https://www.nytimes.com/2013/04/28/busi ... .html?_r=1&
NY Times article: Today’s Dream House May Not Be Tomorrow’s
Thanks for posting. It show's how careful and clever you have to be as well als seller/developer as well as buyer of a house.
A not mentioned trend can also be: more generation houses. You see younger ones staying longer in the parental house. So perhaps solutions where freedom of coming and going but also supporting each other generation can take place.
A not mentioned trend can also be: more generation houses. You see younger ones staying longer in the parental house. So perhaps solutions where freedom of coming and going but also supporting each other generation can take place.
I found this article to be fascinating. During the worst of the gasoline price spikes in 2008, some commentators were saying that the suburbs would become the new slums.
I've owned two houses and a condo, and I've become leery of owning real estate. There's money to be made, but there certainly are risks, too.
I've owned two houses and a condo, and I've become leery of owning real estate. There's money to be made, but there certainly are risks, too.
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secretwealth
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I have enormous respect for Shiller, but this article is a little odd to me. If there are a lot of variables and greater risks in housing now that demographics, lifestyles, and tastes are changing, doesn't that mean there is also great reward for those who understand the market and are willing to take on those risks?
I don't think the takeaway from the changing housing market is to avoid it altogether, but rather to buy with these changes in mind. And I don't think that's too different from buying at any other point in U.S. history.
I don't think the takeaway from the changing housing market is to avoid it altogether, but rather to buy with these changes in mind. And I don't think that's too different from buying at any other point in U.S. history.
More risk does not automatically translate into more reward. The key is to ride the trend.
One of the trends he alludes to is change itself. More precisely, the pace of change. It continues to accelerate. Many changes are now occurring at a pace expressed as Moore's Law. Trends like the small housing movement have spread like wildfire and are limited only by the artificial constraints of zoning laws.
He is probably the leading expert in the field and he's saying that predicting this market is beyond him. Honest guy. If he refuses to even hazard a guess then it seems foolish for any regular person to make what is likely to be the largest purchase of their life in the hope that they will ride what experts believe to be an unforeseeable trend.
One of the trends he alludes to is change itself. More precisely, the pace of change. It continues to accelerate. Many changes are now occurring at a pace expressed as Moore's Law. Trends like the small housing movement have spread like wildfire and are limited only by the artificial constraints of zoning laws.
He is probably the leading expert in the field and he's saying that predicting this market is beyond him. Honest guy. If he refuses to even hazard a guess then it seems foolish for any regular person to make what is likely to be the largest purchase of their life in the hope that they will ride what experts believe to be an unforeseeable trend.
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secretwealth
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"More precisely, the pace of change. It continues to accelerate. Many changes are now occurring at a pace expressed as Moore's Law. Trends like the small housing movement have spread like wildfire and are limited only by the artificial constraints of zoning laws."
I must disagree. The small housing movement definitely has a big following on the web, but that doesn't mean it's penetrated the mainstream. Actually, more people are hoping for bigger houses these days: http://blogs.wsj.com/developments/2013/ ... uy-bigger/
I must disagree. The small housing movement definitely has a big following on the web, but that doesn't mean it's penetrated the mainstream. Actually, more people are hoping for bigger houses these days: http://blogs.wsj.com/developments/2013/ ... uy-bigger/
@secretwealth, I must disagree. The small housing movement definitely has a big following on the web, but that doesn't mean it's penetrated the mainstream.
That's true. Right now it is intensely popular with a particular generation who just happens to be at a point in life where they are not even close to settling down. Some day they will. As a few here frequently point out, large fundamental change often happens not by people adopting different positions but by those people being replaced by others who already hold a different position.
That said, it is a distraction from the point he made about the impossibility of prediction.
That's true. Right now it is intensely popular with a particular generation who just happens to be at a point in life where they are not even close to settling down. Some day they will. As a few here frequently point out, large fundamental change often happens not by people adopting different positions but by those people being replaced by others who already hold a different position.
That said, it is a distraction from the point he made about the impossibility of prediction.
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secretwealth
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1. Real estate is hyper-local and there are definitely different trends in different areas. It is possible to make an educated guess on where things are moving in a given area that will turn out to be right more often than not.
2. While renting may be desirable for reasons listed in the article, one of the biggest constraints on home purchases in the white-collar crowd may be education debt-load. There's only so much debt service people can manage.
Funny, I just closed on a house today. My wife and I are moving from a 1BR apartment in DC metro area to 2BR 1BA detached home in Bel Air, MD (to be near family as we raise our kid(s).
2. While renting may be desirable for reasons listed in the article, one of the biggest constraints on home purchases in the white-collar crowd may be education debt-load. There's only so much debt service people can manage.
Funny, I just closed on a house today. My wife and I are moving from a 1BR apartment in DC metro area to 2BR 1BA detached home in Bel Air, MD (to be near family as we raise our kid(s).
1. Real estate is hyper-local and there are definitely different trends in different areas. It is possible to make an educated guess on where things are moving in a given area that will turn out to be right more often than not.
It is possible to make an educated guess as to where YOU will be (or want to be) moving and turn out to be right more often than not, because you control you.
Shiller is probably the leading expert in the field and HE is stating outright that he cannot predict the future price of individual homes or the direction of national markets.
"This future for housing is possible, but we don’t really know. The housing haze is very thick, and, as I’ve said in other columns, so many things affect home prices that it is hard to foresee prices for a particular home years from now."
Note: It is not that he believes in the Taleb version of reality where prediction is impossible. He has proven his willingness to make predictions in the past. Here is where he predicted the crash:
http://www.project-syndicate.org/commen ... le-trouble
It is possible to make an educated guess as to where YOU will be (or want to be) moving and turn out to be right more often than not, because you control you.
Shiller is probably the leading expert in the field and HE is stating outright that he cannot predict the future price of individual homes or the direction of national markets.
"This future for housing is possible, but we don’t really know. The housing haze is very thick, and, as I’ve said in other columns, so many things affect home prices that it is hard to foresee prices for a particular home years from now."
Note: It is not that he believes in the Taleb version of reality where prediction is impossible. He has proven his willingness to make predictions in the past. Here is where he predicted the crash:
http://www.project-syndicate.org/commen ... le-trouble
It's interesting how home values are tied to just simple fashion trends as well. There are some large developments you can visit and it's obvious what era the homes were built in, lots of 1940's, 50's and 70's era stuff around where I live. And the houses just look old-fashioned and don't fetch the best prices anymore. Then I look at the new developments going up now that are all the rage and I can just see people in about 20 years from now driving through those neighborhoods and grimacing at how dated everything looks with their partial faux-stone facades and massive street-facing garages making them just look out of style compared to whatever the fad will be a couple of decades from now.
I would distinguish between the house and the land it sits on. Regional land values are going to be heavily influenced by economic and social trends which are going to be hard to predict. Buildings though can be more flexible and adaptable; they can be replaced, restored, converted etc
Some eras seem to have proved their adaptability more than others; Georgian and Victorian properties have often shown themselves to be highly adaptable and suitable for modern living. Cheaply built 1950s bungalows and 60s tower blocks much less so.
Some eras seem to have proved their adaptability more than others; Georgian and Victorian properties have often shown themselves to be highly adaptable and suitable for modern living. Cheaply built 1950s bungalows and 60s tower blocks much less so.
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secretwealth
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"He has proven his willingness to make predictions in the past. Here is where he predicted the crash:"
Shiller is an academic. Academics are conservative in their predictions, choosing only to make them when the conviction rate is sky high.
Of course I'd like to limit my prediction making to times when my conviction rate is really high. But people looking to invest cannot always do this, and the more yield you look for, the more you'll have to lower your conviction-level threshold.
Shiller isn't looking for yield when making predictions. That's the important difference. (No disrespect to him, BTW--I think he's one of the most brilliant minds in modern economics. In that sense, the polar opposite to Taleb, who I find to be a rich idiot.)
Shiller is an academic. Academics are conservative in their predictions, choosing only to make them when the conviction rate is sky high.
Of course I'd like to limit my prediction making to times when my conviction rate is really high. But people looking to invest cannot always do this, and the more yield you look for, the more you'll have to lower your conviction-level threshold.
Shiller isn't looking for yield when making predictions. That's the important difference. (No disrespect to him, BTW--I think he's one of the most brilliant minds in modern economics. In that sense, the polar opposite to Taleb, who I find to be a rich idiot.)
It seems like the most reasonable conclusion to draw is "I better not over extend myself to purchase a residence because you never know" and not "it's impossible to predict the future of real estate, so rather than getting involved I'm going to rent, couch surf, whatever"
Good advice/reminder for typical consumer but probably something already internalized by most folks hanging around these boards.
Is the risk in real estate inherently greater than stocks or cash? Of course not. So you make the best guess you can and don't put yourself at too much risk (probably the same thing Shiller would do if he we're buying a property).
Good advice/reminder for typical consumer but probably something already internalized by most folks hanging around these boards.
Is the risk in real estate inherently greater than stocks or cash? Of course not. So you make the best guess you can and don't put yourself at too much risk (probably the same thing Shiller would do if he we're buying a property).