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The statement below kind of paints a too rosey picture..
Over 10 years, a $10,000 investment in the stock market at a normal 10 percent market
rate of return would yield $23,600. The same investment as a down payment on a
$200,000 home at a normal appreciation rate of 5 percent would return nearly five times
the stock market return, at $110,300.
What 5% return are you referring too where has this happened?
Unfortunately you need to pay 1.5% in property taxes. 1% in upkeep and another 0.5% in insurance. So the 5% (which is not even accurate) is whiddled down to about 2%, that doesn't even beat inflation.
Also...
- 6% commission to sell
- Mortgage insurance
- Points to get mortgage and closing costs
YOU LOSE 31,000$ !!! at the end of 10 years. The above statement that you make 10x the amount in stocks is complete crap.
So put $40K down and get rid of the PMI. Live in Vegas and the Tax is .9%.Actually in Vegas and I suspect many places the equivalent cost of rent on a $240K house is about -$250. So you actually make $250 a month or for ten years $250*12*10 or an additional $30K savings over renting.
My view would be ignore the appreciation and be thankful if it should happen. But the $250 per month is real and bankable.
I'm not sure what is so wrong with what this document.... tell me what is wrong or dishonest about this...
prices are down
the $8K credit is good
interest rates are at record lows....
Realtors provide expertise in the market place... yes, some of us are better then others... but GOOD Realtors know markets
Realtors provide access to potential buyers and huge web presence that sellers can't get on their own...
Realtors give info on areas to buyers who are relocating and have no idea of where to start.
SO... What's wrong with the points in the memo????
NAR has blown it! The real estate market is changing rapidly and NAR is still stuck in the stone age. Not to mention telling flat lies about the bubble. Any half way descent economist knew that we had a bubble and prices could not continue to appreciate at the rate it was going. Anyone holding the title of economist at NAR is little more than a spin doctor. Recently NAR has backed up the MIBOR Realtor MLS in Indiana on a topic that if held to will damage the profitability of an agents business or it will bring further DOJ action.
YOU LOSE 31,000$ !!! at the end of 10 years. The above statement that you make 10x the amount in stocks is complete crap.
Also the above statement is using leverage to buy the home. Everyone knows that the more leverage you use the more risk. Meanwhile the stock example is not using leverage. The only way to be fair is if both examples used the same amount of leverage.
Quote:
NAR has blown it! The real estate market is changing rapidly and NAR is still stuck in the stone age. Not to mention telling flat lies about the bubble. Any half way descent economist knew that we had a bubble and prices could not continue to appreciate at the rate it was going. Anyone holding the title of economist at NAR is little more than a spin doctor. Recently NAR has backed up the MIBOR Realtor MLS in Indiana on a topic that if held to will damage the profitability of an agents business or it will bring further DOJ action.
No kiding. NAR is bogus. They are nothing but salesmen that is it! they'll tell you anything they want you to hear in order to get you to buy a home from them. I would do the same if I was making an outrageous 6% commission! It is a matter of time before NAR gets hit pretty bad. With services like redfin showing up offering significantly better deals than NAR. I just wish they would expand more. None the less though, the NAR is a down right greedy group their mission is to try and rip off as many people as possible. Never listen to an NAR realtor, ever.
I was surprised by how difficult it was to get reliable housing information, I kind of thought it would be as availableas stock quotes. But it doesnt seem like it is compiled regularly, but I guess there is no incentive for someone to publish this information for free.
Real estate is a commodity- the market determines it's value. If a buyer can't buy this property, the buyer will buy another.
Yet, while every share of IBM is the same and thus fungible, no two properties are exactly alike.
Most national and city specific data is broad information representing averages, meaning half the sales fall above or below the average.
Also the above statement is using leverage to buy the home. Everyone knows that the more leverage you use the more risk. Meanwhile the stock example is not using leverage. The only way to be fair is if both examples used the same amount of leverage.
No kiding. NAR is bogus. They are nothing but salesmen that is it! they'll tell you anything they want you to hear in order to get you to buy a home from them. I would do the same if I was making an outrageous 6% commission! It is a matter of time before NAR gets hit pretty bad. With services like redfin showing up offering significantly better deals than NAR. I just wish they would expand more. None the less though, the NAR is a down right greedy group their mission is to try and rip off as many people as possible. Never listen to an NAR realtor, ever.
That is kind of a sad refrain. In actual fact brokerage commissions have gone up the last couple of years. And note that Redfin has cut its rebate by 50%.
Locally all the discount brokers have gone belly up. It is tough competiting in a market based on hgih volume when there is not high volume available.
And by the way given Leslie's view that commission should go down when the price goes up...should we not be raising commission as the price comes down?
Redfin survives but not by much. The model requires that they do in fact get multiple times more production per agent. Tough to do in this market.
Was fun watching that though. Shows just how far off base the experts can be....
And by the way given Leslie's view that commission should go down when the price goes up...should we not be raising commission as the price comes down?
It did, in my area. 6% used to be the norm. It's now 5%, amongst the lowest in the U.S..
Any half way descent economist knew that we had a bubble and prices could not continue to appreciate at the rate it was going. Anyone holding the title of economist at NAR is little more than a spin doctor. Recently NAR has backed up the MIBOR Realtor MLS in Indiana on a topic that if held to will damage the profitability of an agents business or it will bring further DOJ action.
Let's not confuse the NAR spin with that of FRB. Greenspan, the 18 year chairman of FRB, called it " froth". At the time, most economists agreed.
I'm not sure what is so wrong with what this document.... tell me what is wrong or dishonest about this...
prices are down
the $8K credit is good
interest rates are at record lows....
Realtors provide expertise in the market place... yes, some of us are better then others... but GOOD Realtors know markets
Realtors provide access to potential buyers and huge web presence that sellers can't get on their own...
Realtors give info on areas to buyers who are relocating and have no idea of where to start.
SO... What's wrong with the points in the memo????
Previous posters hit on the high points with the constant switches between "all real estate is local" and "these national averages prove buying a house is a good idea".
I have problems with the obvious factual errors :
Calling 5% appreciation normal.
Claiming that people in a highly leveraged investment will make up their losses on the selling side from reduced prices on the buy side. The opposite is actually true - a 20% drop in value will wipe out someone who has 20% down. There's no amount of price drops on the buy side that will make up for having 0 or negative equity from selling your current house.
Saying that data shows the market stabilizing when the latest numbers from their "economists" actually show record price drops and foreclosures.
Basically, it's the same lies they've been pushing for the past few years. Imagine what would happen if a stock broker made these sorts of claims. Why is the NAR not held to similarly high standards when giving investment advice?
Previous posters hit on the high points with the constant switches between "all real estate is local" and "these national averages prove buying a house is a good idea".
I have problems with the obvious factual errors :
Calling 5% appreciation normal.
Claiming that people in a highly leveraged investment will make up their losses on the selling side from reduced prices on the buy side. The opposite is actually true - a 20% drop in value will wipe out someone who has 20% down. There's no amount of price drops on the buy side that will make up for having 0 or negative equity from selling your current house.
Saying that data shows the market stabilizing when the latest numbers from their "economists" actually show record price drops and foreclosures.
Basically, it's the same lies they've been pushing for the past few years. Imagine what would happen if a stock broker made these sorts of claims. Why is the NAR not held to similarly high standards when giving investment advice?
They are not held to a high standard because they are a trade group not an investment firm.
The 5% is not a number that I would chose to use but it is defensible. Actually you can check Shiller who I believe has a suitable spread sheet.
Since 1940 appreciation has exceeded 5% even including the recent disaster.
Here is the historic record by decade. This is an extract of Shiller data...
Stabilizing and such are weasel words...but probably can be claimed to be within the reach of puffery.
NAR is a trade association that sells property. That a trade association tends to favor an optimistic view should surprise nobody. Hell I often disagree with the enthusiasm of the local board anynore a national one.
I have seen no indication that they manipulate the data...just their opinions of it. So watch the data....not the opinions.
I would note that the doom sellers are almost as bad as NAR. They can't see any good changes ever...
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