Shiller: Homeownership is a bad investment

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jeffyscott
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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Sun Jan 05, 2020 2:02 pm

willthrill81 wrote:
Sun Jan 05, 2020 12:29 pm
Agreed. In some markets, renting really is obviously preferable to owning. But what's going on in the real estate markets of the Bay area, Seattle, Portland, Manhattan, etc. is not typical and most certainly not universal.
I can see being anti-buying if you live in those areas and others where annual rent is, apparently 1/20 to 1/30 what the purchase price would be.

I would like to see an argument against buying when the ratio is 1/10 to 1/13, as it seems to be in the areas that I am familiar with. As long as you will not want/need to move for many years, it seems pretty clear to me that buying is cheaper than renting in these areas as long as one does not over-buy.

For example, compare owning a mortgage-free $300,000 house to renting that same house for $2000 per month, that's 1/12.5 ratio. With no mortgage, the biggest factor is the opportunity cost. The anti-buy zealot, who was linked to about 47 times in this discussion, suggests using the yield of Vanguard Real Estate Index as the opportunity cost, here: https://jlcollinsnh.com/2012/02/23/rent ... e-numbers/

Vanguard Real Estate Index Fund Admiral Shares (VGSLX) says this about it's yield:
The current unadjusted effective yield is 2.99% as of 11/30/2019, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).

The current adjusted effective yield is 2.19% as of 11/30/2019. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years.

https://personal.vanguard.com/us/FundsY ... undId=5123

From that it seems to me that the opportunity cost would be 2.19%, based on J. L. Collins' suggested alternative. If we assume the house will appreciate at the rate of inflation, that means using 2.19% is assuming the alternative investment return is 2.19% real. While I previously had used a higher figure, I think that was off because I failed to realize that a real return should be used, if the assumption is the house will keep up with inflation.

With that, the opportunity cost of the $300,000 house is $6570 per year. In my area, your property tax would be about $4000 per year and insurance maybe $500-1000, I'll use $750. Use 1% to cover maintenance and repair, that is another $3000. The total is about $14,300 or about $1200 per month. I'll add $200 per month to pay someone to cut the lawn and clear snow. That puts owning at about $1400 per month, $600 per month less than rent.
Time is your friend; impulse is your enemy. - John C. Bogle

jpdion
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Re: Shiller: Homeownership is a bad investment

Post by jpdion » Sun Jan 05, 2020 2:05 pm

I might ask, tongue in cheek, how many rental units Shiller owns?

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geerhardusvos
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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Sun Jan 05, 2020 2:45 pm

rascott wrote:
Sun Jan 05, 2020 12:06 pm
geerhardusvos wrote:
Thu Jan 02, 2020 8:04 pm
willthrill81 wrote:
Thu Jan 02, 2020 5:57 pm
petulant wrote:
Thu Jan 02, 2020 5:50 pm
This highlights a key aspect of home ownership left out of current-dollar rent vs. buy calculators. Even if renting and buying appear to be in equilibrium today, if rent goes up you already own your home and avoid the new expense. That might not be a big deal if the rent goes up like inflation. There is always a risk, though, that the rental market in your area tightens up and moves fast in a bad way. Owning your own home is the one asset that is a near-perfect hedge against significant rent increases. A hedge like that is a powerful thing.
Indeed, although the counter-risk is that you are forced to sell the home at a significant loss at some point. But as long as you remain in the home you get the value of imputed rent.

Where finances really tilt toward favoring home ownership with no mortgage is in retirement, when sequence of returns risk is exacerbated by a mortgage or rent unless you have non-portfolio income to cover them. These are expenses that must be satisfied every month, and being forced to make fixed (or increasing, as often happens with rent) withdrawals from your portfolio when it is suffering is a very real and potentially serious risk.
Having a house paid off in retirement where you can live is a nice thing for a lot of people if they want to stay in that location for their entire retirement. Like we’ve seen in Michigan, Washington, Oregon, etc. the cost of maintaining the home is actually going up significantly. What used to cost $10,000 to change your roof in Oregon now costs $30,000, and only 10 years later. This and other costs don’t always get passed on to the renter.

My long-term prediction is that the boomers will move out of all their houses and there won’t be a market to buy them. As many of them move into assisted living, there isn’t the population growth in many areas to support the housing market, meaning that rent will stay a good deal with more vacant large SFhomes. Probably be driving prices down for buyers too
Not sure what world you are living in.... but it's not the one of economic reality.

1) as a 20 year landlord, I can tell you for certain that all costs.... including roof replacements get passed onto renters. Landlords don't landlord for a hobby.... and if they aren't running their business to cover cap-ex, they won't be in the business long and will just sell out.

2) the demand for SFH is growing tremendously right now. The millennial generation is larger than the boomer generation. Due to the GFC, many had their launch into full blown adulthood delayed.... but it's now picking up in earnest. And why nationwide the inventory of homes on the market is a record low. Home building dropped to basically nothing for half a decade, and supply is a major issue basically everywhere outside of truly depressed rural areas. Zoning restrictions in metro areas will continue to drive the prices of housing up over the long term in all desirable areas of the country.... due to artificial lack of supply. You have pointed to Seattle and Portland in your other posts..... those are markets that are extremely distorted right now in valuations.... mainly because of long- term zoning restrictions. Yes, in those extreme markets, buying doesn't make much sense at all.... as it's mainly a speculative play.

3) seniors won't be going into assisted living at near the rate it was expected even a decade ago. Aging in home with in home care is both more desirable and much more cost effective. Obviously some will require senior living facilities.... but they will be the exception, not the norm.
When homes are purchased in years past as many are, the mortgage is lower. This passes on the savings to the renters. The top populated cities in all states align with what I have said here. Landlords can make money and renters also get the value in many cases all costs considered. Again the comparison is renting or owning the home you are living in. I’m not talking about the value of owning a rental home as an investment which is a business in itself
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Re: Shiller: Homeownership is a bad investment

Post by willthrill81 » Sun Jan 05, 2020 4:20 pm

Unless the renter/would-be owner is moving frequently, it's not generally possible for a given property to be a good 'deal' for a landlord but a bad 'deal' for an owner-occupier.

I suspect that some of the bias that some clearly exhibit against owning stems from anecdotal experience (e.g. "I bought in 2007 and lost my shirt," "My friend came out ahead renting in (fill in the blank with a VHCOL city") being generalized to a universality or nearly so.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Sun Jan 05, 2020 4:54 pm

willthrill81 wrote:
Sun Jan 05, 2020 4:20 pm
Unless the renter/would-be owner is moving frequently, it's not generally possible for a given property to be a good 'deal' for a landlord but a bad 'deal' for an owner-occupier.

I suspect that some of the bias that some clearly exhibit against owning stems from anecdotal experience (e.g. "I bought in 2007 and lost my shirt," "My friend came out ahead renting in (fill in the blank with a VHCOL city") being generalized to a universality or nearly so.
Will - Did I tell you that time I made $280k proceeds selling my house? :) I actually did, and it was in a MCOL area. I Would have been better off renting. GCC made some money with his primary residence too: https://www.gocurrycracker.com/how-i-ma ... al-estate/

In case you missed it:
My parents "made" $900k USD when they sold their home two years ago. My dad will tell you that if he had rented the equivalent home for 28 years instead of owning (even with moving costs considered - assuming we would have moved every 5 years within the same school district), there would have been money left over (10-20% depending on the year) to put into the sp500 and more time doing the things he wanted to do with us (helping others, camping, sports, reading, playing games, learning, etc). When running just the investing opportunity costs alone over the 28 year period (not even the total cost of ownership, maintenance, etc which is a further drag) he conservatively missed out on $2-3M which would have allowed him to retire earlier with even more money than he has. And they would have accumulated less crap hahaha

This is not a joke. This is math. It is similar in many MCOL/HCOL areas if people are willing to move a few more times than if they owned. But we have friends who have rented the same house for 12 years, so that's possible too.
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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Sun Jan 05, 2020 5:37 pm

geerhardusvos wrote:
Sun Jan 05, 2020 4:54 pm
willthrill81 wrote:
Sun Jan 05, 2020 4:20 pm
Unless the renter/would-be owner is moving frequently, it's not generally possible for a given property to be a good 'deal' for a landlord but a bad 'deal' for an owner-occupier.

I suspect that some of the bias that some clearly exhibit against owning stems from anecdotal experience (e.g. "I bought in 2007 and lost my shirt," "My friend came out ahead renting in (fill in the blank with a VHCOL city") being generalized to a universality or nearly so.
Will - Did I tell you that time I made $280k proceeds selling my house? :) I actually did, and it was in a MCOL area. I Would have been better off renting. GCC made some money with his primary residence too: https://www.gocurrycracker.com/how-i-ma ... al-estate/

In case you missed it:
My parents "made" $900k USD when they sold their home two years ago. My dad will tell you that if he had rented the equivalent home for 28 years instead of owning (even with moving costs considered - assuming we would have moved every 5 years within the same school district), there would have been money left over (10-20% depending on the year) to put into the sp500 and more time doing the things he wanted to do with us (helping others, camping, sports, reading, playing games, learning, etc). When running just the investing opportunity costs alone over the 28 year period (not even the total cost of ownership, maintenance, etc which is a further drag) he conservatively missed out on $2-3M which would have allowed him to retire earlier with even more money than he has. And they would have accumulated less crap hahaha

This is not a joke. This is math. It is similar in many MCOL/HCOL areas if people are willing to move a few more times than if they owned. But we have friends who have rented the same house for 12 years, so that's possible too.
You realize you are confirming exactly what willthrill said, right?

Links to an example from Seattle, where the person states: I had just purchased the biggest house I could afford...
and What does a single guy need with a 3 bedroom + office, 2.5 bath, 2,000 sq. ft. house with a 2 car garage?
and Over the course of 5 years, I would have paid $47,568 in Rent

So that's $9513 per year in rent vs. buying at $292,500 and that's over 30X what his annual rental cost would've been. Of course it was a bad decision, he bought way too much house. The excess house was a bad investment. He should have bought a 600 SF apartment condo, like my son did.

If your gain was $280K, that sounds to me like it is either a HCOL area or you also bought too much house, like the guy in the article. Same goes for your parents, with a gain of $900K.
Time is your friend; impulse is your enemy. - John C. Bogle

petulant
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Re: Shiller: Homeownership is a bad investment

Post by petulant » Sun Jan 05, 2020 6:02 pm

jeffyscott wrote:
Sun Jan 05, 2020 5:37 pm
geerhardusvos wrote:
Sun Jan 05, 2020 4:54 pm
willthrill81 wrote:
Sun Jan 05, 2020 4:20 pm
Unless the renter/would-be owner is moving frequently, it's not generally possible for a given property to be a good 'deal' for a landlord but a bad 'deal' for an owner-occupier.

I suspect that some of the bias that some clearly exhibit against owning stems from anecdotal experience (e.g. "I bought in 2007 and lost my shirt," "My friend came out ahead renting in (fill in the blank with a VHCOL city") being generalized to a universality or nearly so.
Will - Did I tell you that time I made $280k proceeds selling my house? :) I actually did, and it was in a MCOL area. I Would have been better off renting. GCC made some money with his primary residence too: https://www.gocurrycracker.com/how-i-ma ... al-estate/

In case you missed it:
My parents "made" $900k USD when they sold their home two years ago. My dad will tell you that if he had rented the equivalent home for 28 years instead of owning (even with moving costs considered - assuming we would have moved every 5 years within the same school district), there would have been money left over (10-20% depending on the year) to put into the sp500 and more time doing the things he wanted to do with us (helping others, camping, sports, reading, playing games, learning, etc). When running just the investing opportunity costs alone over the 28 year period (not even the total cost of ownership, maintenance, etc which is a further drag) he conservatively missed out on $2-3M which would have allowed him to retire earlier with even more money than he has. And they would have accumulated less crap hahaha

This is not a joke. This is math. It is similar in many MCOL/HCOL areas if people are willing to move a few more times than if they owned. But we have friends who have rented the same house for 12 years, so that's possible too.
You realize you are confirming exactly what willthrill said, right?

Links to an example from Seattle, where the person states: I had just purchased the biggest house I could afford...
and What does a single guy need with a 3 bedroom + office, 2.5 bath, 2,000 sq. ft. house with a 2 car garage?
and Over the course of 5 years, I would have paid $47,568 in Rent

So that's $9513 per year in rent vs. buying at $292,500 and that's over 30X what his annual rental cost would've been. Of course it was a bad decision, he bought way too much house. The excess house was a bad investment. He should have bought a 600 SF apartment condo, like my son did.

If your gain was $280K, that sounds to me like it is either a HCOL area or you also bought too much house, like the guy in the article. Same goes for your parents, with a gain of $900K.
One thing to think about though is what the opportunity cost should be. Maybe instead of using one perfect opportunity cost, as you were developing with the REIT index fund, it is actually more accurate to develop a range with 2-3 hypothetical inputs compounded over 30 years and think about that. The REIT index might be one rate. A savings account or short-term bond fund might be the lower end. The high end could be an equity-heavy portfolio that one would normally use for retirement. With 30 years of compounding, the differences between these discount rates could be significant.

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Re: Shiller: Homeownership is a bad investment

Post by willthrill81 » Sun Jan 05, 2020 6:19 pm

jeffyscott wrote:
Sun Jan 05, 2020 2:02 pm
willthrill81 wrote:
Sun Jan 05, 2020 12:29 pm
Agreed. In some markets, renting really is obviously preferable to owning. But what's going on in the real estate markets of the Bay area, Seattle, Portland, Manhattan, etc. is not typical and most certainly not universal.
I can see being anti-buying if you live in those areas and others where annual rent is, apparently 1/20 to 1/30 what the purchase price would be.

I would like to see an argument against buying when the ratio is 1/10 to 1/13, as it seems to be in the areas that I am familiar with. As long as you will not want/need to move for many years, it seems pretty clear to me that buying is cheaper than renting in these areas as long as one does not over-buy.

For example, compare owning a mortgage-free $300,000 house to renting that same house for $2000 per month, that's 1/12.5 ratio. With no mortgage, the biggest factor is the opportunity cost. The anti-buy zealot, who was linked to about 47 times in this discussion, suggests using the yield of Vanguard Real Estate Index as the opportunity cost, here: https://jlcollinsnh.com/2012/02/23/rent ... e-numbers/

Vanguard Real Estate Index Fund Admiral Shares (VGSLX) says this about it's yield:
The current unadjusted effective yield is 2.99% as of 11/30/2019, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).

The current adjusted effective yield is 2.19% as of 11/30/2019. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years.

https://personal.vanguard.com/us/FundsY ... undId=5123

From that it seems to me that the opportunity cost would be 2.19%, based on J. L. Collins' suggested alternative. If we assume the house will appreciate at the rate of inflation, that means using 2.19% is assuming the alternative investment return is 2.19% real. While I previously had used a higher figure, I think that was off because I failed to realize that a real return should be used, if the assumption is the house will keep up with inflation.

With that, the opportunity cost of the $300,000 house is $6570 per year. In my area, your property tax would be about $4000 per year and insurance maybe $500-1000, I'll use $750. Use 1% to cover maintenance and repair, that is another $3000. The total is about $14,300 or about $1200 per month. I'll add $200 per month to pay someone to cut the lawn and clear snow. That puts owning at about $1400 per month, $600 per month less than rent.
+1

As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood. It's hard to find a stable (not guaranteed, but stable) 4% real return these days. That's completely aside from the almost 40% property appreciation that we've experienced over the last five years.

And that's somehow a 'poor' investment?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Sun Jan 05, 2020 6:29 pm

jeffyscott wrote:
Sun Jan 05, 2020 5:37 pm
You realize you are confirming exactly what willthrill said, right?

Links to an example from Seattle, where the person states: I had just purchased the biggest house I could afford...
and What does a single guy need with a 3 bedroom + office, 2.5 bath, 2,000 sq. ft. house with a 2 car garage?
and Over the course of 5 years, I would have paid $47,568 in Rent

So that's $9513 per year in rent vs. buying at $292,500 and that's over 30X what his annual rental cost would've been. Of course it was a bad decision, he bought way too much house. The excess house was a bad investment. He should have bought a 600 SF apartment condo, like my son did.

If your gain was $280K, that sounds to me like it is either a HCOL area or you also bought too much house, like the guy in the article. Same goes for your parents, with a gain of $900K.
Not exactly. The biggest thing I’ve learned in these discussions is Not exactly. The biggest thing I’ve learned in these discussions about rent vs own the home you live in can be summed up in two questions:

1. Does it faciliate a lifestyle that makes you happy?
2. Will it save/make you money over the long term compared to the alternatives?

when considering these two questions, there are cases on both sides. Mostly it’s a wash as Big ERN has said. More times than not, renting the SFH in the MCOL/HCOL area is more financially sound. but renting might not answer yes to the first question above which is the most important: what works for you? If owning the home you live in works for your lifestyle, just don’t count on it being the best financial decision, just do the TCO math first. Cheers!
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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Sun Jan 05, 2020 7:05 pm

willthrill81 wrote:
Sun Jan 05, 2020 6:19 pm
jeffyscott wrote:
Sun Jan 05, 2020 2:02 pm
willthrill81 wrote:
Sun Jan 05, 2020 12:29 pm
Agreed. In some markets, renting really is obviously preferable to owning. But what's going on in the real estate markets of the Bay area, Seattle, Portland, Manhattan, etc. is not typical and most certainly not universal.
I can see being anti-buying if you live in those areas and others where annual rent is, apparently 1/20 to 1/30 what the purchase price would be.

I would like to see an argument against buying when the ratio is 1/10 to 1/13, as it seems to be in the areas that I am familiar with. As long as you will not want/need to move for many years, it seems pretty clear to me that buying is cheaper than renting in these areas as long as one does not over-buy.

For example, compare owning a mortgage-free $300,000 house to renting that same house for $2000 per month, that's 1/12.5 ratio. With no mortgage, the biggest factor is the opportunity cost. The anti-buy zealot, who was linked to about 47 times in this discussion, suggests using the yield of Vanguard Real Estate Index as the opportunity cost, here: https://jlcollinsnh.com/2012/02/23/rent ... e-numbers/

Vanguard Real Estate Index Fund Admiral Shares (VGSLX) says this about it's yield:
The current unadjusted effective yield is 2.99% as of 11/30/2019, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).

The current adjusted effective yield is 2.19% as of 11/30/2019. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years.

https://personal.vanguard.com/us/FundsY ... undId=5123

From that it seems to me that the opportunity cost would be 2.19%, based on J. L. Collins' suggested alternative. If we assume the house will appreciate at the rate of inflation, that means using 2.19% is assuming the alternative investment return is 2.19% real. While I previously had used a higher figure, I think that was off because I failed to realize that a real return should be used, if the assumption is the house will keep up with inflation.

With that, the opportunity cost of the $300,000 house is $6570 per year. In my area, your property tax would be about $4000 per year and insurance maybe $500-1000, I'll use $750. Use 1% to cover maintenance and repair, that is another $3000. The total is about $14,300 or about $1200 per month. I'll add $200 per month to pay someone to cut the lawn and clear snow. That puts owning at about $1400 per month, $600 per month less than rent.
+1

As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood. It's hard to find a stable (not guaranteed, but stable) 4% real return these days. That's completely aside from the almost 40% property appreciation that we've experienced over the last five years.

And that's somehow a 'poor' investment?
I would just say it's a financially wise housing choice. Trying to avoid calling it an investment as that leads to the refutation via examples of people who overbought, thinking the excess house would be a good investment.

I might actually put the opportunity cost lower as it is a guaranteed return in the form of a place to live. Though there is some risk of excessive maintenance and repair costs. I'd maybe use 1% real as that might be what would be expected from bonds with a bit of risk currently, eg. Vg long term investment grade. We're I renting, I'd feel pretty safe putting a pile of money in that, with the idea that it would be my dedicated rent fund. I wouldn't feel comfortable doing that with a REIT fund or stock fund. This also goes to the point above about maybe using a range of opportunity costs.

You could also look at it as if all the money were borrowed. So that'd be maybe a 3.75% mortgage rate and that's maybe 2% real, so in line with the 2.19% that I used.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Sun Jan 05, 2020 7:24 pm

willthrill81 wrote:
Sun Jan 05, 2020 6:19 pm
jeffyscott wrote:
Sun Jan 05, 2020 2:02 pm
willthrill81 wrote:
Sun Jan 05, 2020 12:29 pm
Agreed. In some markets, renting really is obviously preferable to owning. But what's going on in the real estate markets of the Bay area, Seattle, Portland, Manhattan, etc. is not typical and most certainly not universal.
I can see being anti-buying if you live in those areas and others where annual rent is, apparently 1/20 to 1/30 what the purchase price would be.

I would like to see an argument against buying when the ratio is 1/10 to 1/13, as it seems to be in the areas that I am familiar with. As long as you will not want/need to move for many years, it seems pretty clear to me that buying is cheaper than renting in these areas as long as one does not over-buy.

For example, compare owning a mortgage-free $300,000 house to renting that same house for $2000 per month, that's 1/12.5 ratio. With no mortgage, the biggest factor is the opportunity cost. The anti-buy zealot, who was linked to about 47 times in this discussion, suggests using the yield of Vanguard Real Estate Index as the opportunity cost, here: https://jlcollinsnh.com/2012/02/23/rent ... e-numbers/

Vanguard Real Estate Index Fund Admiral Shares (VGSLX) says this about it's yield:
The current unadjusted effective yield is 2.99% as of 11/30/2019, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).

The current adjusted effective yield is 2.19% as of 11/30/2019. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years.

https://personal.vanguard.com/us/FundsY ... undId=5123

From that it seems to me that the opportunity cost would be 2.19%, based on J. L. Collins' suggested alternative. If we assume the house will appreciate at the rate of inflation, that means using 2.19% is assuming the alternative investment return is 2.19% real. While I previously had used a higher figure, I think that was off because I failed to realize that a real return should be used, if the assumption is the house will keep up with inflation.

With that, the opportunity cost of the $300,000 house is $6570 per year. In my area, your property tax would be about $4000 per year and insurance maybe $500-1000, I'll use $750. Use 1% to cover maintenance and repair, that is another $3000. The total is about $14,300 or about $1200 per month. I'll add $200 per month to pay someone to cut the lawn and clear snow. That puts owning at about $1400 per month, $600 per month less than rent.
+1

As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood. It's hard to find a stable (not guaranteed, but stable) 4% real return these days. That's completely aside from the almost 40% property appreciation that we've experienced over the last five years.

And that's somehow a 'poor' investment?
Sure, this one worked out for you. Most people don’t have the luxury of buying a brand new single-family home. Those aren’t always available in the good school districts. If you buy a house from the 70s or 80s or older, you are coming up on $50-$100,000 in big maintenance. Historically, how repeatable is your scenario? 40% property appreciation over the last five years is definitely taking advantage of being within 50 to 100 miles of a large metropolitan area, I’m guessing Seattle. Do most people get that much appreciation? Renting in Seattle suburb or surrounding counties is often the better financial decision if the lifestyle works. The appreciation over the last seven years has been very exceptional. Someone coming to your neighborhood last year who was deciding to either rent or buy, probably would do better with renting. You bought a new house five years ago near one of the fastest growing Real estate markets in the United States. Let’s be clear about who is making the appropriate generalizations for most MCOL areas in the USA
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Re: Shiller: Homeownership is a bad investment

Post by Nate79 » Sun Jan 05, 2020 10:48 pm

geerhardusvos wrote:
Sun Jan 05, 2020 7:24 pm
willthrill81 wrote:
Sun Jan 05, 2020 6:19 pm
jeffyscott wrote:
Sun Jan 05, 2020 2:02 pm
willthrill81 wrote:
Sun Jan 05, 2020 12:29 pm
Agreed. In some markets, renting really is obviously preferable to owning. But what's going on in the real estate markets of the Bay area, Seattle, Portland, Manhattan, etc. is not typical and most certainly not universal.
I can see being anti-buying if you live in those areas and others where annual rent is, apparently 1/20 to 1/30 what the purchase price would be.

I would like to see an argument against buying when the ratio is 1/10 to 1/13, as it seems to be in the areas that I am familiar with. As long as you will not want/need to move for many years, it seems pretty clear to me that buying is cheaper than renting in these areas as long as one does not over-buy.

For example, compare owning a mortgage-free $300,000 house to renting that same house for $2000 per month, that's 1/12.5 ratio. With no mortgage, the biggest factor is the opportunity cost. The anti-buy zealot, who was linked to about 47 times in this discussion, suggests using the yield of Vanguard Real Estate Index as the opportunity cost, here: https://jlcollinsnh.com/2012/02/23/rent ... e-numbers/

Vanguard Real Estate Index Fund Admiral Shares (VGSLX) says this about it's yield:
The current unadjusted effective yield is 2.99% as of 11/30/2019, which is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).

The current adjusted effective yield is 2.19% as of 11/30/2019. The adjusted yield reflects a reduction in the income included in the yield based on the average return of capital and capital gain distributions received from the fund's REIT investments for the past 2 calendar years.

https://personal.vanguard.com/us/FundsY ... undId=5123

From that it seems to me that the opportunity cost would be 2.19%, based on J. L. Collins' suggested alternative. If we assume the house will appreciate at the rate of inflation, that means using 2.19% is assuming the alternative investment return is 2.19% real. While I previously had used a higher figure, I think that was off because I failed to realize that a real return should be used, if the assumption is the house will keep up with inflation.

With that, the opportunity cost of the $300,000 house is $6570 per year. In my area, your property tax would be about $4000 per year and insurance maybe $500-1000, I'll use $750. Use 1% to cover maintenance and repair, that is another $3000. The total is about $14,300 or about $1200 per month. I'll add $200 per month to pay someone to cut the lawn and clear snow. That puts owning at about $1400 per month, $600 per month less than rent.
+1

As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood. It's hard to find a stable (not guaranteed, but stable) 4% real return these days. That's completely aside from the almost 40% property appreciation that we've experienced over the last five years.

And that's somehow a 'poor' investment?
Sure, this one worked out for you. Most people don’t have the luxury of buying a brand new single-family home. Those aren’t always available in the good school districts. If you buy a house from the 70s or 80s or older, you are coming up on $50-$100,000 in big maintenance. Historically, how repeatable is your scenario? 40% property appreciation over the last five years is definitely taking advantage of being within 50 to 100 miles of a large metropolitan area, I’m guessing Seattle. Do most people get that much appreciation? Renting in Seattle suburb or surrounding counties is often the better financial decision if the lifestyle works. The appreciation over the last seven years has been very exceptional. Someone coming to your neighborhood last year who was deciding to either rent or buy, probably would do better with renting. You bought a new house five years ago near one of the fastest growing Real estate markets in the United States. Let’s be clear about who is making the appropriate generalizations for most MCOL areas in the USA
Ouch. What list of maintenance items do you think could add up to $100k?

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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Sun Jan 05, 2020 11:00 pm

Nate79 wrote:
Sun Jan 05, 2020 10:48 pm

Ouch. What list of maintenance items do you think could add up to $100k?
A quality 30 yr roof (only lasts 20 years with all the rain and wind) on a four bedroom home in the Pacific Northwest is often $20k, can be more. Exterior painting is $8k (needs to be done every 10 years in this climate). I could list 10 more things that cost between $5-10 K that need to be changed every 10 or so years. If you are maintaining by the book and keeping your house nice, it’s not cheap. Especially if you don’t have the family who are in blue collar industries. Plus the houses that have been built since the 90s are garbage and were built to last only 30 years (my brother is a builder, quoting him)
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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Mon Jan 06, 2020 9:27 am

geerhardusvos wrote:
Sun Jan 05, 2020 11:00 pm
Nate79 wrote:
Sun Jan 05, 2020 10:48 pm

Ouch. What list of maintenance items do you think could add up to $100k?
A quality 30 yr roof (only lasts 20 years with all the rain and wind) on a four bedroom home in the Pacific Northwest is often $20k, can be more. Exterior painting is $8k (needs to be done every 10 years in this climate). I could list 10 more things that cost between $5-10 K that need to be changed every 10 or so years. If you are maintaining by the book and keeping your house nice, it’s not cheap. Especially if you don’t have the family who are in blue collar industries. Plus the houses that have been built since the 90s are garbage and were built to last only 30 years (my brother is a builder, quoting him)
Why not just go ahead and list them?

We've been in our house in the midwest since it was built for us in 1997. We did get a new roof, but it was paid by insurance due to hail. Full cost of the new roof was $8100, this was about 13 years ago, though. This is for a 1900 sf ranch with an attached 500 sf garage, plus fairly steep pitch (I think they called it 6/12?) so there was a lot of roofing.

We replaced all flooring surfaces for about $9500 and HVAC for about $6500 in 2016, we had a few small things to repair over the years, maybe $1000-2000 total. We have a lot of trees and have spent, perhaps, $3000 on trimming, etc. No exterior painting, exterior is vinyl and aluminum. Interior painting is something my wife likes to do, but let's assume $2000 for that to pay for someone else to have done it.

So actual costs in 23 years, $9500+6500+2000+3000+2000 = $23,000

I'll add $12,000 for a roof as a guess as what the cost would be now, if it had not been replaced by insurance. So that comes to a grand total of about $35,000.

But since my house is "garbage...built to last only 30 years", I guess we better get out soon, only 7 years until it completely disintegrates or something.
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Re: Shiller: Homeownership is a bad investment

Post by stoptothink » Mon Jan 06, 2020 9:48 am

geerhardusvos wrote:
Sun Jan 05, 2020 11:00 pm
Nate79 wrote:
Sun Jan 05, 2020 10:48 pm

Ouch. What list of maintenance items do you think could add up to $100k?
A quality 30 yr roof (only lasts 20 years with all the rain and wind) on a four bedroom home in the Pacific Northwest is often $20k, can be more. Exterior painting is $8k (needs to be done every 10 years in this climate). I could list 10 more things that cost between $5-10 K that need to be changed every 10 or so years. If you are maintaining by the book and keeping your house nice, it’s not cheap. Especially if you don’t have the family who are in blue collar industries. Plus the houses that have been built since the 90s are garbage and were built to last only 30 years (my brother is a builder, quoting him)
Although I am a homeowner, I would much prefer to rent (wife wanted to buy) as I prefer the freedom, but it is very clear you have a perspective on this derived solely from the current renting/owning environment in your specific locale. Almost everything you have said in this thread doesn't match my numbers or experience, at all.

FWIW, MCOL and my 15yr mortgage is $1154/month and I could very easily rent my place out for $1900+/month.

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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Mon Jan 06, 2020 9:51 am

willthrill81 wrote:
Sun Jan 05, 2020 6:19 pm
As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood.

And that's somehow a 'poor' investment?
Hey, since I have only 7 years to unload this garbage house that I am living in, I have a proposal for you that would change that money pit of yours into a good investment for you. Since many rent/don't buy advocates also think that owning property that they rent to others is a good investment, you should sell your house to me and I will sell ours to you and then we can each rent from each other and...PROFIT!
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Mon Jan 06, 2020 9:54 am

jeffyscott wrote:
Mon Jan 06, 2020 9:27 am
geerhardusvos wrote:
Sun Jan 05, 2020 11:00 pm
Nate79 wrote:
Sun Jan 05, 2020 10:48 pm

Ouch. What list of maintenance items do you think could add up to $100k?
A quality 30 yr roof (only lasts 20 years with all the rain and wind) on a four bedroom home in the Pacific Northwest is often $20k, can be more. Exterior painting is $8k (needs to be done every 10 years in this climate). I could list 10 more things that cost between $5-10 K that need to be changed every 10 or so years. If you are maintaining by the book and keeping your house nice, it’s not cheap. Especially if you don’t have the family who are in blue collar industries. Plus the houses that have been built since the 90s are garbage and were built to last only 30 years (my brother is a builder, quoting him)
Why not just go ahead and list them?

We've been in our house in the midwest since it was built for us in 1997. We did get a new roof, but it was paid by insurance due to hail. Full cost of the new roof was $8100, this was about 13 years ago, though. This is for a 1900 sf ranch with an attached 500 sf garage, plus fairly steep pitch (I think they called it 6/12?) so there was a lot of roofing.

We replaced all flooring surfaces for about $9500 and HVAC for about $6500 in 2016, we had a few small things to repair over the years, maybe $1000-2000 total. We have a lot of trees and have spent, perhaps, $3000 on trimming, etc. No exterior painting, exterior is vinyl and aluminum. Interior painting is something my wife likes to do, but let's assume $2000 for that to pay for someone else to have done it.

So actual costs in 23 years, $9500+6500+2000+3000+2000 = $23,000

I'll add $12,000 for a roof as a guess as what the cost would be now, if it had not been replaced by insurance. So that comes to a grand total of about $35,000.

But since my house is "garbage...built to last only 30 years", I guess we better get out soon, only 7 years until it completely disintegrates or something.
We were talking about newer houses in the Pacific Northwest..... Please read it in context... obviously labor is differently priced across the US, and it generally cheapest in the Midwest and most expensive on the coasts
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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Mon Jan 06, 2020 10:52 am

jeffyscott wrote:
Mon Jan 06, 2020 9:27 am
I'll add $12,000 for a roof as a guess as what the cost would be now, if it had not been replaced by insurance. So that comes to a grand total of about $35,000.
I thought of a few things that could be added to the maintenance and repair costs that I had summarized for our house, new refrigerator, range dishwasher about $3000. Water heater about $1200. Two lawnmowers and one snow blower about $2000 and maybe $500 for other miscellaneous yard tools. Adding those and dividing by 23 years, average is about $1800 per year.

The rule of thumb of 1% of property value would have ranged from about that to something like $3000-3500. So that rule, or a range of 0.5% to 1%, which I think I have also seen suggested, seems to be a reasonable enough figure to use from my perspective.
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Re: Shiller: Homeownership is a bad investment

Post by willthrill81 » Mon Jan 06, 2020 2:12 pm

jeffyscott wrote:
Mon Jan 06, 2020 9:51 am
willthrill81 wrote:
Sun Jan 05, 2020 6:19 pm
As I've noted in this thread, based on the math for our home (not our actual expenses, which are even less), including 1% for annual maintenance costs, insurance, and taxes, we're getting about a 4% annual inflation-adjusted return on the property's value vs. renting an identical property in this neighborhood.

And that's somehow a 'poor' investment?
Hey, since I have only 7 years to unload this garbage house that I am living in, I have a proposal for you that would change that money pit of yours into a good investment for you. Since many rent/don't buy advocates also think that owning property that they rent to others is a good investment, you should sell your house to me and I will sell ours to you and then we can each rent from each other and...PROFIT!
Brilliant! :twisted:
jeffyscott wrote:
Mon Jan 06, 2020 10:52 am
The rule of thumb of 1% of property value would have ranged from about that to something like $3000-3500. So that rule, or a range of 0.5% to 1%, which I think I have also seen suggested, seems to be a reasonable enough figure to use from my perspective.
For newer homes, I'd say that 1% is probably a little high, and for older homes (>30 years) it's probably a little low. For very old homes that haven't already been completely modernized, it might be as high as 2%. Also, it's important to keep in mind that these are long-term averages, and the expenses in any given year could be considerably lower or higher. That's why we save up for such expenses along with many others in a savings account.
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Re: Shiller: Homeownership is a bad investment

Post by dm200 » Mon Jan 06, 2020 3:13 pm

For newer homes, I'd say that 1% is probably a little high, and for older homes (>30 years) it's probably a little low. For very old homes that haven't already been completely modernized, it might be as high as 2%. Also, it's important to keep in mind that these are long-term averages, and the expenses in any given year could be considerably lower or higher. That's why we save up for such expenses along with many others in a savings account.
Sometimes, some "older" homes have very desirable features - not generally done in the new homes.

A lot, as well, depends on the tastes of the owners for many kinds of "optional" maintenance/improvements. Some of us may be 100% happy with those "strange" appliance colors of orange, green, etc. -- as long as the stove cooks properly, the oven bakes and broils properly and the refrigerator keeps things frozen or cool. Some of us, also, may be fine just replacing a non-functioning appliance, while others of us will insist on replacing them all so that colors and styles match.

At one time, hardwood floors were the most desired, then "wall to wall" carpeting was the "in thing", and now, most recently, it seems that the structured wood or bamboo flooring has become the most popular. In one era in the past, "knotty pine" was favored for rec rooms, etc., then wood-like (or covered in very, very thin actual wood) paneling became the "in" thing.

In our area, at least, central air conditioning has been "standard" on all new homes for several decades. Older homes, like ours, were not built with easily added air conditioning (we have radiators) - so the usual first step for such houses was window units. Now, it has become more practical (although still expensive) to install central air conditioning in such homes without the large vents and large air handling conduits. Some (perhaps most) owners of such older homes with radiators or water baseboard for heating will get the newer central air. Radiators (for heat), while still very practical, are not considered attracive in most rooms - and folks replace the radiators with baseboard water units.

The same idea with kitchen cabinets. A lot of folks insist on replacing very functional kitchen cabinets with ones that look nicer, or replace the front of the existing cabinets.

So, if I live in an older house - and am happy with radiators, window AC units, older kitchen cabinets, appliances that are in various (now unpopular) colors and/or do not have to be all matching, and am happy with whatever floors I have - then my maintenance/repair costs will be much less than average. The same idea with bathrooms - you can spend a lot of money upgrading a 100% fully functional bathroom to look nicer and more modern.

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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Mon Jan 06, 2020 5:05 pm

dm200 wrote:
Mon Jan 06, 2020 3:13 pm
For newer homes, I'd say that 1% is probably a little high, and for older homes (>30 years) it's probably a little low. For very old homes that haven't already been completely modernized, it might be as high as 2%. Also, it's important to keep in mind that these are long-term averages, and the expenses in any given year could be considerably lower or higher. That's why we save up for such expenses along with many others in a savings account.
Sometimes, some "older" homes have very desirable features - not generally done in the new homes.

A lot, as well, depends on the tastes of the owners for many kinds of "optional" maintenance/improvements. Some of us may be 100% happy with those "strange" appliance colors of orange, green, etc. -- as long as the stove cooks properly, the oven bakes and broils properly and the refrigerator keeps things frozen or cool. Some of us, also, may be fine just replacing a non-functioning appliance, while others of us will insist on replacing them all so that colors and styles match.

At one time, hardwood floors were the most desired, then "wall to wall" carpeting was the "in thing", and now, most recently, it seems that the structured wood or bamboo flooring has become the most popular. In one era in the past, "knotty pine" was favored for rec rooms, etc., then wood-like (or covered in very, very thin actual wood) paneling became the "in" thing.

In our area, at least, central air conditioning has been "standard" on all new homes for several decades. Older homes, like ours, were not built with easily added air conditioning (we have radiators) - so the usual first step for such houses was window units. Now, it has become more practical (although still expensive) to install central air conditioning in such homes without the large vents and large air handling conduits. Some (perhaps most) owners of such older homes with radiators or water baseboard for heating will get the newer central air. Radiators (for heat), while still very practical, are not considered attracive in most rooms - and folks replace the radiators with baseboard water units.

The same idea with kitchen cabinets. A lot of folks insist on replacing very functional kitchen cabinets with ones that look nicer, or replace the front of the existing cabinets.

So, if I live in an older house - and am happy with radiators, window AC units, older kitchen cabinets, appliances that are in various (now unpopular) colors and/or do not have to be all matching, and am happy with whatever floors I have - then my maintenance/repair costs will be much less than average. The same idea with bathrooms - you can spend a lot of money upgrading a 100% fully functional bathroom to look nicer and more modern.
I think it would also be a larger percentage in very low priced homes. If the home value is $50-60K, as a couple of my kids have/had, it doesn't take much to get to a high percentage.

I would think that houses that are very expensive just due to location would be a lower percentage. If my same house were in a market where value would be 4X what it is, I don't think that means maintenance costs go up that much. They would be higher due to labor costs, but not 4X.
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Re: Shiller: Homeownership is a bad investment

Post by dm200 » Mon Jan 06, 2020 5:20 pm

I think it would also be a larger percentage in very low priced homes. If the home value is $50-60K, as a couple of my kids have/had, it doesn't take much to get to a high percentage.
Yes, perhaps.

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Re: Shiller: Homeownership is a bad investment

Post by willthrill81 » Mon Jan 06, 2020 5:32 pm

jeffyscott wrote:
Mon Jan 06, 2020 5:05 pm
I think it would also be a larger percentage in very low priced homes. If the home value is $50-60K, as a couple of my kids have/had, it doesn't take much to get to a high percentage.

I would think that houses that are very expensive just due to location would be a lower percentage. If my same house were in a market where value would be 4X what it is, I don't think that means maintenance costs go up that much. They would be higher due to labor costs, but not 4X.
Correct. For instance, the furnace going into a 1,000 sq. ft. home is probably over 50% of the cost of a furnace going into a 2,000 sq. ft. home, both homes probably one kitchen and may even have the same number of bathrooms.

Also, the percentage would likely be lower in VHCOL areas because the ratio of the dwelling's value to the value of the land it's sitting on will be lower. Dwellings need a lot more maintenance than the land itself (obviously not including landscaping).
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Re: Shiller: Homeownership is a bad investment

Post by Calico » Tue Jan 07, 2020 9:32 am

dm200 wrote:
Mon Jan 06, 2020 3:13 pm

The same idea with kitchen cabinets. A lot of folks insist on replacing very functional kitchen cabinets with ones that look nicer, or replace the front of the existing cabinets.

So, if I live in an older house - and am happy with radiators, window AC units, older kitchen cabinets, appliances that are in various (now unpopular) colors and/or do not have to be all matching, and am happy with whatever floors I have - then my maintenance/repair costs will be much less than average. The same idea with bathrooms - you can spend a lot of money upgrading a 100% fully functional bathroom to look nicer and more modern.
My house really isn't "older" (it was built in the 1980s) but this is me as well. I don't replace things like perfectly functional kitchen cabinets just because they are "dated." Bathrooms are dated too. My house has wall paper in some rooms too, evidentially that's horrible according to HGTV, haha. I just don't see the point of replacing things that are working just fine. It seems like a waste of money.

I do wonder how that might hurt me when I go to sell in a few years (I am looking at selling in 6 years and moving back home/closer to family even if it means a new job. Although ideally I could telecommute... but that's another story).

Rentals in my neighborhood stopped selling. Now they just go up for rent so I think people are done cashing out on them. So the latest data I have on a rental (usually dated like mine, but a little more worn) is from two years ago. The dated houses were selling for $450k (sale, not listing price) whereas the updated houses were selling for $500k.

Those $450k townhouses houses were in pretty bad shape though with more than just cosmetic issues (they had deeper issues like bowing floors, leaking roofs and mold issues, poor windows, another reeked of cat urine even after they ripped out the carpets, etc). My house is structurally good with new windows, newer heater and AC, good roof, new hot water heater, etc (I maintain it well). It's just dated with the wallpaper, old cabinets, 1980s bathrooms, etc. The only "run down thing about it is the wall paper near the front door is peeling and I can't seem to stick it back down again like I did with other parts that were peeling. I think it's the temperature changes near the door. I wonder if replacing the front door would fix that temperate issue?

Up-to-date townhouses houses in my neighborhood list and sell easily with one very similar to mine down the street (layout and size) selling for $533k a few months ago. But it had an updated kitchen and a deck. I have the dated kitchen and a patio.

I wonder if I should "flip" my own house when I go to sell or just sell as is. I figure when the time comes, I will talk to a real estate agent.

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Re: Shiller: Homeownership is a bad investment

Post by jeffyscott » Wed Jan 08, 2020 10:43 am

I was thinking more about using the artificial assumption that all money to buy a house is borrowed. With that, mortgage rate is about 3.75%, maintenance 1% (range of maybe 0.5-2%), and taxes and insurance might be 1-2% or so :?: (For us it is about 1.5%, but I recognize there can be a lot of variability). So on the low end the total is 3.75 + 0.5 + 1 = 5.25% and high end 7.75% and those correspond to about 1/19 and 1/13. I am guessing maybe this relates somewhat to the 1/15 rent to buy ratio rule of thumb as it would be right in the middle of my rough range.

I also found a couple of lists of that ratio by city, but both only compare median rent to median purchase price. So if comparing similar properties the ratio would likely be lower, under the assumption that the median rental is comparable to something less than the median purchased property. One list at least shows the square footage of the median house but not the square footage of the median rental...in looking at my area, I am pretty sure that the median rental is significantly smaller.

https://rentberry.com/blog/price-to-rent-by-city

https://smartasset.com/mortgage/price-t ... -us-cities
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Re: Shiller: Homeownership is a bad investment

Post by geerhardusvos » Mon Jan 13, 2020 10:32 am

rascott wrote:
Sun Jan 05, 2020 12:06 pm
geerhardusvos wrote:
Thu Jan 02, 2020 8:04 pm
willthrill81 wrote:
Thu Jan 02, 2020 5:57 pm
petulant wrote:
Thu Jan 02, 2020 5:50 pm
This highlights a key aspect of home ownership left out of current-dollar rent vs. buy calculators. Even if renting and buying appear to be in equilibrium today, if rent goes up you already own your home and avoid the new expense. That might not be a big deal if the rent goes up like inflation. There is always a risk, though, that the rental market in your area tightens up and moves fast in a bad way. Owning your own home is the one asset that is a near-perfect hedge against significant rent increases. A hedge like that is a powerful thing.
Indeed, although the counter-risk is that you are forced to sell the home at a significant loss at some point. But as long as you remain in the home you get the value of imputed rent.

Where finances really tilt toward favoring home ownership with no mortgage is in retirement, when sequence of returns risk is exacerbated by a mortgage or rent unless you have non-portfolio income to cover them. These are expenses that must be satisfied every month, and being forced to make fixed (or increasing, as often happens with rent) withdrawals from your portfolio when it is suffering is a very real and potentially serious risk.
Having a house paid off in retirement where you can live is a nice thing for a lot of people if they want to stay in that location for their entire retirement. Like we’ve seen in Michigan, Washington, Oregon, etc. the cost of maintaining the home is actually going up significantly. What used to cost $10,000 to change your roof in Oregon now costs $30,000, and only 10 years later. This and other costs don’t always get passed on to the renter.

My long-term prediction is that the boomers will move out of all their houses and there won’t be a market to buy them. As many of them move into assisted living, there isn’t the population growth in many areas to support the housing market, meaning that rent will stay a good deal with more vacant large SFhomes. Probably be driving prices down for buyers too
Not sure what world you are living in.... but it's not the one of economic reality.

1) as a 20 year landlord, I can tell you for certain that all costs.... including roof replacements get passed onto renters. Landlords don't landlord for a hobby.... and if they aren't running their business to cover cap-ex, they won't be in the business long and will just sell out.

2) the demand for SFH is growing tremendously right now. The millennial generation is larger than the boomer generation. Due to the GFC, many had their launch into full blown adulthood delayed.... but it's now picking up in earnest. And why nationwide the inventory of homes on the market is a record low. Home building dropped to basically nothing for half a decade, and supply is a major issue basically everywhere outside of truly depressed rural areas. Zoning restrictions in metro areas will continue to drive the prices of housing up over the long term in all desirable areas of the country.... due to artificial lack of supply. You have pointed to Seattle and Portland in your other posts..... those are markets that are extremely distorted right now in valuations.... mainly because of long- term zoning restrictions. Yes, in those extreme markets, buying doesn't make much sense at all.... as it's mainly a speculative play.

3) seniors won't be going into assisted living at near the rate it was expected even a decade ago. Aging in home with in home care is both more desirable and much more cost effective. Obviously some will require senior living facilities.... but they will be the exception, not the norm.
zillow's economists are predicting 25% of homes to be on the market by 2027
https://www.zillow.com/research/silver- ... ers-24933/
https://www.wsj.com/articles/ok-boomer- ... 1574485201
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