Crypto moonshot is an attractive possibility, but in my experience real estate was the only sure way to make money over time :)
Crypto moonshot is an attractive possibility, but in my experience real estate was the only sure way to make money over time :)
I feel like a lot of the data shows that both stocks and real-estate don't go up that much at all but rather USD just goes down as it continues to be diluted. Real-estate got the advantage of all the hedge funds buying it up... without that it's definitely a failed bet. I'd say real estate is very risky these days with such inflated prices and houses just sitting around unoccupied posing only as investments. There is a slim but real possibility that hedge funds start dumping real-estate hard and rotating into BTC as the superior asset class.
Well, I was just speaking of my own experience with real estate. Here is a tidbit of data:
Anybody could have borrowed at 4% or lower during that time period. Real estate allows you to borrow at very low rates with no danger of a margin call. So you can borrow $1,000,000 zero down or for 200,000 if you want to avoid PMI and you are effectively making 4% on 800k of not your own money risk free while you wait for property values to go up then take your capital gain tax free up to 500k...
Oh yeah, and I forgot to add you get to live in that place rent free...
Okay sure but these numbers you're throwing out are derived from an already broken economy. You can only get 4% loan on the house because the FED fund rate was 0% for ten years. Why was is literal zero for a decade? Because the entire unsustainable system needed to get injected with funny money to avoid systemic collapse.
The numbers you've presented completely ignore the inflation rate and all the inherent risks of property ownership (which there are too many nuances to explain without writing an entire post).
The boomers literally stole from future generations with this whole debt ponzi scheme and real estate was a big part of how the scam works. It's not an accident that people shilling real estate as a rock solid investment decided to frame all their numbers immediately after the housing collapse in 2008 with everything was all hunky-dory again.
This is an unfair characterization of an entire generation of people that simply made do as best they could. They did not personally oversee the creation of the financial and monetary system they operated in.
Neither can the hard work and saving they necessarily executed successfully to take advantage of margins on mortgages be remotely considered 'stealing'. While the financial and monetary mechanisms are a little different today, neither you nor 'Boomers' are responsible for them.
Landlords aren't Satan. If you ever do try to benefit from renting out real property you will discover that there are numerous landmines that can quickly make what appears to be a profitable enterprise on paper a black hole sucking every nickel out of your savings to just prevent losing your decades of hard work and saving.
You don't say?
I've always rented and have no interest in buying unless I can get an amazing deal or buy a house outright during a mega crypto rally. The fact remains that the entire vibe of that time period was just to print more debt and engage in completely unsustainable practices; literally the definition of Tragedy of the Commons was the ethos of that growth period.
It's honestly kind of a little woke and politically correct to be like "well not all boomers you can't lump everyone in there". So what? That's not even the point being made. Semantics.
I keep an eye on certain neighborhoods, property owners with multiple properties, and lately just missed out on a 3 Bd house in the county seat for <1/2 the tax appraised valuation, ~$150k below market. The deal was signed in three days, and I couldn't get ducks in a row in time. I actually don't want to buy a house, but was trying to make it available to other people that do, and they weren't in a position to move on it in the time allowed.
I am confident the market in your area is no different. If you have a network that includes high net worth individuals (relative to yourself), and keep feelers into bread and butter neighborhoods, either through a buyer's realtor, an appraiser, or contractor, etc., they can apprise you of sudden distress of sellers, that can produce prices significantly below market from time to time.
Folks suddenly sell properties they don't want all the time. The owner of this house was an elderly woman who had a stroke. In order to get medicaid to pay the $17k/month bill for their care in physical rehab, they had to sell that house, which meant her kids - who were footing that rehab bill until medicaid kicked in - wanted that house sold right now. They didn't care what the price was because they weren't getting the proceeds of the sale, but every month it remained unsold they were out $17k. If you're first past the post you can acquire significant equity out the gate, but you have to have your ear to the ground - and your ducks in a row.
Had I bought that house it wouldn't be because I'm a boomer. It would be because I did the leg work.
First of all I agree with you about risks of property ownership there are a few. I also agree that 4% loan on the house was a function of FED rate at 0%, but that is what it was and for me it was an opportunity to take the 3.75% rate in 2012 and 2.75% rate in 2022 and I took them both to the max of my ability.
Going forward I am not so sure about real estate at least right now with 7% rates and high property values. But if we see a drop of at least 15-20% in real estate this year and and drop of mortgage rates to the 4% area again real estate would be an interesting investment once again.
I am an X-gen so I am not a boomer :) I didn't use 2008 numbers, I missed the bottom of that market by 2-4 years as I bought in 2012 but still 8% per year was a good deal in that rate environment. And nothing is rock solid not even US treasuries anymore :)
But in terms of risk I would say:
CDs lowest risk
Treasuries almost as low
Investment Grade Bonds very low risk
Real Estate low risk
Stocks risky
Crypto very risky
With more risk there is more return, at least there should be.