In our younger days when we needed mortgages they ran between 9 and 14%, the last one we had was 9% and that was in 1993.

I think this house is nice, it just needs some landscaping.
I wouldn’t ever say this house is ugly.

I counted them on TV and Zillow sights. No, I am not a realtor or Village sales agent.

I agree with your 1st paragraph but are you sure about that "zero return" as it relates to your opportunity cost argument? And I'm not talking about capital appreciation.

My intention behind that comment was that having your home paid off you're only getting capital appreciation. That money is "dead money" otherwise. In the past 20 years it was easy to pull a modest amount of money out your home in a home equity line of credit (HELOC) for under 5% or much less in most cases and then invest it to generate income if you're willing to take on a small amount of risk for extra income.

Obviously that's not necessarily as viable of a strategy now in the current interest rate environment.

I remind you that your original statement on this subject was a blanket statement "Sad if a retired person purchases in TV and has a mortgage."...

you said it was "sad", you didn't specify that it was sad "unless of course it was an investment decision" which seems to be your new stance.

you seem unwilling to acknowledge that your initial blanket statement was, in fact, just wrong.

It's OK...

What would be sad would be buying a home that proves to be too much of a strain on the finances, or as they say, become "house poor". That can happen by buying a house that costs too much, relative to one's ability to pay for it.

Whether one overspends on a house with a mortgage, or by depleting one's reserves in order to pay cash, the result is still a lot of stress.

If one can afford the house, and still have resources left over to comfortably pay for the other things in life that need to be paid for, whether it's a cash deal or an affordable mortgage payment, there is no need to be "sad".

i stated it's an investment decision 120 posts ago. :shrug:

read and educate oneself

jus found a new sad.

:ohdear::ohdear:

So that was your acknowledgment that you were wrong when you said having a mortgage was sad?

Almost Aloof
 

Almost aloof. We all put our pants on one leg at a time, and we all have the same Maker.

Actually never put on pants one leg at a time. You truly believe everyone has this Maker that you speak of? Some have very different beliefs

Actually, I think the cash versus mortgage is the financing decision, after the investment decision, but I understand your point. But then i might reject the investment decision since buying a home to live in is never an investment decision from a finance point of view.

so we are back to being at a mexican standoff..


obviously, none of us have enough to do in our regular lives today

So, back in 2019, we were looking to move to a different home in TV. At the same time, we were deciding where to invest a recent inheritance. We were fairly risk averse and yields on treasuries and the like were very low, so we decided to invest the inheritance in a way more expensive house than we needed. Our plan was to sell in 3-5 years, which we did, and reap the capital appreciation. How is this NOT and "investment decision from a finance point of view."

IMO If two retiring teachers (what age 50?) don’t have enough funds to buy house approaching retirement they have either overspent ( on children or taking trips every summer ect…). Or been divorced or have medical expense which I doubt the cause due to teachers union healthcare. Each situation different can’t lump all to one example.

Or could lose the investment from bad advice or bad decisions and be without house? Meaning I’d you got mortgage really not your. It’s the banks.

executive summary: housing is a consumption decision, with no expected income generation, and conflating consumption with investment because there is a price attached, and potentially a taxable gain.

The truth? Your house is not an investment | Money Under 30

A House Is a Home—Not an Investment - The Atlantic

A Wharton Professor Explains Why a Home Isn't an Investment

Why Your Home Is Not An Investment | by Adam Del Duca | Making of a Millionaire

What you are engaging in is human bias, and in this case, mental accounting and resulting. Understanding Common Types of Bias in Investing

https://www.investopedia.com/terms/m...accounting.asp

The other being resulting, which is a really hard one to grasp
https://www.bjjmentalmodels.com/resulting

best explanation
https://www.amazon.com/Thinking-Bets.../dp/0735216355

this all comes under the heading of behavioral finance, which is infinitely more accurate in understanding hoomans handling money, than the 1950's rational man model. Economics is actually the study of hoomans handling money, so behavioral economics and behavioral finance explains much more of reality of decisions than the rational man, which we know we are not. If we all were rational, many industries would not exist

///

Did you just search for your post from months ago and copy and paste those links? I can search google and post counless links also to substantiate my stance but all you need to do is think about the decision I made. Can I make more money by investing in a bigger house than in another investment vehicle. Can I realize more capital appreciation than the gains in bonds, treasuries or equities. It was a financial decision of how to invest my inheritance to realize the highest ROI, PERIOD.

Whatever you want to believe, you can. My only comment is confirmation bias can be a real beetch! I answered your question, you don't like / agree with the answer, that's fine. There's common knowledge and there is expert knowledge. I am not an expert, but worked in the finance industry in many capacities, and i read the experts when i can to learn from them.

I could say that our purchase of our house in 2018/9 was a brilliant investment decision, with an ROI gain, yada, yada, yada, because I am in finance and that's what i do. .

but i don't, it was an impulse and pure luck. it was nothing more than planning for the future in a good area with a custom design which we love. after that, nothing was planned nor thought to be an investment, even being in an LLC and generating revenue and income.

peace out

I'm not sure that there's any one right answer to the question.

It's certainly reasonable to have a low-interest mortgage to free up cash for investing.

The last mortgage I had was low interest, but I still made conservative investment decisions. I did consider paying the minimum on a 5 year ARM at 2 3/8%. But in that time frame, 2014 forward, I could not find a risk-free investment that was going to significantly provide a better return. Interest on US Treasuries and CD's was far below 2 3/8's. So I paid every extra dollar I had against that mortgage and paid in off in 7 years, and then sold it at a profit and that's the money we used to buy our home in The Villages.

In retrospect, had I invested the money in the stock market, I would have done a lot better than 2 3/8%. But I didn't have the benefit of hindsight when I was making that decision. I also had peace of mind. At the time of the financial crisis, 25% of the mortgages in the country went underwater.

That being said, in a rising interest rate environment, the investing paradigm has changed. If I still had a 2 3/8% mortgage, I would not pay it off early today because I can get a guaranteed 4.66% on the 10 year US Treasury, and the interest I pay on the mortgage is tax deductible if I can get over the threshold for itemized deductions. It's a no-risk decision.

Good luck to everyone on their investments in their homes, the markets and everywhere else.

That was a deal. In 1981 we had a land contract for 20 acres with a small home, rate was 18% and we negotiated to pay only the interest on the loan of $75,000. purchase price until our home sold. Our home at the time was under contract, contingent on the rezoning permission from county on the buyers home. It ended up taking a year for their home to rezone and then close on our home. That was painful but when we sold the home in 2000 for close to $300,000., we felt much better.

insight on housing costs in TV and financial discussion on finance v investing. Good Stuff thanks all!

A Leopard doesn't change its spots. I laugh every time I read the "ex-finance guy" line. I think I'm up to reading it, about 700 times now.

I once provided $10 in financing for my daughter's lemonade stand, so I guess I'm an ex-finance guy, too.

Any other statistics?
 

Hi Craig, do you have any other statistics on home sales/prices, etc. you can share with us? Thank you for putting this together.

Called life ..
 

That’s life for you

It’s happening slowly but it will get a lot harder as they continue building the same boxes everywhere.. I look at used homes values and have to laugh at the current values..

You are correct. It does not make sense, it only appeals to someone wanting to buy here, hoping for a lower price, then praying for prices to rise again once the house is purchased.

Reality
 

The Villages median price on a home from a year ago dropped 6%. Ocala’s median price dropped 9.2%. The crash is undisputed, speculators or investors are really the only ones that need to worry.

The Villages Housing Market: House Prices & Trends | Redfin

Ocala Housing Market: House Prices & Trends | Redfin

This brings great opportunities to bargain as a buyers and who should have been able to do that from the start. The inflexible will be left in the dust. Trending analysis demonstrates the downward movement till next Spring? Wages and inflation should push this in the other direction by Summer 24.

If you go on YOUTUBE and look at Davids in Florida he does a weekly break down of real estate activity in TV.

I disagree TV has a problem with speculators, flippers and AIRBNB short term rentals. The thirty percent increase over two to three years was a benefit to short term investors not full-time residents or individuals. TV has an excellent history of 6% a year in value growth if property values drop by 10% of the 30% they gained in the last few years it only takes incentives from short term investors and hopefully removes some of the speculators from the market. IMHO.

Zillow Home Value Imdex
 

We actually are seeing a decline in home values for last month. The Developer created a huge inventory that isn’t moving. Retirees haven’t absorbed the financial impact of fixed income versus active workforce. Obviously continued active workforce buyers aren’t generally buyers in most cases for a retirement community. This is being exasperated by the continued recall of workers back to their offices.

IMHO this isn’t the time to buy, look to the Spring of 2024. Buyers now would likely see financial loss. The downward correction will last until at least the early summer of next year.

Major losers ironically will be small home Villa owners. Investment properties will take the largest hit since they are the surplus in existing sales and inventory.

If you are a buyer, it’s advisable to use the home value metric of price per square foot and compare it the existing market. Comps are out the window. Banks are savvy to previous problems after 08 with lagging comp value calculations.

Speculators absolutely will take the largest hit during this crash. Be very cautious if you are a buyer.

There's still about 100 names a week showing on the news residents boards in the sales centers so not much has changed.

Lol
 

Great, 5,200 homes sold this year then? Sales maps, county records, the news, WallStreet and the Villages own websites are all wrong. Who knew?:1rotfl::mademyday::a20:

A crash???? I don't know what village you live in or if you even live in one but in our village the majority of the homes listed are sold in a week or two at unbelievably high prices. You also need to put into your equation the number of family homes TV has built outside and sold this year using the builders that would normally build within TV, these homes are not included in the numbers they release. I would not hesitate in buying a home here now nor would I expect to have to accept a lower price to sell my present home, I keep an eye on re-sales and our particular model continues to command a higher price than last year or the year before. There are several designer home models that are in great demand and very few are for sale, 2 that I have noticed are the Woodside and Ivy models, both being 4 bedroom homes. Another thing I noticed in some of the patio villas is the lack of window and patio blinds, lesser amount of sidewalks, smaller patios, no washer/dryers, no glass shower doors in the masters, etc., they have cut back a lot on features and therefore they can sell them at a lower prices with the same profit.

So, where did you get this ax that you seem to continue to grind?
What is your point?

The cost of new homes are definitely up. In Dabney the bonds are high 30k-mid 40k with high interest rates. Land 25k-60k. Taxes 16.8mills. By the time your done building a mid 500k home taxes + bond will be close to 11k. That’s what we pay in the Northeast. Basically no savings when moving like there used to be. Add in higher home insurance and idk. I’m just glad we’re not the people who need a 200k house and are on a strict budget. TV is definitely not what it use to be. Eastport is going to be even worse.