Edmunds Members - Cars and Conversations

fintail · July 2018

Why give so much benefit of the doubt? What data hints that things may be worked out for the better?

snakeweasel said:

Well it did bring people to the table and it looks like things may well be worked out for the better. As for manufacturers leaving, they haven't yet, the best that they have done is started to look into possible relocation with few things, if anything, set in stone. They can very easily stay put.

fintail · July 2018

I think it is all distraction from other potentially more embarrassing or illegal issues. Not to mention, remember who happily admits they love the poorly educated.

Regarding economics, I'd wager a lot there will be a significant slowdown by 2020 or so. Whether or not we will see a return of stagflation (I also believe real inflation is higher than parroted numbers, if one includes housing costs, medical costs, etc), I don't know, but interesting times are ahead, and this is likely going to happen no matter who is in office.

berri said:
I believe it won't go all the way and is a lot of short term bluff and bluster, but if it does it certainly economically has the potential for very negative effects like Nixonomics leading to stagflation several years down the road. If you haven't been around long enough to experience stagflation, it will impact most everyone and not lead to happy consequences for most. The car industry was whipped very harshly by it all and looks to be potentially victimized again if economic sanity doesn't prevail.

Michaell · July 2018

fintail said:
I think it is all distraction from other potentially more embarrassing or illegal issues. Not to mention, remember who happily admits they love the poorly educated.

Regarding economics, I'd wager a lot there will be a significant slowdown by 2020 or so. Whether or not we will see a return of stagflation (I also believe real inflation is higher than parroted numbers, if one includes housing costs, medical costs, etc), I don't know, but interesting times are ahead, and this is likely going to happen no matter who is in office.

berri said:
I believe it won't go all the way and is a lot of short term bluff and bluster, but if it does it certainly economically has the potential for very negative effects like Nixonomics leading to stagflation several years down the road. If you haven't been around long enough to experience stagflation, it will impact most everyone and not lead to happy consequences for most. The car industry was whipped very harshly by it all and looks to be potentially victimized again if economic sanity doesn't prevail.

Some good points made in this article.

http://fortune.com/longform/economic-expansion-end-is-near/

driver100 · July 2018

graphicguy said:
HBD JM!

Says the computer guy! Easy for you to say!

driver100 · July 2018

Mr_Shiftright said:

houdini1 said:

dino001 said:

driver100 said:
$12 billion in subsidies to farmers to make up for the money they will lose from tariffs. So, the tax payers will reimburse the farmers. Isn't this communism?
And that isn't even considering the money going to be lost when the tariffs hit the auto industry!
"Fixing" problems of your own creation.
You guys need to catch up on the news. All those tariffs you keep referring to have been put on hold per agreement with E.U. as of today. The U.S. and E.U. put them on hold today and are working toward eliminating all tariffs, subsidies, etc. More great news for U.S.
Don't count on it. There's really nothing here.

Meanwhile, estimated cost of a new car will be $1500 to $7000 more. Job losses in the 100000s, And the good news is......what?

snakeweasel · July 2018

fintail said:

Why give so much benefit of the doubt? What data hints that things may be worked out for the better?
Well it did bring people to the table and it looks like things may well be worked out for the better. As for manufacturers leaving, they haven't yet, the best that they have done is started to look into possible relocation with few things, if anything, set in stone. They can very easily stay put.

Why so much benefit of the doubt? Because I see major players in this talking in ways that could very well solve this problem. That and I am not in the Trump cant do anything right camp. In short I am trying to be a realist here.

pensfan83 · July 2018

Happy Birthday @jmonroe!

houdini1 · July 2018

LOL, if Trump walked on water you guys would say look, he can't swim.

driver100 said:

Mr_Shiftright said:

houdini1 said:

dino001 said:

driver100 said:
$12 billion in subsidies to farmers to make up for the money they will lose from tariffs. So, the tax payers will reimburse the farmers. Isn't this communism?
And that isn't even considering the money going to be lost when the tariffs hit the auto industry!
"Fixing" problems of your own creation.
You guys need to catch up on the news. All those tariffs you keep referring to have been put on hold per agreement with E.U. as of today. The U.S. and E.U. put them on hold today and are working toward eliminating all tariffs, subsidies, etc. More great news for U.S.
Don't count on it. There's really nothing here.
Meanwhile, estimated cost of a new car will be $1500 to $7000 more. Job losses in the 100000s, And the good news is......what?

One immediate positive effect was that the stock market rose 175 points in about 15 minutes after the news of the agreement came out. Apparently the financial sector disagrees with your negative assessment.

ab348 · July 2018

jmonroe said:

Michaell said:

jmonroe said:

tjc78 said:
Happy Birthday @jmonroe... who would have thought our birthdays are only a few days apart and we both had an 09 Burgundy Genesis!
I didn't know that. So now more than ever, between you and I and @ab348, since we have enough seniority in here, Edmunds can at least spring for a cake. Gifts would be more than welcome but for now let's just insist on a cake. We could threaten to leave this place if our demands aren't met but Edmunds might call our bluff and wouldn't even miss you and @ab, so think it over so we can plan this out.

jmonroe
We will cut your dues as a birthday gift.
Hey guys, I think we have em on the ropes now. Is that offer good enough?

jmonroe

Only if I can get it too as a special gift to those with birthdays in July.

dino001 · July 2018

houdini1 said:

One immediate positive effect was that the stock market rose 175 points in about 15 minutes after the news of the agreement came out. Apparently the financial sector disagrees with your negative assessment.

I would caution against bringing 15-minute stock market ticks (up or down, doesn't matter) as justification for anything. And I mean absolutely ANYTHING. As a 10+ year investor (direct in stocks), I can assure you stock market is smart only in context of multiyear (5+) stretches - when it comes to minute-to-minute or even on occasion even month-to-month, it can be as dumb as a table. Also, if you start accepting stock market rising as a "proof", you will have to accept it falling, too.

And no, Trump cannot walk on water. I don't know if he can swim, but I'm positive walking on water is not his competency.

dino001 · July 2018

snakeweasel said:

Why so much benefit of the doubt? Because I see major players in this talking in ways that could very well solve this problem. That and I am not in the Trump cant do anything right camp. In short I am trying to be a realist here.

Well, we are now from unequivocal "great news" down to "benefit of the doubt". At least now we can have a discussion. Yes, this could turn into a good news. I remain a skeptic, but I think there is about 10-20 percent chance. But for now there is no good news to be found. Doubt, with some benefits - perhaps.

stickguy · July 2018

GG, good news. Breld is about to have a pretty blue golf R for sale!

stickguy · July 2018

Aldis, we like it for some stuff. Just keep a spare quarter in cup holder. And the washer lady is stealing. Because at checkout, you don’t get the same cart back. The next person in line will get her washer.

houdini1 · July 2018

dino001 said:

houdini1 said:

One immediate positive effect was that the stock market rose 175 points in about 15 minutes after the news of the agreement came out. Apparently the financial sector disagrees with your negative assessment.
I would caution against bringing 15-minute stock market ticks (up or down, doesn't matter) as justification for anything. And I mean absolutely ANYTHING. As a 10+ year investor (direct in stocks), I can assure you stock market is smart only in context of multiyear (5+) stretches - when it comes to minute-to-minute or even on occasion even month-to-month, it can be as dumb as a table. Also, if you start accepting stock market rising as a "proof", you will have to accept it falling, too.

And no, Trump cannot walk on water. I don't know if he can swim, but I'm positive walking on water is not his competency.

Ok, consider me cautioned. However I am not suggesting that someone rush out and buy or sell stocks based on one tidbit of news. That would be very foolish. That said, the stock market is a very good gauge of whether current news is considered positive or negative and reacts very quickly. This news was greeted with an extremely positive response. This means the financial sector voted with their cash that they considered this to be very good news, which is at odds with some of the negative reactions here.

berri · July 2018

The stock market can be disconnected from the economy shorter term. Politics is but one of many factors. My big fear is that when the slowdown comes, and it is as much related to economic cycles as who runs Washington, with interest rates climbing and potentially large tariffs it all potentially adds up to stagflation which is nasty stuff and can be difficult to combat. However, as I stated, sometimes Washington talk is negotiation posturing, but that always can carry a risk it goes awry. Personally, the US was in a great (and maybe unique) economic position in the 50's and 60's, but the world has changed and I don't see how we can get back to that realistically. But on the flip side, globalizing has led to lower prices through more trade. Globalization is not going away and BOTH political parties championed those moves years back. Then throw in the disruption of technology, much like industrialization in the late 1800's and early 1900's, and all this change hurts some and helps others within the US economy. What I think we need as a nation is leadership and bipartisan governing, which seems kind of like the opposite of what is actually occurring right now. btw, never follow the lemmings on Wall Street because that herd mentality often can end up leading your money astray down the road.

fintail · July 2018

Very interesting, and likely, correct. 24 months out, maybe 36 months if we are lucky, we will be in a new reality. People who work in credit and collection-related fields are already preparing for it.

The stimulus is most perplexing, with the regime using moves usually reserved for times of mild economic crisis. When such policy is applied to an already warm economy, what will they do when the pendulum moves to its next position?

Michaell said:

Some good points made in this article.

http://fortune.com/longform/economic-expansion-end-is-near/

fintail · July 2018

The markets and financial sector are disconnected from actual people, too. Examine markets and then examine socio-economic trends of the past few decades. Markets keep rising, chasms keep widening. How long will (or can) it continue?

The markets gauge the sentiments of the top few. How many people own what percentage of securities, or any financial instruments? Introduce pity-the-rich tax policy, and the beneficiaries will react positively.

berri said:
The stock market can be disconnected from the economy shorter term. Politics is but one of many factors. My big fear is that when the slowdown comes, and it is as much related to economic cycles as who runs Washington, with interest rates climbing and potentially large tariffs it all potentially adds up to stagflation which is nasty stuff and can be difficult to combat. However, as I stated, sometimes Washington talk is negotiation posturing, but that always can carry a risk it goes awry. Personally, the US was in a great (and maybe unique) economic position in the 50's and 60's, but the world has changed and I don't see how we can get back to that realistically. But on the flip side, globalizing has led to lower prices through more trade. Globalization is not going away and BOTH political parties championed those moves years back. Then throw in the disruption of technology, much like industrialization in the late 1800's and early 1900's, and all this change hurts some and helps others within the US economy. What I think we need as a nation is leadership and bipartisan governing, which seems kind of like the opposite of what is actually occurring right now. btw, never follow the lemmings on Wall Street because that herd mentality often can end up leading your money astray down the road.

fintail · July 2018

I am sure he can float, anyway

And distract, a skilled showman.

175 points is just over one half of one percent? Seems to be normal on the recent yo-yo Dow.

houdini1 said:

One immediate positive effect was that the stock market rose 175 points in about 15 minutes after the news of the agreement came out. Apparently the financial sector disagrees with your negative assessment.

graphicguy · July 2018

stickguy said:
GG, good news. Breld is about to have a pretty blue golf R for sale!

Don’t think I’m not checking here every day! LOL!

Regarding cars and tariffs, I’m thinking this is not going to end well for the consumer. Prices for cars we mostly know and love in this forum (BMW/Mercedes/VW/Volvo/Audi), all are going to become much less competitive price wise. Yes, I’m sure some of the tarrif will be absorbed by the manufacturers. But, there will be a significant amount that will be tacked on to the MSRP.

That’s not good for anyone.....not the manufacturers.....not the consumers. And, it’s likely to spur an already rising inflationary rate.

At best, it’s ominous. I see Honda, Toyota and Nissan perhaps picking up some market share. The U.S. manufacturers are all but abandoning cars for trucks, CUVs, SUVs.

Gas prices have been rising, too.

Then we have the roll back of banking oversight.

This all paints an ugly picture in the next 12-18-24 months. And, like what happened 10 years ago, it’s going to take a Herculean effort to get things back on track, again. The last time, it took 4-5 years for the previous administration to get things moving in the right direction, again.

This one could take longer.

driver100 · July 2018

houdini1 said:
LOL, if Trump walked on water you guys would say look, he can't swim.
driver100 said:

Mr_Shiftright said:

houdini1 said:

dino001 said:

driver100 said:
$12 billion in subsidies to farmers to make up for the money they will lose from tariffs. So, the tax payers will reimburse the farmers. Isn't this communism?
And that isn't even considering the money going to be lost when the tariffs hit the auto industry!
"Fixing" problems of your own creation.
You guys need to catch up on the news. All those tariffs you keep referring to have been put on hold per agreement with E.U. as of today. The U.S. and E.U. put them on hold today and are working toward eliminating all tariffs, subsidies, etc. More great news for U.S.
Don't count on it. There's really nothing here.
Meanwhile, estimated cost of a new car will be $1500 to $7000 more. Job losses in the 100000s, And the good news is......what?
One immediate positive effect was that the stock market rose 175 points in about 15 minutes after the news of the agreement came out. Apparently the financial sector disagrees with your negative assessment.

And, there was no rain in Chicago yesterday....I guess he is doing something right.

jmonroe · July 2018

Thanks all for the birthday wishes. I had a nice day, and as usual since I'm now retired, a relaxing day. If you don't have relaxing days when you're retired you're doing it all wrong.

Thanks again.

jmonroe

graphicguy · July 2018

stickguy said:
Aldis, we like it for some stuff. Just keep a spare quarter in cup holder. And the washer lady is stealing. Because at checkout, you don’t get the same cart back. The next person in line will get her washer.

Went to ALDIs once. Not impressed....with the selection nor the quality. Store was somewhat dingy, too. Even the cashier wasn’t really welcoming.

Maybe I expected too much.

Won’t go back.

Found some good deals on some high quality produce and butcher shop food at Whole Foods, though. Plus, I got some “deals” because I’m an Amazon Prime member.

Still, my go to is.....

http://junglejims.com

jmonroe · July 2018

ab348 said:

jmonroe said:

Michaell said:

jmonroe said:

tjc78 said:
Happy Birthday @jmonroe... who would have thought our birthdays are only a few days apart and we both had an 09 Burgundy Genesis!
I didn't know that. So now more than ever, between you and I and @ab348, since we have enough seniority in here, Edmunds can at least spring for a cake. Gifts would be more than welcome but for now let's just insist on a cake. We could threaten to leave this place if our demands aren't met but Edmunds might call our bluff and wouldn't even miss you and @ab, so think it over so we can plan this out.

jmonroe
We will cut your dues as a birthday gift.
Hey guys, I think we have em on the ropes now. Is that offer good enough?

jmonroe
Only if I can get it too as a special gift to those with birthdays in July.

Oh you'll get it alright but probably not the $150 bonus for wordy posts like I get. That is reserved for special contributing posters.

Have a nice birthday today @ab.

jmonroe

Mr_Shiftright · July 2018

fintail said:
I think it is all distraction from other potentially more embarrassing or illegal issues. Not to mention, remember who happily admits they love the poorly educated.

Regarding economics, I'd wager a lot there will be a significant slowdown by 2020 or so. Whether or not we will see a return of stagflation (I also believe real inflation is higher than parroted numbers, if one includes housing costs, medical costs, etc), I don't know, but interesting times are ahead, and this is likely going to happen no matter who is in office.

berri said:
I believe it won't go all the way and is a lot of short term bluff and bluster, but if it does it certainly economically has the potential for very negative effects like Nixonomics leading to stagflation several years down the road. If you haven't been around long enough to experience stagflation, it will impact most everyone and not lead to happy consequences for most. The car industry was whipped very harshly by it all and looks to be potentially victimized again if economic sanity doesn't prevail.

There's an interesting thing going on right on with the economy, and it relates to everyone. Despite the allegedly "good" economy (debatable, but that's another story outside our purview) there is something that has just about all economists quite puzzled:

Wages remain stubbornly stagnant, and no one is quite sure why. Obviously, someone or something, is not coughing up the cash.

fintail · July 2018

No ALDI here, but I have been to them in Germany. Do the cashiers get to sit like they do there? I might be in the upper midwest later in the year, and will probably visit one, I hear they carry many German goods.

graphicguy said:

Went to ALDIs once. Not impressed....with the selection nor the quality. Store was somewhat dingy, too. Even the cashier wasn’t really welcoming.

Maybe I expected too much.

Won’t go back.

Found some good deals on some high quality produce and butcher shop food at Whole Foods, though. Plus, I got some “deals” because I’m an Amazon Prime member.

Still, my go to is.....

http://junglejims.com

fintail · July 2018

Stagnant wages (especially in comparison to many cost of living factors) have been an issue for a long time, right? For some reason, benefits to workers are never part of what determines a "good" economy.

Mr_Shiftright said:

There's an interesting thing going on right on with the economy, and it relates to everyone. Despite the allegedly "good" economy (debatable, but that's another story outside our purview) there is something that has just about all economists quite puzzled:

Wages remain stubbornly stagnant, and no one is quite sure why. Obviously, someone or something, is not coughing up the cash.

jmonroe · July 2018

stickguy said:
Aldis, we like it for some stuff. Just keep a spare quarter in cup holder. And the washer lady is stealing. Because at checkout, you don’t get the same cart back. The next person in line will get her washer.

Under normal circumstances, you are right. You don't get the cart that you used for your shopping, you get the cart from the person ahead of you. But since this counter-fitter lady said her washers had worked before, she must make sure she gets her shopping cart back.

I still can't understand why anyone would do it since you get a quarter back from another cart. Maybe she's a coin germophobic nut.

jmonroe

graphicguy · July 2018

This is from today’s Bloomberg. The entire article paints a dismal picture for the automakers. But, GM said this.....

“Trump’s steel and aluminum tariffs have driven up metals prices and contributed to commodities adding $300 million to costs in the quarter and $500 million in the first half.”

In short, commodity prices have gone up, as everyone expected with the tarrifs while the sales of cars is plunging. This is for every manufacturer in the U.S. Not a good recipe for success.

Michaell · July 2018

graphicguy said:

stickguy said:
Aldis, we like it for some stuff. Just keep a spare quarter in cup holder. And the washer lady is stealing. Because at checkout, you don’t get the same cart back. The next person in line will get her washer.
Went to ALDIs once. Not impressed....with the selection nor the quality. Store was somewhat dingy, too. Even the cashier wasn’t really welcoming.

Maybe I expected too much.

Won’t go back.

Found some good deals on some high quality produce and butcher shop food at Whole Foods, though. Plus, I got some “deals” because I’m an Amazon Prime member.

Still, my go to is.....

http://junglejims.com

My last trip to the Queen City, we stopped by the Jungle Jim's off 275 on the east side of town. I'll admit it was an amazing place, especially with the bar in the middle of the store.

dino001 · July 2018

fintail said:
The markets gauge the sentiments of the top few. How many people own what percentage of securities, or any financial instruments? Introduce pity-the-rich tax policy, and the beneficiaries will react positively.

Well, let's not get overly "eat the rich" class warfare here (even though I know you love to

). Plenty of people have real stake in the markets - it's called pension funds and 401k/403b.

Regarding market sentiments, these days short term ticks are no longer decided by people, rather it's the computers run by "AI" (artificial for sure, not necessarily intelligence) programmed to react to headlines, often hijacking the whole thing.

graphicguy · July 2018

While not auto related, the farmers of America are taking action, too.....

https://www.politico.com/story/2018/07/26/farm-groups-anti-tariff-blitz-trade-aid-711958

Mr_Shiftright · July 2018

dino001 said:

fintail said:
The markets gauge the sentiments of the top few. How many people own what percentage of securities, or any financial instruments? Introduce pity-the-rich tax policy, and the beneficiaries will react positively.
Well, let's not get overly "eat the rich" class warfare here (even though I know you love to ). Plenty of people have real stake in the markets - it's called pension funds and 401k/403b.

Regarding market sentiments, these days short term ticks are no longer decided by people, rather it's the computers run by "AI" (artificial for sure, not necessarily intelligence) programmed to react to headlines, often hijacking the whole thing.

Hmmm, but maybe not for long. The real estate industry says that many first-home millennium buyers are looting their IRAs to close the deals. Dangerous move for young people, IMO. Americans are buried in debt right now.

fintail · July 2018

Yes

, but I have to think, what percentage of people own what amount of the market, and what amount of the benefits of a hot market? Pensions, a dream for all but a likely statistically insignificant few in the private sector, anyway. I can't see how market health can be distributed any better than wealth itself, and judging by trends of the past couple generations, likely less.

I believe many of these ~200 point gains and losses are exactly as you describe, computer generated ticks. A loss or gain of that amount, or even several times it, is not something I would use to defend policy. Just as I wouldn't use a hot market to claim overall economic health.

dino001 said:

Well, let's not get overly "eat the rich" class warfare here (even though I know you love to ). Plenty of people have real stake in the markets - it's called pension funds and 401k/403b.

Regarding market sentiments, these days short term ticks are no longer decided by people, rather it's the computers run by "AI" (artificial for sure, not necessarily intelligence) programmed to react to headlines, often hijacking the whole thing.

Mr_Shiftright · July 2018

Yeah, it's not like the DOW goes up, and we all get a direct deposit sent to our checking accounts!

driver100 · July 2018

graphicguy said:
While not auto related, the farmers of America are taking action, too.....

https://www.politico.com/story/2018/07/26/farm-groups-anti-tariff-blitz-trade-aid-711958

Good article GG. Even if tariffs are a ploy, look at the worry created, and the money lost fighting them. The farmers are getting $12 billion in subsidies, and even they don't want them.

Mr_Shiftright · July 2018

I see they're going after Peter Navarro. That's a proper target. His positions are quite radical and highly controversial.

fintail · July 2018

In my area, it beats the alternative of waiting and never catching up

I know very few people in my age demographic who didn't get such a start without parental help. But I suppose that's one for the Houses Cost Too Much discussion.

Mr_Shiftright said:

Hmmm, but maybe not for long. The real estate industry says that many first-home millennium buyers are looting their IRAs to close the deals. Dangerous move for young people, IMO. Americans are buried in debt right now.

28firefighter · July 2018

We have several friends who spent every penny in savings to buy a house here in Seattle, so much so they ended up needing a HELOC to be able to buy furniture along with maxing their credit cards.

I am still not convinced of the benefits of home ownership anymore.

houdini1 · July 2018

Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.

driver100 · July 2018

houdini1 said:
Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.

That was always my dream Mr Houdini....pay off my home and live for free. Unfortunately, living for free never happens, taxes keep increasing, as do utilities, and maintenance........there is no free!

I think what you really do is decide how important home ownership is to you. Don't buy when prices are rising, try to buy in a down market or at least neutral market, pay off your home as soon as possible.......and hope for the best.

xwesx · July 2018

driver100 said:
That was always my dream Mr Houdini....pay off my home and live for free. Unfortunately, living for free never happens, taxes keep increasing, as do utilities, and maintenance........there is no free!

I think what you really do is decide how important home ownership is to you. Don't buy when prices are rising, try to buy in a down market or at least neutral market, pay off your home as soon as possible.......and hope for the best.

Quite true, driver. Happily, the absence of a mortgage means one's "rent" is pretty darn cheap. If I include all my housing-related fixed expenses (property taxes and utilities), I'm at about $650 a month. For this area, that's equivalent to a 500 square-foot dry cabin off in some mosquito-infested swamp.

dino001 · July 2018

houdini1 said:
Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.

I don't regard house (used as a primary residence) as an investment - it's a life style choice. A good one and bringing lots of joy, but as an investment house stinks (most of the time, most of the cases). Even when the price appreciation is high (like in some areas), overall cost of owning a house (from mortgage, to upkeep, to insurance, to improvements, to taxes, to everything else) outweighs "investment benefits". People will always quote price A they bought and price B as they sold and claim they "made" B-A on the house. Never mind all those mentioned costs they had to bear over the years (they somehow don't count). Never mind agent fees.

House is a great investment for a bank, not the owner-resident. Especially in America, when people own their houses for less than 10 years at a time. I don't count professional house investing (for rent or flip), as those are ruled by different dynamics. Even if one buys a house and then enjoys real boom in its value, it usually creates a lot of strain on them as they may not have cash flow to support increased taxes, insurance due to that growth. They can easily become house rich, cash poor. If they tap into that equity without income supporting it, we have foreclosure within couple of years. Also, if you buy a house and enjoy it going up in value, you still made nothing if you have to stay in the area (all other houses also increased in value). This happens for a lot of people, when they move from place to place, buying a house each time. They end up paying enormous amounts in closing/selling costs that they never seem to have accounted in their overly optimistic math of "investment". So, unless you move to middle of nowhere, you "made" nothing just yet. Perhaps, tapping into equity in reverse mortgage might get you some value in the old age.

As I said, it's a great life choice, but it's a terrible "investment". At best, it may be a "store of value" for some and perhaps force savings vehicle for those who are responsible enough to pay their bills, but otherwise spend every cent they get. However, those who know how to save, can invest in much better assets without bearing the costs - provided they can live in a rented apartment or house and put that difference away.

fintail · July 2018

Buying in at the right time is also something hard to beat. Some older generations around me were very lucky in their timing, buying when it was possible for normal working people. Of course, they pretend to be the second coming of Warren Buffett, but it was nearly all luck, and still often some parental aid, too. And then they gripe about taxes reflecting that value - no sympathy here, just snickers and rolled eyes.

Regarding making money, only if you sell, right? Or maybe take out a HELOC to fund an investment.

IMNSHO, the economy is far too dependent on housing.

dino001 · July 2018

fintail said:
Buying in at the right time is also something hard to beat. Some older generations around me were very lucky in their timing, buying when it was possible for normal working people. Of course, they pretend to be the second coming of Warren Buffett, but it was nearly all luck, and still often some parental aid, too. And then they gripe about taxes reflecting that value - no sympathy here, just snickers and rolled eyes.

Regarding making money, only if you sell, right? Or maybe take out a HELOC to fund an investment.

IMNSHO, the economy is far too dependent on housing.

To take any kind of loan, you need to have a capacity to pay it back. Or at least used to... So if you bought a cheap house on low income then it rose in value way past your ability to buy it again, you can't take the loan, unless you wish to be foreclosed. Even HELOC, as it can be recalled and still needs to be paid according to some schedule. Now, if you invest the money into something making a better return, but it's now taking double risk (the investment and the house). I also agree, dependency of our economy on bricks and mortar rather than productive assets is something to be concerned about, not to celebrate.

houdini1 · July 2018

driver100 said:

houdini1 said:
Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.
That was always my dream Mr Houdini....pay off my home and live for free. Unfortunately, living for free never happens, taxes keep increasing, as do utilities, and maintenance........there is no free!

I have to disagree with you Mr. driver. If I live in a house for 10 years and it appreciates by $150,000. I can pay a lot of taxes, maintenance, and utilities with that $150,000. Not to mention that you don't have to pays taxes on the $150,000. gain when you sell.

houdini1 · July 2018

dino001 said:

houdini1 said:
Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.
I don't regard house (used as a primary residence) as an investment - it's a life style choice. A good one and bringing lots of joy, but as an investment house stinks (most of the time, most of the cases). Even when the price appreciation is high (like in some areas), overall cost of owning a house (from mortgage, to upkeep, to insurance, to improvements, to taxes, to everything else) outweighs "investment benefits". People will always quote price A they bought and price B as they sold and claim they "made" B-A on the house. Never mind all those mentioned costs they had to bear over the years (they somehow don't count). Never mind agent fees.

House is a great investment for a bank, not the owner-resident. Especially in America, when people own their houses for less than 10 years at a time. I don't count professional house investing (for rent or flip), as those are ruled by different dynamics. Even if one buys a house and then enjoys real boom in its value, it usually creates a lot of strain on them as they may not have cash flow to support increased taxes, insurance due to that growth. They can easily become house rich, cash poor. If they tap into that equity without income supporting it, we have foreclosure within couple of years. Also, if you buy a house and enjoy it going up in value, you still made nothing if you have to stay in the area (all other houses also increased in value). This happens for a lot of people, when they move from place to place, buying a house each time. They end up paying enormous amounts in closing/selling costs that they never seem to have accounted in their overly optimistic math of "investment". So, unless you move to middle of nowhere, you "made" nothing just yet. Perhaps, tapping into equity in reverse mortgage might get you some value in the old age.

As I said, it's a great life choice, but it's a terrible "investment". At best, it may be a "store of value" for some and perhaps force savings vehicle for those who are responsible enough to pay their bills, but otherwise spend every cent they get. However, those who know how to save, can invest in much better assets without bearing the costs - provided they can live in a rented apartment or house and put that difference away.

You paint a very bleak picture. Someone once said that the only things we really know are those things that we learned through personal experience. I am speaking from owning 10 homes over my adult working life and gradually being able to pay cash (mainly from profits off previous homes) for the last two. The money you save by doing this is unbelievable. I realize that all of our experiences may not be the same.

dino001 · July 2018

houdini1 said:

driver100 said:

houdini1 said:
Buying a house is just like any other investment, you have to do your homework. Owning the right home in the right place, and buying it at the right time, and at the right price can be a very rewarding investment. Plus you get the added enjoyment of living in a nice home while living there for free, and even making money as it appreciates in value. That is an investment that is hard to beat.
That was always my dream Mr Houdini....pay off my home and live for free. Unfortunately, living for free never happens, taxes keep increasing, as do utilities, and maintenance........there is no free!

I have to disagree with you Mr. driver. If I live in a house for 10 years and it appreciates by $150,000. I can pay a lot of taxes, maintenance, and utilities with that $150,000. Not to mention that you don't have to pays taxes on the $150,000. gain when you sell.

1. To appreciate 150 grand in 10 years, how much did you pay? Say it appreciated 5 percent per year (above average), it would be $240K. If it is 3 percent (typical long term), it would have to be $440K. Big difference. What makes you think you can achieve consistently above average house appreciation?
2. Where do you go after you sell? How much it costs?
3. I'd say it's quite likely that if the appreciation was average, $150K was easily eaten by taxes, insurance, living costs and closing costs/selling expenses. But say it's just half of it, more likely two-thirds, especially if you experience only average price appreciation (higher starting price). If you actually took a 30 year mortgage and paid nothing extra, you still owe more than 75 percent of the original amount, so most of your payments went to cover interest. No, my friend, you didn't make $150K. You'd be lucky to cash 50 grand, which is better to have or not, but I can think of much better schemes to turn this kind of money into real 150 grand. But you wouldn't have enjoyed your house, which is nice thing and there is nothing wrong with that. It's actually great. Just not as investment.

dino001 · July 2018

houdini1 said:

You paint a very bleak picture. Someone once said that the only things we really know are those things that we learned through personal experience. I am speaking from owning 10 homes over my adult working life and gradually being able to pay cash (mainly from profits off previous homes) for the last two. The money you save by doing this is unbelievable. I realize that all of our experiences may not be the same.

You misunderstand my intention. I think house is a great place for a family to grow up in. But it's much more expensive than anybody wants to admit, because people think it would make them look bad, as they had overspent. So they disregard those costs in the calculus and overexpose benefits.

You with your ability to actually save the cash and roll it forward, are an exemption, not rule. Majority of people I see, never get from the thumb of the debt, definitely not in 10 years from first purchase, because every penny they make goes to cover the interest and expenses and life. They usually have very little equity after 10 years, as second mortgage would eat all the possible appreciation. BTW, I almost paid off my house, on schedule to do it in less than 3 years (could send a check now, if wanted to), so I'm not talking about myself.

28firefighter · July 2018

So...given that I live in a market that is an anomaly (and one that seems to actually be slowing down), we realized a 40% ROI in 3 years of ownership of our first home in Seattle. We had to use all of that gain as a downpayment in order to fit our current home within our budget. Our current home sold for exactly the same as we paid for our first home 3 years ago, just is bigger and located in the suburbs.

We were lucky and had the funds for our first down payment to be able to purchase when we did, or we would be like our friends and stuck putting every dime of our savings into a home. My issue is that while they are "in" the market and likely realizing excellent gains, same as we did, they are cash flow strapped and have no emergency fund. I can't live like that and probably wouldn't live like that.

graphicguy · July 2018

Even property and home ownership is in real danger.....

https://www.bloomberg.com/news/articles/2018-07-26/american-housing-market-is-showing-signs-of-running-out-of-steam

Edmunds Members - Cars and Conversations

Comments

Helpful Tools

Most popular vehicles