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Robert Shiller's Devastating Takedown Of Housing As An Investment; Will Have You Renting For The Rest Of Your Life
Topic Started: 15 Oct 2013, 08:54 AM (3,313 Views)
peter fraser
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Robert Shiller's Devastating Takedown Of Housing As An Investment Will Have You Renting For The Rest Of Your Life

Sam Ro

Link

Yale professor Robert Shiller won the Nobel Prize in Economicsthis morning.

Among other things, Shiller correctly predicted the U.S. housing bubble when no one else would.

With prices still off of their all-time highs, many can’t help but ask the brilliant Professor if now’s the time to invest in housing.

And for years, he has responded with more or less the same answer: housing is not a great investment.

This was an idea that he pushed in his must-read book, Irrational Exuberance.

Here are quotes from one particularly memorable exchange with Bloomberg’s Trish Regan, when Shiller dismantles the idea of investing in a home:

Trish Regan: “Then why buy a home? People trap their savings in a home. They’re running an opportunity cost of not having that money liquid to earn a better return in the market. Why do it?”

Robert Shiller: “Absolutely! Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there’s technical progress in housing. So, new ones are better…

“So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000′s. And I don’t expect it to come back. Not with the same force. So people might just decide, “Yeah, I’ll diversify my portfolio. I’ll live in a rental.” That is a very sensible thing for many people to do.

“If you think investing in housing is such a great idea, why not invest in cars? Buy a car, mothball it, and sell it in 20 years. Obviously not a good idea because people won’t want our cars. It’s the same with our houses. So, they’re not really an investment vehicle.”

Homeowners understand that you can’t sell a home with 30-year-old roofing, carpet, and kitchen appliances. Sure, the home price might go up, but investors must adjust prices for years of maintenance and renovations.

Video here.

definitely one for the bears.
Any expressed market opinion is my own and is not to be taken as financial advice
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No shit.

Like Billy Jack says, home ownership is for the feeble brained and insecure. People who have to do it to prove theyre a man or be somebody or because their low IQ jobs mean that owning a home is the biggest thing they ever do in this world.
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skamy
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Some of his points are nonsense eg housing as an investment was a fad starting in 2000. Housing has been an investment for 100s if not 1000s of years.

The obvious ability of housing to provide returns as an investment is clear in any survey of wealth distribution in Australia, home owners vastly outperform non home owners.
Edited by skamy, 15 Oct 2013, 09:45 AM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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stinkbug
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It's a nice argument from an academic perspective, but in the real world there are other considerations.

As far as investing goes, I subscribe to the idea of finding well located property with sufficient yield (including growth in yield) that the property pays for itself either when bought or within a few years. Once it pays for itself you can basically set and forget, and eventually use the extra cashflow for other things. Once you own your own home, use the extra cashflow to pay off your IPs. I actually have several IPs that are principle+interest right now, and easily pay for themselves.

Having other people buy me a major asset? Yes please. And this is the bit that the article overlooks.

EDIT: fix my spelling... :)
Edited by stinkbug, 15 Oct 2013, 09:58 AM.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Frank Castle
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Business As Usual

skamy
15 Oct 2013, 09:42 AM
Some of his points are nonsense eg housing as an investment was a fad starting in 2000. Housing has been an investment for 100s if not 1000s of years.

Some more

Quote:
 
Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there’s technical progress in housing. So, new ones are better…

So why are those renovated old Qlders , Terrace houses and California bungalows fetching such high prices?

Quote:
 
“If you think investing in housing is such a great idea, why not invest in cars? Buy a car, mothball it, and sell it in 20 years. Obviously not a good idea because people won’t want our cars.

cough cough
$750,000 for 36-year-old Ford Falcon
http://www.smh.com.au/news/national/ford-falcon-record/2007/06/02/1180205572256.html

Quote:
 
It’s the same with our houses. So, they’re not really an investment vehicle.”

and yet the evidence shows something completely different
Ignore posts by The Whole Truth · View Post · End Ignoring
The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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Catweasel
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peter fraser
15 Oct 2013, 08:54 AM
Robert Shiller's Devastating Takedown Of Housing As An Investment Will Have You Renting For The Rest Of Your Life
Sam Ro
Link
Yale professor Robert Shiller
won the Nobel Prize in Economicsthis morning.

Among other things, Shiller correctly predicted the U.S. housing bubble when no one else would.

With prices still off of their all-time highs, many can’t help but ask the brilliant Professor if now’s the time to invest in housing.

And for years, he has responded with more or less the same answer: housing is not a great investment.

This was an idea that he pushed in his must-read book, Irrational Exuberance.

Here are quotes from one particularly memorable exchange with Bloomberg’s Trish Regan, when Shiller dismantles the idea of investing in a home:


Trish Regan: “Then why buy a home? People trap their savings in a home. They’re running an opportunity cost of not having that money liquid to earn a better return in the market. Why do it?”

Robert Shiller: “Absolutely! Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there’s technical progress in housing. So, new ones are better…

“So, why was it considered an investment? That was a fad. That was an idea that took hold in the early 2000′s. And I don’t expect it to come back. Not with the same force. So people might just decide, “Yeah, I’ll diversify my portfolio. I’ll live in a rental.” That is a very sensible thing for many people to do.

“If you think investing in housing is such a great idea, why not invest in cars? Buy a car, mothball it, and sell it in 20 years. Obviously not a good idea because people won’t want our cars. It’s the same with our houses. So, they’re not really an investment vehicle.”

Homeowners understand that you can’t sell a home with 30-year-old roofing, carpet, and kitchen appliances. Sure, the home price might go up, but investors must adjust prices for years of maintenance and renovations.

Video here.


definitely one for the bears.


Catweasel say many the think it a outrageous,

about Robert the Schiller be award Nobel the Prize.

Media squawk, white shoe and assorted rapscalls and mouzealots all over a globe the be dismissive.

But mouse sum up collective the think:

Acknowledge and accept or a risk and a complexity,

make it a "bear."

It plant in skull of mainstream mouse society,

who takes its the lead,

from today the press release

and internet scavenging of emotional titillate,

and well worn myths that promise it money tree.

And sandpit be the frolic of a specimens,

nicely bundled for qualitative insight.
Edited by Catweasel, 15 Oct 2013, 10:16 AM.
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Billy Jack
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The Duke of Brisbane Town

Housing is an investment class.

As long as there are Enough Greater Fool Aspie Cholos who are prepared to buy because

1. They want to make their folks proud
2. They believe that's what life's about
3. They watch the media/PR about How To Live Life
4. They have a burning emptiness inside because of an impoverished childhood which They Seek To Repair Through Appearances of "Wealth"
5. They want to Impress a Woman
6. They want to Impress Others in Society (see 4 and 5 above)
7. They have genuine reasons to "invest" to help get Citizenship Rights or To Escape Their Terrible Fortunes in the country they live in

then there will always be people willing to spend money on property.
Tell Billy Jack the Truth
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stinkbug
Member Avatar


Billy Jack
15 Oct 2013, 10:16 AM
Housing is an investment class.

As long as there are Enough Greater Fool Aspie Cholos who are prepared to buy because

1. They want to make their folks proud
2. They believe that's what life's about
3. They watch the media/PR about How To Live Life
4. They have a burning emptiness inside because of an impoverished childhood which They Seek To Repair Through Appearances of "Wealth"
5. They want to Impress a Woman
6. They want to Impress Others in Society (see 4 and 5 above)
7. They have genuine reasons to "invest" to help get Citizenship Rights or To Escape Their Terrible Fortunes in the country they live in

then there will always be people willing to spend money on property.
...and:
8) They recognise everyone needs somewhere to live, and realise they can buy a property, rent it out, and eventually own it outright, paid for with other peoples' money.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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skamy
Member Avatar


Catweasel
15 Oct 2013, 10:13 AM
Catweasel say many the think it a outrageous,

about Robert the Schiller be award Nobel the Prize.

Media squawk, white shoe and assorted rapscalls and mouzealots all over a globe the be dismissive.

But mouse sum up collective the think:

Acknowledge and accept or a risk and a complexity,

make it a "bear."

It plant in skull of mainstream mouse society,

who takes its the lead,

from today the press release

and internet scavenging of emotional titillate,

and well worn myths that promise it money tree.

And sandpit be the frolic of a specimens,

nicely bundled for qualitative insight.
The award is for his trend predicting models and his clearly very useful charting indices and methods. I would not argue with the award going to these contributions, he has become a household name. I just think he is sometimes guilty of a little irrational exuberance himself with his over gloomy analysis on the negatives of home ownership and property investment.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Catweasel
Member Avatar


skamy
15 Oct 2013, 10:24 AM
The award is for his trend predicting models and his clearly very useful charting indices and methods. I would not argue with the award going to these contributions, he has become a household name. I just think he is sometimes guilty of a little irrational exuberance himself with his over gloomy analysis on the negatives of home ownership and property investment.
Catweasel say if a Robert the Schiller can the be a guilty,

how it apply to mouse?

How does mouse position its bench the mark to ascertain a guilty?

Base upon a hopes & expectation of mouse in English-speak the world?

Or a collective of white shoe article it consume?

And any the way,

why does mouse attach emotional adjective to word "analysis"?

If collective mouse really feel this way, not much the change from a 2003.
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