All Forum Posts by: Jack B.

no need to squabble over the charts above, they are actually the same, both by Dr Robert Shiller at Yale, the only difference is that one backs out inflation. Shiller did his PHD at MIT in 60s w fellow student Dr Jeremy Seigel, whose latest edition of Stocks for the Long Run does a deep dive into US inflation, basically we had none from 1809 till 1945, house prices flat, then post WW2, lots of inflation and house prices up, if you remove the inflation, the red line in last chart above, house prices nearly flat again. Almost all real estate historical studies show all real estate appreciates at rate of inflation. The famous Amsterdam study looked at bills of sale for >400 years on canal front homes in Amsterdam, and price appreciation exactly mirrored inflation rate, ie residential real estate or any real estate never goes up in Value only in Price because the currency its denominated in loses its value at same rate. As real estate investors we carefully surf the micro-fluctuations over several years and use leverage to amplify them. 

Quote from @Marcus Auerbach:

Quote from @Jack B.:

Quote from @Greg Scott:

Quote from @Jack B.:

What the inflation adjusted home price history does not account for is home sizes. A lot has changed since the 1960s.

Most of the boomers grew up in a 1,200 sqft ranch with one bathroom on 0.1 acre. They also had only one car and a stay at home mom raising 3.6 kids.

Today the average new built home is about 2,500 sqft, often 4 bed 3 bath for 1.9 kids. They have multiple cars, both spouses are working at least one job and they have multiple cars. Of course this costs more.

Every comodity market has ebbs and flows, that's why people observe it as cyclical. But there is no pacemaker that drives 18 year cycles or any other number of year cycles.

Home prices hinge on cost of labor and cost of materials plus cost of land. You can follow that metric. Existing homes are driven by supply and demand. We have underbuilt housing for 14 years following 2008 and now we are 3-4 million homes short (some banks say 5), that will take a decade to catch up as a nation.  

However, some markets like TX have already built massive amounts of new homes (126,000 last year if I recall correctly), while my home State Wisconsin has built not even a tenth of that. In fact new construction in Milwaukee is almost non existant, so we have a chronic housing shortage (both for rent and for sale) but very little additional inventory. They build large homes in the suburbs, but with cost of labor and materials where they are these house are twice the median price for our market and provide no real inventory relief.  This is just an example how local markets can behave totally different.

Home prices are what we call "downward sticky". You can say they go up like a rocket and come down like a feather. Sellers won't sell if they don't get what they expect, they just stay put and wait for the market to catch up (except 2008, when they were forced to sell). If they have the choice, they will just wait until inflation has brought wages up enough. We see a lot more of a cycle in home sales volume than we see with home prices - prices are much more linear than volume. 

 There have been many changes in the nature of housing over the last century. Yet the prices have continued to regress to the inflation adjusted levels. And people continue to believe what makes them feel good about real estate.

Your rental income earned in Idaho will be subject to Idaho state tax. 

It won't cause any type of double tax. Only your rental income "earned" there will be subject to idaho state tax, not your WA earned income. 

Keep in mind tax preparation fees as well as you grow as you will now have  state tax return needing to be filed as well as the federal. 

Quote from @Jack B.:

No, it's not just my part of Seattle, we are the 6th most expensive housing market in the country, not Detroit or "SE Michigan" where you can buy a house for the price of a car. Interest rates have a bigger impact where houses are a million and up...

FWIW, I don't actually own any rental property in Michigan.  I own property all over the country, including some expensive markets. 

I still disagree with your premise.  Every year since 2012 I've been hearing the next housing crash is just a few months away.  If you study history, it is not a phenomenon that occurs regularly, at least not compared to the lifespan of a human being.

When prices increase well above inflation (Case Shiller index) they adjust back down. And current prices are way above that level. Exactly when that correction will happen is difficult to say. But it will happen.

I think we see the correction happen when rates are lower, surprisingly. I know every economic belief of lower rates= higher asset prices. I just think the higher taxes, insurance, cost of house upkeep will make the guy who locked in at 3.5% more amenable to sell at 5% than having to come sub 4%. We're not that far from 5%, we're one little cliff like fall in a domino(probably one we don't see) to create a big rate cut and unlock a lot of sellers. 

By then, I don't believe the buyers or "demand' is truly qualified to defeat the inventory increase. Much like we've mentioned on this board quite a few times, if rates do come down in a harsh fashion it's for a net negative underlying reason. Likely going to be impact the average Rupert & Rachel trying to buy, therefore, killed buying ability with the unlocked inventory. We are also at such shortages(not as bad as a 2 years ago), but bad enough that supply shortage being the sentiment on housing price strength is no longer a bullish sentiment. Infact, in any almost and every case there'll be an increase in inventory making it very bearish. 

2026 is not a bad year to predict that correction, but way too hard to tell. I do think something hits the fan this year, I just don't believe it's what we are seeing on the horizon(commercial RE, regional banks) it'll be something we're totally missing. 

Garbage. Do you see a crash every 18 years in this chart? 

If demand is low, it is only in your part of Seattle.

@Tiffany Roberts 

Congrats on snagging those five rental properties. What comes next really hinges on where you're at financially - your income and net worth specifically. If you're already in the accredited investor club, well, then I'd say it might be time to consider moving away from those individual rentals and leaning more into syndications and private placements.

Anyway, if your net worth is north of half a mil, or even a million, then you might want to hop on the LP train sooner rather than later. Personally, back in 2015 and 2016, I was juggling 11 turnkey rentals. Let me tell you, tenants can be a handful. And I reckon you're feeling that too.

You're not alone – even with professional property management, I had my fair share of eviction dances and other major hiccups. It just sorta pulled me away from what I was best at, especially when I was clocking in at my engineering gig trying to progress my career.

A bunch of folks on these forums cover the whole spectrum, from newbies to 1m net worth plus investors. For those just starting out, diving into rental properties makes sense. But if you've hit a point where you're kinda tipping the scales, that's when it's worth considering a shift and step into that passive investor zone.

My perspective shifted when I started mingling with other accredited investors. Surprisingly, a bunch of them were saying goodbye to their rentals too. Maybe I'm just nudging you in that direction, like those folks did for me. But hey, just don't repeat my "buy 11 of them" move.

Why not just 1031 into a DST and avoid the management hassles. Graham