Trump Threatens Mass Arrests of His Rivals

@Raiders22

 Stay caught up..lol did someone else tell you to say that?

The affordability issue has been around forever and it bit me once in a move so I had to make CHOICES that were not ideal but I still had to make them to afford what I felt I needed at that time.

I cant stay as caught up as you and your pocket experts but darn it I will always try.

@wallstreetcappers

Yes, it is common knowledge to folks that study it. 

@Raiders22

 Well that will help me sleep better at night that whatever you are referencing is common knowledge and that your pocket resource folks back you up.

Solid reply as always.

It is common knowledge how the experts view the house purchase for folks. 
It is also a very key issue with them right now about the sudden increase in the housing inflation.  

It is not ‘pocket resource’ folks.  
Simply any decent financial or wealth advisor.  
But like I said in the beginning most people misunderstand this.  
I only addressed it because you brought up that the ‘value’ of your house had gone up so much in the last 3 years.  
Nobody would use anecdotal examples as a good way of making this point over 15 or 30 years.  

You can easily see this when you run the numbers on this as well.  
There are many examples of how to break it down that are easily understood. 

@Raiders22

 Yes you say the same things that the experts say this and they back you up and financial and wealth advisors yes yes yes I know those are your pocket resources, you have these multiple unknown resources that always support your contention yes heard it and whatever that means it makes you happy so good for you and what another great reply from you.

My house has gone up as I suggested, just like you boast about picking investment funds or stocks those go up too and are investment vehicles as are houses. If a home was owned solely for living and only to consider for a dwelling then location would not matter, intangibles would not matter, age of home or demand would not matter because per your pocket experts its unwise to consider your residence as an investment and that nobody (even though thousands do it every year right in my state) ever realizes a gain on a property until they die..and until you realize it then it does not exist. My gain while it can change is of zero value because I am not realizing it today. Yeah thanks to your brilliant pocket resources then that completely changed my mind. It also changed the way my inlaws net worth was impacted and the way my neighbor who just sold their property in my subdivision and downsized this last week profited, those are not real examples they are a fake narrative and those gains were not legitimate.

@wallstreetcappers

It is really not that hard to understand if you just read up on it and look into it.  

Some of those links even break the numbers down for you as well.  
But the key part is the bad psychology behind having folks think this way. 

No advisor will tell you to view it as a true investment.  
They are not unknown sources. 

They have names attached.  

Bad news for America if it happens.  FASCISM is the last thing we need right now.

A recent poll showed most people now feel that housing is the best long-term investment, even better than stocks, bonds, or gold.

Part of this is the psychology of seeing a big lump sum at the end of paying it off and selling it.

Like Robert Schiller, the foremost expert on housing, says:  “…it hasn’t been a good provider of capital gains.  It is a provider of housing services.”

“Capital gains have not even been positive.  From 1890 to 1990, real inflation-corrected home prices were virtually unchanged.”

For example, from 1890 through 2012, home prices adjusted for inflation went nowhere.  Not a single dime of real growth.  For comparison, the S&P 500 increased more than 2,000-fold during that period, adjusted for inflation.  And from 1890- 1980, real home prices actually declined by about 10%.

The entire idea that home prices increase in real terms over time is a figment of the 2000s housing bubble.

In 2010, after the housing bubble burst, people still expected their homes to appreciate by more than 6% a year in the next decade.  That is more than twice the normal rate.  Despite the housing crash, people still expect stock-like returns out of their homes.

Since a home is most people’s largest asset, inflated expectations can become a problem.

The value of American homes fell by almost $7 trillion from 2007 to 2011.  People who thought their homes would return enough to pay for retirement learned that Mr. Market carries a sledgehammer and takes no prisoners.

Everyone should live in a home they can afford and provides the lifestyle they desire.  But assuming it’s a superior long-term investment, one to rival stocks, is dangerous.  There’s just no evidence to back it up.

A home is typically the asset people hold the longest.  They sell stocks after a few months, but keep a home for years, or decades.  When you own something for that long, the returns you think you earned can be overwhelmingly due to inflation.  The CPI has increased six-fold since 1970.  If you bought a house for $30,000 in 1970 and it’s worth $180,000 today, you’ve earned nothing after inflation.  You think you’ve made a fortune, but you haven’t gone anywhere.  Add in property taxes, insurance and repairs, and you’re down.

I get this is the Politics Forum.  But this is still apropos for most folks.  Even if it is too late in life for some, they can encourage the next generation to do better.

At the beginning of 1992 the median home sales price was 119,500.

The median household income was 30,640.

The Price to Income ratio was 5.81

At the beginning of 2022 the median home sales price was 433,100.

The median household income was 74,580. 

The Price to Income ratio was 5.81

The average mortgage rate at the beginning of 1992 was 8.39%.

Maybe it makes sense to refinance with a drop of at least 1.5%.

The average mortgage rate in 2002 was 6.5%.

The average mortgage rate in 2012 was 4%.

So, works out to around 6.17% on average.  To be even round down to 6% on average.

According to the U.S. Bureau of Labor Statistics, prices for housing were 118.75% higher in 2022 versus 1992 (a $141,910.73 difference in value).

Between 1992 and 2022: Housing experienced an average inflation rate of 2.64% per year. This rate of change indicates significant inflation. In other words, housing costing $119,500 in the year 1992 would cost $261,410.73 in 2022 for an equivalent purchase. Compared to the overall inflation rate of 2.48% during this same period, inflation for housing was higher.

From 1992 to 2022 the dollar eroded 52%, or the rate of inflation of costs went up 108%.  In other words $1.00 of buying power would have dropped to $0.48.  Or something that cost $1.00 in 1992 would cost $2.09 in 2022.

So, you are financing for at least 6% on a purchase that is only increasing less than 2.5% a year.  This is not even beating the longterm inflation rate.

So, now you have financed the 119,500.  Say with 10% down.  Because some folks will do less and some will do the 20% to avoid PMI.  But we will not include PMI.  Then a 1% property tax and $500 Home Insurance.

Your loan amount of 107,550 is now fully repaid 30 years later.

You have paid 124,583.97 in interest.  Your total mortgage payments are 232,133.97.

Your total out-of-pocket with insurance and taxes was 282,983.97.

This does not include any PMI along the way.  It does not include any HOA along the way.

Now, if you figure any ‘carrying costs’ into it, you will have to add more to the total.

If you do any maintenance, or repairs, or upgrades.  Let us say you redo the roof once, add a pool, upgrade the kitchen and bathrooms over time.  Buy new appliances.

All of that has to be factored in.

Now you are ready to sell and buy a new house.  A smaller one to downsize, or another location that is cheaper.  

Now you have to factor in closing costs and capital gains on profit that you do not put into the new house.

By now you have, hopefully, broke even after 30 years.  But you have likely actually lost money.

Anyone that thinks breaking even after 30 years — or even losing somewhat — is an investment, is not very good at math or common sense.

Todd Sinai, a real estate professor at the Wharton School words it this way:  “Housing is a consumption decision, not an investment decision.”

“If you spend twice as much on a house, you’re not making twice as big an investment, you’re spending twice as much on housing.  That’s a mistaken way to approach it.”

Taxes, fees, closing costs when buying and selling a house eat into any profits.

“Buying that house cheap and selling it once it’s gotten expensive is an expensive way to make money, because the round-trip (cost to you) is about 10%, so you take a huge hit.”

So, now your house is sold and you have paid cash for a much smaller one to downsize.  But really it is just so you could buy a cheaper one in order to realize some ‘profit’.

Now you have far less house most likely in another state.

But you have a paid for place to live.

Now it is time to really invest.

What do you do for a great investment?  

Start to buy another house and simply hold onto it and maintain it and realize the ‘appreciation’ 30 years later?

No, no moron would think that would be a good investment.  It would be a horrible idea.  But that is the logic if you strictly follow it through.

If a house is a true investment — just buy it and hold on.

Do not buy it to flip it, or renovate it for a B&B, do not buy it to rent it out.

Those would be true examples of a house being a potential investment.

No, of course not.  Most folks by that age do not want the hassle of dealing with that sort of thing.  They would put any potential profit into TRUE investment vehicles that are maintenance free and cost free and actually have been shown to appreciate more than inflation over time.

Mistakes that people make affect them later in life.

You see this for sure financially.

Look at how the USA does it.  

Kids are urged to move out on their own far too early.  This is one of the few countries that do that.  Kids are even made fun of if they still live at home.

But what happens?  They are then urged to get credit cards and get in debt.  This behavior is reinforced by telling them credit is good and they need to build their credit up.

Then they buy a house too soon.

They buy too much house just because they can and the bank says they can afford it

Then they finance it for 30 years.  Then they take the full 30 years to pay it off.  

All of the time thinking it is an investment — when it is not and can be a moneypit at times and a drag on truly investing for retirement.

1. Stay at home until you are really ready to move out and financially able to without going into debt.
2. Buy a house you can truly afford.
3. Finance it for 15 years and pay if off even sooner.
4. Then pile into your true investments hard
5. Retire early if you want or do job that truly gives you joy or simply enjoy your job and life without the burden of debt.

The issue with the housing is most the same as it is with SS.  People know they NEED to depend on SS in retirement because they have not planned properly.

The same with housing, people are taught that it is a true investment because it is their biggest purchase.  They then rely on trying to realize any profit and moving to a smaller and cheaper place.

Why not invest so well along the way that you do not have to depend on these things.

But the behavior is passed onto kids and the cycle simply repeats.

All based on bad information and ideas that are not well thought out.

Finances and debt nd investing should be taught in school at a fairly young age.

So, discouraging that it is not.

Unless your mom or dad is a CPA or something -- everyone has to learn this stuff the hard way it seems.

I used to think with the internet and the ability to find information and read or watch instructive videos it would help.  I just do not see it, yet.

Maybe soon.

FACT!

the maga republicans r not just a a failure but a disgrace