Austin residential real estate market struggling....home sales fell 10% and home values fell 4%..... (Commerce: credit, how much)

[verybadgnome]

Originally Posted by CptnRn

Many people don't have any extra money to invest in stocks. Stocks are also historically far more risky.

You have to live some where and pay to do so. That payment is typically the largest expense for most households. The ability to invest in your home and have that home keep up with inflation and actually increase in value over time has been the only path available for many americans to increase their worth. Home prices going down may seem positive for the moment to a buyer, but once that buyer owns a home seeing the prices continue to go drop is disastrous for the homeowner.

I hope they have some extra money since you really can't live off SS. Stocks are not far more risky - ask real estate investors in Detroit or Nevada. Stocks are more liquid than real estate and it cost less to sell them vs. 6% for real estate. I don't have to pay to insure my stocks like a house (home insurance) and I don't pay taxes on them till I cash out my 401k. Stocks outside of 401Ks can have loses written off at tax time. No real estate overall is not the best investment there. The largest growth areas of our economy comes from innovators willing to take risks, not homeowners who want to plant a garden. Or in other words the Dellionaires out there got their big homes after they made their investment in Dell, Inc., they didn't use their homes to make themselves rich.

Additionally in Texas b/c of the overreliance on property taxes you actually have folks priced out of their appreciating asset.

[dick1973]

[quote=verybadgnome;10845165]No real estate overall is not the best investment there. The largest growth areas of our economy comes from innovators willing to take risks, not homeowners who want to plant a garden.

My net profit on my $74k home was $260K in 23 years. would the stock market have done better at the same risk level? Can you live in the stock market?

[Torontonian]

Interesting that in such a strong real-estate market as Austin the sold values are down even with the unprecedented support from .gov ($8,000 rebate, interest rates below 5%). What would've happened if the true free market forces run their course?

[verybadgnome]

[quote=dick1973;10845809]

Originally Posted by verybadgnome

No real estate overall is not the best investment there. The largest growth areas of our economy comes from innovators willing to take risks, not homeowners who want to plant a garden.

My net profit on my $74k home was $260K in 23 years. would the stock market have done better at the same risk level? Can you live in the stock market?

The dow jones average was 1903 on July 1, 1986 (~23 years ago) and now it is over 9,800 so yes that is a better investment at 5.15:1 versus 3.51:1.

Another rule of investment is not to put all your eggs in one basket. With stock/bonds it is easy to diversify while putting all your money in one house is definitely not.

[dick1973]

[quote=verybadgnome;10846497]

Originally Posted by dick1973

The dow jones average was 1903 on July 1, 1986 (~23 years ago) and now it is over 9,800 so yes that is a better investment at 5.15:1 versus 3.51:1.

Another rule of investment is not to put all your eggs in one basket. With stock/bonds it is easy to diversify while putting all your money in one house is definitely not.

So, it would have been better to rent and invest in the stock market all these years?

FYI, The net profit amount did not include property taxes or the market value of housing. Just closing cost, improvement, basis and PI.

[verybadgnome]

[quote=dick1973;10846795]

Originally Posted by verybadgnome

So, it would have been better to rent and invest in the stock market all these years?

FYI, The net profit amount did not include property taxes or the market value of housing. Just closing cost, improvement, basis and PI.

Just believe whatever your realtor tells you I'm not going to be "house poor."

[dick1973]

I would not be house poor either. Real estate is just an important part of the investment package. i guess i played too much monopoly. always bought homes, park place, hotels etc.

I am waiting for the market to top 10,000. i'am going to cash out.

[austin-steve]

The dow jones average was 1903 on July 1, 1986 (~23 years ago) and now it is over 9,800 so yes that is a better investment at 5.15:1 versus 3.51:1.

Your ignoring leverage. Real estate appreciates based on the value of the home, not the amount invested.

Steve

[woodinvilleguy]

Also ignoring the tax benefits from home ownership that you don't get from stocks. Both are excellent investments if you know what you are doing. Both can be horrible if you don't.

[inthecut]

Originally Posted by riaelise

Not sure if inthecut is a troll. Perhaps he should balance out the gloom with positive posts. However, I do say that some of the things he posts about are true..even if they are negative. I, for one, get tired of people thinking that this region is largely immune from the problems that are occuring in other parts of the country - like unemployment and real estate. My friend was laid off and is yet to find a job. Another guy was warned of his layoff and had to look at Dallas and Houston for work because this place is still a close-knit "small town" when it comes to hiring now. I know first hand (through my job, which handles foreclosures) and my neighborhood, the grasp that this economy has had..there are tons of homes for sale in both Austin and outerlying areas at bargain basement prices because people can't sell them. Not all of us are fortunate enough to buy into a hot neighborhood when it wasn't outrageously priced, or can afford to live in Central Austin. My remedy to that is that I look at my home as the place where I live, not an investment which will reap me financial rewards. I think the only time I would experience that kind of stratespheric increase in income was during the height of the RE boom when I sold my NYC condo.

I love Austin, but hate the hype...sort of like loving the sinner, but hating the sin.....or seeing the expectations of others get popped as they get sold a bill of goods.....just a reality-checking is all.....

Also, I include an article from our own local papers almost all the time, with quotes....so our own journalists would technically be trolls with the same definition.....and the equivalent of sending letters to the editor complaining the the AA prints too many articles about the recession, and that they should be more positive.....these are very real trends and happenings in our metro, and have a pronounced impact on everyone, from overburdened roads, to the local tax base, and on to the local job/real estate market and UR.......

Actually, we would be greatly remiss in skirting/avoiding these issues if anything...