Housing market's gonna crash

I know a guy who only rents. Well, I know a few people who only rent, only one has a stupid reason.

One couple is in their mid-50's. Her mother was living with them and had severe health issues. He lost his job in 2009 and was out of work until the end of 2011. So they had no savings and while they did have a house, it got foreclosed on and they lost it. They were basically paying rent on a house with mom's gubment cheese. But he ended up getting a new job and they decided that they didn't want to start all over again with only a decade to retirement. So they rent because it's cheaper and easier than buying again.

Another guy is an IT contractor and he rents because he does very specialized work so he's essentially moving every 5-6 years or so for work. His wife doesn't mind it at all 'cause they've lived in Italy, Thailand, Malaysia, Zimbabwe, Brazil, Canada, Spain, Germany, The U.K. and several places in the U.S. including Hawaii. Owning doesn't make sense to him 'cause he needs to be able to get up and move quickly. He does get paid crazy well, though.

Another guy "rents" a house from himself 'cause he's a tenant of an LLC he and his brother own. The LLC is a property management company. They own a couple dozen units, several are beach properties. All he does is work at maintaining them through the property management company. So while he actually owns the company that owns his house, he's a tenant and gets good rates on insurance and stuff because he bulk buys through the property management LLC. He did it because it keeps him from being liable and sued into oblivion if something goes horribly wrong. He told me he can't be sued if he doesn't actually own anything and the LLC has a limited liability and he can somehow dissolve the LLC without having to liquidate the assets if they get in to some legal trouble for some reason. It's all convoluted and feels shady to me but a real estate attorney told me it was legit. So whatever. Works for him and he's got waaaaay more money than me so what do I know?

Another guy rents because he feels his time is more important and he can earn more in an hour than he'll pay someone else to do something for him. This is the dumbest rationalization I've ever heard. He's been in the same job, not, like, the same industry, literally the same job since 2009. No upward movement, no raises, no nothing. His rent on this house in a fancy area is about $3100 a month. So he's paying almost $40K a year in rent plus utilities, plus renters insurance, plus whatever else. He also has two leased cars. He's been living this way since I've known him and before that too. He's been in his current house for 7 years now, going on his 8th. When he started renting his rent at the current place was $2800 a month. In 7 years, he's paid at least $226,800 (probably closer to $250K with the yearly rent increases) for a town home that was valued at $269K when he started renting. If he had gotten a 15 year mortgage on the $269K house at 2017 interest rates, he'd be able to pay it off and own it outright within the next 2 years if he was throwing $3100 a month at it. Last I knew, he was bringing in about $140K a year so his take home is around $90K-$95K a year. He swears he's saving money but I don't know how. His utility bills electric, gas, water, phones, internet and TV plus his gaming subscriptions total is over 1500 a month. The two leases are over 1200 a month. His rent is 3100 a month so he's at 5800 a month, at least, for just living and renting everything. He's bringing in about $8K a month after taxes. 72.5% of his take home pay goes straight to someone else to rent things he depends on and pay the bills for maintaining them. This doesn't include his food bill or his essentials bills or anything else like that. He goes to concerts all the time, at least 2 a month, he's out to eat every weekend and he's always taking trips to other countries so he can put stuff up on his Instagram account for the social cred. I don't know what he's going to do for retirement but he's only got about 20 more years in the workforce. I just....the lack of foresight there and the indignation when challenged about it that he gets is astounding. Besides all that, his $269K townhome in 2017 is now worth $425K. 40% increase in value for just sitting there with a mook in it. But his time is SOOOO much more valuable. Doesn't have a single piece of wealth building asset to his name. I hope he doesn't outlive his savings.


Ownership is rough. You gotta put on your big boy pants and get to being a responsible adult. But there's having a lot of money in a savings account and then there's wealth building. Savings accounts are nice but even Dave Ramsey tells you not to hold all your money in a savings account. Investing in markets (stocks, funds, money, etc), buying real estate and even owning a business whether it's a primary or a side business makes your money that you've made work for you and return far more on an investment than sitting there in a bank account making millions for the bank while you get a pittance in return while being charged a fee to be able to access your money.

I mean, think about it. Say you bought NVidia stock 'cause you're a gamer and you want to support one of your favorite hardware manufacturers. Say you bought it for $6.50 or so a share back in early 2020. 300 or so shares for $6.50, that's about $2K worth of stock in NVidia. A year later that stock split in a 4:1 ratio. It was valued at $14.40 a share before the split. But you now have 1200 shares of NVidia stock. After the split it was now worth $16 or so a share. Your $2K investment is now worth about $19,200. Cool. Then AI hits and NVidia stocks starts rising. So you keep riding that wave and by June of 2024, it's worth 131.88 a share. Your 1200 shares are now worth $158,256.00. Then it splits in a 10:1 ratio. You now own 12,000 shares of NVidia stock. Immediately after the split, you share value drops to 125.31 a share. Big whoop. Those 12K shares are still worth $1,503,720.00. Congrats, bro, you're a millionaire. But wait! There's more! NVidia is still skyrocketing to a valuation of $153.13 a share.

$153.13 x 12,000 = $1,837,560

A $2,000 investment at the end of 2019 instead of buying that new HUGE TV on the Black Friday Sale turned in to almost $2M in 5 years. That's only a blip in the hundreds of billions in valuation that NVidia has right now. So you could cash in all of that $1.87M and it'd barely register on the stock valuation. There's a lot of gaming nerds out there who have had similar success and are now actually wealthy because of NVidia right now. You gotta play the long game. You don't build wealth with just a paycheck but you can become very wealthy if you're smart with what the guy you work for says you are worth instead of what you are actually worth.

They say a man never got rich working for someone else. That's baloney. I see it all the time. But those people who are getting rich working for someone else? They did it through investment vehicles like investment funds, stock/share ownership, property ownership, all of which they got by leveraging the income they made. You just have to have some insight looking forward and play the long game. The idea that your time is valuable is true but to put a number on it that someone else said it's worth is stupid.

billbillw wrote: »

That's pretty much what I said, but you added almost 1000 words.

As usual, though, it wasn't clear to me that you grasped what I was talking about so I tried a deeper explanation in the hopes that you would comprehend it the second time around.

WilliamM2 wrote: »

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billbillw wrote: »

That's pretty much what I said, but you added almost 1000 words.

Over 2000 words. And you never mentioned predicting the future for investments.

Meanwhile, I'm in an area where house prices continue to go up, just like they did in the last housing "crash".

And pot shots from the cheap seats from a guy who clearly didn't read any of it. Otherwise, you would have seen that I was using the Nvidia story as an example of riding out the long game. It was not a future prediction at all. In all honesty, it was dumb luck. The story is actually true only the timeline is different. The guy bought Nvidia stock in 2001. He bought it because his dad's graduation gift to him was $25K and he had to invest it. At the time, Nvidia was about $2 a share. He bought 5,000 shares because it was on track to double that in 5 years. The only reason he wanted to buy it was because he liked Nvidia better than ATi. So he wanted the nerd cred to be able to say he owned Nvidia. Seriously. That was why. That's like your wife winning a football pool because she liked the colors of the team she chose and they just happened to go all the way. He never sold it, he just let it ride. 5K shares turned to 20K then to 200K. They are worth over $22M now. He has enough shares in Nvidia to be a voting shareholder and he has a portfolio worth 9 figures over all from all the stocks he bought with that $25K in 2001. He doesn't "day trade" or short anything either. He makes investments in stocks showing steady growth and then sits on them for years.

And your house's value doesn't matter a hill of beans unless you sell. Housing market prices affect those who own more than one property or those who are making a move. The housing market taking a dive, nationwide, hurts everyone even those whose "house prices continue to go up, just like they did in the last housing "crash"." and those who don't even own a house.

Which is the point of this thread. Not to gloat about anyone's wealth or house values. It's a discussion on the volatility of the housing market since about 2015 and where the pandemic bubble is heading.

If your house went up in value, good for you. Mine didn't and it hurt for a couple years there.