It's Over: Homes Won't Make You Rich in 2024
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Күн бұрынOwning a Home Wont Make You Rich Anymore - well, at least according to the data. Owning a home back in the day used to double as not only a place to live, but a great investment as well. If you grew up in the 70s, 80s, 90s etc - the American Dream was to buy a house because it means heavy in appreciation. Its also just seems to be accepted that buying a home has been the sole way to build your wealth.
Ok so when it comes to homes, IF we compare the CAGR of home prices between different time periods, we can assess whether or not there has been a slowdown in the rate of appreciation.
Using our two data points from 1970 to 2023, the Compound Annual Growth Rate of this entire period was 5.63%... The CAGR from 2009 till now is approximately 4.13% - this means that homes are appreciating at a rate that is 1.5% lower than the entire time period, which means that they’re not appreciating as much anymore.
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Hello 👋 I’m Humphrey, I used to be a financial advisor, worked in gaming/tech, and started my own eCommerce business. I make practical, rational content on investing, personal finance, the news, and much more with a data-backed approach. My goal is to help you with financial literacy and creating wealth.
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⏱️ Timestamps:
0:00 - Start Here
0:38 - Two Reasons to Buy
1:30 - Appreciation over Time
2:30 - CAGR Example
3:46 - Home Appreciation Data
5:10 - Buy or Rent?
6:38 - Homeowners Wealthier Than Renters?
9:12 - Why I Would Still Buy a Home
12:07 - Easter Egg
@humphrey 2 ай бұрын
Who made it to the end for the "Easter Egg"?
@ozymandias_times9663 2 ай бұрын
I did
@sw33tm3 2 ай бұрын
It’s anti-histamine time Humphrey!
@markamark123 2 ай бұрын
Best I could do is a Cadbury Egg.
@Nunya.Bidness 2 ай бұрын
You get more youtube credit for views that make it to the end, right? Just asking.
@britkc 2 ай бұрын
Benadryl time 🎉
@hersdera 25 күн бұрын
I'm hoping there will be a housing crisis so I can buy cheaply when I sell a few houses in 2025. As a backup plan, I've been thinking about purchasing stocks. What advice do you have for choosing the best buying time? On the one hand, I continue to read and see trading earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?
@Hectorkante 25 күн бұрын
Investing in real estate and stocks might be a wise choice, particularly if you have a sound trading plan that can get you through profitable days.
@nicolasbenson009 25 күн бұрын
You're not doing anything wrong; you simply lack the expertise necessary to make money in a bad market. In these difficult circumstances, only really skilled experts who were forced to witness the 2008 financial crisis could expect to generate a large wage.
@EddyAgnes-vy4kp 25 күн бұрын
Recently, I've been considering the possibility of speaking with consultants. I need guidance because I'm an adult, but I'm not sure if their services would be all that helpful.
@nicolasbenson009 25 күн бұрын
Finding financial advisors like Melissa Terri Swayne who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
@HectorWhitney 25 күн бұрын
I appreciate this. After entering her full name into my search bar, her professional web page surfaced as the top result. Her impressive qualifications undoubtedly speak volumes about her expertise
@shanewachlin 2 ай бұрын
If owning a home is an investment, it will always be unaffordable for the next generation
@LRF49 2 ай бұрын
That's the problem. Ever since the turn of the century. Realtors use he buzzwords "investment" and "rentals" to sell overpriced homes. As a result, homeownership became a speculative market.
@jonathanmack6285 2 ай бұрын
It wasn’t really unaffordable until 3 years ago. In 2020, all you needed was a 60k salary to afford a home. Now it’s 110k plus
@Elwyndor 2 ай бұрын
@@jonathanmack6285 You know the average person back in 2020 only made about 45k a year gross right?
@jonathanmack6285 2 ай бұрын
@@Elwyndor And what does the average person make now? Median household income is 70k. Average is bad example always take median because the millionaires will skew number higher. Hmmm so would I rather make 50k and only be 10k away from affording a house or make 70k and be 40k plus away from affording a house. Very interesting dynamic we have here.
@CaedenV 2 ай бұрын
100% home ownership should be considered a consumable rather than an investment. Homes aren't these perminant unchanging objects that we all pretend them to be. It's a lot of effort to prevent a home from looking like a heap, and that effort has costs. If we all viewed housing as the cost that it is instead of the investment everyone thinks it is, then housing costs would be more appropriate. What I really hate are new home prices. I mean, you would think that angels built them with bricks of gold, but they are slapped together with worse materials that maintain worse than my 1950s house. It's insane what people pay for wood, drywall, mud, and plastic slapped together with glue and nails. 😅 Houses aren't that complicated, and aren't made out of that expensive of materials, and aren't that custom. There is no way they are worth the prices charged.
@kylehackett162 2 ай бұрын
You should not buy a home with the idea or plan on making you rich. You buy a home for a place to live.
@zakiahmed6712 2 ай бұрын
If only the corporations thought this way…but they don’t and that’s why house prices will keep going higher and higher.
@Jack-fr9bk 2 ай бұрын
I disagree It's also a long term investment.
@upon1vp 2 ай бұрын
Lol, meanwhile I owe 135k on an 850k house...you people are so bass ackwards, its not even funny
@kylehackett162 2 ай бұрын
@@upon1vpcongratulations
@kylehackett162 2 ай бұрын
@@upon1vp Congratulations
@BenJustSaid 2 ай бұрын
The problem is that society shifted from seeing houses as homes to investments instead.
@jakevb141 2 ай бұрын
China did this and it went badly
@agates9383 2 ай бұрын
@@jakevb141 is Yep - we did it too and it will end the same BUT we didnt go as crazy as China did
@ssing7113 Ай бұрын
Very wise words 🎖️
@ATCrogerwilco Ай бұрын
It's both. It's an investment and a place to live.
@rebeltheharem7028 7 күн бұрын
@@agates9383 And yet, here we are, at it again.
@Brandon_66 2 ай бұрын
I don't even want to be rich, I just want to live like we were supposed to
@desiv1170 2 ай бұрын
What if you were supposed to be rich?
@lycanwarrior2137 2 ай бұрын
Then allow DEFLATION. Which would also entail getting rid of the the Federal Reserve, Central Banking and fractional reserve lending.
@republicunited2183 2 ай бұрын
Then vote America 1st and pray it’s not rigged.
@cashflow68 2 ай бұрын
I would rather be wealthy than rich.
@JoyceElFer 2 ай бұрын
@@republicunited2183 hahahaha
@shiftym1 2 ай бұрын
The problem is that in most places, you can't compare the average home in the 1970s vs. 2023 because a home built in the 1970s is very outdated in 2023. The amount of upgrades needed is pretty big, and if the owner did those upgrades, you have to factor those prices into the cost of the original house. I think a lot of people simplify this stuff and leave out home ownership costs. For instance, if you owned a house from 1970 to 2023 you have probably replaced 2 rooves, 4 or so AC/Heat units, a few appliances, yard care, etc. Plus when you sell your house, the next house you're going to buy will be about the same price if its the same kind of home in a similar location. So you arent making money on your house unless it is an extra house. I'm not saying renting is better, just saying that people tend to overplay the "your investment is going up"
@martincagle9226 2 ай бұрын
Maintenance and taxes on a rental is paid for by rental income.
@markeasley6149 2 ай бұрын
A home is a store of value. It may not go up a ton, but it is pretty stable to get your money out and there are a lot of financial options using your home so you can be your own bank in many ways.
@andresgarciacastro1783 Ай бұрын
If houses go down, your house is still worth a house. I'm a home owner and i really hope houses go down in price, so my friends/descendents and whole country as a whole can afford them.
@schrodingersmechanic7622 21 күн бұрын
I look at buying a home like riding a train. When you buy you're getting on the train. It's value can go up or down, just like you can move to the front or back of the train. Every other home owner is on the train with you. The only people that get left behind are those that can't/don't own, they never got on the train. You can sell and get off the train and you'll be ahead of those that didn't buy but the train will leave you behind if you don't get back on.
@desiv1170 2 ай бұрын
As you mentioned, the piece of mind can have significant value. We paid off our home after about 20 years, and just knowing that if something happens, I own that home... That takes away so much I might have worried about if I were still paying for it...
@BasicBeachCommunity1 2 ай бұрын
A $32,000 home in 1968 is now $1.9 million in my old hood.😂
@Gromov-jj8jf 2 ай бұрын
did you live in Oakland, CA?
@dforrest4503 2 ай бұрын
@@Gromov-jj8jfOakland is a mess.
@Jack-fr9bk 2 ай бұрын
If you invested $1,000 in Amazon in 2004 you'd have $74,000 today. It's called an investment.
@jim2404 Ай бұрын
That's a 7.57% yearly return. The stock market returned 10.33% per year in the same time period. $32,000 invested in the stock market in 1968 would be worth $7.87 million today. Plus it has less maintenance costs and taxes and insurance.
@andresgarciacastro1783 Ай бұрын
@@jim2404 But, you're not considering that during all those years you didn't pay rent, didn't have to move (wich costs money and time,...).
@jacquie212 2 ай бұрын
Causation vs correlation… are homeowners wealthier because they own, or do they own because they are wealthy. With home ownership so ingrained as a necessity, it is going to difficult to find a decent set of data of renters who don’t own, but could afford to.
@joshuairvin9661 2 ай бұрын
I was thinking the same thing haha
@thebosshouse 2 ай бұрын
I recently sold my house after moving to a different state. I can't afford to buy a house in a decent neighborhood here, so I rent an apartment. I'm far from wealthy. The cost of living in different cities matters.
@georgebunny1910 2 ай бұрын
It depends when and where you buy and sell. My parents bought a home for $300,000. Kept re-financing to survive, then sold the home for $680,000. Took the profit and bought another home for $250,000, now the home value is approaching $500,000.
@DaveDDD 2 ай бұрын
Did you know that people who own horses tend to live ~15 years longer than people who don’t? It sounds like we should all obviously own horses!
@E_Crypto Ай бұрын
You start out by saving, then you roll the dice, then the longer you own the more correlated wealth gets. From my perspective, the key is getting your foot in the door and luck with location.
@Botanicalguy91 2 ай бұрын
The key is to treat yourself as a liability and an asset. Thus, I always say to keep your home on the smaller end and be content with owning it. The problem becomes when you want more house and that becomes unaffordable.
@NotTehJon 2 ай бұрын
I've stopped treating owning a home (that you live in) as an "investment" and instead as a hedge against inevitable rising housing costs. Rent always goes up. Fixed Mortgages do not. Yea I know taxes, maintenance, etc. etc. etc. do but in a lot of cases that hurts less than the landlord/management company turning around at lease renewal day with an insane rent increase.
@pete5691 2 ай бұрын
Exactly. You have to live somewhere and it is always going to cost something. At the very least a home is a big asset to leave to children.
@mapleleaves5156 2 ай бұрын
Rent is the maximum cost, mortgage is the minimum cost
@markeasley6149 2 ай бұрын
Harder to get kicked out or priced out of your own home. You control your destiny
@ssing7113 Ай бұрын
I do agree. Yet it is a a little bit of cope.. houses are far more expensive then one thinks along with not doing the actual maintenance on the place it gets sold for a lot less given you didn’t do the upkeep. Can you be lucky and it appreciate absolutely. CN you be u lucky and be under water and lose your job, you bet. It’s all a little bit of timing. Luck. Faith and spinning the roulette wheel. I know people who lost everything in 08’ and had to rebuild. Sounds like we’re headed for that cliff once again. Buckle up. Never know when you go down the waterfall
@schrodingersmechanic7622 21 күн бұрын
I bought my first home 2 years ago, I installed 30ft of rain gutters myself and the parts were $400 by themselves. There's always SOMETHING that needs to be fixed. If you're not a handyman then maintaining a home will put you in the poor house. Buying a home is easy, keeping it is the hard part
@CelesteMSun 2 ай бұрын
Always the best and interesting content. Thank you so much!!
@denaetak1147 2 ай бұрын
I wish I could afford a house right now but I definitely cannot.
@Leife22 2 ай бұрын
Always run the numbers. In my area, renting puts fixed costs at 40%. Mortgage puts fixed costs at 85%. We'll stick with renting.
@antoinettesandoval2275 2 ай бұрын
Thank you Humphrey. This video was Extremely needed especially now.
@celinelover 2 ай бұрын
I dont believe that renting will make you poorer as some would say. Or the saying that "You're throwing money away when you rent". Like many things about life, It's just not that black and white. I do believe most people should be able to own a home as an asset at some point in their life, especially if you're starting a family or have a family. We all have to live somewhere and need shelter. But timing is really important too. I would argue that even if you are renting, maybe longer than most of your peers -- what you DO with the additional money or difference is whats most important. i.e. Are you investing into the stock market while you're renting? Buying assets is great, and although housing appreciation can be substantial over your lifetime -- there are clear phantom costs that come with owning a home that many of my peers do not plan for. Home ownership is not a fool proof way of increasing your net worth for everyone
@humphrey 2 ай бұрын
Well said Celinelover, its really about what you DO with that difference (if any). And I think that's my point with this video. Thank you for sharing.
@schrodingersmechanic7622 20 күн бұрын
Exactly. I rented for a decade but I also invested as much as I could afford(if not more). Even renting my net worth was 6 figures on my 30th birthday, I'm knocking on the door of 7 figures now. For me renting was great, any property issue I had was rectified with a phone call and no additional cost to me. Plus it gave me mobility that owning would make it extremely difficult. All I had to do was give 30 days notice instead of moving and having to sell a property and deal with all the hassle and expense that entails. When I finally did buy, it was the most painful and stressful experience of my life financially including my divorce. I lost sleep over it and came close to blowing up the deal several times just from the stress involved. I never want to buy a house again.
@MisterSnowman97 Ай бұрын
The stability of the payment is what we love looking forward as new, young homeowners. It might feel a little high now, but as rents continue to go up around us year after year, our payment stays right where it is.
@donovan962 Ай бұрын
Home is where the heart is. Pride of ownership is a good thing IMO. Fun to fix up that way you want it, projects are fun too. It’s like a leased car vs owned car. You can’t modify a leased car. 😊
@358studios 2 ай бұрын
Great video. You make some really good points and cover your bases well. I did not realize the return on RE was so low over the last 15 years. In my opinion, Forbes (and media in general) tend to toss anecdotal numbers out there as a basis for absolute fact. I can't stand it when they try to make an argument based on statements like that. I personally think, it comes down to education and discipline. It takes a will and want to learn about managing your money and investing. Educators have yet to find a good way to reach the youth on this subject. It's typically left up to the family. Hopefully that changes.
@justinsongnj 2 ай бұрын
Love how you make it so easy to understand!
@humphrey 2 ай бұрын
Glad you think so!
@lukescapee1234 2 ай бұрын
As someone who is under contract on their first home, I can’t wait to watch 😅
@theelvensong4328 2 ай бұрын
Thanks for the video Humphrey! I plan to buy a home once I can purchase it outright or most of it to have severely reduced mortgage costs. Since I pay less than $1k a month in a safe and decent apartment and considering other factors, it is more financially advantageous for me to rent.
@markeasley6149 2 ай бұрын
Only buy a home if you are stayng in an area for more than five years, but much longer is preferable. You got to live somewhere, might as well be your own castle.
@latelifeinvesting 2 ай бұрын
One thing to point out - mortgage goes up every year too (usually) - courtesy of valuation of the home and how much we're charged via property taxes.
@davidk6482 2 ай бұрын
Exactly. I have rarely seen a major price drop in all areas, they always * appreciate * somewhat every year
@Marl-hj8hh 2 ай бұрын
Property taxes and HOA typically go up every year so that is not fixed.
@romangabriel007 2 ай бұрын
Also, maintenance costs.
@HeyitsMarioDiaz 2 ай бұрын
Home insurance can increase too
@mrmistmonster 2 ай бұрын
All of those costs and their increases are a component of rent increases.
@E_Crypto Ай бұрын
Taxes can go either direction. HOA never goes down. Insurance always goes up.
@hangguy209 Ай бұрын
And those are pass down to renters to pay for. You think your landlord pays for all that and not you?
@benjaminkerneves8552 2 ай бұрын
Hello there, lot of interesting point of views and many of them very debatable. First, some might argue that a house can be called an asset only if it brings income. As a home owner, it is an expense. If you rent it out, then ok, it's an asset. Especially nowadays where interest rates are above average appreciation rates And the comparison of the net worth between homeowners and renters.....one word: affordability! But thank you for opening the debate. I do like your point of vue
@adamsmith2740 2 ай бұрын
In California, insurance prices have exploded severely affecting affordability for homeowners.
@markeasley6149 2 ай бұрын
A california house is never affordable. But the US is a big place and finding another market is what a lot of others do.
@CaitlynGoesHiking 2 ай бұрын
I just went under contract yesterday, and I can say one of the things I’m most excited about and a strong addition to your list would be a yard for your doggy 🐶😅
@nathanr5825 2 ай бұрын
I have no idea who can even afford to buy a house today. Prices are high, boomers arent moving, rates a high, wages are low....... Good luck kids.
@mandypdx 2 ай бұрын
$600k only got me a 3 bedroom townhouse, so sad.
@rylanrussell9595 2 ай бұрын
A lot of people do, including millenials and zoomers. A millennial myself looking to buy a home (I can afford it), many of my millennial friends own homes and both my younger brothers (zoomers in their early 20s) own homes. If you can't own a home you either a) live somewhere you cant't afford, b) haven't developed a skill the world really needs or c) haven't developed the discipline to save a downpayment or build up the credit needed. Those problems can all be solved on your own.
@jordanlp02 2 ай бұрын
@@mandypdx girl..
@mandypdx 2 ай бұрын
@@jordanlp02 And, i am selling a 1 bedroom condo for $360k (in Oregon)
@Mellow429 2 ай бұрын
Why so high good god!!! Just get an apt😂@@mandypdx
@nmanfailz 2 ай бұрын
One other benefit of home ownership is that you are taking on leverage, meaning any returns you do make from home appreciation are amplified (and so are losses) depending on your equity/debt ratio at the time of sale. Of course closing costs can eat into this, but it can be another consideration! Thanks for another great video Humphrey 😊
@E_Crypto Ай бұрын
Definitely
@nevermind0143 14 күн бұрын
Quality of this content is straight 10/10
@ItsTruble 2 ай бұрын
My luck was I was saving up for a Nissan GTR in 2010. At this time I was still living at home with my mom. Saved up 45k, and realized I needed to move out! Ended up cashing out a house after years bidding with lower amounts I finally landed my house at 26 for 43k cash. That’s what put me ahead of the game and being debt free made it easy to play catch up on wealth building. Pure luck and timing, with obviously a decent savings rate minus the financial knowledge I now have.
@humphrey 2 ай бұрын
Sounds like you were looking for that opportunity though at the time which could be luck or just being aware
@jesuisrobert808 2 ай бұрын
Property taxes, HOA fees are sly high after you buy that house. There will be a lot of foreclosures in the future. Houses at current prices and interest rates are overstretching households
@udayshome1793 2 ай бұрын
I can across your channel and been watching some of your videos. They reassure me as a person who's achieved FI and kinda coasting now. I do have a very random question - Where do you get your polo shirts from? - I like the texture in the videos and I'm a sucker for soft, well-fitted basic-colored polos and tees.
@Bangpaulxu 2 ай бұрын
I just purchased my home since moving back stateside after two decades….all I can say is prices are pretty insane but compared to Chinese homes it is okay! Basically sold my 700 square foot apartment to buy a 3500 square foot home. Great video as always man!!!
@valerieewing4023 2 ай бұрын
Bought a house a year ago and although I love it, I don't love the cost of updating and repairing it.😅 I'm hoping that all the big stuff is paid for and taken care of in the next 5 years.
@erin1220 2 ай бұрын
I personally could never afford a $500k home. However, my family and I are going in on some land in the next 2yrs, building our own homes (and/or adding manufactured homes), and creating a massive garden so we can feed ourselves. This is a much cheaper option...as long as land can be found before large companies buy it all up 🙃
@July4th1999DMV 18 күн бұрын
👍
@bravelefave5642 2 ай бұрын
In Canada, landlords can only raise the rent, according to the rate that the government stimulates. Not being responsible for regular maintenance of the home is peace of mind.
@dakotafaught7593 2 ай бұрын
The payment is sorta fixed with mortgage I think an added tip is including the fact property taxes and insurance can be adjusted as well as including depending on your state if property taxes is a thing or not. So mortgage base payment may be fixed but everything that comes with it isn't unfortunately.
@jrobbins8058 4 күн бұрын
If you're buying a house for a rental and plan on keeping it ten or fifteen for passive income probably a good idea.
@sw33tm3 2 ай бұрын
The home insurance and property tax are absolutely out of control… I bought a home 2 years ago, every day it makes me question if it was a good decision.
@humphrey 2 ай бұрын
It is getting pricey for insurance these days...
@jmandagamer 2 ай бұрын
Why would you be questioning it? If your renting those same costs would be passed on to you. Maybe a little slower than when owning home but you’d see them eventually. Atleast home is burning money away like renting.
@sw33tm3 2 ай бұрын
@@humphrey it sure did. Home insurance premium went up by $800 and property tax went up at $1400. If these two aren’t the unknown variables currently I would definitely say owning a home is worth it but because these two seem to be skyrocketing and who knows what they will look like next year, it makes me question if it is actually a good move for people who are trying to buy a home. It also depends on the location, I can’t speak for other places but at least where I am it feels like my money is never coming back to me
@TonyDaExpert 2 ай бұрын
@@sw33tm3a year or a month
@Hilts931 2 ай бұрын
Generalization, but I suspect home owners tend to be further along in their careers than renters starting out. I wonder if home owners are also more likely to be in a secure relationship and have split personal costs.
@vladoffline 2 ай бұрын
I am a Canadian who lives in Germany. While my net worth at age 28 is much higher than renters’ median displayed in the video, I still rent. I think I am doing this for several reasons - renters have much better protections here than in the U.S. - there is a rent control mechanism meaning that I am paying an insanely low cost for rent - I have the flexibility to move to another city if I find a better job elsewhere - I am quite strict with my personal finances and really make the effort to save up
@Rello77359 2 ай бұрын
Yang: Landlords can raise prices whenever they want. Homes mortgages are fixed. Taxes: Hold my beer.
@loljk9443 2 ай бұрын
Property taxes are unconstitutional. Change my mind
@matthewleconey9813 2 ай бұрын
@@loljk9443 If property taxes didn't exist, how would we fund local government and services (i.e. schools, DPWs)? People like to complain about taxes, but use the services they provide.
@loljk9443 2 ай бұрын
@@matthewleconey9813 better use of our income taxes, which are constitutional, and spend that money they earn from your income taxes better. City, state, federal, etc. That’s how. They generate so much money in tax revenue and quite a lot of it isn’t spent the way it should be on the things that we as citizens are entitled to get for paying our taxes.
@xianx1866 2 ай бұрын
LOL...that's a small amount. Rent is always more expensive than a payoff house with only property tax.
@Gromov-jj8jf 2 ай бұрын
Insurance: Challenge accepted.
@corinnesimard9326 2 ай бұрын
I personally own renting a propertie and was talking with my boyfriend about the fact that this is less efficient than just investing in stocks market. His point of view was interesting. He told me that he prefers doing less profit but contributing to the society by providing a "service" than just brutal capitalism (stop market indices). Anyway I liked it and I is more in peace with our choice ☺️
@jayocean4724 2 ай бұрын
So many people that would like to be homeowners cant. That being said homes arent assets until their paid off. A mortgage is still a liability
@davidk6482 2 ай бұрын
Where I live , in Canada, I never seen a slow down in housing prices. I have owned my home for 8 years now and it has gone up 100k ( my city taxes have gone up of course since their evaluation) in that period with no major changes. Before owning i never seen a price drop in houses, its always going up. When rates will go down ( eventually ) the demand will be outrageous that the prices will surely go up again. Rents have gone up so much too here
@LivingRetirement 2 ай бұрын
I remember when renting a place that I always missed being able to modify things around. Owning an own home since 2004, there is no way back. Also: my last rental place was decent for the first two months, but then the noisy neighbors moved in downstairs. They always had loud fights at 4:30am, leading me to complain to the management office. Plus they were listening to loud music. Literally on daily basis. Since that office never did anything, I even had to resort to call the police. And then peace came into my life by buying my first own home. Renting is good if you are at a location for a short time, but otherwise nothing beats owning your own home.
@bvoyelr 2 ай бұрын
Get the best of both worlds: rent a single family home. Namely because every problem you mentioned can occur in suburbia. Your neighbor could be the "I mow my lawn at 7 am every Sunday" type of person. Or he could have huge parties every week with a bunch of onstreet parking backing up onto your property. Or the dreaded loud car owned by someone that has to go to work at 6 o'clock in the morning. With renting, you have mobility. I still wish I owned my home, but renting definitely has its perks.
@LivingRetirement 2 ай бұрын
@@bvoyelr that can be true for sure. I guess I got lucky with both my home that I had in suburbia and now my home here in the country side.
@mapleleaves5156 2 ай бұрын
This is anecdotal. I've been renting an apartment for 7 years and couldn't be happier. Noisy neighbours are not limited to rentals
@falkc11 2 ай бұрын
Yeah but you could easily move when renting to a better place. When you own and have noisy neighbors (one doesn't live in Alaska on 50 acres) you are stuck and become the hatfields and mccormicks and get super emotional about lousy neighbors destroying your nest egg and you have zero recourse. End up like that senator in Kentucky getting in a fight, police, court, ect..
@LivingRetirement 2 ай бұрын
@@mapleleaves5156 I know that. I was living in rentals for many years, and only had noise problems in the last year. I just wanted to have my own place once I knew I would stay for a long time in this area.
@CarrieV9 2 ай бұрын
In my mid 20s. I decided to buy a home because I no longer felt safe as a renter, even though I was in a nice building in an upscale neighborhood. I had non-financial reasons but it was a great move financially.
@karlschmidt313 2 ай бұрын
It seems like these rising home prices just reflect inflation, higher in the 70s, low in the 00s, high in the last 5 years. Or are inflation values based largely on home prices? 🤷♂️
@jonathanadams8255 2 ай бұрын
Bought a home in last 8 months. It was significantly cheaper mortage payment than 2 bedroom apartment in southern MI. It is hard to buy due to upfront cost but cheaper per month by about 300$ for my family.
@dfonts9568 Ай бұрын
If you can put 20% down, plan to live in the home for at least 5-7 years, and can spend a comparable amount of money monthly for the home as you would renting, then it’s worth it to buy. For example say you live in NYC. Rents and taxes are very high and comparable monthly to buying a home in some NJ suburbs when factoring in the difference in state and city taxes. In that case it makes sense. If you’re planning on going from a $4k rent payment to an $8k mortgage payment in the same city and town, then it financially doesn’t make sense to buy.
@KyleShmidheiser Ай бұрын
Might also want to consider the benefits of up to $250-$500k of exclusions from capital gains tax if you’re considering a primary residence.
@petruSarac Ай бұрын
The pure economic debate should be on rentals vs other investments. Owning a home is much more than an investment.
@pikyi2001 2 ай бұрын
You should also include the opportunity costs of putting the deposit for a home and also the interest rates for the mortgage that could be more than the rent.
@mandypdx 2 ай бұрын
Buying a home was worth it for me (i previously owned a condo). The quality of life is reason enough… i work from home and have a designated office now instead of working from a dining room table. (A garage, pantry, 2 walkin closets, laundry room, fenced backyard are also huge quality of life perks)
@nycdave7 2 ай бұрын
is it better than owning a condo?
@mandypdx 2 ай бұрын
@@nycdave7 for my situation, yes. I work from home and adopted a dog :) I also like that i can vacuum after 10pm lol
@imrank7 2 ай бұрын
Leverage would be another reason to prefer property as an investment. Through leverage (mortgage), you could earn more if the property appreciates from a higher baseline, even if the actual yield is less than other assets like stock.
@ronniedeyro1979 2 ай бұрын
I love owning a home. Here in Las Vegas Nevada rent is high
@sweetpotatogreens7491 2 ай бұрын
keep in mind despite your fixed interest rate, property taxes can be quite volatile! be sure and get your homestead exemption if you’re buying a property you intend to live in! also, if you’re very responsible about bills and savings, doing your own escrow instead of leaving it to the bank can keep a good deal of extra cash in hand.
@republicunited2183 2 ай бұрын
Home taxes near me range from 5k-20k.
@youtubemobilegaming 2 ай бұрын
The important thing to look at is the cost of your house you will be paying in interest, taxes, and other charges that don't go into your houses value. I calculated that renting for me is cheaper then just the interest I would pay along with the property tax and estimated yearly repairs. This means that even though as a renter your money is gone forever, its still less then the amount you would pay towards a house that's not used for the principle.
@powpow2699 2 күн бұрын
Long term home-value comparisons make little sense when over simplified. For example: In 1973 the average home was 1660 square-feet. In 2023 the average home is 2411-square-feet, meaning the average home size grew by 45%. A 50-yr old home, that’s out-dated, significantly smaller, and in an older neighborhood, won’t have the same re-sale price as newer home in a newer neighborhood.
@JimmyHuynhdesign 2 ай бұрын
My house has increased 100k per year since I purchased in 2021. Although I'm not rich, it's been a great return.
@lucaspm98 2 ай бұрын
Yes, you bought right before/during the greatest run-up in real estate prices in decades. That certainly doesn’t mean it’ll happen again, in fact it’s more likely prices will revert to the mean and decrease/increase at a slower rate going forward.
@thepunisherxxx6804 2 ай бұрын
@@lucaspm98 You have no idea what will happen, nobody does. With the way corporations are buying up real estate, the costs of everything, construction, inflation, I really don't see them coming down in price for a long, long time. I could be wrong too, but the circumstances are very unique today compared to the past.
@mauriceg4354 2 ай бұрын
Same. Got my house in 2021 and it’s up 120k. I don’t think I can afford to sell it and buy another one. At least not in California.
@tomaszp2027 2 ай бұрын
Hate to burst your bubble but there's no return unless you sell.
@pete5691 2 ай бұрын
The appreciation we saw post covid isn’t likely to be seen again soon however inflation will keep prices moving upward as will increasing population.
@vancouversworstdrivers 2 ай бұрын
At least you can sell it and move or downsize and then it'll be an asset. For me when i retire im selling my house and traveling in an RV with my wife which means my house will pay for the RV and I could even live off dividends of the money left over without touching my ETF investments
@Helena-ou8ry 2 ай бұрын
Buying allows you to lock in future housing costs in today’s dollars. The advantage is also that you can do things you can’t when renting, like say I want to smash my mortgage so I don’t include the garage in the lease and I live in it rent free while I lease the house.
@Krevvs 2 ай бұрын
The only financial benefit of home ownership is when the home is paid off. Price appreciation is irrelevant because 1.) A rising tide lifts all boats, all other home prices have appreciated as well and 2.) The value in your home is illequid. You cannot sell 4% of your home like you can an index fund.
@JoshuaFitch 2 ай бұрын
A rising tide lifts all boats - this is largely true. If your home appreciates $100,000 the next home you buy is likely to have appreciated as well. BUT - if you rented instead of buying you won't even have the $100,000 offset. And, you can sell your home and buy a smaller home as you get older and need less space or move to a less expensive city where the gain goes further. If you rent, neither of those are true.
@brock5946 2 ай бұрын
@@JoshuaFitchOpportunity costs of a down payment needed for buying a home VS renting and investing the money somewhere else
@ShameenYakubu 2 ай бұрын
I can cash out refinance a home if it gains a ton of value. The liquidity is not inaccessible.
@Krevvs 2 ай бұрын
@@ShameenYakubu Congrats, you're back in debt!
@Krevvs 2 ай бұрын
@JoshuaFitch I certainly am not a proponent of "renting is better". I am simply stating that your primary residence should *usually* not be valued as an investment. Even the hypothetical of down sizing or moving to a cheaper area is very difficult to do when you're 60 and retired.
@RGamerVideosYay 2 ай бұрын
A very big factor that is not considered is the leverage of your money from the mortgage for a house. For example, if you put 20% down on a 100,000 property, and the house price increases by 2%, then you have an unrealized gain of 10%!!! Not 2% (2,000 gain from 2% of 100,000 divided by the 20,000 Down Payment).
@RGamerVideosYay 2 ай бұрын
And with FHA loans, then it would be much more unrealized gain percentage-wise from a low downpayment minumum of 3.5%.
@republicunited2183 2 ай бұрын
Love the old videos. I miss America.
@flicks28 2 ай бұрын
Ive never owned a home for personal and practical reasons. Most people that I know that own homes, all they do are home repairs, maintenance and upkeep. No thanks. On the practical side, I have been a global nomad for almost 30 years. Ive still diversified into real estate by REIG's and have done really well. Own real estate, do none of the maintenance, and collect quarterly checks along with year end bonus checks. Finding the right group is key, but once you do, its an easy way to make money. The groups I have been in have all targeted 9% returns and they have never missed this target with some years being up to 12%.
@pete5691 2 ай бұрын
But where do your kids go to school?
@LRF49 2 ай бұрын
@@pete5691Who cares?! Those who adapt to change will always be the stronger ones.
@pete5691 2 ай бұрын
@@LRF49 What are you even talking about? When I hear global nomad it says to me living all over the place and possibly no children.
@lynninfinite 2 ай бұрын
You should do a video of how much a down payment could grow in investments versus not buying a house. Someone whose rent payment is cheaper than a mortgage could be throwing that money into investments. And people don’t truly own their home until they pay off that loan and they pay MORE than the loan, they pay in interest, insurance, HOA fees, and maintenance, furniture, and repairs.
@Courtney-Alice-Gargani 2 ай бұрын
I own a home. It also depends on where you live. Where I live prices really hasn’t gone up much.
@robertopang4240 2 ай бұрын
Try cromolyn (Nasalcrom) for your allergies. It takes time to take (it needs to build up in your body), but eventually it might free you from seasonal allergies.
@petermooney8944 10 күн бұрын
I don’t think the CAGR is comparable vs equities for the following reasons: - your CAGR calculation doesn’t consider maintenance costs and taxes you pay on your home yearly - also, when financing a home, you pay interest, meaning you deduct from your CAGR that cost - the majority of your CAGR growth is driven by the recent growth from 22’-‘24. Which although this video is for 2024, but you could also make the argument for equities. - also, shouldn’t we consider the closing and buying costs when buying or selling a home? I think home owning is more personal for most of the reasons you mentioned. You could argue that your appreciation starts at a higher point than with stocks, since you start with a ~500K asset appreciating vs 0 with stocks.
@legacyrydeshare3478 2 ай бұрын
The real estate industry has become so difficult to follow, it almost makes sense to stay away until clarity can show its face again.
@to4217 Ай бұрын
the "investment" of owning a home is that it is YOUR place to call your own shelter. A place to shelter you. You get place to live not subject to price increases or lifestyle restrictions. Its yours. Its weird that as a society we've been obsessed with looking at real estate as a speculative financial investment vehicle and its priced people out.
@jbrad1294 2 ай бұрын
In retirement I'll only owe taxes, reducing my cost of living vs renting.
@kennethM Ай бұрын
I’m feel like there are a lot of hard numbers here but not a lot of real life going on here. And that’s what makes more of a difference.
@joeedo89 2 ай бұрын
Probably won’t get seen but the increased price plus the higher interest is a double whammy on return on in investment now
@msoldate 2 ай бұрын
In cali you’re paying around 10k+ a year in property taxes before even getting to the interest rates, renovations, ect..
@MKK-wg7fz Ай бұрын
Depends when you bought your house. I only pay &5300 a year in CA Bay Area.
@marklechadores5574 2 ай бұрын
I'm renting and investing in the stock market(s&p500, dividends stocks, etc) and its usually easier to manage my investments than having a mortgage.
@EC-cm8sf 11 күн бұрын
My grandmother told me she bought her house for 25k 60 years ago. The home is now worth $1.5 million. Had she took the 25k and put it in the sp500 she would have 7.5 million. Of course she would of had to pay rent all that time but even if he rent was 3k a month which it would not have been (probably closer to 200 for first 20 years) she’d still be ahead by 5 million and that does not even account for home maintenance and property tax she paid by owning. Bottom line is a home is not a good investment. You should not buy a home as an investment you should buy it because it allows you to settle and it’s convenient. But don’t overestimate the importance. The important thing is keep investing as much as you can into the sp500 and you’ll be fine. 100% of people who put 10% of their earnings into the sp500 died millionaires.
@a-bruce 2 ай бұрын
Yes, more appreciation in 80s but much higher interest rates as well! So overall you would make the same money if you wanted to finance your home
@stefanboster5728 Ай бұрын
If you’re pushing 70 & have no family, renting is the only option.. Just make sure it’s near a beach, & is small enough to be manageable.. When the end is closer the beginning, it’s about being comfortable NOW - just live below your means..
@shibaspeed 2 ай бұрын
Ability to make modifications to the home. In other words, more things to spend money on. Things to fix or upgrade. Items to buy to fill and decorate your home.
@LRF49 2 ай бұрын
Yup. The average homeowner has accumulated consumer debt as a result.
@jim2404 Ай бұрын
CAGR is supposed to be a measure of the growth rate of a specific asset over time. Using the average price of a home as your starting and ending values will skew the results. As average home size has increased from 1970 to 2023, the price has also increase. This is not due to appreciation, but because it is a bigger house. Updated building codes, added amenities, etc. will also drive up the price of newer houses. CAGR would only work if the average price of homes that existed in 1970 were priced in 2023. Houses built between those years would need to be excluded. In other words, A $2 million home built today would increase the average cost of hones today but would not increase the value of homes built in 1970. The appreciation numbers are all inflated. Houses {on average) do not appreciate as fast as the video states.
@nicholasgabriel9231 2 ай бұрын
Just bought my first home a couple months ago. Let the grind begin😅
@humphrey 2 ай бұрын
lets go
@rebeltheharem7028 7 күн бұрын
There's a few reasons, but the most important is that most renters don't put the money "saved" in mortgage vs rent into investments. I would say that owning a home is a forced investment over a savings account (as savings account implies that it wouldn't go down in value over time, which can happen). And if renters can't afford the down payment for a house, it means they weren't disciplined investors and savers anyways, so they would never put the extra money "saved" into investments. Personally, I would want to buy a home if I could afford one (I can't with today's mortgage rates), but only because I want to A. Live it it. B. Have it has a protection against rent raises. I expect that with current rent collusion by all landlords (yes, they have that collusion software), that 10 years into the mortgage, rent will cost the same as the monthly mortgage payment. Not to mention, you can "inflate away" the mortgage anyways. After about 10 years, with the average US inflation, the mortgage payment would "cost" 20% less. After 16 years, it'll "cost" 50% less.
@Duxdex 2 ай бұрын
Buying is about life circumstances having a house is huge money pit people don’t see that thing break and you have to pay for it
@jameszeng2666 2 ай бұрын
I agree that homeowners are richer is simply because the much more strict mortgage requirement since 2008... it's the outcome not the cause
@hongchen2554 2 ай бұрын
seem age likely helps to explain net worth differences between home owners and renters too - 25 year olds are more likely to rent, have lower salaries, have less time in the market, etc than 60 year olds...
@kammbanks 2 ай бұрын
@6:53 is exactly why you shouldn’t be counting a primary residence in a persons net worth liquidity is almost everything
@willardSpirit 2 ай бұрын
Ideally it should match with inflation plus a little more. Housing shouldn't be a get rich quick speculating scheme
@vanityaffection 2 ай бұрын
Better to rent than to buy in most the country, while corporations buy up house… something doesn’t smell right.
@alexrox727 2 ай бұрын
I find it interesting that it is so rarely mentioned that despite the housing market going up slower than stocks, people forget that for most people, the gains you make on your house is leveraged. If you put a down payment of 20% on a house and it appreciates by 4% you have really gained 20%. Yes this does also work against you if the housing market goes down but in the long term it is very likely to go up. Even if the housing market stopped getting more expensive and increased by inflation you would still see a significant return by buying.
@xsorin 5 күн бұрын
You fail to mention that a home purchased with a mortgage is a leveraged asset. Typically someone puts only 3%-20% down, and finances the rest. That is the equivalent of investing on margin. Even a lower appreciation percentage vs the stock market becomes vastly more in dollar terms compared to that stock market investment made without leverage.
@AModernRogue 2 ай бұрын
The biggest benefit of not owning a home for me is geographic flexibility- owning a home would run me about 30% more than my current rent for a comparable place, but there really aren't any homes on the market anyway. I save the $800 difference, and have much lower maintenance costs than when I was a homeowner, which adds up to more money I can save and compound. Couple the down payment and the annual savings in the market and I am putting away far more than a home would appreciate annually.
@calvinbarriga195 2 ай бұрын
I bought my home in 2014 best choice I ever made.
@OscarLook-sl4qu 2 ай бұрын
Nice work!
@snackattack200 2 ай бұрын
Home is an better option but it’s depends on the location
@romangabriel007 2 ай бұрын
Equities don’t have property taxes or maintenance costs. That is a huge drag on your 7% gains. I prefer equities.
@RobinFitzgerald-wt3yp Ай бұрын
You forgot the main reason it is better to buy. If you pay off the mortgage by retirement you retire rent and mortgage free at a time when income will typically reduce. If you rent you have to do this for your lifetime and rent will be a big expense in retirement and likely an increasing cost as rents gradually go up. Just my take
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