Housing Market Bubble: No Way Out?

pmward
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Re: Housing Market Bubble: No Way Out?

Post by pmward » Wed Nov 25, 2020 12:24 pm

doodle wrote:
Wed Nov 25, 2020 12:15 pm
Yeah, the elevation vs valley arrangement in the southwest is cool. Flagstaff and Sedona have a pretty cool complimentary climates...vegas even has mt. Charleston which will stay in the 70s while it might be over 100 on valley floor. It's about 5 degrees for every 1000 feet of elevation so even in New Mexico you have escapes. It isn't the ideal of So. Cal but pretty close. There are pockets out east as well like that in and out of blue ridge or Appalachia. Climate does matter, but having lived in a bunch of different ones over the years I've learned that you quickly adapt. I never thought I'd make it out of florida...that warm weather had thinned my blood quite a bit. But I'm doing fine up in the mountains. Anything over 80 and I feel like I'm having heatstroke now. That used to be long pants weather for me a few years ago.
Haha, yeah it's 70 degrees here now and it's hoodie and sweat pants weather for me, haha. Growing up in MI 50 degrees was short and T-shirt weather! And yeah here's the thing... I could have a place in Phoenix and somewhere up in the mountains (like Flagstaff, CO, UT, or even somewhere out east in Appalachia) and live cheaper than in SoCal. But I lose the convenience of living in one home year round. There's the tradeoff. But I need outdoor access year round. I could not move back somewhere where the weather was miserable for long stretches of the year. I still don't know ultimately what I'll end up choosing, so for now both options are on the table. In the meantime we will see how my investment performance is over the next few years...
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Re: Housing Market Bubble: No Way Out?

Post by doodle » Wed Nov 25, 2020 12:38 pm

pmward wrote:
Wed Nov 25, 2020 12:24 pm
doodle wrote:
Wed Nov 25, 2020 12:15 pm
Yeah, the elevation vs valley arrangement in the southwest is cool. Flagstaff and Sedona have a pretty cool complimentary climates...vegas even has mt. Charleston which will stay in the 70s while it might be over 100 on valley floor. It's about 5 degrees for every 1000 feet of elevation so even in New Mexico you have escapes. It isn't the ideal of So. Cal but pretty close. There are pockets out east as well like that in and out of blue ridge or Appalachia. Climate does matter, but having lived in a bunch of different ones over the years I've learned that you quickly adapt. I never thought I'd make it out of florida...that warm weather had thinned my blood quite a bit. But I'm doing fine up in the mountains. Anything over 80 and I feel like I'm having heatstroke now. That used to be long pants weather for me a few years ago.
Haha, yeah it's 70 degrees here now and it's hoodie and sweat pants weather for me, haha. Growing up in MI 50 degrees was short and T-shirt weather! And yeah here's the thing... I could have a place in Phoenix and somewhere up in the mountains (like Flagstaff, CO, UT, or even somewhere out east in Appalachia) and live cheaper than in SoCal. But I lose the convenience of living in one home year round. There's the tradeoff. But I need outdoor access year round. I could not move back somewhere where the weather was miserable for long stretches of the year. I still don't know ultimately what I'll end up choosing, so for now both options are on the table. In the meantime we will see how my investment performance is over the next few years...
I've been free of property now for two years and it has its upsides. There is something very liberating about the nomadic gypsy lifestyle. I'm sure mark could speak more to that...I believe he lives out of a backpack. I live cheap and don't need to save anymore so I'm fine working whatever so as to just avoid having to tap into reserves. I plan to bounce around for a while longer. I've found it pretty easy just to pick up jobs here and there and a place to live...or we just live out of my van and it's fun always seeing what's over the next hill. Eventually I'd like to settle on a piece of raw land or maybe a house but I'm in no rush with these prices right now and there are so many places to choose from that it frankly hard to make a decision.
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Re: Housing Market Bubble: No Way Out?

Post by pmward » Wed Nov 25, 2020 2:03 pm

doodle wrote:
Wed Nov 25, 2020 12:38 pm
pmward wrote:
Wed Nov 25, 2020 12:24 pm
doodle wrote:
Wed Nov 25, 2020 12:15 pm
Yeah, the elevation vs valley arrangement in the southwest is cool. Flagstaff and Sedona have a pretty cool complimentary climates...vegas even has mt. Charleston which will stay in the 70s while it might be over 100 on valley floor. It's about 5 degrees for every 1000 feet of elevation so even in New Mexico you have escapes. It isn't the ideal of So. Cal but pretty close. There are pockets out east as well like that in and out of blue ridge or Appalachia. Climate does matter, but having lived in a bunch of different ones over the years I've learned that you quickly adapt. I never thought I'd make it out of florida...that warm weather had thinned my blood quite a bit. But I'm doing fine up in the mountains. Anything over 80 and I feel like I'm having heatstroke now. That used to be long pants weather for me a few years ago.
Haha, yeah it's 70 degrees here now and it's hoodie and sweat pants weather for me, haha. Growing up in MI 50 degrees was short and T-shirt weather! And yeah here's the thing... I could have a place in Phoenix and somewhere up in the mountains (like Flagstaff, CO, UT, or even somewhere out east in Appalachia) and live cheaper than in SoCal. But I lose the convenience of living in one home year round. There's the tradeoff. But I need outdoor access year round. I could not move back somewhere where the weather was miserable for long stretches of the year. I still don't know ultimately what I'll end up choosing, so for now both options are on the table. In the meantime we will see how my investment performance is over the next few years...
I've been free of property now for two years and it has its upsides. There is something very liberating about the nomadic gypsy lifestyle. I'm sure mark could speak more to that...I believe he lives out of a backpack. I live cheap and don't need to save anymore so I'm fine working whatever so as to just avoid having to tap into reserves. I plan to bounce around for a while longer. I've found it pretty easy just to pick up jobs here and there and a place to live...or we just live out of my van and it's fun always seeing what's over the next hill. Eventually I'd like to settle on a piece of raw land or maybe a house but I'm in no rush with these prices right now and there are so many places to choose from that it frankly hard to make a decision.
Yeah I've also put thought into my first few years of "retirement" staying put in AZ for the cold half of the year, and getting a nice camper for the cooler part of the year and going and living different places. The benefit of that is it's cheap, it also lets me test a bunch of places out to see if anywhere feels like "home" for the summer months. You leave a place with a much different impression after living somewhere for 2-3 months vs the typical 1-2 week trip.
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Re: Housing Market Bubble: No Way Out?

Post by Libertarian666 » Thu Nov 26, 2020 2:22 pm

The way out is when one of two things happens:
1. The dollar collapses completely, so houses will be $1 billion but an ounce of gold will also be $1 billion, or
2. The Fed finally throws in the towel and stops printing money to buy all the trillions in Treasuries.

One of those will happen eventually; we just don't know when or which one.

In the meantime, keep renting. Houses aren't really a good investment; they just look like it because of leverage during inflation.
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Re: Housing Market Bubble: No Way Out?

Post by SomeDude » Thu Nov 26, 2020 2:42 pm

Tomfoolery what about just decent furniture and things in your apartment and instead of having value tied up in real estate you can't transport, you have physical gold in your possession?

The government won't be able to screw with you as easy as they will if you own a house.

A good carry gun and ammo are definately a good idea.
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Re: Housing Market Bubble: No Way Out?

Post by I Shrugged » Thu Nov 26, 2020 4:02 pm

I say that 30 yr mortgages below 3% are like stealing. Get one while you can.
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Re: Housing Market Bubble: No Way Out?

Post by SomeDude » Thu Nov 26, 2020 4:16 pm

I Shrugged wrote:
Thu Nov 26, 2020 4:02 pm
I say that 30 yr mortgages below 3% are like stealing. Get one while you can.
There's the other argument. Inflation alone is likely to pay for half your home if you buy now and lock in 30 years. My wife and i were upgrading from our starter home this year and locking in 2.75%. I had to back out right before closing since my wife was bedridden with a miserable pregnancy. Moving was too much stress.

Prices feel very high but borrowing all that money at nothing interest was attractive.
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Re: Housing Market Bubble: No Way Out?

Post by doodle » Thu Nov 26, 2020 5:48 pm

Tom, are you opposed to living in most red states? There are so many affordable states out there with housing prices for a third of the figures you posted. Do you have to purchase in a specific market?
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Re: Housing Market Bubble: No Way Out?

Post by vnatale » Thu Nov 26, 2020 7:40 pm

I never looked at a house as an investment. I looked it as a place that I "own" with all the benefits that come with ownership, many of which were enumerated above by tomfoolery.

The main benefit is complete independence from any landlord telling me what I could not do.

I've owned my house since April 30, 1982. During all that time the only things the governments have made me do regarding my house is pay my real estate taxes and connect to the sewer line once it was installed on my street.

They don't make me keep any sidewalks shoveled since I do not have any. They have never complained when I let my "lawn" grow to waist level.

In addition to both obtaining freedom from a landlord's dictates and being too close to neighbors, buying a house gave me permanence where I did not have to leave because something happened to the ownership of the property I had been renting.

I have never regretted home ownership for a second. Fits into my personality of always wanting to own if possible and wanting to be as independent as possible.

Vinny
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Housing Market Bubble: No Way Out?

Post by Mark Leavy » Thu Nov 26, 2020 7:55 pm

tomfoolery wrote:
Thu Nov 26, 2020 4:32 pm
The main problem with this plan is picking a good place to store the gold. I could imagine, hypothetically if a decade ago I picked a place like Portland and now it's occupied territory, I wouldn't want my gold there!
You don't want to go there. I just emptied out my storage in Portland a few hours ago.
This town is dead and will never recover.

Safe Deposit boxes are cheap. I'm distributing everything across multiple boxes in the USA - all small town local banks in areas that are friendly to the kind of things you like, tom. South Dakota, Nevada, Utah, 'The state of Jefferson', those sorts of places...

I setup a small checking account at each bank and setup automatic payment for the boxes.
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Re: Housing Market Bubble: No Way Out?

Post by Mark Leavy » Thu Nov 26, 2020 8:31 pm

And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
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Re: Housing Market Bubble: No Way Out?

Post by I Shrugged » Thu Nov 26, 2020 9:46 pm

Mark Leavy wrote:
Thu Nov 26, 2020 8:31 pm
And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
You sell it and move.
I think you guys are rationalizing something deeper.
:)
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Re: Housing Market Bubble: No Way Out?

Post by Mark Leavy » Thu Nov 26, 2020 9:51 pm

I Shrugged wrote:
Thu Nov 26, 2020 9:46 pm
Mark Leavy wrote:
Thu Nov 26, 2020 8:31 pm
And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
You sell it and move.
I think you guys are rationalizing something deeper.
:)
That plan worked :)
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Re: Housing Market Bubble: No Way Out?

Post by Mark Leavy » Fri Nov 27, 2020 12:44 am

tomfoolery wrote:
Fri Nov 27, 2020 12:36 am
Mark Leavy wrote:
Thu Nov 26, 2020 8:31 pm
And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
Imagine I bought a house in Portland for $80k, twenty years ago and it was worth $1.2M now. Okay, you got me excited. :)
$270K and $750K
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Re: Housing Market Bubble: No Way Out?

Post by glennds » Fri Nov 27, 2020 11:42 am

Mark Leavy wrote:
Fri Nov 27, 2020 12:44 am
tomfoolery wrote:
Fri Nov 27, 2020 12:36 am
Mark Leavy wrote:
Thu Nov 26, 2020 8:31 pm
And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
Imagine I bought a house in Portland for $80k, twenty years ago and it was worth $1.2M now. Okay, you got me excited. :)
$270K and $750K
Tempted to do a little rough math on the $270k to $750k scenario.

Assuming 5% selling costs and say $5k/year for property taxes, repairs, insurance, renovations and maintenance that would not required if renting, I come up with an annualized return of about 4.5% if the house was purchased all cash.
If the house were financed, the return would drop considerably to reflect mortgage interest net of tax deduction. It would depend on LTV and rate, but a net 3% annualized return (nominal) would not surprise me.

In comparison the S&P 500, dividends reinvested, returned nominal 7% CAGR for the same period, so more than double, if the investor had the stomach to stay the course.

The $80k and $1.2M home example would probably be closer to 9-12%, so yes, exciting.

PP, annually rebalanced would be about 6.5% (real return 4.8%), relatively low volatility and basically zero time. Maybe the best of all worlds? Maybe the reason many of us are here?
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Re: Housing Market Bubble: No Way Out?

Post by SomeDude » Fri Nov 27, 2020 8:22 pm

MangoMan wrote:
Fri Nov 27, 2020 6:53 pm
glennds wrote:
Fri Nov 27, 2020 11:42 am
Mark Leavy wrote:
Fri Nov 27, 2020 12:44 am
tomfoolery wrote:
Fri Nov 27, 2020 12:36 am
Mark Leavy wrote:
Thu Nov 26, 2020 8:31 pm
And to continue that thought...

You have the same issue when trying to select a place to own property. A lot can change in 20 years. Imagine if you had bought a house in Portland.
Imagine I bought a house in Portland for $80k, twenty years ago and it was worth $1.2M now. Okay, you got me excited. :)
$270K and $750K
Tempted to do a little rough math on the $270k to $750k scenario.

Assuming 5% selling costs and say $5k/year for property taxes, repairs, insurance, renovations and maintenance that would not required if renting, I come up with an annualized return of about 4.5% if the house was purchased all cash.
If the house were financed, the return would drop considerably to reflect mortgage interest net of tax deduction. It would depend on LTV and rate, but a net 3% annualized return (nominal) would not surprise me.

In comparison the S&P 500, dividends reinvested, returned nominal 7% CAGR for the same period, so more than double, if the investor had the stomach to stay the course.

The $80k and $1.2M home example would probably be closer to 9-12%, so yes, exciting.

PP, annually rebalanced would be about 6.5% (real return 4.8%), relatively low volatility and basically zero time. Maybe the best of all worlds? Maybe the reason many of us are here?
That's actually not correct, in fact, it's the opposite. If you finance, you put down 20% (or less if lucky) and the CAGR is multiplied because the purchase price is irrelevant. Only the amount invested (down payment) and the profit over time when you sell.
What about the mortgage payments and all the other costs lol 😆
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Re: Housing Market Bubble: No Way Out?

Post by SomeDude » Fri Nov 27, 2020 9:00 pm

MangoMan wrote:
Fri Nov 27, 2020 8:42 pm
SomeDude wrote:
Fri Nov 27, 2020 8:22 pm

What about the mortgage payments and all the other costs lol 😆
Presumably, you would otherwise be paying rent, which has 'the other costs' built in. You can't live free anywhere.
Good point! I miss mom and dad.
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Re: Housing Market Bubble: No Way Out?

Post by SomeDude » Sat Nov 28, 2020 12:14 pm

MangoMan wrote:
Sat Nov 28, 2020 10:39 am
SomeDude wrote:
Fri Nov 27, 2020 9:00 pm
MangoMan wrote:
Fri Nov 27, 2020 8:42 pm
SomeDude wrote:
Fri Nov 27, 2020 8:22 pm

What about the mortgage payments and all the other costs lol 😆
Presumably, you would otherwise be paying rent, which has 'the other costs' built in. You can't live free anywhere.
Good point! I miss mom and dad.
Forgot about the parents' basement. I stand corrected; you can live for free. ::)
Live free or die hard!
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