Housing is not an investment but what if market behaves like it is?

NEW -> Contingent Buyer Assistance Program
Housing, a diamond ring. . . I love when people refer to these things as an "investment." Before they're done with that three syllable word, "investment," I like to start my question, "When are you going to sell it?"





"Huh?" they say.


"Well, if it's an 'investment' that means you're going buy it so that you can sell it and make money in the future, that's an 'investment'."





Then, big surprise, no plans to ever really sell. Great investment.
 
<p>ISB--that is also the reason that more people don't make money in the stock market. They don't have a plan, even a weak, flimsy plan for selling.</p>

<p>At least some stocks throw off dividends.</p>
 
"Then, big surprise, no plans to ever really sell. Great investment."



that's the only time it actually will pay off... by living rent/mortage free in 30 years or whenever the mortage is up... so that's when you get your return on your "investment"... not paying rent every month



i personaly don't look at it as an investment, but if it turns out that i will be living rent free before i retire i'm down with that.



xsocal... love your comment
 
flmgrip



Thanks.



I have owned over 23 homes and made a profit on all but 3. I can't say as much for my forays into the stack market. Both after tax profit as well as an income stream makes me believe that real estate can be a true investment. Just buying a house and expecting a quick profit is sheer speculation and not the same as investing for the long term.



Believe me, there is nothing that feels as good as owning your primary residence outright. It changes your opportunities and gives a lot of peace of mind.



That is a worthwhile goal.



enjoy!
 
<p><em>"but if it turns out that i will be living rent free before i retire i'm down with that".</em></p>

<p>So many thoughts running through my head....like, saddled with a mortgage the size of yours there is probably no doubt you will have to work the entire 30 years in order to afford it....etc. I'm glad you are happy with your choice however.</p>

<p>xsocal,</p>

<p>I agree with your "owning your primary residence outright" sentiment. But seriously, how many new (SFR) buyers in the OC do you think will ever achieve that goal. Perhaps with a 300K salary....but not so sure otherwise.</p>
 
<p> </p>

<p>Trooper</p>

<p>It may surprise some that over 16% of OC homes do not have mortgages.</p>

<p><em>"There are 83,108, or 16.9 percent of home owners without mortgages." </em>This is from <a href="http://www.house.com/Metro/Metro_Real_Estate_s_California_co_Orange.aspx">house.com.</a></p>

<p>I think Gary Watts quotes 18-20% in his presentations but that is close.</p>

<p>Personally I know many people who do not have a mortgage and many more who did not refi or HELOC theirselves upside down. Maybe I travel in conservative crowds.</p>

<p>If one had bought using a 15 year loan 10 years ago and paid an extra payment a year they would be free and clear now. It really isn't that hard to do.</p>

<p>I like to add the <strong>fair and balanced view</strong> here.</p>

<p>Just keeping it real!</p>

<p>


</p>
 
<p>I checked your link and this is what I found. </p>

<p>"Of these homes, 407,386 or 83.1 percent have a mortgage. <strong>The median monthly mortgage payment is $1,717</strong>. There are 83,108, or 16.9 percent of home owners without mortgages".





"Orange County, California has a total of 360,598 occupied rental units. <strong>The median rent per month is $923".


</strong></p>

<p>Your information is coming from the 2000 census when things were much more reasonable housing -wise. Just being real. </p>
 
<p>Trooper,</p>

<p>Hello. I am sure you have heard that 9 of 10 American wealth were created from real estate. So how can anyone dispute this data?</p>

<p>As painful as owning real estate in the early years, I am a strong believer of real estate holdings. Believe me, I have wasted enough money in the stock market and nonsense spendings. I even invested my children college fund in real estate instead of college savings. And this is not just realtor talk.</p>

<p>I am in my 40's. My house is just about paid off. My real estate investment for the children future reached it's goal even in today depressed value. Any future gain will be just bonus. </p>
 
<p>Damn you are sharp!! LOL</p>

<p>There are still more than one would think. I will find some more updated numbers. All in all if people had focused on paying off their primary residence in the last ten years rather than buying high cost cars and flashy bling then they would be better off. </p>

<p>Spoken as a 'po country boy!</p>

<p>Enjoy </p>

<p> </p>

<p> </p>

<p> </p>

<p> </p>
 
<p>Hi NIR !!! Long time no see !! </p>

<p>xsocal....</p>

<p><em>All in all if people had focused on paying off their primary residence in the last ten years rather than buying high cost cars and flashy bling then they would be better off. </em></p>

<p>now THAT is a statement we can all agree with ! But you and I both know....it's simply not true. </p>
 
<p>NIR</p>

<p>Good going on your choices. </p>

<p>It is interesting that a lot of my clients were executives in the new home building industry who bought older homes with no Mello-Roos and low dues rather then buying new in the developments they built. </p>

<p>Some of us in the RE industry are very conservative and practical. </p>

<p>Trooper</p>

<p>I bought my first home as a college student in 1972 working part time and collecting the GI bill for school. It was around 35-40% of my income but I managed and it got me started. Things cost less but it was still a stretch and I made it work. Got a roomate to help out. I believe that you can accomplish whatever you want if you are motivated and willing to sacrafice.</p>

<p>Been there-done that!</p>
 
<p><em>Some of us in the RE industry are very conservative and practical. </em></p>

<p>Some of us future homebuyers are very conservative and practical.(and patient) </p>
 
RE and the the stock market and any other investment are all the same in this sense:



It helps if you know what you're doing, but it REALLY helps to be lucky at the right time.



Anybody can get lucky. The unwritten truth is the real fortunes are made when the market is all screwed up, and realized when everybody else is getting "lucky".



YMMV.
 
<p>Boy.....this sure does look familiar.....</p>

10 yr. DOW JONES INDUSTRIAL AVERAGE INDEX ($INDU)

<p class="h3q topGap">







<img height="300" alt="Chart" width="520" border="0" src="http://quote-web.aol.com/?syms=$INDU&e=DJI&action=hq&dur=120&type=mountain&hgl=1&vgl=1&vol=0&splits=0&div=0&w=520&gran=d" />





<a onclick="javascript:subChart('60', document.charts);return false;" href="http://finance.aol.com/quotes/$indu/dji/charts?dr=60">5 Yr</a> <strong>10 Yr</strong>







</p>
 
NoVas



You are correct that one needs to buy when everyone else says sell and sell when everyone else says buy. That is hard for most people. We will see how many people pass on good deals in this downturn or wait until the market passes them.



It also helps to be informed and knowledgeable.



"Luck" is the residual of hardwork and committment.



Have a great day!
 
<p>no_vas,</p>

<p><em>Anybody can get lucky</em></p>

<p>Luck, that is what truly boils down to. Anyone can get lucky; though you have to be there to get lucky, either by just because or good vision. This goes with stock market also. The difference between stock and real estate is one is not real, and the other is.</p>

<p>I bought real estate in my early 20's simply because I did not like being a renter at all. My debt ratio was something like 60%. I was viewed insane to have bought when no one was buying at the time too.</p>
 
<p><em>We will see how many people pass on good deals in this downturn or wait until the market passes them.</em> </p>

<p>Now this is a typical realtor fearmongering statement. I'm calling you out !</p>

<p>If you had added "On or after 2010" to the statement somewhere, I might just listen. </p>
 
According to the <a href="http://factfinder.census.gov/">census bureau</a>, 21.7% of owner occupied homes in OC, have no mortgage. However, 46.9% of those with a mortgage spend 35% or more of their income on their mortgage. The scary statistic is in 2000, that number was only 27.8%. That is a staggering increase of 68.7% in 6 S I X years. Nope... no problem here, Gary Watts says everyone is rich, so foreclosures are never gonna happen, NEVER!





In Irvine, 85.8% of owner occupied housing has a mortgage. Surprisingly, only 39.2% spend 35% or more on their income on their mortgage. Of course, this was only 25.1% in 2000, for an increase 56.2%. Mmmm... seriously, no problem here, people will just make more money with all that positive cash flow from the rental properties they bought in the last five years.





<em>We will see how many people pass on good deals in this downturn or wait until the market passes them.





</em>HAHAHAHA! That is funny... More like we watch people call false bottoms and fall victim to dead cat bounces, all the while still stuck with catching the falling knife. Hell... we haven't even had a true dead cat bounce yet, and it took almost three years in the last bust before we did. Hey, and then there was job growth, and rates were really low too. Wash, rinse, and repeat.
 
Trooper



I'm your huckleberry!! LOL I agree that maybe in 18-24 months we may see a bottom but not sure of that. I wasn't saying we are at a bottom but whenever we hit it a lot of folks will still being singing the same song as now. Its human nature.



Graph



Thanks for the stats. Don't get me wrong about the bottom. I will start looking to buy investment rental units in 18-24 months depending on how the foreclosure numbers are going at that time. As far as the 46.9% spending more than 35% of their income I did that when I was in my early 20's to buy. The numbers were just a lot lower.



My rentals were purchased pre 2000 or out of state. Rentals haven't penciled in OC for a long time unless you got in 1999 or 2000 and out by 2005.



The reality might be that not everybody can afford to live in OC. there are lots of less expensive places to live.



Enjoy
 
<p>Trooper:</p>

<p>I am already fully invested in equities. If I was not, I would be buying like crazy right now. I have been trading since 1993 and have never - <em>never - </em>had a losing year. If the year were to end today, this would be the first. Thankfully, this is the first inning in a 12 inning game.</p>

<p>Fundamentals for equities are really good right now. On whole, the collective balance sheets of publicly traded companies haven't been this strong in something like 50 or 55 years.</p>

<p>I'm itching to buy RE - but not today. My current plan is to secure financing and start actively shopping next January. In my neighborhood, the rent equivlent factor is about 245. When it gets to about 180 I'm going to drop the hammer and buy a home I like - provided I can find one I like. It's my guess that will happen sometime in Q1 or Q2 of 2009. I may look around and decide I want to wait it out longer.</p>

<p>I know I'll be paying too much but I don't care. It's so close to the bottom at that point it won't matter. I can stand being stuck $50K but the folks that bought at the peak will be off $400K if they are nutzo enough to ride it out. I don't care about the percentages as much as I care about the cubic dollars.</p>

<p>Anyway, I'm dying to build a small race car shop and it would be helpful if I owned the place.</p>
 
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