Author Topic: Appreciation  (Read 855 times)

Ty Webb

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Appreciation
« on: March 02, 2017, 07:25:37 PM »
So about two years ago I bought a house for $590,000 around the corner from my house at the time and asked on this forum if I should keep both houses and rent out my old one.  The answer was a unanimous no, that it would be crazy to keep both houses hoping for price appreciation. I ended up selling my old house for $490,000. Hindsight being 20/20 my old house just sold again for $700,000. Would have been up $210,000 in two years!

SwordGuy

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Re: Appreciation
« Reply #1 on: March 02, 2017, 08:14:10 PM »
And you could have been down $200000.   Could you have afforded that?   How much would it have cost you to wait those two years?

Ty Webb

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Re: Appreciation
« Reply #2 on: March 02, 2017, 08:37:13 PM »
Not in this area! Houses have doubled and tripled in the last 5 years. Have been on a sharp upswing for the last two decades. $1 million over asking price is not uncommon these days in Toronto. There is a constant stream of immigrants to Canada and half of them move to the GTA.  Trump has scared even more people from moving to the U.S. and major tech companies are expanding their offices here as talented engineers, software developers etc from the middle east and India etc are leaving the U.S. or are afraid to go there.
« Last Edit: March 02, 2017, 08:42:07 PM by Ty Webb »

Metric Mouse

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Re: Appreciation
« Reply #3 on: March 02, 2017, 09:33:43 PM »
I think this site comes with disclaimers...
Give me one fine day of plain sailing weather and I can mess up anything.

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bosspross

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Re: Appreciation
« Reply #4 on: March 03, 2017, 08:32:00 PM »
I feel that investing in appreciation is like picking individual stocks. Sure you should have bought IBM or RE in SF but success is based more on luck. I would rather take slow and steady then guess and hope for the best.

waltworks

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Re: Appreciation
« Reply #5 on: March 03, 2017, 10:34:16 PM »
And I asked the forum if I should borrow a bunch of money to make a leveraged bet on Trump becoming president 2 years ago! Damn!

Appreciation is great when it happens. It's not so great when it doesn't. Given that historically real estate basically just keeps up with inflation, it's usually a bad bet, especially given all the other investing opportunities out there.

-W

powskier

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Re: Appreciation
« Reply #6 on: March 07, 2017, 11:58:06 PM »
I bet this is the first time in the history of the internet that a bunch of people you don't know gave bad advice.

Metric Mouse

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Re: Appreciation
« Reply #7 on: March 10, 2017, 03:51:29 AM »
I bet this is the first time in the history of the internet that a bunch of people you don't know gave bad advice.
I'll take that bet!
Give me one fine day of plain sailing weather and I can mess up anything.

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marty998

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Re: Appreciation
« Reply #8 on: March 10, 2017, 04:29:13 AM »
There is an incredible aversion to real estate appreciation on this site.

It's as if people would rather be happy with their $7,000 cash return than a $210,000 capital gain because, 1% rule and all that.

I don't doubt there is a place for 1% rules... but it does result in missing a lot of better opportunities.

waltworks

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Re: Appreciation
« Reply #9 on: March 10, 2017, 08:06:34 AM »
There is an incredible aversion to real estate appreciation on this site.

It's as if people would rather be happy with their $7,000 cash return than a $210,000 capital gain because, 1% rule and all that.

I don't doubt there is a place for 1% rules... but it does result in missing a lot of better opportunities.

Stick around with RE long enough and you'll realize that appreciation is not the norm.

-W

andysandp

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Re: Appreciation
« Reply #10 on: March 10, 2017, 08:35:35 AM »
Anyone know the historical appreciation rates for the big cities?  Long term it must be more then 3%.

waltworks

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Re: Appreciation
« Reply #11 on: March 10, 2017, 08:54:52 AM »
Anyone know the historical appreciation rates for the big cities?  Long term it must be more then 3%.

I don't have a good answer for that (we do know that overall, US housing has appreciated in line with inflation over the last century per Schiller) but you have to be aware that there's huge selection bias in play. Places that are big cities now are often not places that were big cities 100 years ago - so you are really asking "how much did prices appreciate in the places people moved to".

That doesn't mean those places will continue to be where everyone moves (something like 40 percent of the 250 largest cities in the US *lost population* over the last 40 years, as well as almost all rural/small town areas).

It is possible (and even likely) that some of the current hot housing markets will lose population and crash at some point in the future. When and where is an open question.

-W

bullcitybro

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Re: Appreciation
« Reply #12 on: March 10, 2017, 08:58:36 AM »
Anyone know the historical appreciation rates for the big cities?  Long term it must be more then 3%.

... Unless you bought into Detroit, Syracuse, Rochester, Cleveland, Las Vegas, or any of the other dozens and dozens of major American cities where property bubbles crashed.

I would consider maybe buying a rental property that was a little light on cash flow but had appreciation upside if I already had a balanced portfolio and wasn't working in the city that the property was located in because I'm not trying to leverage myself even more to a tiny regional economy that I can't control.