Current Homes For Sale? (Pittsburgh, Penn Hills: apartment, to rent, good credit)

[WhoIsStanwix?]

Originally Posted by PGH423

I thought about this and looked into it more. Investing $7K in 1960 and having it become $30K now is a poor return on investment even if the family didn't think of their purchase as an investment. It is sad that they didn't come close to keeping up with inflation since just keeping up with inflation is not good. If you take $7K and invest it in the stock market and use the average annual return of 10%, over 68 years would be worth several million right now (about $4 to 5 million). So generally the rich get better return on their investment and become richer and lower-income people get worse return and the wealth gap grows.

Average real estate appreciation tends to be 4 to 5%. So if you use those numbers, the sellers should have gotten $100K to $200K. We could go through a lot of numbers but I don't see how anyone could say there are no losers when a real estate market is depressed (or not even coming close to keeping up with inflation).

This is a pretty clear depiction of why real estate is not an investment unless you are a developer, flipper, or owner of rentals. In PreservationPioneer’s example, he is also making a wise choice in the realm of investing by freeing up capital for other things. Sometimes that “other thing” is just not paying interest.

[PGH423]

Originally Posted by WhoIsStanwix?

This is a pretty clear depiction of why real estate is not an investment unless you are a developer, flipper, or owner of rentals. In PreservationPioneer’s example, he is also making a wise choice in the realm of investing by freeing up capital for other things. Sometimes that “other thing” is just not paying interest.

Yes, in their situation it is less bad than renting. It is still bad for sellers (and I'd say long-term residents too) when the market doesn't keep up with inflation.

[_Buster]

Originally Posted by PGH423

Even if it's an enjoyable hobby, they could work as a handyman maintaining other people's properties. Most probably wouldn't do this, but that is why economists say time is money.

They could. there is really no difference economically, whether they're doing it for themselves or for some other property.

[WhoIsStanwix?]

Originally Posted by PGH423

Yes, in their situation it is less bad than renting. It is still bad for sellers (and I'd say long-term residents too) when the market doesn't keep up with inflation.

Right. The "less bad than renting" situation is more akin to making a good decision about consumable spending. Similar to "should I buy a new car, a used car, or try to use public transit", or "should I buy that TV or get by reading books for leisure and cut the cable".

[PGH423]

Originally Posted by _Buster

They could. there is really no difference economically, whether they're doing it for themselves or for some other property.

This discussion came up comparing the cost of owning vs. renting. So if you rented and love maintenance, you could turn that love into profit. I was just for sake of thoroughness comparing the costs of renting and owning. Maintenance was mentioned as a plus for owning (some people enjoy it as a hobby) but it could still be something a renter does (but for profit helping others).

[Tallysmom]

Originally Posted by PGH423

I thought about this and looked into it more. Investing $7K in 1960 and having it become $30K now is a poor return on investment even if the family didn't think of their purchase as an investment. It is sad that they didn't come close to keeping up with inflation since just keeping up with inflation is not good. If you take $7K and invest it in the stock market and use the average annual return of 10%, over 68 years would be worth several million right now (about $4 to 5 million). So generally the rich get better return on their investment and become richer and lower-income people get worse return and the wealth gap grows.

Average real estate appreciation tends to be 4 to 5%. So if you use those numbers, the sellers should have gotten $100K to $200K. We could go through a lot of numbers but I don't see how anyone could say there are no losers when a real estate market is depressed (or not even coming close to keeping up with inflation).

There is always an aspect of this that people don’t take into account. By buying, you stabilize your housing costs. And your income generally goes up, and your house payment stays the same, so you can sock away more money.

We will always be grateful for our little old house. Especially out here, where rents are sky high, having a very low house payment has really helped our financial outlook.

[PreservationPioneer]

People buy new cars for practical reasons, as new cars are reliable and functional as transportation. The value of the new car diminishes over time until it is worthless. Does that mean we should stop buying cars? Even knowing that they will lose money on car ownership, most people still think it's a good deal to buy a new car. It is their transportation.

One could look at housing this way. You're paying slightly more than what you pay for a new car for a modest, livable house in a depressed but generally safe area. Let's call it Turtle Creek. You could live in this house for several years, have extremely low housing costs, and when you sold the property, it would likely not depreciate like a car would.

So why do we insist that housing must appreciate in value? If buying is cheaper than renting, then why does one need to profit in the sale? You are profiting by living inexpensively!

[Knepper3]

No, you are comparing to completely different commodities. Cars will always decline over time, it is simply personal property and most people do not technically need a car. Everyone needs a place to live, the house could decline over time if you simply did nothing to care for it just as a car but there is a tangible piece of property sitting under that home.


The reason housing should appreciate is simply supply and demand, unlike cars you can not make more land. Once it is gone it's gone, over time less land means what you have is more valuable.

[Moby Hick]

Originally Posted by Knepper3

The reason housing should appreciate is simply supply and demand, unlike cars you can not make more land. Once it is gone it's gone, over time less land means what you have is more valuable.

You can't make more land (shut up volcanoes), but you can put more houses on the same land as things get more dense. And you can build a freeway out to empty land where people can build more houses now because they can be connected to jobs.



Housing has appreciated in the U.S. over the post-war period because of deliberate government policy making it easy to borrow money for houses and not because of the laws of nature or the market. When that policy gets stupid in an attempt to keep appreciation going, you get the giant recession we all lived through.

[PreservationPioneer]

Originally Posted by Knepper3

The reason housing should appreciate is simply supply and demand, unlike cars you can not make more land. Once it is gone it's gone, over time less land means what you have is more valuable.

One of the reasons housing has depreciated to $30k in some neighborhoods is because few people see the value in living below their means. If we could change this mentality, we'd see more owner occupants than renters and neighborhood dynamics would stabilize and improve gradually. I don't understand how we live in a world where everyone complains about not having or making enough money, but no one wants to see how easy it is to live on nothing.