Misleading Media on the real stats on house prices (to buy, college)

[irrational exuberance]

Originally Posted by Condorll

Why is it that I believe most of the posters that claim gloom and doom for the Puget Sound real estate market do not own a home or have never owned a home.

They are wannabe homeowners that are afraid to invest in their own lifestyle and future. If you were a long term stock investor, would you worry if your strong growth stock declined 5% or 8% on a pullback? Probably not. You would be looking at the future potential of that sector.

Buying a home accomplishes two things.

1) Stability, a place to live "forever" if you wish. A place you can furnish and equip to suit you without ever having to worry about rent increases, conversions to condo, the possibility of bugs and noise from the folks in the apartment next to you.

2) A long term investment. Most homebuyers will stay in their homes a minimum of 7 years in my experience before even considering moving to another location.

That said, I have owned 5 homes in my lifetime (all over the country) and made an excellent return on all of them, far exceeding stock market returns, with the exception of one condo I owned for only 3 years during a flat market, broke even on that one. The 4 others were all owned for over 7 years each.

With Washington state no longer totally dependent on Boeing (that is a proven fact with the head office move to Chicago and outsourcing of assembly etc) and the constant INFLUX of people moving to this area,
Interest rates at HISTORICAL lows and GUARANTEED payments for 30 years, you have to be absolutely blind not to take advantage of the current lull in the market. Fact is, MOST people do not know how to save money. Owning a home is a forced savings program.

What is your option? Paying at least $1500/ month for a small boxy apartment? That will mean $2100/month rent in 7 years based on a 5% increase every year. Go ahead, throw $155,000 right out the window renting and have NOTHING to show for it after 7 years.

People who rent their homes land up POOR in their retirement years. Look at ANY 55+ retirement community and do a survey, ask the owners if this is their first home? Then ask what they did for a living. You will find average folks, that did average middle class jobs, raised families on average incomes in their own homes, and are enjoying their retirement in style.

Do you really believe a home purchased today will not be worth more in 7 years?

I agree with you partially but lets be realistic, 70% of Americans have no retirement plans or a retirement adequate enough to survive the 20+ years they live after they retire. To say your house is an asset you can retire on and leverage is ignorant. There is a common term used called Opportunity cost. And if you do the math if you rent for 10 years paying what I pay now about 850$ dollars and invest the the remainder of the 1150$ assuming when we get a mortgage after PITI we would pay around 2000k a month borrowing 310k, at a rate of return of 9% the rate of the S&P 500 I would have have $222,541 in my portfolio, and that is assuming you start from 0 dollars. However if you pay 2000 a month on a mortgage borrowing 310k at the end of year 10 you paid 92381 in principle and 147618 in interest. Im not even counting maintanence, homeowers due etc. So saying owning a house is better than not owning is ignorant. If you know Time Value Money and invest you could buy a house outright in 15 years while a person is still paying on their house for 30. The real issue is that most people dont know TVM and how to invest so they rent and blow the extra income on fancy cars. I see it in my apartment, 5 series beamers, audi, etc. So why do I want to buy a house? Its strictly intangible, The feeling of owing, the feeling of something is my wife and I, the American dream aspect etc. But I that is a widely accepted thing that your house is an asset you can retire on but truth be told it isnt. And our younger generation will see that in about 40 years. Until you own a house outright and it puts money in your pocket its a liability.

[Condorll]

irrational exuberance,

Yes your math works. No one follows it though, and the stats prove that RENTERS land up poverty stricken, pushing shopping carts under freeways and applying for social assistance, where as Homeowners land up comfortable in retirement.

By the way after owning 5 homes, my next home is being purchased "all cash", the leftover a nice big chunk of dough being added to my retirement account.

One last thing, don't ever call me ignorant. I can probably buy you out with the spare change in my pocket, and I am not joking.

Cheers!

[irrational exuberance]

Originally Posted by Condorll

irrational exuberance,

Yes your math works. No one follows it though, and the stats prove that RENTERS land up poverty stricken, pushing shopping carts under freeways and applying for social assistance, where as Homeowners land up comfortable in retirement.

By the way after owning 5 homes, my next home is being purchased "all cash", the leftover a nice big chunk of dough being added to my retirement account.

One last thing, don't ever call me ignorant. I can probably buy you out with the spare change in my pocket, and I am not joking.

Cheers!

I didnt call you ignorant, I said your statements are. And I am still young but you cant buy me out, please I have never ran into anyone claiming to be rich to make statements like that and trust me I have been around alot of millionaire investors as I just sit and listen to what they say and learn. I hope you are 1031 exchanging your homes or you are paying boat loads in capital gain taxes even if they are long term. By your statements, I can see you have never consulted a financial planner, because majority of those that have homes wont retire until they physically cant work anymore. At 22 years old I am telling you what I learned but most baby boomers are learned this at 40 or never learned this until it was time to retire and they cant

[Condorll]

Originally Posted by irrational exuberance

I didnt call you ignorant, I said your statements are. And I am still young but you cant buy me out, please I have never ran into anyone claiming to be rich to make statements like that and trust me I have been around alot of millionaire investors as I just sit and listen to what they say and learn. I hope you are 1031 exchanging your homes or you are paying boat loads in capital gain taxes even if they are long term. By your statements, I can see you have never consulted a financial planner, because majority of those that have homes wont retire until they physically cant work anymore. At 22 years old I am telling you what I learned but most baby boomers are learned this at after 40 when there time horizon hasnt completely shortened or never learned this until it was time to retire and they cant

I am a boomer and retiring in 3 years at 55. I have been buying and selling homes and stock trading since way before you were born. But I guess you have packed a lot of living and experience into the past year or so, so you must know best.

Good luck to you.

[irrational exuberance]

Originally Posted by Condorll

I am a boomer and retiring in 3 years at 55. I have been buying and selling homes and stock trading since way before you were born. But I guess you have packed a lot of living and experience into the past year or so, so you must know best.

Good luck to you.

True you are about to retire but lets see how long your retirment will last you. Because statistically you 7 out of 10 people cant live off their retirement and pensions. I hope you are in good health. But experience comes with time and effort. I am 26 now and I still have alot to learn but i have the time to learn from my mistakes. But I think the foundation I have right now will help me retire by 40 if I want........ But dont detract from what I say because of my age, that is the a problem that alot of people have, worrying who says what rather than what they are saying. If some younger than me can teach me something I listen and they do all the time. Besides my two best friends are a Financial Advisor and a Financial Planner plus I work in taxation and finance so I am pretty confident with the things I say. I work with alot of people your age

[Condorll]

Originally Posted by irrational exuberance

At 22 years old I am telling you what I learned but most baby boomers are learned this at 40 or never learned this until it was time to retire and they cant

I am 26 now and I still have alot to learn but i have the time to learn from my mistakes. I work with alot of people your age

I thought you were good with numbers, you can't even keep your age constant.

[70Ford]

Why is it that I believe most of the posters that claim gloom and doom for the Puget Sound real estate market do not own a home or have never owned a home.

Everyone is entitled to believe what they wish. This is America, not Nazi Germany. Land of the free. I'm sure some haven't. I'm sure some have. So, I'm agreeing with you. I also believe most of them have probably eaten a mushroom. WOW. That came from WAY out of left field, didn't it? Added nothing to the conversation either...much like your statement. Except to state some beliefs. That may or may not be held. Much like this delicious mushroom I am eating. OMG, it's so good.

They are wannabe homeowners that are afraid to invest in their own lifestyle and future. If you were a long term stock investor, would you worry if your strong growth stock declined 5% or 8% on a pullback? Probably not. You would be looking at the future potential of that sector.

They (being most but not all).... I'm sure some own stock, and some don't. Some may have seen their stocks dip lately. Some may have not. Some people live inside their portfolio. I live in a brown manila folder. See? Stocks = house! Shelter = piece of interest in a companies future. THEY ARE EXACTLY THE SAME THING. My manila folder has a nice view of filing cabinets O-Z, by the way.

What is your option? Paying at least $1500/ month for a small boxy apartment? That will mean $2100/month rent in 7 years based on a 5% increase every year. Go ahead, throw $155,000 right out the window renting and have NOTHING to show for it after 7 years.

This has been proven wrong so many times, now I just think you're trolling. It depends on what sort of dividend you wish to SPECULATE on. You can rent and speculate on the stock market, bonds market, or play the casino. You are right in that you should look at trends, but in the end, you really should make a cost comparison of renting vs. buying and how they can apply the savings thus earned towards an investment and get a nice rate. I really do suggest investing your savings. In mushrooms. Much as you believe most people posting here have not owned a home, I believe most HAVE eaten mushrooms. The mushroom future is very bright, indeed.

Hey - Let's take your scenario for a minute. Let's say that I had put all my money in like say, Microsoft when it was like el cheapo, and I was renting an apartment and placing the money saved vs. buying a home into their stock. Now, I'm be crapping gold eggs and saying "WHY DIDN'T EVERYONE RENT AND INVEST IN MICROSOFT!! I’M a GAZILLIONAIRE! RENTING IS THE BOMB!"

No, one can't make that argument. I wish I could. I wish I was a gazillionaire. But I'm not. And just because one got lucky speculating, doesn't make that person particularly special.

It makes them "lucky."

[irrational exuberance]

Originally Posted by Condorll

I thought you were good with numbers, you can't even keep your age constant.

Yes I said I learned alot of what I am saying at 22 but after 4 years have really applyed the learning. I have been investing since 20 but I didnt know how to read prospectus, trends etc. Today I make my own portfolio but I like using index funds for low their low fees and low risk. But I would understand when you have no other points to make you start trying to pick apart my post. It makes me feel good to tell a rich baby boomer things that he cant even deny, than I know I have learned well.....

[mthomson]

I'd be curious to hear some thoughts on this scenario. Irrational, I think I'm using your arguments here, but if I sway anywhere please let me know.
You say housing prices are falling. You said that many people moving into Washington are renting not buying. Therefore, rental demand is going up, which will drive supply down, which will drive renting prices up.
So if I own a home in Washington, and there's this biased MThomson character telling me to buy now, why doesn't that make sense?
House prices are falling, according to the Irrational fella. Rental prices should be increasing, according to the irrational guy. Sooo...seems to be to be the perfect time to buy some rental properties. Because according to Kiyosaki, houses are liabilities until they put money in your pocket. Won't buying a liability at a low price, having it generate income at a higher rate, and almost certainly having its value appreciate in the long term, make that house an asset? If you're generating a positive cash flow from the house, it's passive income, right? Isn't that how Trump and Kiyosaki made their bucks? Taking the equity out of properties (some positive, some negative cash flow), and buying other properties that garnered more rental income?
In my mind, even using your logic, this would be a good time to buy.
Any thoughts?

[Condorll]

Originally Posted by irrational exuberance

Yes I said I learned alot of what I am saying at 22 but after 4 years have really applyed the learning. I have been investing since 20 but I didnt know how to read prospectus, trends etc. Today I make my own portfolio but I like using index funds for low their low fees and low risk. But I would understand when you have no other points to make you start trying to pick apart my post. It makes me feel good to tell a rich baby boomer things that he cant even deny, than I know I have learned well.....

No, I have plenty of points to make, I just wanted to clarify your actual age. When I read your posts it seemed like you aged 4 years in an hour.

Whatever your real age it sounds like you are on the right track to hopefully achieve financial independence one day. I hope you get there as quickly as the rich boomers you "advise".

By the way, I don't like ETF's personally, not enough volitility for my short term trading style, unless they are "Ultra" ETF's like SSO and SDS where you get 2X the movement of the S&P, long or short. Considering you have been only investing for the past 4 years you have been fortunate to have witnessed a tremendous Bull market where one could throw a dart and make money. As one that has survived and prospered through several Bear markets since the 70's, I can say that your stock market "education" has only begun.

Perhaps I can sneek in a little mild advice from one that has been on this earth a little longer than you have.

1) Try to learn something new every day

2) What looks good on paper doesn't always work in practice, human emotions often get in the way.

3) Regarding the stock market, Know when to hold 'em and know when to fold 'em.

Cheers!