What have they been thinking?

… Nobel Laureate Robert Shiller emphasizes intercst 30-year real estate strategy.

From Barron’s

Once upon a time, a young family bought a modest three-bedroom Cape, the worst house in the best location in a prosperous suburb. Many years later, during the housing frenzy of 15 years ago and after the kids had grown and moved away, they received an unsolicited cash bid—for 20 times what they paid. That became their nest egg, which provided a comfortable retirement.

It’s all true, but it might as well be a fairy tale. Such an escalation of home prices is unlikely to repeat, especially from here after their frantic climb. Over the long term, history shows the stock market has returned about twice as much as residential real estate. And it’s done so with far fewer headaches than the attendant expenses of upkeep, which have come as a shock to many recent home buyers.

What have they been thinking? Homebuyer behavior in hot and cold markets: A ten-year retrospect
https://www.brookings.edu/bpea-articles/what-have-they-been-…

But—in contrast with the early 2000s—buyers’ expectations of large future price gains do not appear to be driving the market, the paper suggests. During the 2000s bubble, price-gain expectations over the long term (10 years) ran well above short-term expectations (1 year). However, starting in 2013, short-term and long-term expectations converged and, in fact, in 2021, many buyers expected price gains to moderate in the years ahead.

Perhaps now is the time to sell?

intercst

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"Perhaps now is the time to sell?

intercst"


Hmmm.
The problem with selling is still the same as when folks bought their house.
Where are they going to live?
A paid up house is less likely to have the buyer tossed out for failure to pay rent - though
property taxes and maintenance costs and insurance costs and all the rest of the bills that
come along with home ownership may sometimes make homelessness seem a viable option.

Howie52
A problem can occur if moving is required for employment - and people do things that are unwise
or fail to foresee the future of their health, the health of a neighborhood, the potential for
fires, floods and various frippery.

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Perhaps now is the time to sell?

Sure, if you have someplace else to live. Just keep in mind that in many places, rents have escalated just as fast, if not faster, than housing prices, and rental units are just as scarce, if not scarcer, than homes to buy. If you haven’t already moved, and don’t have someplace to move to lined up, it would probably be a bad time to sell.

AJ

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Sure, if you have someplace else to live. Just keep in mind that in many places, rents have escalated just as fast, if not faster, than housing prices, and rental units are just as scarce, if not scarcer, than homes to buy. If you haven’t already moved, and don’t have someplace to move to lined up, it would probably be a bad time to sell.

AJ

No no no. You have to do the math. You’re supposed to sell your stable, fully owned, “bird in the hand” for some magic beans.

Yes, I’m joking

So it’s time to sell?

Questions:

What are you going to do with the money? Will you make more on the ‘money’ or not?

Where you going to live? Going from a ‘house’ to an apartment is downsizing. Moving ‘out’ to the far suburbs/country is not that great for ‘retired’ folks when it comes to health care access, restaurants, shopping, etc.

Yeah - I could sell my house at nice profit. I get 10 offers a week to buy my house - cash - in the mail and on the net. would I want to pay 50+% more to rent it back? Nope. It’s paid for. Low taxes (senior frozen rate).

I’ll probably stay right here. Good health care, hospitals, docs, dentists, 100 restaurants, Walmarts and Krogers, Kohls, bigger shopping centers with 100 stores, Home Depot, Lowes, etc right at m finger tips. Where would I move?

Most folks living in a house for 40-50 years are going to have a nice gain if they are in metro suburb area…

t

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Perhaps now is the time to sell?

I’m closing on my new home on May 2.

PSU

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PSUEngineer writes,

<<Perhaps now is the time to sell?>>

I’m closing on my new home on May 2.

Actually, my idea is that it’s time to take my money out of the residential real estate space.

intercst

Actually, my idea is that it’s time to take my money out of the residential real estate space.

I know it was. I also know your decisions are strictly driven by dollars and cents. Some of us will make alternative decisions because there is more to life than the bottom line.

PSU

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…my idea is that it’s time to take my money out of the residential real estate space.

Then where will you live? Houseboat? RV?
Paying rent worked spectacularly well for you in the past, but at the moment low rents are extremely elusive, so renting a condo now might not be as attractive as it used to be.

Actually, my idea is that it’s time to take my money out of the residential real estate space.

You could take up to 80% of your current value by taking a cash-out mortgage. Or you could sell. But if you choose to sell, be sure you have someplace else to live lined up BEFORE you put it on the market. And it would probably actually sell at a better price if you had already vacated and had it staged.

AJ

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YewGuise writes,

<<…my idea is that it’s time to take my money out of the residential real estate space.>>

Then where will you live? Houseboat? RV?
Paying rent worked spectacularly well for you in the past, but at the moment low rents are extremely elusive, so renting a condo now might not be as attractive as it used to be.

Exactly!

The Portland suburb where I currently reside is starting to look like Houston in the late 1990’s and early 2000’s. The are probably 2,000 rental apartments and townhomes being constructed within a mile of me. And very little of it is low-income housing, so it’s not a cure to the homelessness problem.

intercst

aj485 writes,

You could take up to 80% of your current value by taking a cash-out mortgage. Or you could sell. But if you choose to sell, be sure you have someplace else to live lined up BEFORE you put it on the market. And it would probably actually sell at a better price if you had already vacated and had it staged.

I thought the same thing, but there was only a $20,000 difference in the sales price of a unit that had been beautifully remodeled to the current home decor fashion and a home that was sold to private equity investor “as-is”, dirty carpets and all. Over 30% of the sales in this area are to private equity.

intercst

I thought the same thing, but there was only a $20,000 difference in the sales price of a unit that had been beautifully remodeled to the current home decor fashion and a home that was sold to private equity investor “as-is”, dirty carpets and all. Over 30% of the sales in this area are to private equity.

Given the current market in WA state, unless both units went under contract very closely in time (within a week or two), it’s probably not a fair comparison.

AJ

And very little of it is low-income housing, so it’s not a cure to the homelessness problem.

Regardless of the builder’s intent. The moment supply outpaces demand, it becomes low housing and the homeless problem starts resolving.

The cost of rent determines who is homeless.
Supply and demand determines how many are homeless.

PSUEngineer writes,

<<Actually, my idea is that it’s time to take my money out of the residential real estate space.>>

I know it was. I also know your decisions are strictly driven by dollars and cents. Some of us will make alternative decisions because there is more to life than the bottom line.

Absolutely! If I’ve learned anything over the past 40 years, it’s that paying attention to the arithmetic and the economics provides me with a lot more leisure.

intercst

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And it would probably actually sell at a better price if you had already vacated and had it staged.

In today’s market you don’t need to have it staged. You barely need to have it painted. In some cities you practically don’t need to have much more than 4 walls and a door.

Save the money. Send it to me, or perhaps to the Fool in a desperate attempt to bribe them to keep the free boards open.

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