Have houses made people permanently rich? (Oakland: credit card, home equity loan, new)

[Kibbiekat]

Originally Posted by nmnita

but they also made killings on their home investments. You can't deny that. Yes, they lived differently, saved more (they could) and were more frugal, but the fact still remains the money was made in the real estate market. No one could have ever guessed it would happen, it just did. Here is an example: we purchased a home in Arcadia in 1972. It was about 1600 sq feet at the largest (I dont remember for sure) had 3 very small bedrooms, in fact the master could not have held a king sized bed. We had 1 1/2 bths, no fireplace, a tiny kitchen with no eating area (there was a decent added on family room,not off the kitchen but we could get to it by walking through the tiny dining room) The lot was 50 X135 about and had a detact garage. The most positive thing was the location was very desirable but certainly not the best in Arcadia. Long story short, we paid 35,000 for it, sold it 3 years later for about 43,000 and we learned in 2006 it had just sold for $800,000. Try and tell me people didn't make all their money through real estate and they didn't do it knowingly.

Nita

this may be true for LA and the Bay Area, but there is a whole big state outside of those areas where this did not happen on the same scale.

Originally Posted by oddstray

Depending what's meant by "rich", I doubt anyone got rich by owning one house. That, by itself, isn't even enough to retire on, though it would make a retirement a lot more comfortable.

Even if they did, they will only be able to spend the money if they sell and move to a lower cost area.

[mysticaltyger]

Originally Posted by k374

I am talking about those who bought their homes in the 70s, 80s and in some cases in the 90s as well...even with the crash in home values these people are still sitting on assets that they bought at a fraction of their current values.

Not only have they got 30-40 yrs of rental value by living in these homes but they have also got hundreds of thousands in appreciated value with the profits tax free if they sell (due to the $250k/500k exemption in capital appreciation on homes). Most of these people would never be able to afford to rebuy their homes at the current value.

Do you think this opportunity will come again in the future? Are future generations going to be able to afford real estate like the previous generation did or is it going to be like some countries where the only way you own a home is if it is passed down from the previous generation.

With income declining, inflation rising and home prices starting to find a bottom at a level that is still seriously unaffordable (regardless of what the NAR says)...

I think the bottom line is if you bought ANY asset 40 years ago, it's likely to have gone up in value. The problem is...people are short sighted and don't hold on long enough.

If you'd bought $10,000 worth of shares in the Vanguard S&P 500 Stock Index mutual fund back on 9/30/1976, you'd now have $338,234 as of 3/30/12, and that wasn't even the best performing stock fund (although it was above average).

I am not optimistic about our economic future, but our economy was shaky in throughout most of the 1970s and in the early 1980s as well.

VFINX: Vanguard 500 Index Investor Fund Chart | Morningstar

[mysticaltyger]

Originally Posted by stan4

Yup.
When I was growing up, there seemed to be less showboating and more investment for the future.
When someone got something really cool (like a big screen tv), that was a celebration of hard earned savings and a special occasion.
And we were upper middle class!!!!

Yep. Starting around 1980, America's savings ethic started to fade and it's now been completely gone since the late 1990s.

[mysticaltyger]

Originally Posted by nmnita

It is always a gamble, sometimes it works, sometimes not. All those who talk about living frugally and investing which mainly means CD etc might be right, but there was a time that did work, now nothing pays any interest, so simply living frugally and investing isn't any guarantee of future wealth, unless you have enough to really take a lot of chances.

I am glad the work didn't kill you, who would have enjoyed your profit???

No one ever got rich by investing in CDs, even at the height of 70s inflation. After all, the rates were high because inflation was high.

I still think investing in stocks or a mix of stocks and bonds is the way to go. Unless you're an entrepreneurial type, you really don't have any other shot at financial confort/wealth if you don't. That said, I take the whole thing with a grain of salt. I really don't trust the money/financial system as it is set up. It seems to me it's been hijacked by a tiny global elite who can crash the economy at any point if/when it suits them.

[CA4Now]

Originally Posted by EscapeCalifornia

Even buying in the mid 70's would put you in a really nice equity position today down here. My parents bought their house new in 1974 for something like $40k. Its easily worth $500k today.

Who's still living in the same house they bought in the 1970s? People don't hang on to houses simply because they're a good investment. Most people outgrow, move up, retire, move down, etc, just as they do today.

[EscapeCalifornia]

Originally Posted by CA4Now

Who's still living in the same house they bought in the 1970s? People don't hang on to houses simply because they're a good investment. Most people outgrow, move up, retire, move down, etc, just as they do today.

I know tons of people still living in houses they bought decades ago. Even if they didn't stay in the same house, the fact that they did buy back then gave them equity to apply toward a different house.

[nullgeo]

Originally Posted by CA4Now

Who's still living in the same house they bought in the 1970s? People don't hang on to houses simply because they're a good investment. Most people outgrow, move up, retire, move down, etc, just as they do today.

One of my houses (I own three -- live in none -- I live in a van part-time and a boat part-time) I bought in 1970 and built a second story on in 1980. Three of my four children were born in that house, literally. Two of these now grown children, and one of their spouses and their children, still live there, renting from me. Happy as clams at high tide.

[CA4Now]

Originally Posted by nullgeo

One of my houses I bought in 1970 ... Three of my four children were born in that house, literally. Two of these now grown children, and one of their spouses and their children, still live there.

You, null, are a rare exception. I've lived in So CA (other than during college) since childhood--the 1960s--and know of not one person who lives in the same home they bought in 1970. That's true even in my current neighborhood, and we've lived here for over two decades.

[nullgeo]

Originally Posted by CA4Now

You, null, are a rare exception. I've lived in So CA (other than during college) since childhood--the 1960s--and know of not one person who lives in the same home they bought in 1970. That's true even in my current neighborhood, and we've lived here for over two decades.

I am exceptional ... why thank you for noticing! *primps hair and raises posture*

[ferretkona]

Originally Posted by k374

I am talking about those who bought their homes in the 70s, 80s and in some cases in the 90s as well...even with the crash in home values these people are still sitting on assets that they bought at a fraction of their current values.

Even as like my parents who bought a home in the 60's at $29,000. The current value of one million $ hardly makes them rich.