SuperMxyz said:I'd take the Detroit house over the one from 1890. How can you even compare that with the size and amenities of a modern house? http://architecture.about.com/library/weekly/aa061900a.htm

I have a 1917 house and I'd never trade it for a modern one. The quality of construction blows away modern houses. For example, the floors in my house are 12' long planks of solid longleaf pine and the walls are solid cedar planking over true 2x4 studs.

tolamapS said:HumDoHamaraDo said:Shiller is in the business of selling shiller-case index. Paying attention to his data can be hazdarous to your wealth. RE has created more wealth than most other investments.

The bolded statement is utter non-sense and can be hazardous to your wealth. I am not sure if you meant, "investing in one's own house has created more wealth blah blah", or "investing in real estate in general has created more wealth blah blah", but let me rebutt both:

1. The riches people in the world are: the Buffets, Gatesz, the Elisons, and the Helus. I can go down the list, but YOU would be hardpressed to find a significant percentage of moguls who were MADE by real estate.

There is NO value created by real estate. The only source of appreciation is that land is limited; that forces prices to rise, but not by as much as you think they do.

2. Other than as a nest for ones own family, a place to call a "home", and the forced saving vehicle it provides, a home is a piss poor investment when compared to other alternatives, perhaps even US treasuries. At least US treasuries do not require maintenance and do not fluctuate as much, and do not usually entail ignorant borrowers getting in shit to their neck and more.

3. The real estate moguls of the world are routinely (not once, not occasionally, but routinely) on the brink of bankruptcy. Real estate involves leverage (4:1, 5:1) AND mismatched cash flows. A real estate investor has assets (leases) which are short-termed, while liabilities (mortgages) which are long-termed. This, my friend, is the root of all evil.

4. It may appear that your parents, or your uncle+aunt, or whoever it is that has had their house for the past 25 years is making a bundle, but that is a function of two circumstances: (i) a forced vehicle, and (ii) significant leverage allowed for the purchase of a home.

If credit granting for house buying is conditioned on a higher downpayment, e.g., 35-50%, bringing the leverage to 3:1 or 2:1, then I assure you that the 1 or 1.5% above inflation rate of return that your uncle or parents are getting on their 25-year+ investment might all but disappear.

And the last bullet: transaction costs. What investment can deliver decent results when transaction costs include 6% real estate broker fees, 1% mortgage original fees, and in some places as much as 2% transfer fees? Don't forget those damn taxes. Have you heard of other (more appropriately termed as investment) assets that are taxed on the asset value, as opposed to the income value??? I have not heard of any other "asset" that is basically bleeding money in the form of taxes every f-ing month.

I do, however, agree with you that Shiller is selling his research. But gotta give him credit - he was saying since early 2000s that this is going to happen. HAD YOU come down from your high horse and actually respected what he has to say, or even given him a little benefit of the doubt, you TOO might have made something or not lost as much.

I guess you can put down your bullet points on why real estate is a poor investment while the smart ones buy up cheap houses, rent them out, and wait for the dust to settle. We'll see who's ahead in 10 years.

pj737 said:Reots said:http://en.wikipedia.org/wiki/Sears_Catalog_Home

Above average "nice" home

Four bedrooms, two porches, two balconies, a piazza, a parlor and one bathroom?

Thanks, but I'll take a modern home, thank you very much.In those days, they were lucky to have an indoor bathroom.

Vibrators are cheaper but land prices may not be. The chart in op is price adjusted by inflation, which is pretty much same as wage.