🚀 go-pugleaf

On Sun, 2 Feb 2003 08:17:29 +0000 (UTC), Don Klipstein 
<don@manx.misty.com> wrote:
>In article <coon3vso9jmj9v486p1hdo536ffdrjn9di@4ax.com>, Scott in Aztlan 
>wrote in part:
>>On Sat, 1 Feb 2003 06:21:41 +0000 (UTC), don@manx.misty.com (Don
>>Klipstein) wrote:
>>>  Real estate will not spend decades on end giving double-digit annual 
>>>rate of return.  
>>
>>BTW, I agree with you - these balls-out rates of appreciation have to
>>level off sometime; there may even be a "correction" like ther was in
>>the early 90s. However, the amount of coastal land is finite, and
>>every day it gets closer to being completely built out. Meanwhile, the
>>population continues to grow. Demand will exceed supply for the
>>forseeable future, which doesn't exactly suggest a collapse in housing
>>prices...
>
>  If coastal California housing prices spend enough years outperforming
>global average wealth of coastal property owners, then coastal California 
>will run into competition.

Assuming no population growth, true.  But that is a bad assumption.

>
>  My argument was in comparison of real estate to stock market index 
>mutual funds.  Those include reinvestment of dividends and capital gains 
>distributions into buying more shares of USA publicly traded corporations.
>Long-term trend of that will be (at best) gains in USA GDP plus the 
>recirpocal of whatever appropriately weighted average PE ratio of these 
>shares.  That seems close to 10% annual rate of return averaged since the 
>Industrial Revolution.
>  Compare to real estate - despite good prospects of price appreciation 
>outperforming that of other commodities, to what extent can this 
>outperform wages of those who have to buy or rent it?  Can be positive 
>due to demand increasing with supply constant, but how can that 
>outperform the per-capita growth of the economy with the population 
>growing?  With the population always experiencing new expenses such as new 

Leverage.

>healthcare, communication and maybe transportation needs that will newly 
>and additionally consume per-capita "product/production" at least as fast 
>as innovation inceases ability of workers to produce?
>  Compare again to a "USA total stock market index fund", which invests 
>profits of USA corporations to a significant extent into themselves or 
>each other for compounded gain.
>
>  I repeat my thoughts:  If your living space needs (and needs for 
>independence from landlords) are low enough, then rent a small apartment
>rather than buy a house.  Invest savings available from renting rather 

What has happened to people that have done that (certainly in the San
Diego area) is that the costs of renting have reached (or often, exceeded)
parity with ownership.  And the rental costs continue to increase.

>than buying into stock s or stock mutual funds (total USA stock market 
>funds such as Vanguard "Index Total" or maybe slightly more conservative 
>stock mutual funds such as Vanguard "Index 500", "Index Value" or 
>competing "S&P 500 index funds" and "equity income funds" with 
>competitively low sub-1% "annual expense ratios").
>
>  What I think is bad:  Condos (costs of buying combined with expenses of 
>professional maintenance, sometimes to often with amateur bid evaluation).

I certainly disagree with this.  Many people have made mucho dinero because
so many other people defer maintenance.  But that is an area for professional
RE investors.

>And if you want freedom, do not buy a home that is a condo unit or 
>otherwise governed by a "Homeowners Association" ("HOA") ("Hellish Osshole
>Agency").  HOA's are, in my words, a "sub-municipal government" with all 
>rights of a "sub-Federal Level of Government" (USA wording of mine) and if 
>you don't like them you have to survive them, get them outvoted in the 
>appropriate election procedures, or move out from them.

I certainly agree with this, having been on the receiving end of it.

>  And I hear enough dozens of horror stories about how so many petty 
>mean-spitited small-minded busybodies are the ones to run for positions in 
>HOA's and then govern whether you can kiss who outdoors within your 
>property line (especially gender-specific), what brand/grade/color of 
>paint to paint doors, fences, house-exterior with and with mandated 
>minimum frequency thereof, rules for satellite dishes and other reception 
>antennas that become federal cases where battles occur, and the like!  It 
>seems to me that many HOA's are worse than most landlords!

It has good and bad points.  But if you are talking economics, the good
outweighs the bad.  I take advantage of the converse here, I have a much
nicer place to live because I specifically avoid HOA's and cities for my
personal residences.  On the other hand, I don't get sidewalks and sewers
either, and it can be hard to find good help...

>
>  A minor good side - there is some case law precedent limiting 
>governmental powers granted to or assumed by HOA's that act as some level 
>of government to not being allowed to do/have what more officially 
>defined/recognized levels of government are not allowed to do/have.
>BUT PLEASE VOTE IN EVERY ELECTION and PLEASE *run for office* if only 
>tyour enemies do so!
>
> - Don Klipstein (don@misty.com, klipstei@netaxs.com)

jg
-- 
These opinions are my own. 
http://www.garry.to                                       Oracle and unix guy.
mailto:joel-garry@nospam.cox.net                       Remove nospam to reply. 
                                                                       OCP 8i.