I'm glad that condos never rally came back

[the urban politician]

Originally Posted by Via Chicago

and traditionally stocks do provide higher returns than real estate, over the long run)

I've heard this before, and I often wonder where this came from, and how accurate this statement is.

My guess is that it's a bullshit oversimplification.

Real estate returns vary drastically by location as well as the use of leverage, as well as taking into account write offs like depreciation, interest payments, and of course let's not forget the added capital from rental income.

[Via Chicago]

Originally Posted by the urban politician

I've heard this before, and I often wonder where this came from, and how accurate this statement is.

My guess is that it's a bullshit oversimplification.

Real estate returns vary drastically by location as well as the use of leverage, as well as taking into account write offs like depreciation, interest payments, and of course let's not forget the added capital from rental income.

well first off, most homeowners are not landlords, and primary residences really shouldnt be considered an "investment" either in the true sense of the word, so you are conflating two different things. of course, it may be more advantageous to have rental properties in neighborhoods, cities, or even countries that you yourself may not necessarily want to live, from an investment standpoint.

its true that the United States Government has highly incentived homeownership in different forms. that said, simply look at the returns of the S&P 500 annually, and assume a buy/hold strategy, and it becomes pretty clear that stocks have delivered higher returns in the 20th/21st century. Stocks have historically returned ~7-9% a year compared to 2-4% for real estate over the past 60 years (which barely keeps ahead of inflation). its also a highly liquid asset class. yes, you can single out certain neighborhoods or cities in hindsight that have outperformed that during particular times, but all other things being equal, stocks have done better. and as others have mentioned, there are certainitly other ongoing costs to real estate in general that one has to consider (property taxes, insurance, maintenance, renovation all subtract from the capital gains of owning a home)

[the urban politician]

^ Yeah, I do agree that if you're simply comparing home ownership as an investment to investment funds, the latter will outperform the former.

[mhays]

In a core city, it's generally easier to add condo supply than SFR supply. But condos might still rise more quickly in value in localized areas with limited supply -- along waterfronts, near job centers, anywhere land prices are skyrocketing... New supply is still a pressure valve, but if development costs are rising then values will be tied loosely to that. Generally the more full the city/district (vs. lots of parking lots), the more likely it might be to add value since new supply is harder.

[Pedestrian]

Originally Posted by Steely Dan

but if i had taken all of my rent money over the past 12 years and invested it, i wouldn't have had a place to live, which is kinda important, at least to me.

and now that i'm actually an investment property owner, the deal is even sweeter! that modest little studio in marina city not only nets me a small little profit of ~$150/month, my tenant who has been in there for 6 years now has built my equity for me. and i don't have to do anything. it's all free money.

Which works if you have a good tenant and it may help to be in Chicago but some cities like mine (SF) have rent laws that make being a landlord such a miserable experience that I wouldn't wish it on my worst enemy.

Basically you can't evict anybody without a big fight and if you do you likely have to pay them a substantial compensation. And if the tenant perceives any maintenance or other deficiencies they can withhold rent and good luck getting it. Plus if they are old, disabled (in even some insignificant way) or whatever, their "rights" are even more solid: https://www.sftu.org/wp-content/uplo...f_Contents.pdf

[JManc]

Originally Posted by Via Chicago

well all situations are different, but i saved money by renting below my means and aggressively saving 30%+ of my salary. its not like i didnt have a place to live. (i also fully realize that not all people are able to do that.)

We do that as well and it's paying off so far. We try to live well below our means.

[Steely Dan]

Originally Posted by Vlajos

Between Welles, Horner, Waters and even Manor Park, you should be fine!

and jacob's playlot, and sunken gardens, and river park, and gross park, etc.

it's kinda nutty how many parks and playgrounds we are surrounded by, everything from 55 acre horner park along the river, to small little 1/2 acre neighborhood playlots like jacob's. LS is such a family-friendly neighborhood!

Originally Posted by Via Chicago

well all situations are different, but i saved money by renting below my means and aggressively saving 30%+ of my salary. its not like i didnt have a place to live. (i also fully realize that not all people are able to do that.)

that's great that you have been able to be so disciplined.

what i like about home ownership for me is that it imposed some discipline on me at a younger age than i probably would have naturally arrived at. i was doing some belt-tightening to amass the down payment and handle the bigger mortgage payments at an age when i would have likely still been farting away most of my money had i remained a renter.

people who are really into money can certainly do way better than i have done, but what i like about home ownership is that it's kinda like "wealth-building for idiots". you gotta live somewhere anyway, so why not live in a place where you also just happen to build some equity along the way, instead of just waving good-bye to your rent checks every month.

i'm not a natural born risk-taker, quite the opposite in fact, so i'm still so very pleased with myself for overcoming my severe risk aversion a dozen years ago to buy that first condo. it's definitely one of the best decisions i ever made for myself.

Originally Posted by Pedestrian

Which works if you have a good tenant and it may help to be in Chicago but some cities like mine (SF) have rent laws that make being a landlord such a miserable experience that I wouldn't wish it on my worst enemy.

yeah, i think being a landlord in chicago vs. being a landlord in san francisco are two entirely different things.

i have the great recession to thank for making me into a landlord. had i not still been slightly under water on that place in 2011 after 5 years of living there, i would have just cut the cord and run when i moved into my fiance's place.

but as it was, i couldn't sell it without taking a big hit, so the recession kinda backdoored me into investment property ownership, and now things are going great with it.

and yes, i got very lucky having a great tenant (my cousin).

[the urban politician]

Originally Posted by Pedestrian

Which works if you have a good tenant and it may help to be in Chicago but some cities like mine (SF) have rent laws that make being a landlord such a miserable experience that I wouldn't wish it on my worst enemy.

Basically you can't evict anybody without a big fight and if you do you likely have to pay them a substantial compensation. And if the tenant perceives any maintenance or other deficiencies they can withhold rent and good luck getting it. Plus if they are old, disabled (in even some insignificant way) or whatever, their "rights" are even more solid: https://www.sftu.org/wp-content/uplo...f_Contents.pdf

Chicago is tenant-friendly too, but I'm guessing it's not as bad as Pelosi-town, USA (where everybody who enriches themselves through any other means but Government is pure evil)