[xchaotic]

It’s really simple- real estate is the only casino where you are almost guaranteed a leveraged payout in the long run. So as soon as houses became an investment, the way to maximise profit is not to go for the cheapest but for the most expensive house you can afford.

[DwnVoteHoneyPot]

I thought people stopped thinking like this after 2008/9. If not, maybe 2023/24 will teach them. When people buy a house and sell for more, they don't include property tax, mortgage interest costs, maintenance costs in their mental calc of profit. Sometimes they include renovations costs, sometimes not. They also don't factor in their next house they buy is inflated too.

[maccard]

> I thought people stopped thinking like this after 2008/9

Why would they? It's not like it stopped in 2008. If you bought at the _peak_ in 2007 and held, in pretty much every area in the UK you're currently _way_ up, particularly if you leveraged yourself.

> When people buy a house and sell for more, they don't include property tax, mortgage interest costs, maintenance costs in their mental calc of profit. Sometimes they include renovations costs, sometimes not.

And people who make this argument often fail to consider the alternative costs, e.g.renting (which here in the UK is likely to be ~30% greater than the cost of mortgage interested to cover affordability checks), and leverage. You know what beats a 10% return on a 20k investment? A 100% return annually on a 20k investment.

For a £200k property in the UK, you could buy it in 2017 with a 20k downpayment, ~£1000 in fees, on a mortgage with 2% interest rates, and it would _very_ likely be worth £240+k right now even without any renevation work.

> They also don't factor in their next house they buy is inflated too.

You're assuming that people are selling to buy bigger houses, or that the rises are spread equally across all pricing bands. If you take my parents as an example, they bought a family home in late 80s/early 90s, sat on it for 30 years, and then downsized to a smaller home. The "inflation" of their house was far more than the inflation of the house they moved into. Also, the ceilings are loosely capped with earnings (since 2008 here at least) - stress tests for lending mean that in practice for the last few years, banks have been lending a maximum of 4.5-5.5x of borrowers income, so the cap is loosely set based on that.

[rascul]

A lot of people in the US who bought shortly before the US housing crash in 2008 paid a lot more money than what they can sell for. Sometimes they can't even get half.

[TrapLord_Rhodo]

This is plain false. I would love a zillow link to show one single example of a house in 2008 being worth more than it is today. Housing in most of the US is up 20-40 % in the last two years alone and the crash in 2008 was around 20-40%.

[ypzhang2]

This is trivially easy: this home was sold in 2007 for 2.9m and was just recently solid for 1.8m 7 months ago. Top of market took a huge beating in 2007-2008.

https://www.zillow.com/homedetails/162-N-Wynstone-Dr-North-B...

[TrapLord_Rhodo]

Your trivally easy remark seems handpicked. look at some of the other homes in that area. None of them have performed like that.

Take a look at this one: https://www.zillow.com/homedetails/610-Signal-Hill-Rd-North-...

[silpheed5]

Depends on the area. The bay area home prices started to exceed the 2007 bubble prices around 2015 and are well above the old peak still. https://www.bayareamarketreports.com/trend/3-recessions-2-bu...

[inferiorhuman]

I'd start by looking at places that had huge real estate bubbles like Las Vegas or are far enough away from anything interesting (like all the shitty Bay Area suburbs).

For a lot of not great reasons I've a condo in one of those shitty Bay Area suburbs. Four units in this complex were listed for sale this year. Two sold for a bit under 500k, and two are still asking well over 500. So yeah I'd say the upper bound currently is $500k. Pre-COVID prices were in the low 400s.

I've checked out the property tax bills for my neighbors, and, yes, some have an assessed value of well over $500k. They've been underwater for about a decade.

[lobocinza]

If something is down by 20-40% it should be up by 25-67% to return to it's initial value.

[TrapLord_Rhodo]

there was more than 2 years in between 2008 and this year.

[bumby]

I never quite understood this, as housing is generally a market you can’t exit. So what’s the long term investment goal, to buy big now and downsize later for a profit?

[maccard]

Or equity release, but yes. Downsize/release equity for a sizable profit, and don't have to continue to pay market rents to continue living.