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Old 03-06-2019, 01:17 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,938 posts, read 3,786,709 times
Reputation: 6596

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Quote:
Originally Posted by 46H View Post
You are failing to account for the cost to purchase and maintain RE property -transaction costs/mortgage/heat/electric/water/security/property tax/HOA/maint, etc. You also would have costs associated with visiting the property. In contrast, if you invest the same down payment in stock funds and make similar contributions to the stock funds over the same time period, you will have much more money investing in the stock with the added attraction of minimal costs.


The other issue is your needs and desires will change over time and then you might be stuck with a property in the wrong location for you.
You have to look at the real estate as a financial deal. I can't say stocks will outperform this deal as I haven't run the numbers, but agree he hasn't factored it in.

The 2nd part echoes exactly what I said in a previous post.
Personally I probably wouldn't do it and I am very pro real estate.
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Old 03-06-2019, 02:40 PM
 
12,852 posts, read 6,724,545 times
Reputation: 23686
Quote:
Originally Posted by aslowdodge View Post
You have to look at the real estate as a financial deal. I can't say stocks will outperform this deal as I haven't run the numbers, but agree he hasn't factored it in.

The 2nd part echoes exactly what I said in a previous post.
Personally I probably wouldn't do it and I am very pro real estate.

You have to look at home ownership as discretionary spending to improve your quality of life. Renting a dirtbag studio apartment and investing the difference is going to create far more wealth. I don't want to live in a dirtbag studio apartment so I own a home. Plus a townhouse condo at a ski resort where I fling more discretionary spending.
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Old 03-06-2019, 05:11 PM
 
Location: Thailand
5,549 posts, read 2,654,591 times
Reputation: 10330
Quote:
Originally Posted by k374 View Post
Example - Tampa, FL: 2012 median home price was $85,000, currently it is $220,000. Granted 2012 was the bottom of the Real estate crash but the forecast for Jan 2020 is $233,000 which is a 6% appreciation from today.
If you know 2012 is a poor baseline then why use it? That's as silly as calculating the appreciation rate using 2006 when prices were almost as high as today and declaring there is virtually no price increase in Tampa housing in over decade. It's like you're chasing a conclusion instead of trying to make a rational analysis.

Nationally housing rate of inflation is slightly over 3% since about 1980.
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Old 03-06-2019, 06:51 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,938 posts, read 3,786,709 times
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Quote:
Originally Posted by GeoffD View Post
You have to look at home ownership as discretionary spending to improve your quality of life. Renting a dirtbag studio apartment and investing the difference is going to create far more wealth. I don't want to live in a dirtbag studio apartment so I own a home. Plus a townhouse condo at a ski resort where I fling more discretionary spending.
for sure, but in the op's case he is looking at it as a financial investment until years down the road when or if he decides to move in.
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Old 03-08-2019, 01:56 PM
 
511 posts, read 151,588 times
Reputation: 1124
Quote:
Originally Posted by GeoffD View Post
I was going to comment on those locations since they're so diverse. That's as unrelated a list as I've ever seen.
Florida, Delaware and Portland Me are all on the east coast with Amtrak service.

I hate cold weather, but my husband loves Portland. I am not crazy about the heat in Florida. Delaware would be nice.

Another home in NYC for when I visit the kids and Florida in the winter and Portland in the summer - if only I had an extra million dollars
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Old 03-09-2019, 01:05 PM
 
Location: Raleigh NC
8,573 posts, read 6,698,093 times
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Quote:
Originally Posted by k374 View Post
My point is that housing even in cheap areas is inflating at a 6-7% per year rate which is far more than inflation or even the forecast for the stock market. You need to get a real return in stocks of 7% to keep up with current Real estate inflation which means a pre tax + inflation return of something like 12% which is impossible. So the strategy of accumulating wealth in a HCOL and then buying something in retirement in a LCOL may not work out.

Example - Tampa, FL: 2012 median home price was $85,000, currently it is $220,000. Granted 2012 was the bottom of the Real estate crash but the forecast for Jan 2020 is $233,000 which is a 6% appreciation from today.

Extrapolating that to 2030 @ 6%/year the median in Tampa, FL would be $425,000. This would result in taking an expensive mortgage in retirement which would not be feasible. If one has a $1M portfolio generating 4% it would be unsustainable to service a payment on that.

https://www.zillow.com/tampa-fl/home-values/
home prices even in cheap areas is NOT going up 6-7% per year.


if you think 6% in Tampa will continue unabated for another decade, you're not thinking right. We're not going to have a 17 year run of price increases at that rate.

and please find better data sources. You're not using "median home price" from Zillow, you're using their Zestimate. Tampa is on the Case-Shiller list and you can see their index.
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Old 03-15-2019, 07:56 AM
 
615 posts, read 471,883 times
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Quote:
Originally Posted by BoBromhal View Post
home prices even in cheap areas is NOT going up 6-7% per year.


if you think 6% in Tampa will continue unabated for another decade, you're not thinking right. We're not going to have a 17 year run of price increases at that rate.

and please find better data sources. You're not using "median home price" from Zillow, you're using their Zestimate. Tampa is on the Case-Shiller list and you can see their index.
2 or 3 big hurricanes and prices will plummet as insurance rates go through the roof. Florida real estate is not a sure bet long term unless some of the climate change issues are resolved. This is of course my opinion only but I donít think Tampa 25 years out is a sure thing.
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Old Yesterday, 06:29 AM
 
Location: Amelia Island
2,797 posts, read 3,816,886 times
Reputation: 2807
We visited this scenario 19 years ago when I was forty.......we built a home in a very small sleepy coastal town in the farthest northeast corner of Florida. We realized then we could be priced out at retirement this was just a hunch though that unfortunately came to be. We prepared and planned for this although we are now in an extremely HCOL area that continues to get worse. We have a small house on a small lot so we will remain here in retirement as long as we can. Taxes keep increasing and as we transition to a very high affluent tourist and retirement community. Resturants and grocery prices are climbing also. The biggest plus though is medical availability here with specialist is getting much better.

I have friends in Franklin, NC and Boise, Idaho and they are settled in retirement but they are seeing their COL increase dramatically due to the fact that Baby Boomers are seeking out their utopia.

It is great to plan and prepare to retire in the HCOL area you lived all your life but it is another thing to get priced out of the area you spent your life in that at one time was affordable. With the highest number of Baby Boomers born in 1957 and 1959, we are going to be seeing a lot more retirees searching for their paradise and unfortunately increasing the COL in those areas they settle in.

With four hotels to open late this year here, a lot of us are wondering where these service support people are going to live. Some are commuting as far as thirty minutes to an hour away. Again, it was not that long ago that our median income and median price of homes was tremendously lower.

Last edited by JBtwinz; Yesterday at 07:11 AM..
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Old Yesterday, 11:52 AM
 
Location: Myrtle Creek, Oregon
11,707 posts, read 12,048,596 times
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Quote:
Originally Posted by mathjak107 View Post
We have no problem retiring in New York City .. renting and investing easily pays the bills
You have rent control, which makes housing inflation irrelevant.
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Old Yesterday, 12:26 PM
 
68,556 posts, read 69,269,944 times
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Quote:
Originally Posted by Larry Caldwell View Post
You have rent control, which makes housing inflation irrelevant.
no , that is not true , rent control applies to only the older original tenants in some very old buildings .. only about 8% of all housing in manhattan and the boroughs is rent controlled . for all purpose it has been gone decades .. it is those ultra low old rent control rents you hear about that are so insane , but like i said they only applied to tenants in the apartment in 1971 or earlier .



what we have is rent stabilization which is a far different animal ..most stabilized apartments are close or at market price ... in fact some of the newer stabilized housing is insanely priced.

the investor group that bought our commercial lease rights put up a stabilized development ... one bedrooms start a 4500 a month and 2 bedrooms 5500 a month .

i love this building https://www.thechrystie.com/

all stabilized means is that you are bound by the increases voted on by the stabilization board ... they have been real world increases for a while and in line with inflation for years . .

our building we are in is stabilized but pretty much at market price .... my wife is here 35 years and we save a total of about 150 a month at this stage . it is nothing to speak of when the rent is 2k . . especially because a garage spot is an extra 190 a month . plus they get capital improvement increases on top of the rent increases .

on the other hand our tenants in the stabilized apartments in manhattan , which is a different breed is at about 60% market . but most stabilized apartments are only that low for the original tenant going back decades ...every time an apartment turns over it gets closer and closer to market

Last edited by mathjak107; Yesterday at 12:43 PM..
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