6 ms·

According to my Dad, younger generations have never experienced a housing environment where your home value goes sideways for a decade. With rates this high and

According to my Dad, younger generations have never experienced a housing environment where your home value goes sideways for a decade. With rates this high and going higher. We may experience our first example of buying a house and selling the houses 10 years later for about the same price.

rdtwo 4y ago
That’s not bad if you buy a newer house and it deprecated but sucks if your old house cost a lot to maintain
JumpCrisscross 4y ago
> buying a house and selling the houses 10 years later for about the same price Which, in practical terms, means losing money.
- ramesh31 4y ago
  >Which, in practical terms, means losing money. Only if you're a robot that sleeps in a closet. Otherwise you have to live somewhere during that time. And every penny spent on rent is literally just vaporized into nothing.
  - Ekaros 4y ago
    It goes to not dying on the street... Which is variable value, but still quite valued thing.
    - tacticalturtle 4y ago
      Additionally, you’re paying for the right to move relatively quickly and cheaply, even in a depressed housing market. Someone who rents can move to a new opportunity much more easily than someone who owns, and would need to either sell or find and manage tenants.
- rr888 4y ago
  > Which, in practical terms, means losing money. By definition no. In reality not either as you have to live somewhere - it might feel like your "investment" hasn't kept up with inflation but your next house hasn't gone up either so is actually good for the average person. Of course if you have a large mortgage the investment is small anyway.
  - loeg 4y ago
    Are you forgetting about the 10% of sale price haircut that accompanies real estate transactions? Agent fees, taxes, title insurance, blah blah. If you sell your house for what you bought it for in the US, you end up with ~90% of what you started with.
    - rr888 4y ago
      Yes I did forget but I'd suggest the transaction costs aren't significant when you hold 10+ years and are just another cost of living. If you rent you have to pay fewer transaction costs but you have rent rising so that has its own problems.
      - JumpCrisscross 4y ago
        > you have rent rising so that has its own problems Rising rents amid flat home prices are necessarily temporary absent price controls.
        giaour 4y ago
        Yes, assuming the rental market has sufficient competition and can take advantage of existing homes. Local rental property monopolies or regulation (either governmental or from private organizations like HOAs) that prevents the excess homes from being rented can cause a rise in rents that is not related to underlying housing prices.
      - ahtihn 4y ago
        There's no reason for rent to be rising if property values aren't rising. Rent rising would push property prices up.
- BobbyJo 4y ago
  Depends on your situation. For example, I bought a house and my mortgage+insurance+repair amortization is less than I'd pay for renting a similar sized apartment or home. I had to lock up 30k in my down payment, but I'm saving $500+ (probably closer to 1000) a month vs renting. That's equivalent to 6k a year, or >20% return on my investment.
  - bombcar 4y ago
    Be sure to save that extra money, houses have a way of turning you into a cash machine for Home Depot holy shit there's always something to fix or spend money on
    - disgruntledphd2 4y ago
      Owning a house is essentially like having a bottomless pit to throw all your excess money into. I didn't really appreciate the advantages of renting until the dishwasher and the oven broke in the same month. Don't get me wrong, you spend that money on stuff you use, but the TCO is much higher than the mortgage payment.
- deleted 4y ago
  [deleted]
mgkimsal 4y ago
Huh? Happened to us and our neighbors - bought end of 2005. 2015... house estimated for... about the same as we paid for it. It wasn't "steady sideways"... it was 'crash and recover'. But it's certainly happened to many folks - buy then sell years later at roughly same price.
- HarHarVeryFunny 4y ago
  Yeah, bought my first house in 1988 and a decade later was still looking at a steep loss, but by luck sold for a profit at the market peak in 2003. In 2011 it resold for less than in 2003.
  - paulpauper 4y ago
    hmm...profit in real terms or nominal?
    - HarHarVeryFunny 4y ago
      Good question - I never calculated it, but house prices had shot up in the 2000-2003 period, so possible it was a real profit.
mywittyname 4y ago
Disagree. Millennials have never known different until very recently. To them, housing wasn't something that appreciated at all. In fact, it's so common for millennials to say things like, "just waiting on another housing bust." It's like they think 2008 was come cyclical event that you just need to wait another year for. I held a similar attitude towards housing and rented throughout my 20s because every single homeowner I knew bitched about how buying a house was a loss for them. People didn't make money on houses outside of rich coastal cities. Heck, I'm trying to unload a parent's home and they are disappointed that the house they lived in for 16 years has only appreciated by maybe $10k. Covid was the when young people outside of NYC and Cali learned that it is smart to get into the housing market earlier, rather than later.
- gilbetron 4y ago
  I don't understand. Housing has been going up steadily for the past decade. 2007-2010ish was the only time it decline, and 2018-2019 had a flat region for some places (not where I live though). https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
  - lotsofpulp 4y ago
    The disconnect is because there are very large regions of the US where land price had stagnated or even went down in price for the past few decades, but there are also very large regions of the US where land price increased or skyrocketed. Many people experienced different things. Of course, the regions where most people were moving to and where most house sales occurred experienced higher land prices, but the regions where land price was stagnating or declining would have fewer sales in the first place and hence not reflect in the data, but the people there would still be experiencing it. So you just have large numbers of people experiencing different price movements depending on where they live.
  - mywittyname 4y ago
    Because you're looking at the USA market as a whole. The regional view tells a much better story because then you don't have movement in one region offset that of other ones. https://fred.stlouisfed.org/graph/?id=MSPNE,MSPMW,MSPS,MSPW https://fred.stlouisfed.org/graph/?id=MSPNE,MSPMW,MSPS,MSPW, You can pretty clearly see that most regions there were long periods of housing stagnation and decline, followed by quick price jumps, then back to stagnation. And look at how wildly the NE region fluctuates. It regularly moves 10% up or down in any given year. And sometimes much more, prices moved from $403k to 566k in one year (2016->2017). Whether you did well or not in your housing purchase comes down to luck. Yeah, in aggregate, over long enough time periods, housing does well. But your individual situation will vary dramatically.
PedroBatista 4y ago
Every millennial lived trough 2008, plus also 9/11, also a global pandemy and now +10% inflation. Everything with real wages being stagnated since the 70's I think we could give those "young latte-sipping kids" a break..

rdtwo 4y ago

That’s not bad if you buy a newer house and it deprecated but sucks if your old house cost a lot to maintain

JumpCrisscross 4y ago

> buying a house and selling the houses 10 years later for about the same price Which, in practical terms, means losing money.

ramesh31 4y ago
>Which, in practical terms, means losing money. Only if you're a robot that sleeps in a closet. Otherwise you have to live somewhere during that time. And every penny spent on rent is literally just vaporized into nothing.
- Ekaros 4y ago
  It goes to not dying on the street... Which is variable value, but still quite valued thing.
  - tacticalturtle 4y ago
    Additionally, you’re paying for the right to move relatively quickly and cheaply, even in a depressed housing market. Someone who rents can move to a new opportunity much more easily than someone who owns, and would need to either sell or find and manage tenants.
rr888 4y ago
> Which, in practical terms, means losing money. By definition no. In reality not either as you have to live somewhere - it might feel like your "investment" hasn't kept up with inflation but your next house hasn't gone up either so is actually good for the average person. Of course if you have a large mortgage the investment is small anyway.
- loeg 4y ago
  Are you forgetting about the 10% of sale price haircut that accompanies real estate transactions? Agent fees, taxes, title insurance, blah blah. If you sell your house for what you bought it for in the US, you end up with ~90% of what you started with.
  - rr888 4y ago
    Yes I did forget but I'd suggest the transaction costs aren't significant when you hold 10+ years and are just another cost of living. If you rent you have to pay fewer transaction costs but you have rent rising so that has its own problems.
    - JumpCrisscross 4y ago
      > you have rent rising so that has its own problems Rising rents amid flat home prices are necessarily temporary absent price controls.
      - giaour 4y ago
        Yes, assuming the rental market has sufficient competition and can take advantage of existing homes. Local rental property monopolies or regulation (either governmental or from private organizations like HOAs) that prevents the excess homes from being rented can cause a rise in rents that is not related to underlying housing prices.
    - ahtihn 4y ago
      There's no reason for rent to be rising if property values aren't rising. Rent rising would push property prices up.
BobbyJo 4y ago
Depends on your situation. For example, I bought a house and my mortgage+insurance+repair amortization is less than I'd pay for renting a similar sized apartment or home. I had to lock up 30k in my down payment, but I'm saving $500+ (probably closer to 1000) a month vs renting. That's equivalent to 6k a year, or >20% return on my investment.
- bombcar 4y ago
  Be sure to save that extra money, houses have a way of turning you into a cash machine for Home Depot holy shit there's always something to fix or spend money on
  - disgruntledphd2 4y ago
    Owning a house is essentially like having a bottomless pit to throw all your excess money into. I didn't really appreciate the advantages of renting until the dishwasher and the oven broke in the same month. Don't get me wrong, you spend that money on stuff you use, but the TCO is much higher than the mortgage payment.
deleted 4y ago
[deleted]

mgkimsal 4y ago

Huh? Happened to us and our neighbors - bought end of 2005. 2015... house estimated for... about the same as we paid for it. It wasn't "steady sideways"... it was 'crash and recover'. But it's certainly happened to many folks - buy then sell years later at roughly same price.

HarHarVeryFunny 4y ago
Yeah, bought my first house in 1988 and a decade later was still looking at a steep loss, but by luck sold for a profit at the market peak in 2003. In 2011 it resold for less than in 2003.
- paulpauper 4y ago
  hmm...profit in real terms or nominal?
  - HarHarVeryFunny 4y ago
    Good question - I never calculated it, but house prices had shot up in the 2000-2003 period, so possible it was a real profit.

mywittyname 4y ago

Disagree. Millennials have never known different until very recently. To them, housing wasn't something that appreciated at all. In fact, it's so common for millennials to say things like, "just waiting on another housing bust." It's like they think 2008 was come cyclical event that you just need to wait another year for. I held a similar attitude towards housing and rented throughout my 20s because every single homeowner I knew bitched about how buying a house was a loss for them. People didn't make money on houses outside of rich coastal cities. Heck, I'm trying to unload a parent's home and they are disappointed that the house they lived in for 16 years has only appreciated by maybe $10k. Covid was the when young people outside of NYC and Cali learned that it is smart to get into the housing market earlier, rather than later.

gilbetron 4y ago
I don't understand. Housing has been going up steadily for the past decade. 2007-2010ish was the only time it decline, and 2018-2019 had a flat region for some places (not where I live though). https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
- lotsofpulp 4y ago
  The disconnect is because there are very large regions of the US where land price had stagnated or even went down in price for the past few decades, but there are also very large regions of the US where land price increased or skyrocketed. Many people experienced different things. Of course, the regions where most people were moving to and where most house sales occurred experienced higher land prices, but the regions where land price was stagnating or declining would have fewer sales in the first place and hence not reflect in the data, but the people there would still be experiencing it. So you just have large numbers of people experiencing different price movements depending on where they live.
- mywittyname 4y ago
  Because you're looking at the USA market as a whole. The regional view tells a much better story because then you don't have movement in one region offset that of other ones. https://fred.stlouisfed.org/graph/?id=MSPNE,MSPMW,MSPS,MSPW https://fred.stlouisfed.org/graph/?id=MSPNE,MSPMW,MSPS,MSPW, You can pretty clearly see that most regions there were long periods of housing stagnation and decline, followed by quick price jumps, then back to stagnation. And look at how wildly the NE region fluctuates. It regularly moves 10% up or down in any given year. And sometimes much more, prices moved from $403k to 566k in one year (2016->2017). Whether you did well or not in your housing purchase comes down to luck. Yeah, in aggregate, over long enough time periods, housing does well. But your individual situation will vary dramatically.

PedroBatista 4y ago

Every millennial lived trough 2008, plus also 9/11, also a global pandemy and now +10% inflation. Everything with real wages being stagnated since the 70's I think we could give those "young latte-sipping kids" a break..