Posted on 07/18/2016 4:55:40 AM PDT by expat_panama
Buy land: They’re not making it anymore. That often repeated adage sounds like good financial advice.
But over the long run, it hasn’t been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments. It’s worth considering why.
Let’s start by looking at the numbers...
...Over the century from 1915 to 2015, though, the real value of American farmland (deflated by the Consumer Price Index) increased only 3.1 times, according to the Department of Agriculture. That comes to an average increase of only 1.1 percent a year — and with a growing population, that’s barely enough to keep per capita real land value unchanged.
According to my own data (relying on the S&P/Case-Shiller U.S. National Home Price Index, which I helped create), real home prices rose even more slowly over the same period — a total increase of 1.8 times, which comes to an average of only 0.6 percent a year.
What all that amounts to is that neither farmland nor housing has been a great place to invest money over the long term.
To put this in perspective, note that the real gross domestic product in the United States grew 15.5 times ...
...When you add all this together, the slow long-term pace of farmland and home price increases is not surprising... ...it’s far from inconceivable that the real price of land could be even lower than it is right now.
(Excerpt) Read more at nytimes.com ...
Is that 100-foldincrease adjusted for inflation? (That was part of the underlying premise.)
For me it’s been extremely lucrative. I flip properties and rarely do worse than double my money.
Plus it’s fun doing fixer-upping on some of them.
With our tax policy private homes are in la-la land, it isn't a level playing field. 1st you get to deduct the mortgage and taxes and then you get 250k or 500k tax free on a sale. Now along the way you have improvements and repairs. IMHO if Homes had the same tax rules as stocks and bonds and we saw the real cost were you'd see what bleeping money pits they are, and the marble counter tops would go bye-bye. Been their done that without getting into the details.
Taking a calculated risk on the creative nature of man to invent new products ( including medicines ) for the betterment of man or even to buy into a company that provides and services ( Utilities, P & G etc ) and to invest in their desire as well to better their lot in life is far more attractive to me than the money pits. Just my 2 cents...
Farmland? What does investing in land have to do with farmland?
Good arguement on both sides of the rent / own debate. Timing is everything when purchasing. I bought my one and only home at the real estate lows of the 1990’s Got into my house 30k less than the orig owner paid for the house new 7 years earlier. Let alone all the money he put in for land scaping, back yard slab, hot tub.......
My home now goes for 300k more than we paid. We are well ahead of the game had we been paying rent for the last 19 years even with the up keep, property taxes and interest. (which are deductable) It’s not cheap to rent a three bedroom home in So Cal in a nice area.
Good arguement on both sides of the rent / own debate. Timing is everything when purchasing. I bought my one and only home at the real estate lows of the 1990’s Got into my house 30k less than the orig owner paid for the house new 7 years earlier. Let alone all the money he put in for land scaping, back yard slab, hot tub.......
My home now goes for 300k more than we paid. We are well ahead of the game had we been paying rent for the last 19 years even with the up keep, property taxes and interest. (which are deductable) It’s not cheap to rent a three bedroom home in So Cal in a nice area.
Good arguement on both sides of the rent / own debate. Timing is everything when purchasing. I bought my one and only home at the real estate lows of the 1990’s Got into my house 30k less than the orig owner paid for the house new 7 years earlier. Let alone all the money he put in for land scaping, back yard slab, hot tub.......
My home now goes for 300k more than we paid. We are well ahead of the game had we been paying rent for the last 19 years even with the up keep, property taxes and interest. (which are deductable) It’s not cheap to rent a three bedroom home in So Cal in a nice area.
15 year Investment Timeframe for Real Estate.
You gambled with your son or daughter’s future by telling them to buy real estate.
Some made money, sheer luck, while other folks lost. Funny how people ignore the relative who went $200k underwater and 20 years to break back to even. That $200k debt went to a foriegn Federal Reserve bankster.
Thank you dad and mom, but next time I do not need the careless investment advice, is what a child should say.
Google Rich Dad Poor Dad Critic. Mr Reed gives a good advice.
There’s a reason they call it REAL estate, or REAL property.
Certainly no need to apologize. I’ve reread your remarks just to be sure, and I see only politeness.
OOOOh. Good one.
“Time to buy more land and not stock. ROBERT J. SHILLER ??? The root of his name is SHILL?”
He is a highly respected economist especially with regard to real estate.
“In 1991 Robert Shiller formed Case Shiller Weiss with economists Karl Case and Allan Weiss who served as the CEO from inception to the sale to Fiserv.
“The company produced a repeat-sales index using home sales prices data from across the nation, studying home pricing trends. The index was developed by Shiller and Case when Case was studying unsustainable house pricing booms in Boston and Shiller was studying the behavioral aspects of economic bubbles. The repeat-sales index developed by Case and Shiller was later acquired and further developed by Fiserv and Standard & Poor, creating the Case-Shiller index.”
I must disagree.
There has been absolutely no discussion of the utility of land, only of its market value.
Land, unlike a piece of paper (with the exception of stock dividends and interest payments), has the potential for enormous return.
Farmland, timberland, grazing land, etc., if used correctly, produces income.
The idea is not to buy it, let it sit, and hope the cost per acre increases.
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