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Originally Posted by The North One
Rising housing costs aren't good for homeowners either, if you buy in this current market you're guaranteed to have a diminishing return in your investment in the coming years unless you sell quickly while prices are still rising.
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How is that possible? Are rising 401ks and rising pensions bad for people too?
How do you figure that rising housing prices mean diminishing returns? I don't get it.
If you own Apple stock, are you sad when the share price increases? When your salary increases, are you despondent? I'm not understanding how wealth gains are a negative for those receiving the gains.
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Originally Posted by The North One
The bay area can't keep rising forever, either the bubble will pop like it did in 08 or a loss of people/increase in housing options will make the market stabilize and decrease the price of properties in the future to what they're actually worth.
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Of course you're right, but that has nothing to do with anything. Detroit can't keep rising forever either. No market will rise forever. That doesn't mean the Bay Area is a poor long-term investment. It's like saying Tesla is a worse investment than Sears because Tesla is currently more valuable. Markets with solid price increases are less likely to have weaker future returns; that's kind of the whole point, and why people put their money in Manhattan and not Mississippi.
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Originally Posted by The North One
It's great for people who owned homes in the Bay area for the last seven or eight years but they'll only see the benefit when they liquidate their investments, people who are actually living in their homes need another place to live, and if they plan on buying again in the bay area they're going to be facing the same inflated prices.
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Not true. People who own real estate can take reverse mortgages, they can take home equity loans, they can take second mortgages, they can rent, or they can move somewhere else. And they'll all die, eventually. In all these cases they're benefiting from their property gains.
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Originally Posted by The North One
Metro Detroit?! For god's sake, do you even know a single thing about the market in metro Detroit? it's absolutely NOTHING like the city proper and it isn't any more or less stable than the market in metro Toronto, please don't pull out unrelated examples when you're not even aware of the stability that exists in those markets.
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I have no idea what any of this means.
Toronto has had strong price gains over the last 30 years, and Detroit hasn't. But according to you Detroit is a better investment. You haven't explained WHY Detroit is a better investment than Toronto. Both metros have gains over 30 years, but why is Detroit, in your estimation, a safer investment, because of slower growth?
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Originally Posted by The North One
Then you would be making a mistake, you don't buy when prices are high.
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What does that mean? What are "high" prices? There is no such thing. No one has any idea whether prices are "too high" or "too low" because they cannot predict the future. If you could do this with any accuracy you would be the wealthiest person on earth.
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Originally Posted by The North One
The Midwest has always had a better value for what you pay than the coastal cities, the Midwest markets are still cheap and steadily rising, that's why you're reading articles about it being wise to invest.
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But none of this is true. The Midwest actually has the worst real estate returns in the U.S. over the last 30 years. It has been the absolute worst place to park your money. That's exactly why it's relatively cheap.
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Originally Posted by The North One
Buying in the currently inflated Bay area market is not a smart decision, you'd be buying in a market that's nearly hitting a ceiling and has nowhere to go but down.
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There is no reason whatsoever to think the Bay Area market is "hitting a ceiling and has nowhere to go but down". That's based on absolutely nothing. The Bay Area may or may not be a good market, but there's no way of knowing.
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Originally Posted by The North One
The children are likely living with their parents in the same home or renting, unless their parents die and they inherit and sell their home while still in a sellers market they're not going to see any benefit from inflated prices.
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I don't understand any of this. I don't know any adults living with their parents, and yet most people I know who own homes did so in part because of assistance from their parents. Millennials whose parents own in New York or California are passing on much greater resources than millennials whose parents own in Michigan or Ohio.
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Originally Posted by The North One
Again you're focusing on a specific group that is't the rule, it's great that those people come from well off families and are supported by their parents but that's not the case for most working millennials.
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Working millennials don't have to buy real estate, and don't need to be in high cost markets. But millions of them do live in such places, and can afford nice homes. I work and live around them. I'm one of them.
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Originally Posted by The North One
How is this relevant to a diminishing middle class who can't find affordable homes to live in based on their incomes?
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The middle class is diminishing largely because the upper class is growing. The lower class hasn't budged in decades. Obviously if people "can't find affordable homes" then prices will decline.
U.S. incomes are higher than almost anywhere, and U.S. home prices are fairly low for first world standards, so not getting why there would be some nationwide affordability problem. Look at income to home price ratios in the UK, in Germany, in Canada, in Japan, in Australia, in Hong Kong.