 years on this planet and 50 in CA, real estate has done nothing but go up decade over decade with a few dips here and there. Our home was purchased for about $200k in 1985 and is worth about $2M now. Similar story with the rentals. The below is for all of CA. San Diego has doubled the below results as has any area within 50 miles of the beach.
If you like the stock market, have at it. Real estate has been very very good to me.

RE has higher costs, more hassles, and is much less liquid than stocks.

[liv2ski]

RE has higher costs, more hassles, and is much less liquid than stocks.

Which is a mixed blessing, as it is harder to sell when it sells off for a few years. Great news it is a leveraged investment were with as little as 3% down (on an o/o home) you have a value that is much larger hopefully appreciating over the years and if rentals, income to offset the mortgage payments and eventually income for retirement.
But ya, stocks are more liquid and good investments if you know what you are doing or just lucked into a Fed induced melt up, like we have had since the mid 80's and you never sold your S&P 500 fund you would be in the money for sure.

How much would $10,000 in 1980 be worth today?

To illustrate this, let's say that you had invested $10,000 in a low-cost S&P 500 index fund in 1980. Since Jan. 1, 1980, the S&P 500 index has generated a total return of approximately 7,670% as of this writing. This translates to a 12.1% annualized rate of return.

Assuming an expense ratio of 0.1% on your index fund (you can find even lower costs now), this means that a $10,000 investment would have turned into just over $760,000 as of Feb. 1, 2018.

[Benny Profane]

And don't forget that the stock investments are liquid, and can be used for retirement, (although 401k and IRA funds are taxable as income, which is a huge hit), but primary home appreciation don't mean squat unless you're moving from an overpriced place to an underpriced place, and most old people don't move.

[m2711c]

There is something to be said for having your shit paid for and not owing anybody anything.

That’s a nice idea, but it’s never actually achievable. Sure, you can pay off your mortgage, but you’re still going to have ongoing monthly expenses associated with that fucking property for the rest of your life or until you sell it.





Having owned property for a very long time, I can definitely see the attraction to not owning property anymore.

[Conundrum]

That’s a nice idea, but it’s never actually achievable. Sure, you can pay off your mortgage, but you’re still going to have ongoing monthly expenses associated with that fucking property for the rest of your life or until you sell it.





Having owned property for a very long time, I can definitely see the attraction to not owning property anymore.

My goal when I say that is to have a liquid savings account that covers that stuff in addition to not paying interest on things I “own”.

[Name Redacted]

Would you rather have $2M cash in the bank and be paying on a $200K mortgage or a $2M home that is paid off and $200K in the bank?

[El Chupacabra]

That’s a nice idea, but it’s never actually achievable. Sure, you can pay off your mortgage, but you’re still going to have ongoing monthly expenses associated with that fucking property for the rest of your life or until you sell it.





Having owned property for a very long time, I can definitely see the attraction to not owning property anymore.

As opposed to living in some magical place with no expenses of any kind?

[Conundrum]

Would you rather have $2M cash in the bank and be paying on a $200K mortgage or a $2M home that is paid off and $200K in the bank?

A paid for house and $1.8m in the bank. I’m not telling anyone how to do things. Just how I want to do things.

[schuss]

Would you rather have $2M cash in the bank and be paying on a $200K mortgage or a $2M home that is paid off and $200K in the bank?

Not really a good comparison as the places that lead to you banking 2 mil don't have 200k houses (generally)

[Conundrum]

$200k owed on a mortgage only means that’s your debt. You could owe $200k on a $10m house.

People successfully leverage all the time and make money doing it. I think his example sucks if he’s asking me questions on why I don’t want to be in debt. It’s a personal decision that probably isn’t the best financial decision. Comparing not wanting to owe people/institutions money can be independent of wanting to increase wealth or to “have” more.

[shroom]

it is a shame that you have to both have your cake and eat it based on the game and current competition, i would prefer not to be leveraged

net part of our high cost problem is we’re detached from paying of these assets in absolute terms, to the moon always works well with that lending model

[Toadman]

That’s a nice idea, but it’s never actually achievable. Sure, you can pay off your mortgage, but you’re still going to have ongoing monthly expenses associated with that fucking property for the rest of your life or until you sell it.





Having owned property for a very long time, I can definitely see the attraction to not owning property anymore.

IDK. I have several relatives who paid off their houses, and now just have the normal costs of homeownership. No more mortgage seems to beat perpetual rent.

Although at some point after retiring, people get to a point where they most likely will need some assisted living type situation. Having that house asset to sell and take the money to help pay for that assisted living situation has to provide some comfort. I know it did for my aunt and uncle.

[XXX-er]

the basement tennant pays more than enough rent to cover all the expenses and leave a pretty healthy budget for beer and dope

also tends the gardens which would not exist and just to stop the rumors right now ... she is not illegal

[MontuckyFried]

the basement tennant...

Your "basement tenant", eh?





Dayum, son. You cold blooded, homey.

[XXX-er]

I closed up the door to the pit ^^ and she has a separate entrance, you know so she can do the gardening eh

right now no mortgage and owing NO money is a huge legup, both GF and myself are in that situation

[lifelinksplit]

Solid bump.

Just got a letter in the mail yesterday from a realtor asking we wanted to sell and what a great sellers market it is.......we've only had our house for 2 years and live in a town of 900 people in bumfuck MT. Shit is crazy.

[Toadman]

Got an unsolicited letter in the mail with someone wanting to buy our lot. All cash. I'm not sure if it's a scam or not. But not interested. Although the lot next to ours just went pending for $85 grand more than we paid for ours last December. Timing isn't everything, but it sure counts for a lot.

[Toadman]

Mortgage rates hit a record-low for the 15th time this year the week of December 10. But in many cities, homeownership is still unaffordable.

Home prices rose faster than wages in 53 out of the top 100 largest cities in the U.S. over the past decade, according to a new study by Point2, a Santa Barbara, Calif.-based real estate search portal owned by Yardi System.

“More and more cities in America are becoming unaffordable,” said Monica Alistar, a communications strategist at Point2. “The most important takeaway is that despite mortgage rates being at a low point right now, home prices and wages can’t keep up.”

In five cities — North Las Vegas, Nev., Las Vegas, Paradise, Nev., Aurora, Colo., and Stockton, Calif. — there was more than a 50% difference between rises in home prices (89%-104% growth) and income (20%-44% growth). For instance, in North Las Vegas, home prices rose 104%, while wages increased only 29%, according to the study.

“Mortgages are becoming less affordable and buyers are becoming more cost burdened than they were 10 years ago,” said Alistar.

In 2020, housing costs represented more than 30% of income (the threshold for being considered cost burdened) in 15 top U.S. cities, up from only 13 cities in 2010, according to the study. Three cities in California — San Francisco, Fremont and San Jose — joined the list of housing-burdened cities in 2020, while Newark, N.J., left the list.

Most cost-burdened cities are on the West Coast. In 2020, Americans spent the highest percentage of their income on housing costs in Honolulu (41%), Los Angeles (41%), Oakland, Calif. (39%), San Francisco (39%) and New York (39%).