U.S. Housing Prices Explosion Making Repatriation a Less Realistic Option for Many?

[KhunLA]

7 minutes ago, BritManToo said:

or a homosexual.

Same sex marriage now legal in many places.  Does that mean the bottom gets the house now.  Top or Butch loses ????

[heybruce]

35 minutes ago, newnative said:

     I thought your post was a bit simplistic because it only referenced a few statistics.  People's financial decisions are not explained in a few statistics.   Renting vs. home ownership is also a lot more than a few statistics.  I could cite a statistic that home ownership is still the American Dream of 74% of Americans, despite other investments perhaps offering a better return.  The personal stories I referenced were used to illustrate that more than just statistics enter into the equation.  I'm sure many other home owners have their own stories. 

     I don't think, by the way, that borrowing money from a relative automatically puts one in the 'privileged class'.  The lender may or may not be in that class but if someone needs to borrow money, he probably isn't.  And, lending and borrowing $10,000 is not exactly high finance either, come to think of it.  

      What I find most curious in your first post, and this one, is you make a special point of mentioning the high interest rates of the 1980s and how this prevented some people from buying a home.  But, your first post was all about how buying a home is a bad investment.  So, if we follow your logic, those people shut out in the 1980's were actually done a huge favor because they were prevented from buying a property which would 'only' likely double in price in 30 years.  Or, might have not even doubled. Or, might have lost money.  And, those taxes.  Phew!  Lucky them!   Dodged a bullet!   I imagine they all invested in that S&P index fund you mentioned and tripled their money, instead.  Happy ending.

      But, suppose, like me, you aren't of the privileged class.  How do you invest in that S&P index fund if you don't have a big chunk of money to invest in the first place?   Yes, you could send a little money each month--if you had a little money left each month after paying all the monthly expenses, including the rent, which in my case went up at least 5% every year, while my paycheck didn't.  Most months I was just breaking even, with no savings.  Little or nothing left to send to the index fund.

      So, we're back to the question of how do you create a little wealth for yourself if you're not of the privileged class, while still having the big monthly expense of keeping a roof over your head.   For me, a huge part of my monthly take home pay in expensive northern Virginia was going to rent, which, as I said, increased each year. 

     That chunk of monthly rent money was the biggest amount, and really the only amount, for me to work with in terms of any investment.  But, always looming, I still had to keep a roof over my head and not be homeless.  So, I chose to invest in me, rather than the landlord.   Something I could invest my rent money in that might only double in 30 years was better for me than a zero investment in something that would triple in value.  

       

     

"How do you invest in that S&P index fund if you don't have a big chunk of money to invest in the first place?"

 

If you are an average person, you would take the difference between the average mortgage payment, $2064  https://www.businessinsider.com/personal-finance/average-mortgage-payment?op=1, and the average rental payment, $1164  https://ipropertymanagement.com/research/average-rent-by-year, and invest that $900 a month in something that offers better long-term returns than the housing market.

 

BTW, I don't think you understand the consequences of long term capital gains being applied in non-inflation adjusted terms.  Since you like family stories, I'll give you one.  My father sold the house he lived in for decades for a price that was, in inflation adjusted terms, equal to what he had paid for the house.  However in non-adjusted dollars he had made a huge "profit", and had to hand over a significant amount of the money to the IRS.  So he lost money on the house.

 

Millions of people are subjected to that kind of situation.  But you don't hear their stories, you only hear the stories of people who bought and sold at the right times and places.

[newnative]

28 minutes ago, BritManToo said:

Now tell us a story about all the married guys who paid for a house and lost it to their wife in a divorce! 50% of marriages end in divorce, mostly the women keep the house.

 

Any investment with a 50% chance of a total loss ain't that great IMHO.

Obviously not a consideration if you're 'true forced lonely' or a homosexual.

     Yes, and 50% of marriages don't end in divorce.  And, not all divorces end with the wife getting the house.  Nine states in the US split assets 50/50 with a divorce.   With just a 50% chance of success, why do people invest in a marriage in the first place?   My goodness, it's sooo simple.  Stay single and invest in that S&P index fund the other poster mentioned.  Easy peasy. 

      Except, it's not.  It's life, which is not simple or easy.  Or cut and dried.   In any case, it's difficult to predict the future with any investment and there are so many variables and considerations in play.  Which sort of makes my point with my previous point--there's more involved than just a few statistics.  

[BritManToo]

1 minute ago, newnative said:

Yes, and 50% of marriages don't end in divorce.  And, not all divorces end with the wife getting the house.  Nine states in the US split assets 50/50 with a divorce.   With just a 50% chance of success, why do people invest in a marriage in the first place?   My goodness, it's sooo simple.  Stay single and invest in that S&P index fund the other poster mentioned.  Easy peasy. 

Considering most women contribute nothing to a married couples house purchase, are you claiming a 50% chance of losing half your money (best case) is a good investment?

[newnative]

22 minutes ago, heybruce said:

"How do you invest in that S&P index fund if you don't have a big chunk of money to invest in the first place?"

 

If you are an average person, you would take the difference between the average mortgage payment, $2064  https://www.businessinsider.com/personal-finance/average-mortgage-payment?op=1, and the average rental payment, $1164  https://ipropertymanagement.com/research/average-rent-by-year, and invest that $900 a month in something that offers better long-term returns than the housing market.

 

BTW, I don't think you understand the consequences of long term capital gains being applied in non-inflation adjusted terms.  Since you like family stories, I'll give you one.  My father sold the house he lived in for decades for a price that was, in inflation adjusted terms, equal to what he had paid for the house.  However in non-adjusted dollars he had made a huge "profit", and had to hand over a significant amount of the money to the IRS.  So he lost money on the house.

 

Millions of people are subjected to that kind of situation.  But you don't hear their stories, you only hear the stories of people who bought and sold at the right times and places.

     In my case, there was not a big difference between what I was paying in rent and what my monthly condo expense was with the small condo I bought.  They were about equal, even without the mortgage tax advantages figured in.  That's how I knew I could afford to buy if I could just scrape up the down payment--I would be spending about the same each month.   Back then, I wouldn't have had an extra $900 to invest each month.   

     In your father's case, did he have a mortgage?  If so, did you figure in his tax savings over the life of the mortgage?   How about the satisfaction of home ownership that 74% of Americans strive for?  What's the value of that?  For me, it's high.   I know it was for my parents, and is for my 5 siblings.  Perhaps it was for your father, as well.   In any case, he did end up with a chunk of money, even if some of it went to taxes.   Could he have made more as a renter?  Maybe.  Would he have been happier renting all those years?   It's not always just about the money.

    One can always make a case for doing something and getting better results.   Invest that $900 each month and reap the rewards.  That's assuming people have the discipline and the $900 actually gets invested each month and not spent on some bright bauble of the moment, instead.  Big assumption.  That's also assuming past investment returns will continue at the same pace in the future. 

     Looks good on paper but we don't live life on paper, although some end up living in cardboard boxes--a fate I didn't want.   Having to keep a roof over my head was my discipline to not fritter away my money but to keep focused on making the monthly mortgage payments, the best investment with my poor financials at the time.   

[newnative]

1 hour ago, BritManToo said:

Considering most women contribute nothing to a married couples house purchase, are you claiming a 50% chance of losing half your money (best case) is a good investment?

    I'm not claiming anything, just stating a fact that 50% of marriages do not end in divorce.   I would dispute your claim that 'most women contribute nothing'.  I don't think that's the case these days, with so many married women working.   Over 72% in the US in 2019, according to the Bureau of Labor Statistics.   In any case, whether a married couple has invested in a home or an S&P index fund, if they divorce the assets will be split, by various formulas that some will view as fair or unfair.  

[BritManToo]

2 minutes ago, newnative said:

I don't think that's the case these days

Not relevant what you think. 

In the USA men earn 75% of all earnings, and women spend 75% of it. Men save, women spend, it's the why things work. 

[heybruce]

52 minutes ago, newnative said:

     In my case, there was not a big difference between what I was paying in rent and what my monthly condo expense was with the small condo I bought.  They were about equal, even without the mortgage tax advantages figured in.  That's how I knew I could afford to buy if I could just scrape up the down payment--I would be spending about the same each month.   Back then, I wouldn't have had an extra $900 to invest each month.   

     In your father's case, did he have a mortgage?  If so, did you figure in his tax savings over the life of the mortgage?   How about the satisfaction of home ownership that 74% of Americans strive for?  What's the value of that?  For me, it's high.   I know it was for my parents, and is for my 5 siblings.  Perhaps it was for your father, as well.   In any case, he did end up with a chunk of money, even if some of it went to taxes.   Could he have made more as a renter?  Maybe.  Would he have been happier renting all those years?   It's not always just about the money.

    One can always make a case for doing something and getting better results.   Invest that $900 each month and reap the rewards.  That's assuming people have the discipline and the $900 actually gets invested each month and not spent on some bright bauble of the moment, instead.  Big assumption.  That's also assuming past investment returns will continue at the same pace in the future. 

     Looks good on paper but we don't live life on paper, although some end up living in cardboard boxes--a fate I didn't want.   Having to keep a roof over my head was my discipline to not fritter away my money but to keep focused on making the monthly mortgage payments, the best investment with my poor financials at the time.   

So you don't like my posts when I use referenced sources about home prices, home loan interest rates, average mortgage payments and average rental payments, and you don't like my anecdotal example either.  There's no pleasing some people.

 

Your experience with real estate was a good one.  Congratulations.  However most people don't do so well in real estate, and some do very poorly. 

 

As my references indicate, most people would do better financially if they took the difference between what they would pay in mortgage payments and what they would pay in rent and invested that in a stock market index fund.  Some people do better in real estate, but most don't.

 

Also, the satisfaction of home ownership must be balanced with the restrictions of home ownership; a house is an anchor.  Have a great job prospect somewhere else?  Too bad, you're currently underwater on your house mortgage and the house market in your area is terrible.  If only you'd rented, you wouldn't have to stick with the lousy, low pay job you have.

[newnative]

3 minutes ago, BritManToo said:

Not relevant what you think. 

In the USA men earn 75% of all earnings, and women spend 75% of it. Men save, women spend, it's the why things work. 

     Women actually now earn 85 cents to every dollar a man earns in the US so the gap is finally closing.  Women do spend-- going to the grocery store and buying food to feed the family, buying clothes for the kids, spending on the kids at the doctor and the dentist, buying underwear for hubby who is too lazy to shop for himself, buying the Christmas and birthday presents for the family and relatives, taking and paying for hubby's suits at the dry cleaners, buying housewares and whatnot to keep the house running . .  .   Yes, spend, spend, spend.  Shameful.

[EVENKEEL]

29 minutes ago, heybruce said:

So you don't like my posts when I use referenced sources about home prices, home loan interest rates, average mortgage payments and average rental payments, and you don't like my anecdotal example either.  There's no pleasing some people.

 

Your experience with real estate was a good one.  Congratulations.  However most people don't do so well in real estate, and some do very poorly. 

 

As my references indicate, most people would do better financially if they took the difference between what they would pay in mortgage payments and what they would pay in rent and invested that in a stock market index fund.  Some people do better in real estate, but most don't.

 

Also, the satisfaction of home ownership must be balanced with the restrictions of home ownership; a house is an anchor.  Have a great job prospect somewhere else?  Too bad, you're currently underwater on your house mortgage and the house market in your area is terrible.  If only you'd rented, you wouldn't have to stick with the lousy, low pay job you have.

Every time I moved I kept my house and rented them out. Did it twice, all paid for years ago. Nice little earners.

[heybruce]

29 minutes ago, EVENKEEL said:

Every time I moved I kept my house and rented them out. Did it twice, all paid for years ago. Nice little earners.

Sometimes a great approach.  It depends on local markets, timing, the financial circumstances of the owner, and finding good tenants.

[newnative]

4 minutes ago, heybruce said:

So you don't like my posts when I use referenced sources about home prices, home loan interest rates, average mortgage payments and average rental payments, and you don't like my anecdotal example either.  There's no pleasing some people.

 

Your experience with real estate was a good one.  Congratulations.  However most people don't do so well in real estate, and some do very poorly. 

 

As my references indicate, most people would do better financially if they took the difference between what they would pay in mortgage payments and what they would pay in rent and invested that in a stock market index fund.  Some people do better in real estate, but most don't.

 

Also, the satisfaction of home ownership must be balanced with the restrictions of home ownership; a house is an anchor.  Have a great job prospect somewhere else?  Too bad, you're currently underwater on your house mortgage and the house market in your area is terrible.  If only you'd rented, you wouldn't have to stick with the lousy, low pay job you have.

      I like your posts; I just don't find your few statistics to be very relevant in the real World, where there is more than just financial gain in play in the equation of renting vs. buying.  If I rent and invest the supposed savings each month, 30 years down the road I will maybe earn more than I would buying a home. 

      Ok, all fine and good.   But, there's more to it than just an investment.  More to it than comparing the return on the buying of a stock vs. buying, say, gold.  You don't live in either of those.  We're talking about where you'll spend a good part of your life--in the home you own or someone else's you rent.  That's important, at least to me.  But, hard to assign a value.

      I would question your statement that most people don't 'do better' in real estate.  As opposed to what?  Religiously sending that $900 off each month to the index fund?  Providing they actually do that?   Yes, perhaps a bigger return there but that's disregarding all other factors.

      I never found owning a home to be restrictive and where is the housing market 'terrible'?  This whole thread is about the housing price 'explosion'.  But, even if one market is actually terrible does that mean don't buy anywhere?   Despite your gloom and doom regarding a home purchase, about three-fourths of Americans are happy they purchased a home, 'anchor' or not.   

     By the way, I also liked your father's story--you dodged all my questions about it, though.   I wonder if he counted himself among the three-quarters who were happy they purchased a home.  If yes, how do you figure in that happiness when you're calculating his home profit when he sold?

[heybruce]

9 hours ago, newnative said:

      I like your posts; I just don't find your few statistics to be very relevant in the real World, where there is more than just financial gain in play in the equation of renting vs. buying.  If I rent and invest the supposed savings each month, 30 years down the road I will maybe earn more than I would buying a home. 

      Ok, all fine and good.   But, there's more to it than just an investment.  More to it than comparing the return on the buying of a stock vs. buying, say, gold.  You don't live in either of those.  We're talking about where you'll spend a good part of your life--in the home you own or someone else's you rent.  That's important, at least to me.  But, hard to assign a value.

      I would question your statement that most people don't 'do better' in real estate.  As opposed to what?  Religiously sending that $900 off each month to the index fund?  Providing they actually do that?   Yes, perhaps a bigger return there but that's disregarding all other factors.

      I never found owning a home to be restrictive and where is the housing market 'terrible'?  This whole thread is about the housing price 'explosion'.  But, even if one market is actually terrible does that mean don't buy anywhere?   Despite your gloom and doom regarding a home purchase, about three-fourths of Americans are happy they purchased a home, 'anchor' or not.   

     By the way, I also liked your father's story--you dodged all my questions about it, though.   I wonder if he counted himself among the three-quarters who were happy they purchased a home.  If yes, how do you figure in that happiness when you're calculating his home profit when he sold?

I replied to a post from IAMFALANG that painted real estate as an always win by pointing out the financial restrictions imposed by interest rates and the fact that average house prices barely increase faster than inflation and are not a great investment.  People who have done well in real estate frequently brag about it and often exaggerate their success.  I posted a counter narrative because I and friends of mine fell for the nonsense in the '80's.  I speak from experience when I state that house prices don't always increase faster than inflation.

 

Yes, there is more to owning a house than the financial aspect, but there is good and bad there as well.  Houses need maintenance, often expensive maintenance.  The also need to be insured, and that can be expensive as well.  And they are an anchor.  The satisfaction of home ownership needs to be balanced against these things.

 

Regarding my father, he was so certain that he could make money investing in real estate that he bought land next to his house certain that it would make him rich.  He worked until he died of a heart attack at 69 and was far from rich.  None of his property investments paid off, he would have done much better with a stock index fund.  I don't know how much satisfaction he got from ownership.

[Jingthing]

This is anecdotal but I think quite on point to this topic. 

There is an expat in Colombia that I've been in contact with for many years now.

He fits the profile of the type of expat that I don't think can realistically repatriate now almost perfectly. 

Low social security check. About 1,200 a month and he doesn't pay for Part B. 

No savings or investments. He literally lives on his check in Colombia. If he needs a big purchase which for him might be a few hundred dollars up, he saves for it.

His rent in Colombia is about 300 for very nice, modern, large places, in very desirable areas.

Quite decent government supervised private health insurance costs him about 40 dollars a month. 

His politics are right wing.

About four years ago he said something like, well I can always move back to the U.S. There are places in the U.S. where I can live a decent life on my income. Not the glamor places of course.

My response was, yes, you can find such places but your quality of life is going to be radically degraded. 

Well, well, well, out of blue, without prompting, in response to inflation particularly housing inflation in the U.S. he said -- NO, moving back is impossible now. 

He wants to live in Colombia for the rest of his life. I hope he can do that. 

If he is pushed out of Colombia, he would be looking for a new Colombia, not the U.S. 

[Mac Mickmanus]

47 minutes ago, Jingthing said:

This is anecdotal but I think quite on point to this topic. 

There is an expat in Colombia that I've been in contact with for many years now.

He fits the profile of the type of expat that I don't think can realistically repatriate now almost perfectly. 

Low social security check. About 1,200 a month and he doesn't pay for Part B. 

No savings or investments. He literally lives on his check in Colombia. If he needs a big purchase which for him might be a few hundred dollars up, he saves for it.

His rent in Colombia is about 300 for very nice, modern, large places, in very desirable areas.

Quite decent government supervised private health insurance costs him about 40 dollars a month. 

His politics are right wing.

About four years ago he said something like, well I can always move back to the U.S. There are places in the U.S. where I can live a decent life on my income. Not the glamor places of course.

My response was, yes, you can find such places but your quality of life is going to be radically degraded. 

Well, well, well, out of blue, without prompting, in response to inflation particularly housing inflation in the U.S. he said -- NO, moving back is impossible now. 

He wants to live in Colombia for the rest of his life. I hope he can do that. 

If he is pushed out of Colombia, he would be looking for a new Colombia, not the U.S. 

Which Country did you relocate to, when you moved to Central America and how long have you been back in Thailand for  ?

[Jingthing]

The best of all possible housing worlds.

 

 

[newnative]

7 hours ago, heybruce said:

I replied to a post from IAMFALANG that painted real estate as an always win by pointing out the financial restrictions imposed by interest rates and the fact that average house prices barely increase faster than inflation and are not a great investment.  People who have done well in real estate frequently brag about it and often exaggerate their success.  I posted a counter narrative because I and friends of mine fell for the nonsense in the '80's.  I speak from experience when I state that house prices don't always increase faster than inflation.

 

Yes, there is more to owning a house than the financial aspect, but there is good and bad there as well.  Houses need maintenance, often expensive maintenance.  The also need to be insured, and that can be expensive as well.  And they are an anchor.  The satisfaction of home ownership needs to be balanced against these things.

 

Regarding my father, he was so certain that he could make money investing in real estate that he bought land next to his house certain that it would make him rich.  He worked until he died of a heart attack at 69 and was far from rich.  None of his property investments paid off, he would have done much better with a stock index fund.  I don't know how much satisfaction he got from ownership.

      If I remember correctly you said your father had to pay a large tax bill on the profit on his home when he sold so his property investment must not have lost money, even if he might have made a better return on something else--or, perhaps worse..  You never said whether he had a mortgage but if he did that would have earned him tax benefits during the mortgage years.   

      I certainly agree that if you can choose the right investments--and have the discipline to stick with it--you have the possibility to garner a bigger return than with real estate, depending on how the investment does and where the real estate is.   However, I'm not sure most people have that discipline; I know I don't.

      Real estate isn't the only way to invest money but it was my only avenue with my income at the time.  As I have said, the monthly money set aside for housing was the only investment money I had.   Buying a condo rather than continuing to rent put that money to work for me, not the landlord.  Obviously, if you have more money to work with, your options also increase.

     For me, using that money to buy property rather than wasting it on rent paid off.  All my friends did the same thing at the time--we were young with little or no savings to invest--but we all had that housing money to do something with each month while keeping that roof over our heads. 

    We were fortunate to live in an area where real estate appreciated nicely.   Most of us moved around a number of times, taking our profits and buying slightly better each time--some moved from a condo to a townhouse to a single-family home.   I think this was common.  I do believe had I continued to rent I would have never gotten ahead and I would probably be living on a shoestring right about now. 

     Sorry about your bad experience with real estate in the 1980s.  Timing can be important with real estate, and sometimes patience is needed.   I don't know the particulars but perhaps had you held the property you might have had a better outcome in due time.   Case in point:

     The last property I sold in the US was a Reston, VA condo.   I had bought it as a foreclosure in 2009, paying $170,000.  I thought I was getting a bargain because the previous owner paid $350,000.  This for a 1 bedroom condo!  A good example of the real estate madness of that period.

    Little did I know, the market was not yet at rock bottom and the condo continued to decrease in value--to $160,000.   I was not going to sell at a loss, so when my partner and I decided to move to Thailand in 2010 we rented it out.  And, continued to rent it out until 2014, making some money while paying down the mortgage.  

    By that time we were tired of trying to manage the rental from Thailand.   The condo had finally  increased in value from $160,000 to $179,000 so we decided to sell, making a small profit as we used Craigslist to find a buyer and a relative to handle the sale and avoid realtor fees.

     Selling seemed like a good idea at the time.  Wrong.  Somehow I've gotten on Zillow's mailing list and periodically they send me updates on this condo I sold.   Last update in July had the condo at $235,300.  Thanks, Zillow, for periodically reminding me of my failure to be patient.

      In any case, it's been an interesting discussion.   Except for my youngest niece who just got out of college, all my friends and my very large, extend family, both here and in the US,  own property rather than renting.   I've enjoyed reading your different point of view.   Have a good day.

[heybruce]

15 minutes ago, newnative said:

      If I remember correctly you said your father had to pay a large tax bill on the profit on his home when he sold so his property investment must not have lost money, even if he might have made a better return on something else--or, perhaps worse..  You never said whether he had a mortgage but if he did that would have earned him tax benefits during the mortgage years.   

      I certainly agree that if you can choose the right investments--and have the discipline to stick with it--you have the possibility to garner a bigger return than with real estate, depending on how the investment does and where the real estate is.   However, I'm not sure most people have that discipline; I know I don't.

      Real estate isn't the only way to invest money but it was my only avenue with my income at the time.  As I have said, the monthly money set aside for housing was the only investment money I had.   Buying a condo rather than continuing to rent put that money to work for me, not the landlord.  Obviously, if you have more money to work with, your options also increase.

     For me, using that money to buy property rather than wasting it on rent paid off.  All my friends did the same thing at the time--we were young with little or no savings to invest--but we all had that housing money to do something with each month while keeping that roof over our heads. 

    We were fortunate to live in an area where real estate appreciated nicely.   Most of us moved around a number of times, taking our profits and buying slightly better each time--some moved from a condo to a townhouse to a single-family home.   I think this was common.  I do believe had I continued to rent I would have never gotten ahead and I would probably be living on a shoestring right about now. 

     Sorry about your bad experience with real estate in the 1980s.  Timing can be important with real estate, and sometimes patience is needed.   I don't know the particulars but perhaps had you held the property you might have had a better outcome in due time.   Case in point:

     The last property I sold in the US was a Reston, VA condo.   I had bought it as a foreclosure in 2009, paying $170,000.  I thought I was getting a bargain because the previous owner paid $350,000.  This for a 1 bedroom condo!  A good example of the real estate madness of that period.

    Little did I know, the market was not yet at rock bottom and the condo continued to decrease in value--to $160,000.   I was not going to sell at a loss, so when my partner and I decided to move to Thailand in 2010 we rented it out.  And, continued to rent it out until 2014, making some money while paying down the mortgage.  

    By that time we were tired of trying to manage the rental from Thailand.   The condo had finally  increased in value from $160,000 to $179,000 so we decided to sell, making a small profit as we used Craigslist to find a buyer and a relative to handle the sale and avoid realtor fees.

     Selling seemed like a good idea at the time.  Wrong.  Somehow I've gotten on Zillow's mailing list and periodically they send me updates on this condo I sold.   Last update in July had the condo at $235,300.  Thanks, Zillow, for periodically reminding me of my failure to be patient.

      In any case, it's been an interesting discussion.   Except for my youngest niece who just got out of college, all my friends and my very large, extend family, both here and in the US,  own property rather than renting.   I've enjoyed reading your different point of view.   Have a good day.

I made it very clear that my father's house had not appreciated in inflation adjusted terms, but the IRS does not adjust for inflation in determining if an investment was sold at a profit.  Surely a real estate whiz like you understands this.

 

You had the luck to be living and working in an urban area that was appreciating rapidly.  Most of the country doesn't appreciate that much.  You also had the luck to have parents who could loan you $10,000 many years ago.  What would that be in today's dollars?  If you got the loan in 1980 it was the equivalent of $36,000 in today's money.  If the loan was in 1990 it was the equivalent of $27,700.  Most of us don't have parents that can spare that kind of cash.

 

So, as I posted much earlier, if you are lucky enough to have the means to buy at the right time and place, real estate works out great.  However for most most people in most times and places it not a great investment, and can be a costly mistake.  And even for those with the means, you can never be sure you're buying in the right time and place.

 

The real estate market is like a Las Vegas casino.  When you're in the casino you hear lots of people talk about how much they've won.  The majority, who lost money, keep quiet.  People do the same regarding real estate profits and losses.  That's why people entering the real estate market need to take the stories they hear with a huge grain of salt.

[ExpatOilWorker]

Looks like housing prices are starting to fall.

 

[GypsyT]

I didn't know stats are this depressing for new home buyers:

 

https://www.fool.com/the-ascent/research/average-house-price-state/

 

Not fun to be young and starting life in Sun shine states when 90% goes for housing....

 

"Overall, median and mean home prices have made similar gains. Between 1980 and 2020 the median home price has increased by 416% and the mean has increased by 420%."

Edited August 2, 2022 by GypsyT
added something

[newnative]

1 hour ago, GypsyT said:

I didn't know stats are this depressing for new home buyers:

 

https://www.fool.com/the-ascent/research/average-house-price-state/

 

Not fun to be young and starting life in Sun shine states when 90% goes for housing....

 

"Overall, median and mean home prices have made similar gains. Between 1980 and 2020 the median home price has increased by 416% and the mean has increased by 420%."

Interesting.  Thanks for posting.

[Jingthing]

Evicted by yo Mama. Wintering in the rough in Maine. This is America.

 

An Evicted Couple Prepares to Face Maine's Winter in a Tent (insider.com)

[GinBoy2]

On 8/1/2022 at 10:13 PM, heybruce said:

I made it very clear that my father's house had not appreciated in inflation adjusted terms, but the IRS does not adjust for inflation in determining if an investment was sold at a profit.  Surely a real estate whiz like you understands this.

 

You had the luck to be living and working in an urban area that was appreciating rapidly.  Most of the country doesn't appreciate that much.  You also had the luck to have parents who could loan you $10,000 many years ago.  What would that be in today's dollars?  If you got the loan in 1980 it was the equivalent of $36,000 in today's money.  If the loan was in 1990 it was the equivalent of $27,700.  Most of us don't have parents that can spare that kind of cash.

 

So, as I posted much earlier, if you are lucky enough to have the means to buy at the right time and place, real estate works out great.  However for most most people in most times and places it not a great investment, and can be a costly mistake.  And even for those with the means, you can never be sure you're buying in the right time and place.

 

The real estate market is like a Las Vegas casino.  When you're in the casino you hear lots of people talk about how much they've won.  The majority, who lost money, keep quiet.  People do the same regarding real estate profits and losses.  That's why people entering the real estate market need to take the stories they hear with a huge grain of salt.

Thing with real estate, when it comes to making or losing money.

 

Depends on what you are buying it for?

 

Is it your home, or is it a financial instrument.

 

Now our home is our home. We don't have any mortgages, so its market value could go up or down I don't really care. I don't think we'll ever lose money on it, but since it's our home and this will be our last house not gonna sell it, its final value will probably interest the kids more than us.

 

Now the rentals on the other hand, their resale value and their rental values do interest me. Again we have no mortgages but they are investments and so obviously they do interest me, just like you would keep track of your stock portfolio

Edited August 8, 2022 by GinBoy2

[GinBoy2]

2 minutes ago, GinBoy2 said:

Ended up with a double post for some weird reason

 

Edited August 8, 2022 by GinBoy2

[Fat is a type of crazy]

I do feel for people in general in this inflationary environment. In Australia gas and electricity prices are going through the roof. I got a bit of a shock with a 2 month bill given for 3 weeks I was in Thailand. There's stories of pensioners and others just being cold and covering with a blanket through what has been a cold winter. Not good enough given we have sufficient gas which is being shipped overseas for larger profits. Hope it's not too off topic but these are tough times for those on a low income who have a home let alone the homeless. 

[heybruce]

16 hours ago, GinBoy2 said:

Thing with real estate, when it comes to making or losing money.

 

Depends on what you are buying it for?

 

Is it your home, or is it a financial instrument.

 

Now our home is our home. We don't have any mortgages, so its market value could go up or down I don't really care. I don't think we'll ever lose money on it, but since it's our home and this will be our last house not gonna sell it, its final value will probably interest the kids more than us.

 

Now the rentals on the other hand, their resale value and their rental values do interest me. Again we have no mortgages but they are investments and so obviously they do interest me, just like you would keep track of your stock portfolio

Yes a home is a home, yet this topic is full of people posting about how much money they have made buying and selling houses.

 

The topic is about expats being priced out of the housing market if they return to the US.  Sentimental posts about homes and anecdotal stories giving grossly misleading impressions of the investment potential of real estate are a distraction.

 

Regarding examples of cheap housing found on Zillow; don't believe it until you've actually visited the house and neighborhood, had things inspected, researched taxes, insurance, crime in the area, etc.  Cheap houses are cheap for a reason.

[EVENKEEL]

5 hours ago, heybruce said:

Yes a home is a home, yet this topic is full of people posting about how much money they have made buying and selling houses.

 

The topic is about expats being priced out of the housing market if they return to the US.  Sentimental posts about homes and anecdotal stories giving grossly misleading impressions of the investment potential of real estate are a distraction.

 

Regarding examples of cheap housing found on Zillow; don't believe it until you've actually visited the house and neighborhood, had things inspected, researched taxes, insurance, crime in the area, etc.  Cheap houses are cheap for a reason.

If you left the US with minimal $$ you were priced out of the housing market before you left. Funny how positive stories are considered a distraction.

[heybruce]

2 hours ago, EVENKEEL said:

If you left the US with minimal $$ you were priced out of the housing market before you left. Funny how positive stories are considered a distraction.

These positive stories are people bragging about how well they did by buying at the right time and in the right place.  How are they anything but a distraction?

 

If you've followed the news you know that wannabe first time home buyers are also being priced out of the market.  Do you think positive stories are helping them?

[Jingthing]

3 hours ago, EVENKEEL said:

If you left the US with minimal $$ you were priced out of the housing market before you left. Funny how positive stories are considered a distraction.

They reflect a political  / morality agenda that adds to the narrative that the severe scarcity of decent affordable housing in the US for buying or rentals is somehow OK because some people have prospered from owning real estate.

 

Sneaking personally I did very well on a US condo and if I sell will do very poorly on a Thai condo 

 

But there is an objective reality here.

 

A significant percentage of expats in Thailand would face great hardships with housing if they repatriate. The situation is much worse than five years ago and not all the expats this would impact are even close to broke.

Edited August 9, 2022 by Jingthing

[newnative]

On 7/12/2022 at 2:44 AM, heybruce said:

Right....Appreciation always finances housing cost.

 

Unless you buy before a real estate crash.  Or buy in an area in which the mill/base/mine or some other key industry closed. And you neglect maintenance, taxes, insurance and costs of buying and selling a house. 

 

You also must ignore the fact that your house probably isn't appreciating much faster than inflation:

 

" Housing experienced an average inflation rate of 4.19% per year. This rate of change indicates significant inflation. In other words, housing costing $100,000 in the year 1967 would cost $953,910.69 in 2022 for an equivalent purchase. Compared to the overall inflation rate of 3.99% during this same period, inflation for housing was higher. "  https://www.in2013dollars.com/Housing/price-inflation

 

An investment return of 0.2% a year after inflation isn't that great.  It get worse when you sell a house you have lived in but don't buy a replacement.  Even if you have little or no real profit after inflation, you will pay a capital gains tax on the non-inflation adjusted "profit", which can be huge if you've owned the house for a few decades and its inflation adjusted value was nil. 

 

You are posting the kind of nonsense real estate agents will give to gullible buyers.  Contrary to the "easy money" stories you hear from some people, buying a house isn't a guarantee of easy money.

    I was just re-reading this post and I think one of your statements may be incorrect.  You say that if you sell a house you have lived in but don't buy a replacement you will pay a capital gains tax on the profit, which, as you say, can be 'huge' as most homes do increase in value over time.

    However, this seems to be current tax law, which I'll paste from Investopedia:

    

On Aug. 5, 1997, the Taxpayer Relief Act of 1997 took effect. The act did away with the continual unlimited deferral of profits and replaced it with capped exclusions.4 The current capital gains rules around the sale of your main home allow single taxpayers to exclude $250,000 in profits on their home's sale. Married couples who file jointly can exclude $500,000 from their taxable income.

 

Age is not a factor, and you do not have to buy a replacement home. After you take the exclusion, you could buy a less expensive home or revert back to being a renter. Better still, the IRS will let you use the exclusion each time you sell your primary residence.5 To qualify for the current deferral rules, there are two rules:

 

1. You must have owned and used the home as your primary residence for at least two out of the previous five years. These two years do not need to be consecutive.
2. You cannot have used the exclusion during the preceding two years.5

  The change in the tax law wouldn't have helped your father if he sold before 1997 but if he sold after the new law and the home was his primary residence for 2 of the last 5 years, it seems he should not have had to pay any capital gains tax except on any of the profit over the limit allowed, depending on his filing status.  This 1997 tax law seems like a positive change for homeowners, unless I am misreading it.