Here’s How Much Real Estate $1 Million Buys You in Major US Cities

[Detroitus]

My uncle passed away this past year just outside Detroit in the house his parents bought in 1940, paying it off in 18 years at a thousand a year. Not having to pay off a mortgage and living well with in his means allowed him put some money away. Actually over $78,000 in the rafters alone, nearly twice the value of the house itself. [[Being a depression baby he never really trusted banks, which we still should not).

We are building wealth for few, security for no one in this country. Increasing cities like S.F. are being inhabited by HENRYS [[High Income Earners, Not Rich Yet) who are so focused on their wealth and afraid of falling into the have-nots that they want to squeeze everyone around them, including their maid and gardener, for every little cent. And this over fixation on property values is just feeding into this sickness.

[Bham1982]

If I were a Southern Californian, I'd have my property up on the market yesterday and look at either moving or renting instead. You don't want to be the one holding the bag when the bubble bursts.

They aren't making any more ocean, and the weather could not be more perfect so I would think that Coastal CA is one of the safest investments on the planet.

There is no water shortage in CA; there's a war over allocation [[ag/industrial interests take too much). In any case desal plants are already online in Southern CA and more are planned.

[DetroitPlanner]

They aren't making any more ocean, and the weather could not be more perfect so I would think that Coastal CA is one of the safest investments on the planet.

There is no water shortage in CA; there's a war over allocation [[ag/industrial interests take too much). In any case desal plants are already online in Southern CA and more are planned.

Forget it Jake, its Chinatown.

[SDCC]

Market is robust in San Diego...home prices in my unincorporated city in San Diego county are up, and houses are selling. The market is fairly tight, however there is no housing shortage. In fact prices are as high as they been in a few years...

[EL Jimbo]

They aren't making any more ocean, and the weather could not be more perfect so I would think that Coastal CA is one of the safest investments on the planet.

There is no water shortage in CA; there's a war over allocation [[ag/industrial interests take too much). In any case desal plants are already online in Southern CA and more are planned.

Clearly you haven't been paying attention to the news the past few months. Nearly the entire state of California is under severe drought conditions and reservoir levels are lowering to the point where water restrictions are being put in place and this year's crops likely won't have a harvest.

As far as desalination plants, can they build those plants fast enough? Nobody was planning on a drought.

[EL Jimbo]

Forget it Jake, its Chinatown.

Good movie...Too bad for LA really aren't anymore streams and rivers they can siphon off for fresh water.

Every lake, river, stream, and tributary west of the Continental Divide is spoken for by somebody.

[EL Jimbo]

Market is robust in San Diego...home prices in my unincorporated city in San Diego county are up, and houses are selling. The market is fairly tight, however there is no housing shortage. In fact prices are as high as they been in a few years...

The effects won't happen now, but if the drought lasts another year...two years...or farther then you will see an effect on the housing market. People tend to not like to live where no water is coming out of the tap.

[bailey]

Good movie...Too bad for LA really aren't anymore streams and rivers they can siphon off for fresh water.

Every lake, river, stream, and tributary west of the Continental Divide is spoken for by somebody.

..and about the time it gets really desperate all the talk about "Monetizing" the great lakes will become deafening. the bottled water loophole is already causing irreparable harm to the watershed.... just wait until the lobbyists start talking about how fresh water is inexhaustible and will make the Great Lakes states the new saudi arabia...open that pipeline!

[Bham1982]

Clearly you haven't been paying attention to the news the past few months.

Again, the issue is commercial/agricultural use, not residential use.

Most water in CA is diverted for agricultural use. The only reason there's a "water crisis" in CA is because there's an allocation crisis.

And your doomsday scenario is absurd. There are 20 million people in the LA area, 25 million in Southern CA and nearly 40 million in CA. The economy is bigger than that of France. They will have enough water, no matter what.

The feds will pump it out of the Great Lakes if that's what it takes.

[SDCC]

This drought is scary...think it rained once or twice the entire winter...which is our rainy season...it will be a hot and dry year....starting early in the year and staying hot till next Christmas, without one drop of rain...has already affected my grocery bill...

[SDCC]

Correct...there will be enough h20...What has occurred is that California entered the rainy season and nothing happened...it's be a mild and dry winter...up until the last storm there has been no snowfall in the Sierra mountains this season either...

[iheartthed]

There are an awful lot of analysts who don't think the mega-prices in NY,SF and DC are at all sustainable - they are mini-bubbles waiting to burst

Inflation adjusted, NYC is not really that expensive, historically speaking. It's about the same as it has always been.

[iheartthed]

Yeah... OK.... My late parents bought their house [[near Balduck Park on the far east side) for $14,400 back in 1960. When we sold it in 2011... we got $15,000 for it...
51 years later!!

Yeah, there are plenty of studies that show home ownership is a lousy investment. I think it's more than just coincidence that the cities with the most issues going today are also places with historically high home ownership.

[Islandman]

Don't worry, he won't let a little things like facts on the ground stand in his way.

Water shortages have always been an issue in southern California, even in my 4 years in SD in the early 90s.

I've also found the quality of house you get for the money simply is not worth it. Yes, location, location, but I'm not buying a poorly constructed house for 500-700K [[low prices) to live near a beach, and I love beaches.

[DetroitPlanner]

Yeah, there are plenty of studies that show home ownership is a lousy investment. I think it's more than just coincidence that the cities with the most issues going today are also places with historically high home ownership.

The biggest pay off is you're not paying rent. You are paying yourself with each mortgage payment and you get to deduct much of the interest on taxes. It does however have high hurdles to finance, that is why it is not worth it for nomads and is a calculated risk for non-nomads.

Regarding California, I have to spend a week a year in Orange County visiting my Godchildren. Water isn't even on the radar for the folks who live there. It is a given that it will be there. I have to agree that they have a huge political force in DC and the feds will devote a lot of resources to fix whatever problems they will encumber. In the meantime Michigan is #2 in agricultural diversity [[behind CA) so we will be in for some good times as a result of high food prices. It will also put us into a good spot politically because we [[the great lakes) will literally become the breadbasket for the nation with CA's ag role diminishing.

[iheartthed]

The biggest pay off is you're not paying rent. You are paying yourself with each mortgage payment and you get to deduct much of the interest on taxes. It does however have high hurdles to finance, that is why it is not worth it for nomads and is a calculated risk for non-nomads.

I guess you could argue that you're "paying yourself" but I'm sure that maintenance and taxes wipe out whatever benefit there might be to paying into your own pot versus the pot of someone else. Using Gistok's example of his mother's house, his family bought it in 1960 for the equivalent of about $112K in 2014 dollars and sold it for $15K in current era money. So they lost nearly $100K on owning that house just by the fact that property values did not keep pace with inflation. Add on what they spent in taxes and maintenance and you're thousands of dollars in the hole on that initial investment. And I know some will argue that Detroit is an extreme case but even in so-called high cost cities like New York, real estate over the long run doesn't outplace inflation. So adding in the extra costs of owning it ends up being a money loser.

There are good other reasons to buy a house but investment isn't it for most people.

[Richard]

I guess you could argue that you're "paying yourself" but I'm sure that maintenance and taxes wipe out whatever benefit there might be to paying into your own pot versus the pot of someone else. Using Gistok's example of his mother's house, his family bought it in 1960 for the equivalent of about $112K in 2014 dollars and sold it for $15K in current era money. So they lost nearly $100K on owning that house just by the fact that property values did not keep pace with inflation. Add on what they spent in taxes and maintenance and you're thousands of dollars in the hole on that initial investment. And I know some will argue that Detroit is an extreme case but even in so-called high cost cities like New York, real estate over the long run doesn't outplace inflation. So adding in the extra costs of owning it ends up being a money loser.

There are good other reasons to buy a house but investment isn't it for most people.

One would need the numbers of how many years did they live in the house,what was the monthly mortgage verses renting,what home owner tax breaks did they receive etc. and would they have received a $15k rebate had they been lifelong renters.

In theory any house one buys with a mortgage is paid for a few times over unless extra is sent each month.

If that house was in Corktown or others the sales price would have been probably much higher in the near future.

Detroit is different but in the seventies you buy pretty much what you wanted for a dollar from the city of Mlps,Detroit just seems a few years behind on the catch up part.

[Meddle]

Yeah... OK.... My late parents bought their house [[near Balduck Park on the far east side) for $14,400 back in 1960. When we sold it in 2011... we got $15,000 for it...
51 years later!!

And I bought one on a far west side city limits street in '92 for a little over $40K and sold it in '98 for around $70K which allowed me to buy the place in the country I have now for cash in full with plenty left over.

[Bham1982]

I guess you could argue that you're "paying yourself" but I'm sure that maintenance and taxes wipe out whatever benefit there might be to paying into your own pot versus the pot of someone else.

Property taxes are deductible on your federal taxes, along with the mortgage interest. If you're renting, you're missing out on two huge subsidies/deductions.

There are good other reasons to buy a house but investment isn't it for most people.

What other good reason besides investment? I mean, if you assume your house is a poor investment, then why not rent? Why would you park your money in a depreciating asset?

[Meddle]

What other good reason besides investment?

A place to live where you can more or less do what you want.

In five or six houses I've bought, I never once thought about gain or loss. I was only concerned with not having to answer to Mr. Roper or his kind. If I want to knock a wall out to add a door or window, I can. Paint, carpet, floor tile, track lights, whatever, I can do what I want.

[Bham1982]

A place to live where you can more or less do what you want.

I guess; sorta, but you can do the same thing in a rental assuming you get owner approval, and you can't really "do what you want" in owner housing unless you're living in the ghetto or Little House on the Prairie. What you're describing isn't owner vs. rental; it's neighborhood vs. individual.

Most ownership housing has a long list of dos and don'ts from deeds, covenants, zoning, ordinances, neighborhood associations, etc. You need a permit to do most stuff in the majority of communities. I can't just knock down a tree or do anything to the façade without municipal permits. People can't even park their car overnight outside the garage in many communities.

[EL Jimbo]

This drought is scary...think it rained once or twice the entire winter...which is our rainy season...it will be a hot and dry year....starting early in the year and staying hot till next Christmas, without one drop of rain...has already affected my grocery bill...

It's affected EVERYONE's grocery bill and will only get worse. Salinas County is referred to as the "America's Salad Bowl" because of the diversity and quantity of produce it generates. Salinas County is dry this year and their crop is in jeopardy. That's bad news for the whole country.

And yes, Bham is correct that 80% of California's water is consumed by the agriculture industry and only 20% goes to providing water for the major population centers along the coast. However, populations keep rising. How much more strain will be put on water supplies as more people live there?

Will the rest of the nation blindly give the OK for California to take more water from the rest of us just so they can put 25 million people in a desert? Bham seems to be perfectly OK with this, but I'm sure many, including myself, would not be. That's why the Great Lakes Compact was such a vital piece of legislation.

[EL Jimbo]

Again, the issue is commercial/agricultural use, not residential use.

Most water in CA is diverted for agricultural use. The only reason there's a "water crisis" in CA is because there's an allocation crisis.

And your doomsday scenario is absurd. There are 20 million people in the LA area, 25 million in Southern CA and nearly 40 million in CA. The economy is bigger than that of France. They will have enough water, no matter what.

The feds will pump it out of the Great Lakes if that's what it takes.

The most recent population estimates put California's population at 38.3 million people. They have 2 US senators and 53 representatives in the House.

The combined population of the 8 states bordering the Great Lakes and who are members of the Compact is 84.5 million. They have 16 US senators and 118 representative in the House.

I think it would be a pretty steep climb for California if it ever takes a run at our water.