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Patrick's Housing crash article - response and expansion from a different perspective
invite response
2010 Feb 23, 3:20pm 4,520 views 24 comments
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I'm slightly less of a conspiracy theorist here. While your arguments about republicans might be correct, I think the reasoning is different here. I think it's like you're playing a baseball game, and one of your outfielders is useless. The other team keeps hitting the ball to him, and you complain "christ, they're making us lose!". No, they've figured out where to hit hte ball to win.
It's completely possible to play by the same rules they play by. I don't believe they're hiding their strategies, they aren't doing anything underhanded. (Some people might be...) but the general person probably is not. Which means we're just not playing the game as well as we could.
Right now, the asian cultural method is working pretty well. But think about the game monopoly. If you said "I'm not buying *anything* until I've got enough money to handle all worst possible cases, then by the time you were ready to buy, all properties would have been taken. You would just be going around, paying out to others, hoping not to land on boardwalk. You wouldn't have any possible chance of ever winning the game. In this case, taking no risks really hurts you. If you held currency through major inflationary periods, you would be wiped out as well. If you were at 90% there for buying a house, and inflation kicked in, you would be screwed.
There are strategies for all types of economies, no one method will keep you going forever. Any asian who bought a place with cash for 2M and the place is now worth 1M has lost 1M. Anyone who bought a place for 2M, with 0% down, has probably lost nothing, after they walk away (assuming no recourse..) Again, asian mentality wouldn't have worked here. Renting and not buying would be the only case for success during our housing boom, or buying and selling at the top.
People who leveraged the hell out of themselves and bought in 2000 and sold by 2007 got a great deal. Now people who held out to buy all in cash have great deals. People who bought all in cash in 2007 have seen their wealth decrease by 50% or more. People who bought in cash in 2000 have done "ok" but missed the entire boat. I wouldn't call them successful, they missed out on a decade of massive earnings. While they might have made 500K on their single house, the guy who bought 10 houses and sold by 2007 made 5M!
Cultures take about 2-3 generations to fully assimilate, I'm betting that many 3rd generation asians are in the same boat as most of the people caught up in the bubble. The extremely rich ones who bought with cash, well they were rich to start with. The ones who saved forever, will lose that mentality next generation.
Done!
2010 Feb 26, 2:18am
The Dot Com bubble crashed because Old and Big money missed the boat.
They get real nervous when Gladys the temp secretary becomes rich enough to buy the company they work for over night.
Big business sold the Tech industry short, and Greenspan corrected that for them, by Declaring the Tech industry defunct. Don't forget, Greenspan's international title was "The Wizard" back then he could have said Gold is worthless and people would have believed him. They had their life savings tied up in Tech Stocks in their 401ks' after all.
Now tell me, if you believe there was a tech market crash. Why are tech stocks still the biggest winners on Wall Street. And look at a snap shot of 1999 and 2010, what is the difference between those to pictures.
Ah the players, major corporations, non of this garage start up IPO business.
Just because Petco and Etoys was stupid idea, doesn't mean that the tech industry as a whole was a bad investment and over valued.
Google and Apple today are far more over valued than most of the 2K tech crash victims.
I think Warren Buffet said it best.
When cars came out, car companies weren't good investments, 1 in 100 succeeded. We have GM/Ford/Chysler now, but there were hundreds of other car companies back then, all trying to make it. He knew horse carriage companies were all in trouble though, and definitely not a good investment.
The same applies for tech. 1 in 100 succeed and do well. When a tech does well, it does well. But 1 in 100 does well. He was able to see which companies would be effected by the internet and avoid them, but figuring out which tech companies would strike gold wasn't something he was willing to risk money on.
If you were involved in companies during the tech bubble, it was pretty obvious those companies couldn't be sustained. There wasn't some conspiracy to bring them down, they brought themselves down. The ones who came down, often supported companies like cisco, and that brought cisco down for a long time.
Look at lottery winners. How many end up continuing to work and/or going bankrupt. Wall street doesn't worry about those people, they'll bring themselves down eventually. They will spend their money on products that these people have investments in, and it all goes full circle.
LAO
2010 Feb 26, 5:00am
Google and Apple today are far more over valued than most of the 2K tech crash victims.
That statement is very wrong... Apple's P/E is below 20.. that's a fairly fair P/E for a company growing and innovating at the rate it is... Google's P/E is a little higher at 25.
Both these companies are so huge and powerful... Show me a 2K tech company with 40 BILLION in cold hard cash like Apple that was pulling in 3-4 billion in profits each quarter! You can't... Most of the over-valued tech companies were speculative traps... Apple and Google both have huge profit margins and enormous earnings to back up their valuations.
Now tell me, if you believe there was a tech market crash. Why are tech stocks still the biggest winners on Wall Street. And look at a snap shot of 1999 and 2010, what is the difference between those to pictures.
I don't agree with the quoted statement above though. If you look at the long term charts, you'll see that NONE of the tech companies have ever returned back to 2K levels, not even returned to half their 2K valuation. Only one exceptions are Apple, EBay, and Amazon. All the rest bit the dust or were eaten up by their bigger brothers. So my point also is, none of housing or banks will ever return to those bubble 2005-2007 levels for a long time.
pkennedy made some pretty good points.
Also again, after reading all of everyone's points, I have to argue that it's still deregulation that is the primary cause for both bubbles. Although it's still a little murky to me, what exactly was the catalyst to cause the dot com bust in Jan. 2000 and March 2000. What was the turning point? Was it really Greenspan talking that scared everyone out of the market? Same with the latest recession bottom and rally starting March 9, 2009. What exactly was the turning point to change big institutions and private equity's minds to start loading up on stocks?...seems unclear to me, was it just because Obama signed the stimulus package program? I still remember the headlines on March 6th, "Stocks tank on fear Banks will be nationalized, but the government states that they will not nationalize banks", yet the market was still tanking. I remember thinking, why isn't anyone BUYING if the government stated that?
simchaland
2010 Feb 26, 8:15am
Having worked in the dotcom industry during the dotcom bubble and having been there I can say with all certainty that the bubble burst because most of the businesses for whom I worked (I was a contractor) had businesses constructed in the clouds with no real foundation or legs to stand on. They all looked cool and innovative and anything with a dotcom caché at that time was deemed "the latest and greatest and will make you rich quickly." I kind of like to think that it was like a gold rush or the roaring '20s... Lots of people jumping on the bandwagon with little actually supporting long-term success.
Most of it was fluff, air, marketing, branding, and "pizzazz." I used to laugh all the way to the bank after finishing a design/coding job making a site look all pretty after being paid a king's ransom to do the work knowing that the business whose website I just designed didn't have any real legs to stand on.
Venture capitalists were foaming at the mouth, stark raving mad to invest in anything and everything dotcom...
I was actually doing this in Chicago and it was called "The Silicon Prairie" at the time. Chicago crashed at the same time and just as hard as San Francisco and Silly Valley. Everything disappeared overnight and suddenly my friends and I had to try to find "real jobs" or just party and pretend like nothing was happening (which some did). I escaped to John Deere in Moline, IL, a business that had a real business plan, customer base, and a solid foundation. I lived across the river in Davenport, Iowa. The job was there for easy pickings because the dotcom designer/coder/developer snobs in Chicago, New York, and San Francisco wouldn't take jobs in "flyover" states where there was allegedly "nothing." I was actually paid even more per hour there than I was ever paid in Chicago so I was living like a king. Then 9/11 took care of that contract, but I digress...
There were some truly stupid and insane ideas spawning empty businesses that actually got venture capital and paid me nice sums of money to do my handiwork. I took the money and ran, knowing all the time that it all had to end at some point. That's why I took my exit strategy and that's how I eventually landed here doing what I do here which is nothing related to Tech or to being a "Corporate Whore."
Those times of the Old Wild Wild Web ((www) isn't that cute?) were fun while they lasted. I sure had my good run of it. I made and spent fortunes and transformed my life into something meaningful when it was time to "grow up."
It just seems that some of my peers went on to the next bubble - Real Estate - and some of them are crashing again looking for that next bubble.
I was in my twenties then and had a great time during the dotcom bubble. It was a perfect time to be young and tech savvy. And it was fun while it lasted. But like anything built without a foundation, it had to fall. After all, if you work for people who don't have a solid business plan, no customer base, and an impossible business model then you know you shouldn't sign on permenantly and you should remain a contractor, take the money, run, and plan to settle somewhere when it's all over and the dust settles unless you want to ride the next wave and crash and burn again...
Cultures take about 2-3 generations to fully assimilate, I’m betting that many 3rd generation asians are in the same boat as most of the people caught up in the bubble. The extremely rich ones who bought with cash, well they were rich to start with. The ones who saved forever, will lose that mentality next generation.
much more likely the next gen.. 25 years or less, which most are already. And your correct, they are in the same boat as everyone else.
Misstrial
2010 Feb 28, 7:57am
Sorry, but you are wrong in your analysis regarding Asians:
Homeownership Fell in '08; Asians Hit Worst
http://abcnews.go.com/US/wireStory?id=8634199
And as long as our government is determined to prop up property prices, then the charade will go on.
~Misstrial
Done!
2010 Feb 28, 8:26am
That statement is very wrong… Apple’s P/E is below 20.. that’s a fairly fair P/E for a company growing and innovating at the rate it is… Google’s P/E is a little higher at 25.
If I recall correctly, it was an international NO! NO! back in 2K to use child labor.
That killed Kathy Lee Gifford's name over night.
Apple Reports Child Labor Was Used to Build iPhones, iPods
http://www.dailyfinance.com/story/company-news/apple-reports-child-labor-was-used-to-build-iphones-ipods/19376517/
Bap33
2010 Feb 28, 11:09am
""Americans put up with troops killing innocent Muslim children for oil…""
bwahhh ahhhh haa ha ha ha ....... ha.
#1) nobody kills more arab babies than the cowardly non-troop arabs.
#2) children have no religion until they meet the age of responsibility -- well ... except for arabs if you insist.
#3) Lord Barry wants you to report for your Brown Shirt fitting, first thing tomorrow.
On the other stuff I agree. The freaks that want tech do not care about much else.
4X
2010 Feb 28, 3:09pm
Sorry, but you are wrong in your analysis regarding Asians:
Homeownership Fell in ‘08; Asians Hit Worst
http://abcnews.go.com/US/wireStory?id=8634199
And as long as our government is determined to prop up property prices, then the charade will go on.
http://www.whitehouse.gov/the-press-office/president-obama-announces-help-hardest-hit-housing-markets
~Misstrial
I dont agree that we should prop up housing, however, the economy for some odd reason has never rebounded until housing has turned around. This is "political theatre' as we have hear over the past 2 weeks....no way the prices are going to stabilize....only until they match the incomes and the demand will the housing prices stabilize.
http://finance.yahoo.com/news/7-Stressors-Sapping-the-usnews-2236123833.html?x=0
More proof to substantiate my thesis
That statement is very wrong… Apple’s P/E is below 20.. that’s a fairly fair P/E for a company growing and innovating at the rate it is… Google’s P/E is a little higher at 25.
If I recall correctly, it was an international NO! NO! back in 2K to use child labor.
That killed Kathy Lee Gifford’s name over night.
Apple Reports Child Labor Was Used to Build iPhones, iPods
I just have to comment on this...because it really does make me sick how people can justify or simply ignore some things when it doesn't suit them. Steve Jobs is one of the biggest assholes on the planet, and for all his $$$$$$ he's still outsourcing everything to make MORE billions. Somehow people's morals go out the window if it messes with their ability to own the latest i-crap...
LAO
2010 Mar 21, 4:00am
I just have to comment on this…because it really does make me sick how people can justify or simply ignore some things when it doesn’t suit them. Steve Jobs is one of the biggest assholes on the planet, and for all his $$$$$$ he’s still outsourcing everything to make MORE billions. Somehow people’s morals go out the window if it messes with their ability to own the latest i-crap…
Did u even read the article? Apple blew the whistle on their own factories child labor infractions... And to be fair the "children" were 15 and lied and said they were 16... Probably forged paperwork... The kids parents should be the ones in trouble in that situation. Name ONE electronic manufacturer in the US that doesnt buy parts from overseas! Ive also heard Steve Jobs is an asshole to work for because he is so DEMANDiNG and a perfectionist.. Most people who are THAT successful are! Show me a NICE down to earth person who is the 13th richest man alive!
Â¥
2010 Mar 21, 5:55am
Somehow people’s morals go out the window if it messes with their ability to own the latest i-crap…
Chinese have the "comparative advantage" of rock-bottom labor prices -- the minimum wage in Guangdong is $150/mo, and that's after this year's 20% pay rise due to inflation there.
What you call "crap" I call "wealth". Wealth is that which satisfies human needs and wants. Try communicating on the internet without "crap".
Back in 1983 Steve Jobs actually set up production lines in Fremont for the new Mac. That really didn't turn out so well compared to the Taiwanese and E Asian manufacturers.
Free market capitalism will seek and profit from every advantage it can. Generally this is good but of course left unregulated this becomes a race to the bottom.
The pegged exchange rate with China has been one of the bigger macroeconomic challenges facing this country since 1995 or so.
Chinese have the “comparative advantage†of rock-bottom labor prices — the minimum wage in Guangdong is $150/mo, and that’s after this year’s 20% pay rise due to inflation there.
Another advantage is that most Western consumers don't care and are too addled by slick-looking products with built-in-obsolescence to ever consider the matter of their existence, let alone why they maybe shouldn't subsidize the fat cats with their anemic wages. If you want to be disgusted with someone, start with the audience.
If you want to be disgusted with someone, start with the audience.
I am...and our worshiping of those with money merely for money sake. How many billions does one need? By the behaviors of people like Steve Jobs... never enough. So you exploit more and more, and give less and less, for more and more profit for yourself.
They/re spinnin!!
http://www.youtube.com/watch?v=GOCu45gI9-k
Tenouncetrout says
Google and Apple today are far more over valued than most of the 2K tech crash victims.
That statement is very wrong… Apple’s P/E is below 20.. that’s a fairly fair P/E for a company growing and innovating at the rate it is… Google’s P/E is a little higher at 25.
Both these companies are so huge and powerful… Show me a 2K tech company with 40 BILLION in cold hard cash like Apple that was pulling in 3-4 billion in profits each quarter! You can’t… Most of the over-valued tech companies were speculative traps… Apple and Google both have huge profit margins and enormous earnings to back up their valuations.
Frankly, much of Google's success comes from the in roads made by others in that industry, Yahoo, Excite, Alta Vista, Northern lights, Inktomi, and of course Infoseek. Once many of them failed Google simple continued where the others left off. Their revenue pre-2001 was 25% growth quarter over quarter. After the others fell apart, their revenue went from 100M a year to over 500M a year. The same was true with Salesforce come, success came from killing off their competition, Siebel.
Apple nearly died off in the early 90s. Their product no matter how great was down to 5% market share, they lost their corporate users and clients by early mid 90s.
Show me a NICE down to earth person who is the 13th richest man alive!
Certainly not the 13th richest, but were the early wonders of SV. Former AMD founder Jerry Sanders, some what eccentric at times ,but you can have a beer with him on Fridays, as was the case with Tandem Computer founder James "Jimmy" Treybig. Jimmy rather talk about Chevys and Fords with the machinest and mfg folks during Friday beer bash than talk business with the suits. Had a chance to work for both back in the day. You wont find these kinds of people around anymore!
Having worked in the dotcom industry during the dotcom bubble and having been there I can say with all certainty that the bubble burst because most of the businesses for whom I worked (I was a contractor) had businesses constructed in the clouds with no real foundation or legs to stand on. They all looked cool and innovative and anything with a dotcom caché at that time was deemed “the latest and greatest and will make you rich quickly.†I kind of like to think that it was like a gold rush or the roaring ’20s… Lots of people jumping on the bandwagon with little actually supporting long-term success.
The Dot.com bubble was too much money chasing too few good ideas. The same could be said about the housing bubble, too much money chasing too few real or qualfied buyers. Neither was in the long run viable.
I am…and our worshiping of those with money merely for money sake. How many billions does one need? By the behaviors of people like Steve Jobs… never enough. So you exploit more and more, and give less and less, for more and more profit for yourself.
Jobs and the rest were examples of "accidental empires" back in the 80s.
@Snoopy
Pretty simply put, it doesn't matter what the government says at that point. The fact that government said anything was enough. Obviously "something" had to be done. Obviously "something" was hidden all this time. Obviously "something" was going to happen to straighten out this mess.
All those "somethings" caused a run. When you've got unknowns, you sell. If you don't know whats happening in a business, you sell. That is the cause of a sell off. When people get a chance to sit back and think and reorganize, they stop the selling process. They need time to calm down. This is the reason that the stock market has shut off valves, if the market drops 500 points in a day, trading is halted for awhile. We've got housing credits, foreclosure processes that stop foreclosing and tarp to get people to stop and think for awhile, and ultimately calm down, so they realize the world isn't ending.
@simchaland
I also watched the tech boom and bust. I was wondering how the whole ponzi scheme was going to pan out as well. In the end, even companies with earnings (cisco, dell, hp, internet providers) all were hurt. Cisco was making money hand over fist, but it was due to the fact that badly funded companies were buying equipment for equipment, and would never be returning to buy more because they were headed for bankruptcy by the time the next round of purchases were needed.
Many of these companies were holding things together, hoping for the best in 2000. They all started going belly up around the same time, but they held a straight face, hoping they would get a buy out or more money. Then a few of them failed, and then a few more, and all of a sudden they realized there wasn't any more money coming. Some hunkered down and made it. Others had been at full burn rates right until the end and couldn't do anything to change their business model in time, or to even cut back spending before they were out of cash. Others knew they were going belly up, and wanted to just "hide" behind someone much bigger going down. Instead of being a page 1 story, they were a simple line on f'dcompany.com!
As far as child labor goes, it's impossible to fully understand where all of your parts are coming from. The management in those companies might hire child labor even though someone like Kathy Lee specific said don't. How would she ever know? They might have 3-5 factories and they send her to the "nice" ones, while hiding other factories from her. When land and labor is so cheap, anything is possible to hide. Even when it's your own employees doing the hiding.
From the link above a comment from a reader off SFGate worth mentioning...
GreenMoney2/15/2010 2:46:15 PM
THIS ARTICLE IS SOOOOO STUPID!!!
Asians only have a "few" last names, and these last names are VERY common.
Half of the Vietnamese I know are "Nguyen". And most of the Koreans are "Kim".
While White last names are not as common among their people.
Whoever write this article needs to get fired.
!! DITTO !!!!
OK, here's my big spiel on a more macroeconomic and historical view coming from a SF Bay Area resident...you may find holes in my thesis nor is my writing as clean as Patrick's article, but I'm just going to spell it out from my perspective as a response to Patrick's Housing Crash article. Granted, I haven't gotten around to reading everyone else's posts yet.
1. There's no reason why real estate values should appreciate much in the next few years.
2. There's a big backlog, from my observation...not a whole lot of real estate was sold in 2009 nor listed. The ones that were listed were short sales and most never closed. They were only delisted only to be relisted again later as a short sale again or REO.
3. Most single income 1st time homebuyers will buy a small cheaper home below the 500K range...homes/condos that you don't have to buy, but alternatively can rent easily....a 2bd/2bth or 3bd/3bth...due to plenty of inventory.
Here's my take on the situation.
The dot com boom(Bubble) happened because of hype and deregulation of businesses. It busted because it was Wall St.'s giant head fake on Main St.(a pump and dump). After the dot com bust, a lot of people were broke and also a lot of people were flush with cash. What did they do with that cash?...buy themselves homes. What did the govt (i.e. SEC) do to fix the dot com bust recession..regulate Wall St. and corporations more (i.e. SOX), and they tried to stimulate spending in the housing market instead (not just by low interest rates), but the primary cause of the housing boom(Bubble) being deregulation of the banking industry and hype once again. All in a sudden sub-prime loans were bringing false buyers into the market with inflated loan amounts...driving up home prices. If you didn't sell your home in 2007, you didn't learn to sell your stocks in 2000...this was the banking industry's second head fake on Main St. Why did the banks deregulate?...because the banks/wall st. is in bed with Capitol Hill. Oooohhhh, no wonder the banks/Wall St. got bailed out but not Main St. This head fake wasn't designed to let the banks take a loss, it was designed to let the middle class take the fall by playing with their funny money. So I see, the homeowners take the blame and punishment by ruining their credit, even though it was the banks' fault and poor business decision to qualify bad loans. Now the govt is patching up their mess by regulating what they de-regulated (back in the 70s/80s/90s it was a requirement to put 20% down), and now once again loans are harder to get, and there are no more new qualified buyers in the market to drive up prices besides 1st time homebuyers. There is no reason for there to be any rise in demand or buyers in the next several years. All the defaulted ex-homeowners have their credit ruined for 7 whole years, more renters coming to the market. The banks destroyed these lower income people's lives by manipulating their credit, for their own financial gain. The stock market will recover long before the housing market does, because people might not have credit, but they have CASH...institutions, corporations, private equity, and Main St...all have cash and want to put it somewhere. Which is why my original plan was to bet on the stock market first, and then use the proceeds to buy a home later. The govt won't increase interest rates until they see inflation in the stock market...that hasn't happened yet. One of the main reasons why I bought a home in 2009 was because somebody else told me to diversify my investments, but now in hindsight, I believe that was a mistake...a little too early to buy. Better to keep saving your $$$ by renting/living at home longer, instead of investing that $$$ in a sinking ship or at best break even. The more you can save now, the more $$$ you'll have later to put that towards a down payment or into your rainy day fund. Lastly, housing prices and inflation have outpaced the average income...income levels have not changed much in the past 10 years. I used to think housing was affordable on incomes back in 1998 and 1999, but not after housing started to climb in 2001...and income levels dropped from unemployment, etc...
All in all, I believe the past decade has been more rampant than ever with market manipulation and corruption. Keep in mind, Republicans have primarily been in power during this past decade...helping the rich get richer off of the middle/lower class. The only way you can win in this market is if you #1 buy near the bottom, #2 buy all cash (cash is king, don't be indebted), #3 find a high income source, #4 find a deal through a foreclosure or help-u-sell or craigslist, etc. If you're wealthy, you come out on top (as income property) if you buy all cash and not use other people's money unless the interest rate is much lower than it is right now, currently 4.75% on a relatively big home loan.
Also, why buy something as permanent as real estate, when there's no such thing as job security / job stability anymore in the past decade?...now due to the internet age and corporate deregulation from govt (so the business owners can make more $ and payoff our politicians), outsourcing has become mainstream and employee salaries stopped appreciating due to the constant need to change jobs.
From another perspective, America is a credit based economy, while China is still primarily a cash based economy. Look who's economy is better shape right now?....cash is king, credit/debt is NOT. China is America's lender now.
In Patrick's article he mentions foreign buyers briefly.
http://www.sfgate.com/cgi-bin/blogs/ontheblock/detail?entry_id=57123&tsp=1
Yes, asians are the primary buyers of California real estate, but the vast majority of them are local residents, not foreign investors. Asians save and rely more on cash, than on building credit...that's how they grew up in asia....so culturally it is a way of life. Also, just because they're buying doesn't mean it's prudent, it's just culturally they believe in real estate as a tangible investment. Yes, there are a few foreign wealthy buyers of US real estate, but the ones who aren't residents aren't holding onto the property...they are buying "good deals" if they can find them with all cash and quickly turning around and reselling them at market prices. They have no need to buy and hold, especially if they're not residing in them.
Here's a solid example, the home I just bought, was resold to me by a Chinese investor...he picked it up dirt cheap from a foreclosure auction (probably used all cash), and turned around and sold it to me at market prices 2 weeks later.
My home in Dublin 400K, rent goes for about $2000 or $2100 for my 3bdrm/3bth townhome/condo. Total cost to own is $2400/mo (mortgage+tax+insurance+hoa or PITI). I only put 20% down, if I had put down more, then I'd break even (not including closing costs...10K to buy, 20K to sell). The sister complex next door is mostly 2bdrm/2bth smaller condos selling for 350K, and yet rent goes for about $2100. Dublin is a nicer than average neighborhood....and prices are still inflated here.
It was stated that rental income property is starting to look good in areas where housing has really crashed, i.e. Brentwood, Pittsburgh, even Las Vegas...but we are making the assumption that one can rent in those remote areas where there are no jobs or in those ghetto areas. And in those areas, property is so cheap, it makes sense to buy these homes all cash as a retirement home right now and rent it out in the interim.
Homeowners being wealthier is only pure perception, and unfortunately, for a single man like me, women do not understand that...they equivocate a homeowner as a better source of security than a renter...but most don't realize that most homeowners these days owe big debts....and don't really own...the bank owns a majority stake (80%). Yes, we own the equity and get to live in the house, but they charge the interest. That makes us only shareholders. It's like saying I have ownership of Microsoft when I only own 100 shares of their common stock.
The other thing is, homeowners with families grow even more deep debt amassing college loans for their children, because all their savings are tied up in their home and 401K. Granted most of those college loans are passed off to their children to pay off. A college loan to a private school for 4 years amounts to about $200K, that's virtually another home loan. Renters don't have any massive loans, and probably will never need one, or maybe a smaller one for their child's college. The difference here is that the payoff from a good education will often produce returns far quicker than the equity from home appreciation.
Welp, that's my long winded response. But everyone learns from each other...and felt I needed to document all my points down, perhaps others can learn from my lessons learned...
Snoopy
#housing