re: Home Prices start to drop due to rates, lack of sells, and more inventory!

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Now add what you would have spent on rent for a similar place during that time, renters insurance, any additional storage you may have needed, etc to what your house would sell for.

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Oh I’m not saying that renting is better or even good, but owning a home is not a “great investment.” Like I said earlier, it’s more of a savings account.

We paid off our house about 4 years ago so now we’re really saving money now that we’re not paying a mortgage note with interest.

But put it this way to make my point about it being a savings account versus an investment. We put down $100k on the house plus spent $30k on renovations. So a $130k investment in a decent investment account plus adding about $1k/mo to the account for 15 years would probably be worth more than my home currently is.

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It's inflation. Read the last three paragraphs again. If your beachfront home value appreciates, so do all the similarly valued beachfront homes. You pay costs to live there and you don't receive income from the home while you live in it. You can sell it later but the proceeds will only buy you one equivalent home. You can downgrade to a cheaper area or home when you sell it, but that's like receiving no incomes from the widget factory, paying overhead the entire time, and then selling it to buy a smaller widget factory and calling the price difference a profit.

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Goodness. It's easy to see how that line of reasoning would leave an entire generation of Americans beholden to landlords.

Assuming a renter is disciplined enough to put his wouldbe downpayment money into other investments, rather than starbucks, bar tabs, vacations, and flash, renting might work. Certainly avoiding homeownership could work, and it would be the right choice in a RE market downturn.

But in reality, that's not the normal course, is it. The normal course is renting for the sole reason that ownership seems too expensive, too lifestyle limiting, only to find that after a period of time, the initial affordability situation has worsened. Meanwhile funds which would have been tied up in downpayment are instead frittered away. Unfortunately and all too often, the response is not to learn from that result, but rather to blame others for the decision not to buy in the first place.

Regarding real estate investment, you're either confused or confabulating. E.g., the beach home in question was a second residence purchased within an investment portfolio. There was no requisite DP. Essentially it was an arrangement to function as one's own lender. A portfolio in that account served as collateral with IBLR-based rates running in the 1.5%-3% range for most of the period, all while keeping the portfolio invested. The purchase was made at a point where RE prices were down following the '08-'09 recession.

As with any investment decision, the outlay was one based on anticipated ROI. Our realtor addressed that in various homes we were considering. He predicted (correctly) there would be significant ROI variance based on location in that area. So no, our realtor was not addressing mortgage rates, or inflation, or the anticipated overall rate of market escalation. He was suggesting that d/t scarcity (LocationLocationLocation), there would be an appreciation differential in the homes we were considering.

We sold this past summer at a couple million in profit. Now you can creatively term that reesult anything you'd like ... "speculation," "luck," etc.. IMV, and in the view of field experts, it comprised investment in a tangible commodity, which we also got to enjoy as we owned it. It was one component of a balanced investment portfolio.

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As leverage in the US economy increased over multiple decades, the federal reserve has kept interest rates artificially low by increasing the money supply to reduce borrowing costs. The cost of those low rates is borne by savers/depositors. The advantage has been gained by borrowers and levered speculators. This is bound to fail because the fed hasn't actually reduced the downside of leverage, they've transferred it to savers and lenders, and to the federal reserve itself.

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Success in life entails adaptation. Your oversimplification and misconception of the Fed's actions notwithstanding, the environment is what it is. You can either whine about it and not participate, or assess lay-of-the-land and take advantage of it as best as possible.

However, let's clear at least one aspect of this up for you. It is you and I, the voters, who've seated one spendthrift Congress after the next for decades. That ain't the Fed's fault.
As Jagger said:
"Shout it out! Who killed the Kennedys? When afterall, it was you and me."
Blame transference might feel good, but it neither changes the result, nor does it diminish likelihood of a repeat mistake.

In a way, the Fed is doing the best it can to work around our own stupidity, not the reverse as you imply. You talk in terms costs borne by savers. In a circumstance where the Federal Government is a debt ridden spending mess, obviously the cost will be born by savers. The Fed is simply trying to lower the imparted pain. Treasuries running at 4% translate to a $37T Nat'l Debt C-of-C at about $1.5T if rates escalate to 8% (good for "savers"), our C-of-C jumps to $3T/yr. Good for savers, bad for the country. In that equation, savers obviously are disadvantaged.

1- current pricing is artificially inflated by all government created factors (MBS, COVID primarily)

2- 51% of home building is now done by the mega builders (that have already been dropping prices via mortgage buy downs)

3- if we done get 1-3% reduction now, it might be a long time.

4- with fed out of MBS buying, mortgages will never be back below 4.5%. They will crawl back to the low 6s after 2-3 Fed rate drops and market stabilizes.

5- government needs to get out of mortgage lending. People with bad credit or income should rent. Government should support SOME rental programs and project financing.

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Oh good. Luckily Americans don't look at housing as an investment that will grow over time.

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I don’t care if my home value drops 10%, or whatever… I’ll be fine.

I want my kids to be able to buy a house.

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If you own a home, take into account all of your expenses on your home.
Homeowners insurance, maintenance costs, property taxes (especially in some states), costs of renovations. That shite adds up to a lot of money

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Those are all costs built by landlords into rent, so they are paid either way, right?

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Imagine a Roth account where you could start with $130k and add the difference in your mortgage payment to rental over 30 years and I almost guarantee that will out-pace homes (especially when you include maintenance) over that time.

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If I were a young person today and had a good job I would rent and max all my tax advantaged accounts and dump as much as I could into a brokerage account. In many metros right now with property taxes and insurance being as high as they are it wouldn't be worth it to scrounge up the 10% or 20% down payment and be house poor.

Another thing to consider is Baby Boomers will start dying off en masse and they are estimated to transfer between 20 to 40 Trillion to their heirs. That is going to provide a lot of cash for 'renters' to buy homes outright and will enable them to keep dumping money into various retirement vehicles at a rapid rate.

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Baby Boomers will start dying off en masse and they are estimated to transfer between 20 to 40 Trillion to their heirs.

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$70-$80T is my understanding ... and Uncle Sam's (rattling his $37T ball and chain)

I remember just a few years ago that there was property everywhere and nobody wanted it.

But something happened and it started about 10 years ago.

Now I get about 25 phone calls a day from different people wanting to buy my house or know if I have any other property for sale. I tell ya it's about 100 calls a week.

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Call it an inflation hdedge if you like

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So it was inflation ... now it's an inflation hedge?
I agree btw, but that's quite a difference. Insofar as deflation in a fiat economy is less common, that gets back at the investment piece.

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inflation of the asset price will exceed cost of carry.

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You're confusing terminology

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call lots of speculative endeavors investments

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again, you're confusing terminology, or you simply don't understand what speculation is.

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I'm not making a moral judgement of you or your speculative success, just a statement that inflation does not create wealth

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You simply don't know what you're talking about. That's not a moral judgement either. It's just fact.

You've been all over the place on inflation vs inflation hedges, Fed policy, speculation. E.g., now you're conflating the Fed hurting Americans with inflation. The Fed inflation target is very low. That drives Fed policy and protects the very folks you're intimating are getting hosed with inflation.

You need to step back and start over.
Start with basics such as what drives Fed policy, or the delineation between speculation and investment.