In times of economic upheaval/resets, labour does not find bargains, capital does.
Housing prices might take a hit, but by the time they pop up on the open market, you won't be buying from a distressed seller, but rather a numbered corporation domiciled in Delaware that's picked up all those properties in cash, cheap.
Echoing rchaud’s comment, it takes longer to buy houses if you need to get a mortgage with a serious assessment because banks suddenly rediscover diligence in a down market, and there are always stories about having a deal fall through because the buyer’s loan didn’t get approved. If the property would need work to clean up for showing, people might also figure that they’re not getting so much less if they don’t have to pay a realtor, handyman, or cleanup crew.
If you weren’t old enough or in the right neighborhoods to see it in the last bubble, there were shady companies mailing postcards to every house and plastering neighborhoods with poorer / older people with fliers. They appeared to be looking for people with medical bills, old people who needed money for assisted living, etc. who needed money right now and might be swayed by a quick transaction. I noticed how you could cross into a less affluent neighborhood and suddenly it was like every pole had a “ca$h for ugly homes” sign on it.
People who need cash asap and can't wait 30 days minimum to pay agents and lawyers and wait for the cheque to clear. A lot of people have medical bills, school loans, credit card debt etc that will take precedence in their decision making .
Plenty of companies are out there offering quiet cash deals, they will find these properties much faster than agents with their paperwork and fees can swoop.
Depends on how soon you are planning to buy. The usual rule of thumb for a big purchase (house, car, etc) is that if you’re planning on it occurring in 3-5 years, put money in a savings account. Otherwise, yeah you should probably invest it.
I agree there is a time and place for it. 5 years is a bit long IMO. The S&P500 is up 250% in the last 5 years, while savings would have netted maybe 10% growth in that time. I imagine some sort of hedge would be appropriate, but have definitely been burnt by taking money out of the market too soon.
Im just shocked that some people think stock is some SV alternate reality. I grew up in a rural community before the internet, and even then, nobody I knew was long term saving for houses or retirement with a savings account.
Yeah agree, I think it's really about personal risk tolerance.
I do agree 5 years is a while, but it's also easy to say that right now based on the last 5 years. It's not terribly difficult to find 5 year periods where returns aren't very good or flat out bad (e.g. starting investing in 2000).
I thought about saying something snarky, but suffice to say I don't think that socks are a silicon valley invention, and I think you are at a major disadvantage to more flexible/savvy investors.
">60% of Americans own stock" does not tell the whole story.
First, how many Americans only own stock as part of their 401(k) or IRA and can't liquidate it without affecting their retirement?
Second, how many Americans own stock portfolios with sufficient value that they could liquidate them and purchase a house for cash, as the initial response implied? I guarantee you it's less than 60%.
Your loss. They are a good pre-tax investment vehicle. Last I checked you could take $10K out of ira and $50k out of a 401(k) for home down payment or new builds.
You have to pay back with interest, but the interest goes to you.
