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U.S. Housing Market Is The Most Awesome Opportunity In American History
TMO ^ | 9-9-2012 | Daily Wealth

Posted on 09/09/2012 2:17:46 PM PDT by blam

U.S. Housing Market Is The Most Awesome Opportunity In American History

Housing-Market / US Housing
Sep 09, 2012 - 11:14 AM
By: DailyWealth

Dr. Steve Sjuggerud writes: The situation we're facing today can be boiled down to a few very simple points... And the result is an awesome investment opportunity.

It is possibly the greatest investing opportunity in American history...

I'm talking about the housing market.

Real estate investor Jason Hartman interviewed me this week on his radio show (available soon at www.JasonHartman.com). And I made my case.

My points were simple:

1. Housing prices have fallen more than they ever have in our lifetimes – by far. Today, houses are selling for well below replacement cost.

2. Meanwhile... housing prices are up for five-straight months. It sure seems like they've bottomed.

3. Mortgage rates are at record-lows – around 3.5% today. With low home prices and low interest rates, houses are more affordable than ever. But the story gets better...

You have a huge "tailwind" for rising prices, courtesy of the government.

First, Federal Reserve Chairman Ben Bernanke will not raise rates for years.

You see, he will only raise interest rates when inflation gets too high or when the economy is booming (specifically, when the unemployment rate falls too far). We are not in danger of either of those things happening right now – and we won't be in danger for a couple years.

So interest rates will stay low for longer than anyone can imagine... And these record-low interest rates should be like lighter fluid on a fire. It's taken a while to get started... But with higher home prices over the last five months, the fire is now lit.

Second, I can't think of an asset that has more government incentives than the home you live in.

Let me show you what I mean...

You can deduct the interest on your mortgage off your taxes. You get to keep up to $500,000 in capital gains on your home without having to pay any capital gains taxes. And on roughly 90% of home loans, the government has literally made those loans possible (through government-sponsored entities like Fannie Mae and Freddie Mac).

In short, the government wants you to own a home... This is simply adding more fuel to the fire.

And for most regular folks, your home is a much better use of your savings than stashing your money in stocks...

Buy what you understand. When you own a home, you know what you've got – the earth under your feet isn't going out of business. But you could easily buy shares of a company that goes out of business. So today, I suggest putting your savings into your primary residence.

In sum, I believe that starting today, single-family home prices will soar higher than anyone can imagine in the next couple years.

The gains in housing prices will surprise everyone – and you certainly haven't missed it yet. This trend is just beginning. And it will last for years to come.

I believe we have the most awesome opportunity in American history in single-family homes – right now. Do your best to take advantage of it...


TOPICS: News/Current Events
KEYWORDS: economy; housing; realestate; recovery

1 posted on 09/09/2012 2:17:49 PM PDT by blam
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To: blam

Buy RIGHT NOW.

Signed,

The Obama Administration.


2 posted on 09/09/2012 2:20:00 PM PDT by Cringing Negativism Network (America doesn't need any new laws. America needs freedom!)
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To: blam

There is going to be a sales tax on houses in the future.


3 posted on 09/09/2012 2:20:27 PM PDT by Big Horn (Rebuild the GOP to a conservative party)
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To: blam
1. Boomers are retiring and downsizing. They are well past the McMansion phase of their lives, and will not be driving housing like they did.

2. Young people starting out are burdened with college debt more than any other generation, and are a smaller demographic than boomers.

3. What drives home ownership is stable jobs and family formation. Has anyone seen an uptick in job stability?

There is only one factor holding up real estate right now that I can see. Rich Chinese are looking for a place to park their money outside of China to avoid their own recession, and American real estate looks like a bargain compared to China right now.

4 posted on 09/09/2012 2:24:27 PM PDT by Vince Ferrer
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To: Big Horn

3.8% tax going to zerocare starting January 1st. That’s $3800 of your money per 100K going to his ‘free healthcare’.


5 posted on 09/09/2012 2:26:39 PM PDT by Track9 (Ego undermines moral courage.)
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To: blam

If I were young, I would certainly be expecting to rent for the rest of my life. The world is too unstable to tie yourself to a $400,000 structure that could easily be a white elephant worth half what you paid for it.


6 posted on 09/09/2012 2:27:22 PM PDT by ClearCase_guy (ua)
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To: blam
"In sum, I believe that starting today, single-family home prices will soar higher than anyone can imagine in the next couple years."

Today? I happen to agree -- but I also think that the cost of a Happy Meal will soar! (I also think that is only the case in select locations. Detroit houses will remain overpriced at $1.)


7 posted on 09/09/2012 2:32:23 PM PDT by Sooth2222 ("Suppose you were an idiot. And suppose you were a member of congress. But I repeat myself." M.Twain)
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To: blam

Pure bs this guy is selling


8 posted on 09/09/2012 2:33:13 PM PDT by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: blam
U.S. Housing Market Is The Most Awesome Opportunity In American History

YGTBSM.

9 posted on 09/09/2012 2:41:01 PM PDT by SIDENET ("If that's your best, your best won't do." -Dee Snider)
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To: Track9

Not true


10 posted on 09/09/2012 2:42:49 PM PDT by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: Vince Ferrer

Colleges are reporting record freshman class sizes. That is due to the poor economy. Owning a rent house in a college town is like having your own personal ATM machine.


11 posted on 09/09/2012 2:47:40 PM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
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To: blam

Reasons to hold off or have hesitation:
* The federal government holds a lot of houses that it is selling in bulk lots to institutional buyers. This will further lower prices, and those institutional buyers can rent or sell properties lower than anyone who buys on the open market. Unless you are buying a home to live in yourself, investment deals will be undercut by crony capitalism.
* There are liberals, mostly in California, talking about using eminent domain to seize properties and their mortgages. You should not buy a house if it could be taken away by the state for its cash flow.
* If Obama wins a second term, unemployment will increase further. Fewer buyers, fewer opportunities.
* Fannie and Freddie own a lot of properties and mortgages. In a second term, Obama may just give houses to his constituents. Or turn millions of government owned homes into de facto section 8 housing, all in the name of fairness.
* Until the courts clarify the MERS title mess, it is risky to buy a property from anyone whose property has touched MERS. Unless you are building new or buying from someone who held it for a decade, the chain of title is murky and risky.


12 posted on 09/09/2012 2:51:43 PM PDT by tbw2
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To: blam

Yes, the opportunity has “never been greater”, for THE NEXT HOUSING BUBBLE IN THE U.S.


13 posted on 09/09/2012 2:53:32 PM PDT by Wuli
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To: SVTCobra03

The college that I work at is reporting a 12% decline this semester. And it is a real bargain.


14 posted on 09/09/2012 2:54:29 PM PDT by american_ranger
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To: blam

People my age comprise an enormous portion of the US population and will be croaking for the next...oh, about 20 years.


15 posted on 09/09/2012 2:56:23 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the world.)
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To: MileHi

http://www.thegatewaypundit.com/2012/07/thanks-barack-obamacare-will-add-3-8-medicare-tax-on-sales-of-homes-condos-townhouses-and-rentals/


16 posted on 09/09/2012 2:58:03 PM PDT by Track9 (Ego undermines moral courage.)
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To: MileHi

Here’s a better link... and I see you are right. Thanks. http://financialducksinarow.com/4100/the-tax-on-sale-of-your-home-email-myth/


17 posted on 09/09/2012 3:07:43 PM PDT by Track9 (Ego undermines moral courage.)
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To: Track9
Too bad your link gives no info. That tax will apply to equity above something like $500,000 for couples. I don't have more than $500,000 equity. Do you?

While it is a terrible concept, very few will ever pay it.

18 posted on 09/09/2012 3:12:46 PM PDT by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: blam
Okay...I'm laying it on the line.

I live in a Section 8 rental house.

Why? It was through a long and twisted set of circumstances. I am white, married once to one wife, and have 4 kids, one of whom is severely autistic and developmentally delayed. We stopped at 4 because that's all we wanted. I am bringing them up in a Christian tradition, as much as possible in these dark days.

My wife and I also DESPERATELY want a house of our own.

The landlord who owns the Section 8 house we live in is female, black, AND a lawyer. She's also a liar and is probably crooked as the day is long. She promised us several things when we first moved in and she's never come through on any of them. It's my own damned fault for not getting them in writing.

We want our own house for many reasons. One, our current home isn't large enough. Two, we want something we can modify to suit us. And, quite frankly...even with the subsidized rent, we're still paying more each month for this house than a monthly mortgage payment would be on many bigger homes. Not only that...I want to GET OUT of the Section 8 program. I no longer want to be part of the problem.

I have a stable job, working the same place the last 11 years. We've been looking recently, and we're finding places we'd like.

Now...unless I'm reading it wrong, the FReepers in this thread are saying that home ownership is a BAD thing?

Please...either correct me or set me straight.

19 posted on 09/09/2012 3:14:26 PM PDT by hoagy62 ("Tyranny, like hell, is not easily conquered..."-Thomas Paine. 1776)
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To: blam
In an Obama second term, foreclosed McMansions will be turned into Section 8 triplexes filled with criminals, gangs, EBT swipers, illegals, and other assorted Democrats.

I am not joking.

20 posted on 09/09/2012 3:15:06 PM PDT by SkyPilot
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To: Track9

Better. Yes, this has been going around but it is over blown. We should not spread it anymore.


21 posted on 09/09/2012 3:15:31 PM PDT by MileHi ( "It's coming down to patriots vs the politicians." - ovrtaxt)
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To: blam

I have seriously looked into investing in a rental property several times. I am still looking. But, what has stopped me thus far is PROPERTY TAXES. Property taxes (including school taxes) have gone sky high and are likely heading higher. What you save in mortgage payments are made up in property taxes and then some. When the annual taxes are $10K for a 3 bedroom condo valued at $120K, there is something wrong. Oh, and add on another $100/month for an association fee.

Taxes DO tend to be lower on older construction. Unfortunately, that is what requires the most up front work to get it up to snuff for renting.


22 posted on 09/09/2012 3:18:18 PM PDT by rbg81
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To: familyop
"People my age comprise an enormous portion of the US population and will be croaking for the next...oh, about 20 years."

Tell me. If I get 10 more, I'll feel fortunate.

23 posted on 09/09/2012 3:18:42 PM PDT by blam
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To: MileHi

The second link from a Forbes article is much better and documents what you mention. It’s obvious I got had by an email chain. Thanks for getting me to check.


24 posted on 09/09/2012 3:20:08 PM PDT by Track9 (Ego undermines moral courage.)
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To: blam

Greek bonds are an equally exiting investment


25 posted on 09/09/2012 3:31:04 PM PDT by urodoc (If you are not responsible you are irresponsible)
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To: blam
If you bought gold at $400 an oz a few years ago you've experienced a 4X price rise. (5X if you sold when it was almost $2000 a year and a half ago). Now, let say you go out and buy a nice 3 or 4 bedroom suburban house in a not-overheated market and get a good price. Say you pay $250,000. Does anyone really think that house is going to be worth $1,000,000 or more in the next decade? Housing prices are linked to and supported by the general economy. With high unemployment, low worker participation, you are not going to have home price inflation. IMHO the market is being propped up with incredible interest rates today. If the rates go back to more normal 6% for a 30 year that house is likely to fall some more in price, not go up. Interest rates have (literally) no where to go but up. I'm not anti-home ownership. I do think now is a good time to buy a house, given the low rates and low prices. It's a perfect time for a buyer. BUT: it's not going to compare with the Gold bull market we've just been through. It's not going to compare with the DOW and NASDAQ runups of the Clinton era, or the dot com boom.

It is certainly NOT the investment of a lifetime. It is a good solid buy and hold opportunity, that has the bonus of improving your cash flow and moving some of your money into a different asset class than paper. That's enough, too.

26 posted on 09/09/2012 3:35:17 PM PDT by Jack Black ( Whatever is left of American patriotism is now identical with counter-revolution.)
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To: SVTCobra03
Owning a rent house in a college town is like having your own personal ATM machine.

If you don't have to burn it down and rebuild it every few years.

27 posted on 09/09/2012 3:38:05 PM PDT by Vince Ferrer
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To: Jack Black
And I don't know enough financial history to say what the best investments were in American history but I imagine there were huge fortunes made in the Roaring 20s and the Western Expansion (railroads), etc.

So the author is exaggerating.

28 posted on 09/09/2012 3:39:58 PM PDT by Jack Black ( Whatever is left of American patriotism is now identical with counter-revolution.)
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To: tbw2

Excellent points. The sneaky new program to sell foreclosed properties in bulk to institutional investors got my attention earlier. You’ve added several more to the pile.


29 posted on 09/09/2012 3:46:45 PM PDT by SueRae (See it? Hell, I can TASTE November from my house!)
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To: tbw2

Excellent points. The sneaky new program to sell foreclosed properties in bulk to institutional investors got my attention earlier. You’ve added several more to the pile.


30 posted on 09/09/2012 3:46:49 PM PDT by SueRae (See it? Hell, I can TASTE November from my house!)
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To: blam

“In short, the government wants you to own a home...”

How’d that work out the last time we heard that?

As John Boy & Billy would say (on fm99.7 The Fox)...

“Not too goooood...”


31 posted on 09/09/2012 3:47:18 PM PDT by moovova (Hope-ium...Time to kick the habit.)
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To: hoagy62

Pretty good time to buy if you are going to stay. . Houses are very cheap and interest rates are low. A 300k mortgage at 3.5 % was unthinkable just a few years ago. Just don’t buy in an unstable neighborhood. Get the worst house on the best block for a bargain and hunker down. The long term trend is down, but this is as good as it will get.


32 posted on 09/09/2012 3:47:52 PM PDT by MattinNJ (Romney? Really? Seriously?)
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To: SkyPilot

Wow. Thanks. I was thinking about a Mcmansion. In NJ they are throwing them away. Hmmm,...that picture is sobering. Didn’t think it all the way through. Thanks.


33 posted on 09/09/2012 3:49:14 PM PDT by MattinNJ (Romney? Really? Seriously?)
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To: blam

I have been trying to buy a house for a year in the 135k to 145k range. The banks aren’t interested in selling houses at there current market value and in fact keep inventory off the market to pump prices. And I am a cash buyer. Same crap every time on a short sale. Owner takes the offer, bank nixes it.


34 posted on 09/09/2012 3:54:06 PM PDT by jwalsh07 (.)
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To: Vince Ferrer

VF...great summary. And you’re exactly right about the boomers.

It’s like a snake that’s swallowed an ostrich egg, with the egg just reaching the end of its internal journey. And, its gonna hurt when it comes out.


35 posted on 09/09/2012 3:58:50 PM PDT by moovova (Hope-ium...Time to kick the habit.)
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To: Track9
“3.8% tax going to zerocare starting January 1st. That’s $3800 of your money per 100K going to his ‘free healthcare’.”

No not really. There is a very small sliver of people that might pay a tax on a home sale.
I really HATE to a person dispelling something about the healthcare monstrosity; but here are the facts:

http://www.bankrate.com/finance/real-estate/new-tax-home-sales.aspx

36 posted on 09/09/2012 4:08:33 PM PDT by HereInTheHeartland (Encourage all of your Democrat friends to get out and vote on November 7th, the stakes are high.)
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To: Jack Black; blam
I've seen articles like this coming from the same group that was pushing gold ten years ago.

Fact is, there's a lot of good investment opportunities after a bubble's finally deflated. Not great ones, but good ones. Gold was **** in 1982, but it still rose from $300 to above $450 over five years. Not as good as stocks, but it still rose. And speaking of stocks...had it been 1990 and someone recommended investing in stocks, I would have been an enthusiastic scoffer. I bought into the "nasty '90s" meme hook, line and sinker.

Needless to say, someone recommending picking through the wreckage from the tech bubble in '02 would have been met with many a scoff too - but there were some buys out there. They just took some effort (and skepticism) to find.

Residential real estate is a different breed of cat, in part because it's both an investment and a long-term consumption good. As an investment, it requires active management - which may include getting in the car and fixing the plumbing yourself. The rule of thumb is that the monthly rent minus Principal repayment, Interest, Taxes and home Insurance (PITI) should be 1% of the purchase price or more. In other words:

Monthly Rent - (Mortgage Payment + Monthly Property Taxes + Monthly Home Insurance) should >= (Purchase Price) / 100.
That 1% per month is enough to provide a reserve for maintenance, depreciation, etc. plus an adequate profit. If the net rent is less, then it's not worth the bother.

As a consumption good, the calculation is simpler. I suggest this as a rule, although it's more abitrary than the above. Can a person making $40,000 per year shoulder the mortage cost him- or herself and have enough to live a cheapsake but decent life? This rule cuts out all but the Levittown wonders, but those are affordable in a way that we haven't seen in decades.

Needless to say, this criterion's not as simple as it sounds. A lot of properties in that affordability range are in "zombie towns" with dubious employment prospects. With real estate, location is crucial.

[While I'm on the subject, someone making a decent living online has a real advantage, as long as the locale is physically safe.]

Obviously, this little ditty is aimed at youngsters who want to buy their first home. The few with the knack for landlording, although it'll take decades, might make a fortune.

Oh, one more thing. It would help a lot if said youngster-landord was a combat veteran...

37 posted on 09/09/2012 4:09:12 PM PDT by danielmryan
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To: Jack Black; blam
I've seen articles like this coming from the same group that was pushing gold ten years ago.

Fact is, there's a lot of good investment opportunities after a bubble's finally deflated. Not great ones, but good ones. Gold was **** in 1982, but it still rose from $300 to above $450 over five years. Not as good as stocks, but it still rose. And speaking of stocks...had it been 1990 and someone recommended investing in stocks, I would have been an enthusiastic scoffer. I bought into the "nasty '90s" meme hook, line and sinker.

Needless to say, someone recommending picking through the wreckage from the tech bubble in '02 would have been met with many a scoff too - but there were some buys out there. They just took some effort (and skepticism) to find.

Residential real estate is a different breed of cat, in part because it's both an investment and a long-term consumption good. As an investment, it requires active management - which may include getting in the car and fixing the plumbing yourself. The rule of thumb is that the monthly rent minus Principal repayment, Interest, Taxes and home Insurance (PITI) should be 1% of the purchase price or more. In other words:

Monthly Rent - (Mortgage Payment + Monthly Property Taxes + Monthly Home Insurance) should >= (Purchase Price) / 100.
That 1% per month is enough to provide a reserve for maintenance, depreciation, etc. plus an adequate profit. If the net rent is less, then it's not worth the bother.

As a consumption good, the calculation is simpler. I suggest this as a rule, although it's more abitrary than the above. Can a person making $40,000 per year shoulder the mortage cost him- or herself and have enough to live a cheapsake but decent life? This rule cuts out all but the Levittown wonders, but those are affordable in a way that we haven't seen in decades.

Needless to say, this criterion's not as simple as it sounds. A lot of properties in that affordability range are in "zombie towns" with dubious employment prospects. With real estate, location is crucial.

[While I'm on the subject, someone making a decent living online has a real advantage, as long as the locale is physically safe.]

Obviously, this little ditty is aimed at youngsters who want to buy their first home. The few with the knack for landlording, although it'll take decades, might make a fortune.

Oh, one more thing. It would help a lot if said youngster-landlord was a combat veteran...

38 posted on 09/09/2012 4:09:30 PM PDT by danielmryan
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To: hoagy62
“the FReepers in this thread are saying that home ownership is a BAD thing?

Please...either correct me or set me straight. “

Well I make my living as a mortgage lender; so my bias is obvious!
You certainly don't want to buy a home and watch the value drop.
But thinks have stabilized in much of the country. But buying a home should be about having a stable place for your family and not trying to make a large profit on the value going up. But that can be a very nice thing when it happens.
Having your place with the stability that offers is very nice to have.
Especially if you plan to be in one area a long time.
If your housing payment is at or below what you pay for rent then it makes the decision much easier.
On the flip side there costs to home ownership that buyers don't always think about that a landlord pays. Siding, roofing, windows and other things need replacing eventually.

39 posted on 09/09/2012 4:23:47 PM PDT by HereInTheHeartland (Encourage all of your Democrat friends to get out and vote on November 7th, the stakes are high.)
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To: blam

Housing prices will not recover their value in real terms for at least 70 years, if ever. The demographic tide is now going out for housing...


40 posted on 09/09/2012 4:29:31 PM PDT by oblomov
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To: Track9
3.8% tax going to zerocare starting January 1st. That’s $3800 of your money per 100K going to his ‘free healthcare’.

No. There are enough terrible things in the act to get upset about so there is no need to promote things that aren't. Like this.
41 posted on 09/09/2012 4:30:40 PM PDT by whattajoke (Let's keep Conservatism real.)
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To: hoagy62

No, the author says real estate is a great INVESTMENT.

You are talking about a life style choice. Owning a house could (and usually is) a money losing proposition but still worth it if it makes your life better and you can afford it.


42 posted on 09/09/2012 4:32:02 PM PDT by DManA
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To: oblomov
Housing prices will not recover their value in real terms for at least 70 years, if ever.

That's a bold statement. While this may be true is some parts of the country, it's not at all in others. Be smart. Buy smart. Stay smart. I bought my house in 2005 ($5K above list) and am 100% confident that if I were to sell it tomorrow, I'd get at least 15% more than I paid.
43 posted on 09/09/2012 4:35:53 PM PDT by whattajoke (Let's keep Conservatism real.)
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To: All

Let’s all remember that for many, we don’t actually “own” our houses for 15-30 years and even then, we’re pretty much just squatting on government land in the end.


44 posted on 09/09/2012 4:38:40 PM PDT by whattajoke (Let's keep Conservatism real.)
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To: hoagy62

There is a difference between buying a single home to live in and buying multiple houses as a speculative investment for the future.


45 posted on 09/09/2012 4:45:14 PM PDT by Kirkwood (Zombie Hunter)
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To: SueRae
" The sneaky new program to sell foreclosed properties in bulk to institutional investors got my attention earlier."

Thanks for the reminder.
I'd forgotten about that one. That's the crony billionaire investment club, eh? Only billionaires need apply for these government (give-aways) sales...If I recall correctly.

46 posted on 09/09/2012 5:07:05 PM PDT by blam
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To: Kirkwood
"There is a difference between buying a single home to live in and buying multiple houses as a speculative investment for the future."

Yup.

Don't pay your property taxes and see who shows up to claim THEIR property.

47 posted on 09/09/2012 5:12:00 PM PDT by blam
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To: blam

When Romney is elected, home prices will go up immediately, IMHO.


48 posted on 09/09/2012 5:51:51 PM PDT by ilovesarah2012
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To: whattajoke

>> I bought my house in 2005 ($5K above list) and am 100% confident that if I were to sell it tomorrow, I’d get at least 15% more than I paid.

I don’t doubt that you are correct, but a 15% gain from 2005 would still be a loss in real terms, especially when CPI book-cooking is taken into account.

There are undoubtedly local exceptions to this, but I think the era of positive real returns from housing real estate is over.


49 posted on 09/09/2012 6:08:51 PM PDT by oblomov
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