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re: 9 percent of US households are millionaires
Posted on 7/9/17 at 8:57 pm to GoIrish02
Posted on 7/9/17 at 8:57 pm to GoIrish02
quote:
Equity is ... based solely on market conditions
Welcome to the free market, where the prices are made up and what you paid for something yesterday doesn't matter!
Seriously, everything a person will ever buy or own has a subjective value based on market conditions. This isn't a drawback unique to real estate/home equity. Any of the major markets could have a bubble event or game changing technological breakthrough to crater them out. Just ask the oil guys about fracking. quote:
and should not be considered a store of wealth
Then what should? Stocks? Currencies fluctuate all the time, so I certainly wouldn't just keep it in cash, not to mention there's that little bug called inflation. In all honesty, I'd consider a free-and-clear income-producing (or saving) piece of real estate the most recession-proof thing there is.
And the great thing about it is that it's literally everywhere. Money can be made on real estate outside of just Nashville, Raleigh-Durham, etc. You just have to know where to look and what to look for.
This post was edited on 7/9/17 at 9:28 pm
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Posted on 7/9/17 at 9:16 pm to BearsFan
quote:
Sounds like you have the benefit of living in a place where real estate is increasing in value steadily. Many people on this board don't likely have that benefit
Must be the case based on some of the comments. I would have figured that most of the posters on here live in the southeast and weren't affected that much by 2008 real estate value decreases, any drops rebounded here in Texas. I live in a somewhat rural area (10,000 people - nearest large city has 110,000), but housing still seems to steadily increase over time.
Interesting side note, a guy I own investment real estate with was transferred to San Francisco about 5 years ago from Dallas. He bought a home out there for $600K. This past year he moved to Ohio and sold it. He received $1.4M for it, that was more than he was asking. Must be nice to make in one transaction more than what most people will save their entire lives.
Posted on 7/10/17 at 7:01 am to Ramblin Wreck
quote:
Must be the case based on some of the comments. I would have figured that most of the posters on here live in the southeast and weren't affected that much by 2008 real estate value decreases, any drops rebounded here in Texas. I live in a somewhat rural area (10,000 people - nearest large city has 110,000), but housing still seems to steadily increase over time. Interesting side note, a guy I own investment real estate with was transferred to San Francisco about 5 years ago from Dallas. He bought a home out there for $600K. This past year he moved to Ohio and sold it. He received $1.4M for it, that was more than he was asking. Must be nice to make in one transaction more than what most people will save their entire lives.
We say "location, location, location" for a reason.
Right now Middle TN is the epicenter. I had a note in my mailbox for an offer of 1.3M cash based on exterior only drive by of my house. I paid 870k in August 2016.
That said, it's definitely starting to level off here as prices skyrocket. Days On Market in housing over 500k are increasing.
To the OP, including housing in that millionaire status is easy to believe based on Middle TN. But unless you're moving to a much smaller less attractive market, buying and selling in same market becomes a wash.
Posted on 7/10/17 at 7:13 am to ItNeverRains
quote:
But unless you're moving to a much smaller less attractive market, buying and selling in same market becomes a wash.
That's what I was thinking while reading some of those post
Posted on 7/10/17 at 8:24 am to ItNeverRains
quote:
But unless you're moving to a much smaller less attractive market, buying and selling in same market becomes a wash.
Smaller house "yes", but not necessarily a less attractive market. In our case, we won't need a large house when we retire and the kids have moved away. I don't have any desire spending my time maintaining or paying to heat and cool a 5 bedroom home.
Posted on 7/10/17 at 10:57 am to lynxcat
quote:
And if you had a dream job in Berlin come available, you would be able to pick up and move next week, right?
We are closer to 2020 than we are to the 2006 market crash, its really time to move on. That stuff happens in every type of investment whether it be real estate, commodities (oil), equities, etc. Furthermore anyone that didn't see the bubble coming was either making too much money to stop or just ignorant. People were buying houses with 0% down and had mortages 50-75% of their incomes, it was absolutely absurd.
The fact is if you look at any house built in the 1980s right now and compare that to rent, most homes that old are up 300% at least if not more in value while rent is up similarly. Choosing to buy locks in your "payment" for 15+ years while rent continues to increase.
Furthermore, once people hit 50-60 they don't desire to move as much and usually stay put. Most retirees I'd bet a very high percentage like 80% or more have been in the same residence for 20+ years. Many for much longer, I mean how many grandparents have been in their home for 30-40+ years? With their only bills being utilities, tax, and insurance.
Posted on 7/10/17 at 11:10 am to Serraneaux
I'm not saying I disagree with what you're doing. I'm about 18 months away from where I want to be before I purchase my first rental house as well. What I'm saying is I disagree with it as a certain criteria for wealth.
Assuming you can sell you house for what you are asking less taxes and less loans, then yes, you will be richer than if you simply kept them. My perspective on wealth revolves around time and freedom though. If you do that, are you free to do what you please business wise or leisurely? That's where real wealth sets in IMO.
The few truly "rich" people I know do what they do because they can and they are passionate about it, not because they have to.
Assuming you can sell you house for what you are asking less taxes and less loans, then yes, you will be richer than if you simply kept them. My perspective on wealth revolves around time and freedom though. If you do that, are you free to do what you please business wise or leisurely? That's where real wealth sets in IMO.
The few truly "rich" people I know do what they do because they can and they are passionate about it, not because they have to.
Posted on 7/10/17 at 11:12 am to baldona
People in their early thirties still have plenty of mobility; therefore, it is clearly a factor worth considering.
I'm in no way against buying a home but I am against absolute points of view saying that home ownership is the way to wealth accumulation. It is a possible approach but it is not a pre requisite to becoming wealthy.
Since graduating college, I've lived with three roommates and by myself. I've lived in two cities and rented at more than 5 places. In a single city, I have now lived in 3 different neighborhoods each of which was right for that phase of my life. I am open to consider opportunities anywhere in the world and could make the move with minimal headache.
I use this anecdote to make a simple point that you are underestimating the importance of flexibility.
I'm in no way against buying a home but I am against absolute points of view saying that home ownership is the way to wealth accumulation. It is a possible approach but it is not a pre requisite to becoming wealthy.
Since graduating college, I've lived with three roommates and by myself. I've lived in two cities and rented at more than 5 places. In a single city, I have now lived in 3 different neighborhoods each of which was right for that phase of my life. I am open to consider opportunities anywhere in the world and could make the move with minimal headache.
I use this anecdote to make a simple point that you are underestimating the importance of flexibility.
Posted on 7/10/17 at 11:14 am to LSUShock
quote:
What I'm saying is I disagree with it as a certain criteria for wealth
Ditto.
This entire thread derailment is derailment centers around this point.
Posted on 7/10/17 at 11:28 am to Ramblin Wreck
quote:
One of the big hinderances with a lot of people today is that they rent instead of buying. Pretty much everything you can buy with the exception of a house depreciates in value. My first house I bought was very cheap and in a rural area when I was 26. I sold it 5 years later and used the net as a down payment on a house worth twice as much, and so on and so on. If you are over 30 and either living with your parents or renting, the likelihood of having a net worth of a million dollars in the next 15 to 20 years is pretty slim. If you buy a home in your 20's, I'd say the chances are much higher.
pls go with your propaganda
one can rent and invest the money saved (vs. housing costs) in a balanced portfolio (i.e. build equity while renting). If done carefully, your portfolio returns can exceed the returns on your property value AND with far less risk.
a large number of investment vehicles in any number of sectors + dollar cost averaging >>>>>>>> your house in one sector (real estate) in a single locale bought all at once.
i personally would be a multimillionaire if i would have invested into cyrpto instead of a house where ill probablyn only make 10% in 5 years (lol)
regardless, buying under the assumption that you will sell at a higher price than you paid is speculation, not investment.
Posted on 7/10/17 at 12:21 pm to rocket31
quote:
regardless, buying under the assumption that you will sell at a higher price than you paid is speculation, not investment.
I have owned eight houses as primary residences, lost money selling two, broke even on one, came out ahead by various degrees on the others. The homes that I lost money on are in what is now some of the fastest appreciating areas in their respective cities, but I didn't have the luxury of being able to wait out the market. Real estate is no different than equities, when you are in the market is just as important as what market you are in.
Posted on 7/10/17 at 12:28 pm to rocket31
quote:
one can rent and invest the money saved (vs. housing costs) in a balanced portfolio (i.e. build equity while renting). If done carefully, your portfolio returns can exceed the returns on your property value AND with far less risk. a large number of investment vehicles in any number of sectors + dollar cost averaging >>>>>>>> your house in one sector (real estate) in a single locale bought
You are correct, but I would be surprised if very many renters consciously divert what they have identified would be the cost difference between renting and owning into a separate investment. As I've previously stated, based on rental properties I own and have owned, I doubt it is cheaper to rent. If that were the case, why would I invest in rental property? When I purchase properties I pay down as little as possible, many times 10%, and still make money after paying the note, taxes, and repairs. Dave Ramsey would freak out over purchasing like this, but there are smart ways of doing it and minimizing risks. I'll save that thread for another day.
I've offered to sale properties to tenants when I have wanted to move from a particular market. Each time I've shown them on paper how they would save money, but they weren't interested. I suspect it is their inability to come up with a down payment or fear of having to pay for any potential repairs.
Posted on 7/10/17 at 12:37 pm to Ramblin Wreck
quote:Probably the same amount that buy a house with long term finances and wealth accumulation in mind.
You are correct, but I would be surprised if very many renters consciously divert what they have identified would be the cost difference between renting and owning into a separate investment.
Posted on 7/10/17 at 12:50 pm to jimbeam
quote:
Probably the same amount that buy a house with long term finances and wealth accumulation in mind.
This scenario doesn't apply to everyone buying a home, but one of my best friends just put 5% down on a 30 year mortgage for a $215k house with his fiancee as their first home. They are both 25 and combined they may take home $100k/year, max. He hates his job. She doesn't feel much upward growth in hers. When I asked him why they bought they house they did, his response was, "If anything happens, we can just sell it and the house will appreciate in value". I was so blown away by the perspective and naivety.
In the back of my mind I was thinking, you literally just screwed yourself before you have ever even gotten started. It's such a backward perspective that is rooted in a lack of patience and misinformation.
This post was edited on 7/10/17 at 12:51 pm
Posted on 7/10/17 at 12:55 pm to LSUShock
$215K home with dual income of $100K wasn't a wise decision unless they have very secure jobs and use really good birth control.
Posted on 7/10/17 at 12:56 pm to Ramblin Wreck
quote:
215K home with dual income of $100K
That mortgage can't be over $1400. How does a couple making 100k not afford that?
Posted on 7/10/17 at 1:01 pm to Paul Allen
quote:
That mortgage can't be over $1400. How does a couple making 100k not afford that?
They may can afford it, but you have to look at seasons of life. If they have a baby and new Momma quits her job, can they afford the house, car, etc? Unless you have a good load shedding strategy or a windfall source to tap into, it would be a bit scary.
Posted on 7/10/17 at 1:16 pm to Ramblin Wreck
quote:So because you found ownership financially beneficial, then it must be true?
If that were the case, why would I invest in rental property?
While we are preaching with anecdotes here... Since graduating college, I have lived in 8 different residences, or 1 new address every 2 years - including 2 of those in high rent cities. There is no way I would have made the money I make now or have the "wealth" I have now without that mobility.
Now, I am not saying that this works for everyone. It wouldn't work for a young doctor or lawyer trying to establish themselves in a single market. Nor would it work for a low-to-moderate income individual with limited geographic options. Everyone needs to make their decision based on their own circumstances. I just want to agree that there is no "rule" that home ownership is a net benefit or net gain for individuals? That is my main point here - the old idea that owning a home is a foundation for financial security is not universal.
Posted on 7/10/17 at 1:17 pm to yellowfin
quote:
But unless you're moving to a much smaller less attractive market, buying and selling in same market becomes a wash.
That's what I was thinking while reading some of those post
I think it depends on the market, where you bought and where you are buying. Denver market is very hot right now, and some areas are hotter than others. We could easily pocket $200k by moving to an equivalent house in a less desirable neighborhood.
as to the OP, I am somewhat surprised that this many households are millionaires. I would love to see it by age.
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