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welcome to Deerwood Realty YouTube channel I'm John Schink founder and managing broker of dearwood realy in St Louis Missouri you know I uh 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 I wanted to go over it with you I thought if they were interested in it maybe you'd be interested in too let's get to the headline it says this is from Yahoo finance it's it's a couple places uh in the uh in the interwebs it says if you buy a home in one of these cities now you won't turn a profit in over for over 20 years and I mean to tell you what a headline to cause uh 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 um have you seen the real estate market over the past 100 years in the United States uh as far as single family homes I realize things are bad right now and they certainly are I mean affordability is a terrible terrible spot right now um inflation has ravaged the home prices uh and it's bad all right it's 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 uh not be able to make a profit but but then the 21st year you will be able to it's just absolutely ridiculous um even during the great financial crisis in 20 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 it might be there might be a purpose to this article U maybe we can maybe we can decipher it together there's a little bit of stuff and then it says a new Zillow an a new Zillow analysis found that new home buyers can expect to spend approximately 13.5 years in their house before they would able to 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 zestate 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 time frame 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 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 like I mean the idea that you can um you know know how these things things are with certainty is just it's confusing to me um it's 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 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 home ownership 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 this time so you may not be able to profit in 20 years but we 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 we you know the roof needs to be replaced I mean that's going to be a significant amount of money um there's always repairs and there's always things that go into the keeping the home up to date and you know remodeling bathrooms and remodeling kitchens I mean there's a lot of expense to owning a home uh no question about it um 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 says home ownership 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 that your your you should treat your house as your piggy bank like that's your best investment vehicle I 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 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 it it doesn't work that way it it just doesn't when you're buying a home right there are these things that you want right then there's these things that you need and it's it's just a balance of those things obviously if you're considering having a large family living in an 800t 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 it should you should always consider a 10-year Horizon when buying a home it says this analysis uh 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 cost 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 uh California and you will make a profit in um the lowest amount of time that seems kind of biased that that seems kind of biased what do you think what do you think should you I mean I think we should always look I 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 uh you know it's not good for my family it's not good for my my uh my lifestyle um that's a bad idea but but we should look at it like if we buy the right home in the right location and we can you know we spend our our gears in the home uh we should we should just be careful that is in a way an investment um and I've always thought to be honest with you that when you're 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 there's something going on that that that is optimistic your firsttime home buyer you're getting married these are the things where you're investing in a community and I and I 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 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 um we are considered one of the more crime ridden places in the country you can argue with the statistics I don't I don't particularly agree with the way it's the methodology is used but I mean this idea that uh that someone can calculate a time in the future when a house will be profitable is silly absolutely silly um 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 um i' I've doing pretty well lately uh would like to have a few more subscribers it's uh good for my ego and uh 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