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Why are the houses so expensive?

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  • #31
    Originally posted by East coast View Post
    Ha - agreed Lordosis
    CordMcNally - yes, we are making generalizations here and you've found the outliers! I'll repeat the point of my comment again in case it already hasn't set in - in response to OPs 'why isn't housing prices going down' - the fact of the matter is that the vast majority (feel free to go find those outliers!) of the people we buy/sell houses from/to are not only doing fine, but those that are Bogleheads/WCI followers are better networth-wise after the past 6 months! The serious economic hit from a numbers stand point is the workers you mentioned in your prior post - service/hospitality types who are not buying and selling our houses.
    Almost an entire industry in the middle of the country is an outlier? I'm assuming you still live on the east coast...

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    • #32
      Originally posted by CordMcNally View Post

      Almost an entire industry in the middle of the country is an outlier? I'm assuming you still live on the east coast...
      You would be incorrect!

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      • #33
        Originally posted by Hatton View Post

        Funny how real estate is local. My house in Alabama cost 585 one year ago and zillows at 695. A condo on the west coast but a 4200 sq foot 4 bdrm 3.5 bath with a 3 car garage in a lovely walkable neighborhood here. Paying millions for a starter home makes it so hard to get ahead.
        Yep. I've now accepted the idea that "Retire Early" to me will be 60. 55 if I'm lucky with how the market goes for the next 20 years and the house I buy appreciates a certain way. Just too tied to family in this area. My father, who earned just barely median income at the time (late 70s through 80's) was able to buy a couple very decent houses in the area. He never earned much more than that, and was able to live comfortably through his life. Now, my spouse and I are both physicians and we are having to save up for YEARS just for a down payment!

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        • #34
          Originally posted by JBME View Post

          anytime I've walked into a dealership in the past and this is one of the first questions the sales guy has asked me ("what are you looking to spend monthly?") I don't answer and at that point don't intend to ever buy from the guy. I also buy with cash so this is an irrelevant question
          I have not bought a car in a while but I think that is a good plan.

          I have always asked what they drive and I will not work with a salesman who does not drive the brand they work for.

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          • #35
            Originally posted by Lordosis View Post

            I have not bought a car in a while but I think that is a good plan.

            I have always asked what they drive and I will not work with a salesman who does not drive the brand they work for.
            That makes it very difficult, particularly if buying used or shopping via internet.
            A dealership/salesman only facilitate a test drive or options being considered. It is a showroom. Price is in writing (I may tell him) and is impacted in no way by the salesman talk or what he/she drives. I ask the questions, insufficient answers will make me go elsewhere or find another salesman.

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            • #36
              Originally posted by Lordosis View Post

              I will not work with a salesman who does not drive the brand they work for.
              Looks like Rolls and Bentley are not in your future car buying plans.

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              • #37
                The thing about HCOL areas is that people by definition want to live there, o/w they wouldn’t be HCOL areas. Which means greater property appreciation over time. Case in point:
                My dad’s cousin bought a 3500 sq ft house walking distance to the beach in Coronado (San Diego) in the late 80s/early 90s. Redfin/Zillow make looking up purchase price easy. $863k purchase, now worth roughly 3.5 million.
                My parents, on the other hand, bought a place in a LCOL suburbanish area about a 2.5-3 hour drive from NYC also in the late 80s/early 90s—original price $150k, now the zestimate is 285k. So 4x appreciation over 30 years in the HCOL area vs less than 2x in the LCOL area. Also interesting—the z-estimate on my parents house suddenly increased 25-30k in the past 6 months.

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                • #38
                  Originally posted by Lordosis View Post

                  I have not bought a car in a while but I think that is a good plan.

                  I have always asked what they drive and I will not work with a salesman who does not drive the brand they work for.
                  woah-well I'm not sure I'd go this far! It's not like ferrari, I would assume, pays their sales guys way more than the toyota dealers

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                  • #39
                    Originally posted by Anne View Post
                    The thing about HCOL areas is that people by definition want to live there, o/w they wouldn’t be HCOL areas. Which means greater property appreciation over time. Case in point:
                    My dad’s cousin bought a 3500 sq ft house walking distance to the beach in Coronado (San Diego) in the late 80s/early 90s. Redfin/Zillow make looking up purchase price easy. $863k purchase, now worth roughly 3.5 million.
                    My parents, on the other hand, bought a place in a LCOL suburbanish area about a 2.5-3 hour drive from NYC also in the late 80s/early 90s—original price $150k, now the zestimate is 285k. So 4x appreciation over 30 years in the HCOL area vs less than 2x in the LCOL area. Also interesting—the z-estimate on my parents house suddenly increased 25-30k in the past 6 months.
                    You just need to buy one or two properties like that in HCOL areas and can retire.

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                    • #40
                      Originally posted by Lordosis View Post

                      I have always asked what they drive and I will not work with a salesman who does not drive the brand they work for.
                      Good thing you aren't shopping for farm tractors.

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                      • #41
                        Originally posted by Anne View Post
                        The thing about HCOL areas is that people by definition want to live there, o/w they wouldn’t be HCOL areas. Which means greater property appreciation over time. Case in point:
                        My dad’s cousin bought a 3500 sq ft house walking distance to the beach in Coronado (San Diego) in the late 80s/early 90s. Redfin/Zillow make looking up purchase price easy. $863k purchase, now worth roughly 3.5 million.
                        My parents, on the other hand, bought a place in a LCOL suburbanish area about a 2.5-3 hour drive from NYC also in the late 80s/early 90s—original price $150k, now the zestimate is 285k. So 4x appreciation over 30 years in the HCOL area vs less than 2x in the LCOL area. Also interesting—the z-estimate on my parents house suddenly increased 25-30k in the past 6 months.

                        Let us assume both properties were bought in 1988. And both house owners earned the same amount of money and had it available to put towards the house. If you father had put down the difference in the down payment, monthly payments, lower upkeep of the house, lower property taxes and other savings from the lower cost house in a Vanguard index fund that reinvested quarterly ( most have returns between 9-11% between 1988 and 2020) the amount he would have at Vanguard will be much, much more than $3.5M

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                        • #42
                          Originally posted by Kamban View Post


                          Let us assume both properties were bought in 1988. And both house owners earned the same amount of money and had it available to put towards the house. If you father had put down the difference in the down payment, monthly payments, lower upkeep of the house, lower property taxes and other savings from the lower cost house in a Vanguard index fund that reinvested quarterly ( most have returns between 9-11% between 1988 and 2020) the amount he would have at Vanguard will be much, much more than $3.5M
                          Yeah, true. Let’s just say the LCOL environment suits my parent’s personalities much more, while the HCOL environment suits his cousin’s personality much more. My dad retired at an age at least 10 years younger than his cousin retired. Both seem pretty happy, and I doubt either would have been happy in the other’s lifestyle. So HCOL vs LCOL, it works out as long as it’s a good fit for you and you’re not forcing yourself in it.

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                          • #43
                            Originally posted by JBME View Post

                            woah-well I'm not sure I'd go this far! It's not like ferrari, I would assume, pays their sales guys way more than the toyota dealers
                            At Verizon I ask for a non apple user. That is harder to find. Luckily I have only been in there as infrequently as I buy cars.

                            I feel it is somewhat like having a pediatrician who never had kids themselves. They can know the technical details of everything and give you wonderful advice but sometimes things are not as realistic as you want expect from a parent themselves.

                            No offense attended to any pediatricians without children. The same could be said for a geriatrician who does not directly care for any elderly people in their family. Or an obstetrician who has never been pregnant herself. Or a general surgeon who has never had surgery himself.

                            All of these people can be very qualified to perform their services but sometimes the right answer isn't always realistic and having been through it yourself can show you those exceptions.

                            ​​​​​​

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                            • #44
                              Originally posted by Lordosis View Post

                              No offense attended to any pediatricians without children. The same could be said for a geriatrician who does not directly care for any elderly people in their family. Or an obstetrician who has never been pregnant herself. Or a general surgeon who has never had surgery himself.


                              ​​​​​​
                              Sorry to derail this but....so you're saying men shouldn't really be OB/GYN because they don't know what it's like to be pregnant or give birth? Don't get me wrong...it's a different experience (mostly providing empathy) in any situation you can give better advice/understanding if you've had the experience, but people probably can still be good at their job even if it means selling products they themselves don't actually use

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                              • #45
                                Originally posted by JBME View Post

                                Sorry to derail this but....so you're saying men shouldn't really be OB/GYN because they don't know what it's like to be pregnant or give birth? Don't get me wrong...it's a different experience (mostly providing empathy) in any situation you can give better advice/understanding if you've had the experience, but people probably can still be good at their job even if it means selling products they themselves don't actually use
                                let me be clear. that is absolutely not what I am saying. I think there are plenty of excellent male obstetricians. In medicine there is tremendous amount of education and training that goes into performing their services and that makes up for any personal life experiences that could aide. However a car salesman has little to any training and their life experiences matter much more in my opinion.

                                What I am saying in regards to the physicians I mentioned is that sometimes people who have never experienced something personally have unrealistic expectations.

                                Even something is simple as navigating the health system. From our end of things it goes quite smoothly but sitting across in the patient's shoes it can be a very different experience and if you have never done that yourself it is hard to fully empathize with that. I would not choose a different doctor based on something like this but when it comes to buying a car or a phone or a home I would choose somebody who has similar experiences to what I am looking for.

                                Then again I and likely just a crazy person who likes to be a pain in the rear-end.

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