that Intercst hasn’t posted this already. Probably hasn’t had his first cup of coffee.
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Overall I agree. I don’t treat my house as an investment, but rather “this is the lifestyle I want to have”.
Examples. Current house have been in for 6 years. Built in 2005 and well maintained by prior owners. Still, we replaced a roof (insurance would not pay due to mfg defect in shingles, and every roofer we spoke to warned us that would happen), hot water heater, oven, and had the outside repainted. Close to $5,000 per year in maintenance.
Speaking of, why is it legal that the warranty on “30 year shingles” only applies to the original owner???
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Even so this has to be controversial. To wit–
For many equity in their home is their largest asset.
Studies of the wealth divide cite a major racial component caused by red lining and mortgage benefits that excluded blacks.
Home ownership is advantageous for many. Few think renting is a better deal.
He is remembering buying a house in the 1950s and holding it to the 2000s.
I had a friend in a factory town that in the 1950s bought a few houses to rent. By age 80 in the 2000s he was bleeding money fixing roofs for the third time…etc…when he sold them it was not a good deal. Yes he bought the houses for under $10k but he only sold them for around $100k. His rents were in the $800 range. His profit was miniscule. Not that I have worked it out but bonds paying 10% plus from the 1980s would have been a better bet. He did not change his investment vehicles though.
He lived till age 91.
His mother was in a home until age 106. We’d be sitting around a diner at night with the guys. He’d tell us he needed to get his mother a job in the kitchen. LOL
Don’t forget, “usually” doesn’t mean always.
On the MF boards, everyone is above average.
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Yes, my experience is residential inflation in declining rust belt towns is far different from that in hot growth markets. There it can be hard to recover the cost improvements or even maintenance. And it shows in properties that need repair and may be abandoned. Less so in better parts of town but still impacted by resale value.
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The reality is that owning a house is an EXPENSE. Just like renting a house is an expense. Sure, it is possible that sometime in the future, you can sell that house, and maybe even at a profit, but nevertheless, right now it is an EXPENSE. Part of the cost of living.
Probably because that’s what the contract says in it. Want different terms? Change the contract to reflect those terms that you want!
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Why does the contract say that? Because the perpetrator knows it’s a near certitude that the house will be sold to a 3rd party before it needs any work. IOW they made it up to suit themselves
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I can’t read everything, but Buffett is right.
Everyone needs a place to live. It just makes sense to do the arithmetic and determine if renting or buying is the better deal at the time. Bottom line is that over the past 100 years the stock market has averaged 10%+ per year while the average home in America has only appreciated by 4% per annum. And of course, half the homes have appreciated at less than 4%, while you can buy a low-fee S&P 500 index fund no matter where you live in the country and guarantee that you’ll earn the stock market average return. Of course, nobody learns this when they’re growing up, and there’s a whole real estate and mortgage industry that would prefer you not know it.
intercst
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That was what was so remarkable about Houston. Since there was no zoning, if you lived in the wealthy part of town, it was pretty easy to find a $500/month apartment across the fenceline from a $3 MM home.
intercst
If one’s home is one’s biggest asset then yes ROI should be a major consideration.
If not, then perhaps other criteria should kick in, like the security of having a stable place to live in, portfolio diversification, opportunity to raise kids and make friends over time, etc?
Surely a lot of American families benefited from the security and dependability of an upbringing where home was always where it used to be?
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I’m pretty sure one’s home is either the #1 or #2 asset for most Americans (the other is the value of their Social Security benefit.)
Investing in equity markets is largely the province of the top 10%.
intercst
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'The Federal Reserve’s just-published triennial Survey of Consumer Finances — perhaps the most authoritative look at the financial health of American households — shows that in 2022, about 58% of American households owned stock, either directly or indirectly through mutual funds and other investment accounts.
That's the highest on record, trouncing the previous high water mark of 53% seen during the dot-com boom and right before the Global Financial Crisis.
Details:
The rise in those who own stock directly — that is, by buying individual shares rather than through mutual funds — was a big driver.
Direct ownership of stocks increased "markedly" between 2019 and 2022, jumping from 15% to 21% — making it the largest change on record, the Fed said in its report.
That's the highest level of direct ownership of stocks since the early 2000s when it was also 21%. '
https://www.axios.com/2023/10/18/percentage-americans-own-stock-market-investing
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Maybe I should have said “meaningful” assets in stocks. Sure a lot of people have a 401k account, but they don’t have much in it. Then when they change jobs, they cash in the 401k to go on vacation.
intercst
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To emphasize what I think Intercst is saying.
The top 10% of Americans own 93% of all stocks, to bottom 50% own 1% of all stocks.
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Yes, and also for the many who have 401Ks and 403Bs, the stock ownership is remote in many ways, detached from thinking about the market. Those Plans are thought of as benefits primarily and not specifically as stock ownership per se.
Pete
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Yep 401k are tactical or strategic. There is disdain for even putting money into them.
'For many families, the assets held in IRAs and DC plans (typically associated with either a current or past job) are among the most important components of their balance sheets and are a key determinant of their future retirement security.
Among families that have these assets, the mean combined IRA and
DC pension account balance increased to $331,400 in 2022, with the gains concentrated in the top half of the usual income distribution (table A).
Among families in the bottom half of the distribution, the mean balance for participating families decreased between 2019 and 2022, from $66,600 to $54,700.1
In contrast, the mean balance for participating families in each of the higher-earning segments increased more than 10 percent—to $226,700 for the upper-middle income group and to $913,300 for the top decile.’
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The 50 - 89.9 percentile is only partially into the upper middle class. The top 20% have expanded on 401ks plus individual equities.
Meaningful to who? If a 20-35 year old has $20,000 saved up and has $10-15,000 of it in their robinhood account (15-20 million of those accounts so far), is that meaningful?
One of my kids, age 18, opened a robinhood account the day he turned 18 and moved almost all his funds into it. I DO NOT interfere with his trading because I figure it’s better for him to make his mistakes now with a few thousand than in 20 years with a few hundred thousand. Besides, who knows, maybe he will outperform with his few thousand? 
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