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Welcome to Deerwood Realty YouTube channel. I'm John Schink, founder and managing broker of Deerwood Realty in St Louis, Missouri. You know, I came across an article today, and I found it to be just ridiculous, but it was also sent to me by some of my friends and some of my viewers, so I wanted to go over it with you. I thought if they were interested in it, maybe you'd be interested too. Let's get to the headline. It says, this is from Yahoo finance, it's a couple of places in the interwebs. It says, "If you buy a home in one of these cities now, you won't turn a profit for over 20 years." And I mean, to tell you what, a headline to cause, well, is it a self-fulfilling prophecy? Number one, do we just, are we just going to because we wrote it, does that make it true? Have you seen the real estate market over the past 100 years in the United States, as far as single-family homes? I realize things are bad right now, and they certainly are. I mean, affordability is in a terrible, terrible spot right now. Inflation has ravaged the home prices, and it's bad, alright, it's not good. But the idea that there's somebody out there that can take their crystal ball and see that in 20 years, you know, and when we get into it, there'll be more specifics in different locations, but in 20 years, you will not be able to make a profit, but then the 21st year, you will be able to. It's just absolutely ridiculous.

Even during the great financial crisis in 2008-2009, people that held on seem to be back to whole, at least by now, and it hasn't been 20 years, it's been about 10. But you know, it might generate clicks, right? It might be there, might be a purpose to this article. Maybe we can decipher it together. There's a little bit of stuff, and then it says, "A new Zillow analysis found that new home buyers can expect to spend approximately 13.5 years in their house before they would be able to sell it at a profit, over the purchase, mortgage interest, and sale cost that went into the home." Now, Zillow is famous for their Zestimate. It was used during their I-buying program, where they managed to lose over $400 million in just one quarter. So these are definitely people you should be taking the advice of for letting you know that it's going to take you at least 13 and a half years to make a profit on your home. It says in some cities, that timeframe jumps to 20 years or more for homeowners to be able to make a profit.

Now look, I have no idea what's going to happen in 2 years, 4 years, 8 years, 10 years, gosh, in 20 years I'll be 66 years old. That's a long time. It says, "The estimated time before a homeowner would be able to turn a profit is projected to be shorter in many relatively expensive markets because they have seen consistently strong growth." So, like Austin, right? Let's just say, Austin's a big growth in Austin. And so, like right now, if you bought a house in Austin, you won't make any money for 20 years, or you'll may make it in 11 years or 10 years because Austin is growing. Now we don't know what's going to happen to Austin in five years. I mean, that's the thing that drives me nuts. Could you have predicted realistically that San Francisco would turn into the place that it's become, and how many years did you expect for that to happen? I mean, the idea that you can know how these things are with certainty is just confusing to me.

It's to me what you're doing is you're keeping people who may buy a home, who may have the best of intentions, who may just want to raise their family and have some place to call their own, and you're scaring them away from buying a house, and I think that's wrong. But let's continue. It says, "Regardless of how long these projections show it will take before a homeowner would be able to sell for a profit, it's important to note the many benefits of homeownership this analysis does not account for, and also the opportunity cost of renting otherwise that is not included in this analysis." So they're not even taking rent into consideration during this time. So you may not be able to profit in 20 years, but we know you won't lose more money than renting.

I mean, as a real estate broker, you would think that I've got this huge bias to owning a home, but no. I mean, even in my own home, we've had to replace things. The roof needs to be replaced, I mean, that's going to be a significant amount of money. There's always repairs, and there's always things that go into keeping the home up to date and remodeling bathrooms and remodeling kitchens. I mean, there's a lot of expense to owning a home, no question about it. But to say that there's a payback in 20 years, or 10 years, or 5 years, hell, if you bought a house two years ago, you're probably making a profit now if you're selling. That's how ridiculous it's been. I don't expect that to happen for everyone, but you know, this has been a crazy, crazy time, and who's to say that something more strange wouldn't happen in the future.

It says, "Homeownership is the biggest avenue for long-term wealth building for many households, and the fixed payments from a 30-year mortgage insulate households from annual rent increases that can make financial planning a challenge." You know, I have always been uncomfortable with this idea that your house should treat your house as your piggy bank, like that's your best investment vehicle. I suspect that more than 50% of the people that make payments on their home are making the payments just to stay in their home. They're not making these payments as some sort of investment into a better future life. That's just my opinion.

It says, "In this expensive market, it's crucial to find the right home that will fit a buyer's needs for years to come." Well, when isn't that the case? When do you look at a house and say, "Oh, it's a cheap market, I better find the right home that will fit my needs for years to come"? It doesn't work that way. It just doesn't. When you're buying a home, there are these things that you want, right? Then there's these things that you need, and it's just a balance of those things. Obviously, if you're considering having a large family, living in an 800 square foot house doesn't make any sense ever. It's just bizarre to me that it's like, well, you need to think about buying a house and making sure that it fits your needs for years to come. It should always be that way. You should always consider a 10-year horizon when buying a home.

It says, "This analysis took into account several factors, including typical home values, forecasted home value increases, assumptions for closing costs, agent fees at the time of sale, home maintenance costs, and interest payments, as well as varying down payment percentages and maintenance costs." You got two maintenance costs in there. So, let's see, the longest purchase to sale price, it will take you 22 years and 10 months in Cleveland, Ohio. It will take you 21 years and 6 months in Baton Rouge, Louisiana. It will take you 21 years and four months in El Paso, Texas. I mean, just random. And then here's the places where it won't be an issue: Miami, Florida. I mean, they haven't seen a boom for the last two, three years. That's crazy. Los Angeles, California, interesting. Los Angeles is doing well there. How many—look at this, actually, San Jose, San Francisco, San Diego, and Los Angeles—apparently, just buy a home in California, and you will make a profit in the lowest amount of time. That seems kind of biased. That seems kind of biased. What do you think? What do you think? Should you—I mean, I think we should always look—I think we should look at a home as an investment in the sense that yes, if I buy a home in a terrible neighborhood, and you know, it's not good for my family, it's not good for my lifestyle, that's a bad idea. But we should look at it like, if we buy the right home in the right location, and we can spend our years in the home, we should just be careful. That is, in a way, an investment.

And I've always thought, to be honest with you, that when you're buying a home, it's a period of joy. Like, it's an optimistic thing. You don't buy a house because you think something bad is going to happen. Right? You don't buy a house like, "Oh, this is terrible. I'm going to buy a house." No, you normally—it's a life-changing event. You got a raise at work, you're having children, you're growing your family. You know, there's something going on that is optimistic. Your first-time home buyer, you're getting married. These are the things where you're investing in a community, and I truly believe you do invest in the community where you live when you do decide to buy a home there. So I can see it that way.

As far as this payoff, if you're looking for a way to profit in real estate, and it's going to take you 20 years to do so, like, you're not looking at the right investment in the right way. Okay, this—you know, this is kind of bizarre. It's also interesting, like Detroit didn't make the list. Having lived in Detroit, it's kind of fascinating to me that didn't make the list. St Louis didn't make the list. We are considered one of the more crime-ridden places in the country. You can argue with the statistics. I don't particularly agree with the way the methodology is used, but I mean, this idea that someone can calculate a time in the future when a house will be profitable is silly. Absolutely silly.

What do you think? Am I wrong? I mean, put it in the comment section if you get a chance. If you haven't done so in the past, would you please subscribe? I've been doing pretty well lately. Would like to have a few more subscribers. It's good for my ego, and it makes it seem like this is something I should be spending my time on, at least it justifies that.

So with that, I'm going to head on out. Thank you for watching. Thank you for listening, and I'll catch you on the next one.