Prices on retnals keeps going up

as soon as inonada wakes up he's going to try and prove that it was actually more expensive in 2006.

Yup, renting is for suckers. Short term vs. long term thinking.

So if I bot an apartment in 07' thinking i'd stay for a at least 5 years and wanted to sell now, I would be better off? humm. if I wait 2 more years(or7, 2+5), prices will be higher than when I bot you think?

rangersfan, you forgot the tumbleweeds when you attacked Jim. The tumbleweeds joke is funny, keep using it.

Oh, what is entenuate?

rangersfan, did it scar you, having a dad that sucked cock for money?

Brooks, way to make a general conclusion from a isolated cherry picked scenario. Basically, 99% of owners make a shitton of gains. Yes, if you bought in 2007, that might not be the case (yet).

"Basically, 99% of owners make a shitton of gains."

Actually, over a statistically meaningful period of time, owning residential real estate has provided returns of 1-2% over inflation. THis has based on data for the past 100 years or so.

Actually, over a statistically meaningful period of time, owning residential real estate has provided returns of 1-2% over inflation. THis has based on data for the past 100 years or so.

And that's a reasonable go forward expectation....

over a statistically meaningful period of time, owning small cap equities will provide you with 11% return. THis has based on data for the past 100 years or so.

So what do I invest in now? That is the question.

"Actually, over a statistically meaningful period of time, owning residential real estate has provided returns of 1-2% over inflation. THis has based on data for the past 100 years or so."

Not really. If you actually look at the data 1890 to present, you only get 0.3% above inflation:

http://www.ritholtz.com/blog/2011/04/case-shiller-100-year-chart-2011-update

You'll only get 1-2% if you do something stupid, like choose a 5-10 year period. Or else if you use the peak of the bubble in 2006 as a reference point, as RS likes to do. But even the WWII bottom of 1942 to the 2006 peak only produced a 1.3% return beyond inflation.

bingo!

Ionada - yes, you are correct -- the data i was using was also Shiller's, but pre-crash. I hadn't updated it in some time. Thank you for posting the link to Shiller's work.

Brooks2 - it depends on your time horizon and your appetite for risk. Nothing will outperform a diverse basket of equities over time. But the volatility will be significant at times, so that isn't the place to invest your 15 yr old's college money.

and what does your 100 year data on owning real estate in Manhattan?

Why is it so difficult to understand that Manhattan/NYC/NY metro area remarkably improved since the 1970s, and the increase in Manhattan real estate, and the real estate radiating outward, increased as well as a result. Had crime not decreased, quality of life increased, and the city further globalized, we would have had average real estate increases.

Going forward, is NY improving? I don't know.

1890-1941 real estate increases? I don't remember. I'm glad Barry Ritholtz does. I'm sure he's got a reliable data set. When was the television first in commercial use? late 1920s?

Joey, Hunter - you can dismiss the data, but the reason it is relevant is that...wait for it...real estate is a mean reverting market. Blink twice if you know what this means.

Under what situations does the mean apply? The average person is born, reaches the mean, then overshoots and dies... mean reversion at work?

The average life expectancy has been increasing overtime, so with mean reversion, we ought to watch out for a mass group croaking pretty quickly. In fact, if that happens, it would be consistent for mean reversion for global population which now exceeds the mean global population since the start of humanity.

Mean reversion seems like a bitch. Real estate prices seem to be the least of our worries under this mean reversion rule.

Also, it was cold today, colder than the mean temperature. Now I know that in 6 months I'll regret my coldness complaints, but why did we differ from the mean to begin with? Why doesn't the temperature just stay at the mean, instead of differing from the mean at all?

Note that Shiller's method probably overstates capital gains, since he is unable to fully correct for increases in quality over time. He measures repeat sales, but over time, buildings depreciate and are updated, and the updates are almost certainly more important. Most of Manhattan's older buildings have electricity, for example, and over time, many are likely to acquire washer/dryers, central air conditioning and other mid-20th century advances.

Also, of course, just because real estate tends to track CPI inflation quite closely over time is no reason to think that if you pay bubble prices you will receive average returns. Unless you think that capitalist markets in real estate development are terminally broken, you should expect real price declines from here: in functioning markets, prices tend to track costs (not the mean whatever that means in a data set that is constantly changing and not normally distributed).

http://www.city-journal.org/2012/eon0214ng.html

In Summary:
excerpt
"Neither Toy nor the Times editors did their job here—unless their job is to sell real-estate advertising."

Yes Azil the New York Times is a joke. No news flash there.
Shocking they are in the toilet.

If they had half a brain they would have bought Streeteasy 3 years ago.

urbandigs here...is anyone else's user account keep changing?