28 ms·

When my wife and I bought our first house in 2006, the prevailing wisdom was that real estate was an incredibly safe (if often conservative) investment. Then 20

When my wife and I bought our first house in 2006, the prevailing wisdom was that real estate was an incredibly safe (if often conservative) investment. Then 2008 happened. From that experience, I've decided that I will never invest in a market I don't understand.

thomascgalvin 7y ago
That's the beauty of long-haul investing, though. Two years is nothing in terms of an investment strategy, and real estate, along with pretty much everything else, has rebounded since then. There are a handful of hyper-geniuses that can make gobs of money by actively trading. For the rest of us, there's buy and forget.
- Cthulhu_ 7y ago
  Hyper-genius or lucky bastard that is recognized for survivorship bias?
  - thomascgalvin 7y ago
    The lucky bastards are the ones selling get rich quick schemes. The hyper-geniuses are the ones keeping their mouth shut and managing the Harvard Endowment.
    - lozaning 7y ago
      Those who know dont tell, and those that tell dont know.
    - jjeaff 7y ago
      You mean they are genius in the sense that they get paid to manage other people's money? Because the Harvard endowment, like most all other funds out there, generally fails to beat the market and has had down years even while the market was up. This is probably due to lower risk tolerance, but it doesn't really show that hyper geniuses are running it either.
- Finnucane 7y ago
  We bought our house in 2009. It was kinda scary--there was no telling when the recovery would come, and I was working a temp job that ended the day we signed papers. But we had been saving for a downpayment for several years--by 2005 or so it was clear that the Great Bubble was going to end very badly, so we just hunkered down in our crummy tenement apartment and waited it out.
- wincent 7y ago
  > Two years is nothing in terms of an investment strategy, and real estate, along with pretty much everything else, has rebounded since then. Where I live real estate was massively overpriced, so still hasn't rebounded, more than 10 years later.
piffey 7y ago
So you're never investing then? The market's a wild, unpredictable beast.
maccard 7y ago
Even if you bought at the peak of 2007, assuming* you kept up repayments, you will have recovered by now in most western markets. * this is obviously the caveat and where things went wrong for people.
- derangedHorse 7y ago
  Recovered in what way? I know a couple that just recently had the price of their home return to the price they paid for it over 10 years ago. With inflation taken into account, the house is still worth less than what the couple got it for.
  - maccard 7y ago
    It obviously depends on where you are (hence _most_ western markets) but in most parts of the UK and Ireland (and indeed many places in the US) if you bought at the _peak_ of 2007, mortgaged to the hilt, if you sold now, you would break even on inflation. You're also forgetting that they had somewhere to live for a decade for the cost of inflation of the house, which is significantly cheaper than normal rental prices in many places. To come out even after a decade, after housing costs, seems a pretty "safe" investment to me. Certainly not as lucrative as having invested in an index tracker, but it beats the 0% interest my bank pays on my current account balance.

thomascgalvin 7y ago

That's the beauty of long-haul investing, though. Two years is nothing in terms of an investment strategy, and real estate, along with pretty much everything else, has rebounded since then. There are a handful of hyper-geniuses that can make gobs of money by actively trading. For the rest of us, there's buy and forget.

Cthulhu_ 7y ago
Hyper-genius or lucky bastard that is recognized for survivorship bias?
- thomascgalvin 7y ago
  The lucky bastards are the ones selling get rich quick schemes. The hyper-geniuses are the ones keeping their mouth shut and managing the Harvard Endowment.
  - lozaning 7y ago
    Those who know dont tell, and those that tell dont know.
  - jjeaff 7y ago
    You mean they are genius in the sense that they get paid to manage other people's money? Because the Harvard endowment, like most all other funds out there, generally fails to beat the market and has had down years even while the market was up. This is probably due to lower risk tolerance, but it doesn't really show that hyper geniuses are running it either.
Finnucane 7y ago
We bought our house in 2009. It was kinda scary--there was no telling when the recovery would come, and I was working a temp job that ended the day we signed papers. But we had been saving for a downpayment for several years--by 2005 or so it was clear that the Great Bubble was going to end very badly, so we just hunkered down in our crummy tenement apartment and waited it out.
wincent 7y ago
> Two years is nothing in terms of an investment strategy, and real estate, along with pretty much everything else, has rebounded since then. Where I live real estate was massively overpriced, so still hasn't rebounded, more than 10 years later.

piffey 7y ago

So you're never investing then? The market's a wild, unpredictable beast.

maccard 7y ago

Even if you bought at the peak of 2007, assuming* you kept up repayments, you will have recovered by now in most western markets. * this is obviously the caveat and where things went wrong for people.

derangedHorse 7y ago
Recovered in what way? I know a couple that just recently had the price of their home return to the price they paid for it over 10 years ago. With inflation taken into account, the house is still worth less than what the couple got it for.
- maccard 7y ago
  It obviously depends on where you are (hence _most_ western markets) but in most parts of the UK and Ireland (and indeed many places in the US) if you bought at the _peak_ of 2007, mortgaged to the hilt, if you sold now, you would break even on inflation. You're also forgetting that they had somewhere to live for a decade for the cost of inflation of the house, which is significantly cheaper than normal rental prices in many places. To come out even after a decade, after housing costs, seems a pretty "safe" investment to me. Certainly not as lucrative as having invested in an index tracker, but it beats the 0% interest my bank pays on my current account balance.