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Why Your Home Is Not A Good Investment – Raleigh, NC

Joseph Coupal - Monday, December 22, 2014

I've come to believe that for millions of Americans, a house is a large liability masquerading as a safe asset.

Not just because of the recent housing crash, although what an eye-opener that was.

But because after watching real estate implode last decade, the average American still believes their home will make a great long-term investment. The best long-term investment, even.

As my colleague David Hanson wrote last week, a recent Gallup poll shows that Americans now believe housing is the best long-term investment, beating out stocks, bonds, and gold.

They might be right, only because the average stock investor does so poorly that a home may indeed be their best investment. But housing has historically been a terrible bet for people who think it will return more than inflation. To show you what I mean, I have to tell you about my visit to Yale economist Robert Shiller's office a year ago.

Shiller — who won the Nobel Prize last year — is regarded as the world's foremost housing expert. He has married historical data with deep insight into human psychology to offer some of the best housing analysis anyone's ever produced.

Not only is Shiller brilliant, but he's one of the nicest guys I've ever met, easy to talk to and puts things in clear, easy-to-understand language. As we sat in his office eating donuts and drinking coffee, I asked him, in the broadest terms I could, what homeowners should expect out of their homes in the long run.

"The housing boom in the early 2000s was driven by a sense that housing is a wonderful investment. It was not informed by good history," he said. Most people now agree on that much.

"If you look at the history of the housing market, it hasn't been a good provider of capital gains. It is a provider of housing services," he explained.

By that, he means a home gives you a place to live, a place to sleep, a place to store your stuff.

But that's it. Americans believed — and still believe — that the value of their home will increase above the rate of inflation.

And that, Shiller says, is wrong.

"Capital gains have not even been positive. From 1890 to 1990, real inflation-corrected home prices were virtually unchanged."

Shiller — a pioneer of behavioral finance and one of the calmest, levelheaded economists I know — becomes animated at this point, almost irritated. Debunking the notion that housing is a great investment is one of his favorite topics.

Housing prices, he argues, could decline over long periods of time — decades, even.

"Why is that?" he asks me. I really don't know.

"Well, I think you have to reflect on the fact that it's done it before. Home prices declined for the first half of the 20th century [adjusted for inflation]. Economists discussed that back then. Why are they going down? The conclusion was ... of course home prices go down. There's technical progress. They are a manufactured good. Back in 1900, homes were handmade, you know, craftsmen. But now, in 1950, we can get all kinds of power tools and prefab. And [construction workers] were just better in 1950 than we were in 1900. So of course prices will go down."

Shiller also mentions that certain homes go out of style over time, dragging down prices. "What kind of houses will they be building in 20 years?" he wonders aloud. "They may have lots of new amenities. They will be computerized or something in some way that we can't anticipate now. So people won't want these old homes."

His animation peaked with a line I'll never forget.

"To me, the idea that buying a home is such a great idea is just wrong. They may very well decline for the next 30 years in real terms."

Real home prices may decline for the next 30 years.

The best thing about Shiller, and what sets him apart from your typical pundit, is that he has data to back up every point he makes.

In the early 2000s, Shiller wanted to see what nationwide home prices looked like over the long term. He was shocked to learn that no one had ever actually put that data together.

He dug around in libraries, crunched the numbers, and came up with an index that measured nationwide home prices going back to the 1890s.

This was a first. "The strange thing is, nobody else had ever made a plot like that. I can tell you, no one had ever seen that picture," he told me, shaking his head in disbelief. "People plot all kinds of data. Why wouldn't someone have done that? I still haven't figured it out."

The chart, measuring nationwide home prices adjusted for inflation, was this one:

From 1890 — just three decades after the Civil War — through 2012, home prices adjusted for inflation literally went nowhere. Not a single dime of real growth. For comparison, the S&P 500 increased more than 2,000-fold during that period, adjusted for inflation. And from 1890 to through 1980, real home prices actually declined by about 10%.

The reason Shiller warns that home prices could fall going forward is the simple observation that, heck, they've done it in the past. It's what history tells us to expect out of our homes. The entire idea that home prices increase in real terms over time is a figment of the 2000s housing bubble.

It's important to reiterate what a home does do: It provides a place to live. A place to raise your kids. A place to spend the holidays with your family. A place to barbecue with your neighbors. Even a place to rent out. That has tremendous value, of course. Shiller owns a home. He'd buy another if he needed one. "Basically, if I were in the market right now because I wanted a house, I would buy a house," he said.

The problem is that Americans expect more out of their homes than just a place to live. In 2010 — years after the housing bubble burst — Shiller's surveys showed Americans still expected their home to appreciate by more than 6% a year over the following decade. If history is any guide, that's probably about twice as fast as they'll actually appreciate by. Despite the housing crash, people still expect stock-like returns out of their homes.

Since a home is most Americans' largest asset, you can see how this becomes a problem. When you have inflated expectations about the largest asset you own, you walk down the path of financial disappointment. The value of American homes fell by nearly $7 trillion from 2007 to 2011. People who thought their homes would return enough to pay for retirement learned that Mr. Market carries a sledgehammer and takes no prisoners.

Everyone should live in a home they can afford and provides the lifestyle they desire. But assuming it's a superior long-term investment, one to rival stocks, is dangerous. There's just no evidence backing it up.

I think people run into two problems when thinking about the value of their house.

A home is typically the asset people hold the longest. They sell stocks after a few months, but keep a home for years, or decades. When you own something for that long, the returns you think you earned can be overwhelmingly due to inflation. The Consumer Price Index has increased six-fold since 1970. If you bought a house for $30,000 in 1970 and it's worth $180,000 today, you've earned nothing after inflation. You think you've made a fortune, but you haven't gone anywhere. Add in property taxes, insurance and repairs, and you're down.

Yes, you got to live in the house. That's huge. But it doesn't make living free.

If you have a mortgage, you're paying interest. If you own outright, or have a lot of equity, there's an opportunity cost of having money tied up in an asset that barely keeps up with inflation when you could have had it in something else, like stocks.

Say you and I both have $250,000. I buy a house for $250,000 cash, and you rent a house across the street for $1,000 a month and put $250,000 in the S&P 500. After 20 years, I'll have a house worth $200,000 in real terms, and you'll have a portfolio of stocks worth $330,000 adjusted for inflation (assuming the market's average real rate of return, and a 2% inflation rate on my rent payments). The difference between those two amounts is the opportunity cost of owning a house (and I didn't even include taxes, repairs, or insurance). In reality, it's hard to rent the same house for 20 years straight, and a lot of regions don't offer attractive rentals at all, so this probably isn't feasible. But it shows that the decision to own can be more about lifestyle and stability, not financial returns.

So, by all means, own a home. Just keep your expectations in check.

For more information on apartments in Raleigh, NC, contact Auston Grove Apartments.

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Business Insider

Santa Charity Bar Crawl Around Downtown Raleigh, NC

Joseph Coupal - Tuesday, December 16, 2014

If you live in an apartment in Raleigh, NC dress up like Santa this weekend and do some good for a charitable cause while having festive fun. The Santa Charity Bar Crawl brings you to five of your favorite bars located between the Moore Square and Fayetteville Street area. Come out and party with hundreds of Santas, Santa's Little Helpers, Elfs, and other Christmas clad revelers as you visit some of Raleigh's best nightlife venues!

Check in on Friday, December 19, at Rum Runners from 8-845pm. Costume contest for best Guy and Girl costume. You must be 21 or older.

Drink Specials include:

  • $3 Domestic TBA
  • $5 Jack Honey Shots

The best part of all is: it's all for charity!

Donate a toy for a local charity, Memories for Marcus and receive $10 off your ticket price. Donations must be at least $5 value. NO TOY? No problem proceeds from your ticket price will go to a local single mother of 3 battling severe health issues.

Tickets without a donation will $15 in advance and $25 day of (proceeds going to single mother of 3 battling severe health issues).

Strongly encouraged to dress up as many others will be in costume.

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More information - raleigh.carolinanightlife.com

Tree Lighting, Holiday Festival, and Other Events Around Raleigh This Week

Joseph Coupal - Tuesday, December 09, 2014

If you live in an apartment in Raleigh, NC you can enjoy all types of holiday fun this week around town. Festivities begin with the lighting of luminaries and musical performances on the Capitol grounds. The Governor and First Lady will light the state Christmas Tree during the traditional ceremony on the south plaza. After the ceremony, visitors are invited inside the Capitol for an open house to take in the decorations. The Junior Woman’s Club of Raleigh will host a holiday festival featuring music and children’s activities on Union Square, in the museums, and on Bicentennial Plaza.

Wednesday

The Capital City Clauses will hold the 21st Annual Jingle Ball at Marbles Kids Museum from 6:30-10:30 p.m. This event is always so much fun and it helps raise money and collect toys for The Salvation Army's Christmas Cheer program. Just bring a new, unwrapped toy valued at $20 or more or $30 cash or check to get in.

Get into the holiday spirit with "A Christmas Carol" starring Ira David Wood III. The show plays Raleigh Memorial Auditorium through Sunday and then the DPAC Dec. 18-21.

Thursday

The Governor and First Lady will light the state Christmas Tree during a ceremony at the State Capitol. After, visitors will be invited inside the Capitol for an open house. Also, the Junior Woman's Club of Raleigh will hold a holiday festival featuring music and children's activities on Union Square, in museums and at Bicentennial Plaza. The fun starts at 5 p.m.

Friday

Vivian Howard, star of PBS'  "A Chef's Life" and owner of Chef and the Farmer in Kinston, will be at Southern Season in Chapel Hill for to do cooking demos, sign autographs and  meet with fans. She will be there from noon to 3 p.m. and will also be chatting about her line of gift baskets for the store.

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wral.com

Raleigh Winterfest and Outdoor Ice Skating Rink

Joseph Coupal - Tuesday, December 02, 2014

The Raleigh Winterfest, a 10-week holiday event you can enjoy when you live in an apartment in Raleigh, NC. This Saturday, December 6, head downtown for the festival.

The Festival

On Saturday, December 6 from 3-10 p.m., Fayetteville Street will transform into a winter wonderland complete with Santa's village, a carousel, a sledding hill, horse-drawn carriage rides -- and, of course, the ice rink. At 7 p.m., Raleigh Mayor Nancy McFarlane will light up a 40-foot holiday tree with 14,000 LED lights.

There will also be exciting live performances featuring this year's headliner, Grammy-award winning bluegrass legend Peter Rowan.

Adults can socialize at the popular beer and wine garden. This year the festival is introducing Taste of Downtown, with a variety of cuisine form downtown Raleigh eateries, and the Gingerbread House Tent, where you can marvel over creative candied creations and vote for your three favorites.

The Ice Rink

The crown jewel of Winterfest is the ice skating rink, which helps everyone in Raleigh ring in the holiday season.

Dates: November 22 - February 1
Location: City Plaza at the 400 block of Fayetteville St.
Admission: $9 for adults and children

Throughout the season, the rink will host special programming to enhance the outdoor holiday experience.

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abc11

Reconsider Renting - Raleigh, NC

Joseph Coupal - Monday, November 24, 2014

For as long as I can remember, homeownership has been a home run on the American Dream scorecard.

When I graduated from college, my grandmother gave me two choices: live with her or buy a home. In her mind, to rent meant I was a failure financially.

“When you rent, you get nothing for your money,” Big Mama would lecture.

Since I didn’t have enough money saved for a home, I lived with my grandmother, who had been my guardian since I was 4. I hated that year of ridiculous rules. No shoes under the bed. Don’t turn the television knob to the left, only to the right (this was before remote controls). And Big Mama fretted I would be late for work, so she would wake me at 6 a.m. for a shift that didn’t start until 10 a.m.

After a year of this, I decided I had to move. But I still didn’t have enough money saved to buy a home. So I rented.

Every time I called my grandmother, she would berate me about renting. By the end of my lease, I had saved enough to buy a condo, thanks to a first-time homebuying program. I’ve never rented since.

I tell you this story for two reasons. I understand where my grandmother was coming from. Owning a home was the only way she knew of creating wealth for herself and our family. She didn’t trust investing in the stock market. I joke that the only bond she ever owned was the adhesive for her dentures.

However, in the 2000s, the benefit of homeownership became twisted and too many people were persuaded to pay insane prices and take out unsustainable mortgages in the quest to fulfill the American Dream.

Then the housing crisis smacked people back to common sense.

I’ve never been supportive of stigmatizing renters as financial failures. Although it’s true that homeownership has been the path to prosperity for most American families, it’s not the only path. If you buy a home before you are economically ready, it can drag you down financially. As we saw with the drop in housing prices, you can be left without a home and your savings.

A just-released study by HelloWallet, a company that provides online financial help as an employer-provided benefit, puts the debate of homebuying versus renting in perspective. If the cost of renting is less than that of owning a home and you save well, you can accumulate just as much wealth as homeowners do, the study contends.

“Buying a home is akin to a rite of passage, simply something people do when they can, regardless of their circumstances or market conditions,” Aron Szapiro, a consumer finance expert for HelloWallet, writes.

From 2005 to 2012, all home prices collapsed by 42 percent, Szapiro calculated using Case-Shiller housing data.

So, the question HelloWallet set out to answer was this: Could renters build more net wealth than homebuyers, while taking on much less risk, by forgoing homeownership and investing the yearly savings from renting in a tax-deferred retirement plan?

They could indeed, the study concluded.

“Over half of current homeowners, or over 40 million households, purchased their homes during time periods when average homebuyers would have been better off renting and investing,” Szapiro noted.

Of course, the key is that renters need to have the discipline to invest the savings they get from renting.

HelloWallet listed a number of findings in its study, but two stood out for me:

    Be careful about the bias built into “buy-or-rent” calculators. Many of the free online tools that are supposed to help determine if buying a home is right for you are heavily biased toward homeownership, the report points out. The calculators often compare homeownership to saving in an interest-bearing bank account earning low returns. “Since homes are a risky asset, an alternative investment should also present some risk, such as an investment in a mix of stocks and bonds aimed at building long-term wealth for retirement,” Szapiro says.

    Don’t overestimate the tax advantage of homeownership. An overwhelming majority of homebuyers — 80 percent — listed the federal mortgage deduction and other tax benefits as a reason to buy rather than to rent. Yet more than half of homeowners with mortgages don’t even take the deduction because they don’t itemize their federal tax returns. “We find that federal tax benefits for homeownership go largely to high-income families in high-cost areas, and even for these families, the benefit is fleeting,” Szapiro says.

For me, the take-away from the report is that buying a home is not a no-brainer. It never was. There’s much to consider and the old rules of thumb aren’t always true, including assuming that renting is a detriment to wealth-building.

For more information on renting apartments in  Raleigh, NC , contact Auston Grove Apartments.

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roanoke.com

Santa is Coming to Raleigh, NC This Week

Joseph Coupal - Wednesday, November 19, 2014

If you live in an apartment in Raleigh, NC, Santa is coming to the Holiday Open House at a fun event this week. This will surely get you into that holiday spirit.

Holiday Open House and Santa at Cameron Village, November 20, 2014, from 5-8 pm at Cameron Village.

Cameron Village Holiday Open House always takes place on Thursday before Thanksgiving. This is the area's longest holiday celebration. This is a free event -- snow hill; wagon rides; entertainment on every block; refreshments;  gift certificate give away with purchase. Santa arrives at 5pm.

But, you better watch out... Santa Claus is coming to the annual open house! Head to the  Holiday Open House for clowns and jugglers; real snow sliding slope; The Raleigh Boys Choir; music and entertainment on every block; a window decor contest; gifts for the kids; and Santa himself! Bring your cameras! Also, Dave English will be at the Great Outdoor Provision Co. shop pickin’ on the infamous Black Owl Guitars from 6-8pm!

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More information - visitraleigh.com

Holiday Shopping at the Mistletoe Madness Holiday Market - Raleigh, NC

Joseph Coupal - Tuesday, November 11, 2014

If you live in an apartment in Raleigh, NC then you can get some shopping done at the Mistletoe Madness holiday market  from noon-4pm at the Ballentine-Spence House, on Saturday, November 15, 2014.

The  upcoming Mistletoe Madness holiday market is a holiday showcase event with a variety of unique vendors and crafters to liven up your holiday shopping experience. The vendors include everything local, from handmade crafts to art and gifts galore and there truly is something for everyone.

Enjoy live music with Christopher Anderson Reed, our very own local concert pianist, will be providing live holiday and seasonal music. You can also enjoy holiday refreshments, unique arts and crafts. Door prizes will be awarded every 15 minutes!

What types of Holiday Treasures will you find here:

  • Knit & crochet scarves and fingerless mitts
  • Hand-painted holiday & seasonal gourds
  • Handmade soy candles and tarts
  • Custom decorative paintings & murals for the whole family
  • Hand-painted ornaments
  • Sewing creations with a modern twist
  • Handmade children’s dresses
  • Handmade adult & children’s aprons
  • Hand-drawn greeting cards
  • Mixed media art of realism & abstract paintings
  • Seriously sweet hand-painted seasonal decorative art
  • Children’s toys & stocking stuffers
  • Holiday homespun wreaths
  • Earth-friendly, earth-inspired jewelry: necklaces, pendants, and earrings

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More information  - http://mistletoemadness.wordpress.com

Gingerbread Houses and Ice Skating in Raleigh, NC

Joseph Coupal - Tuesday, November 04, 2014

Do you live in an apartment in Raleigh, NC? Do you love gingerbread? If so, you are in luck. The Ipreo Raleigh Winterfest, the downtown Raleigh festival that includes an ice rink from November to February, will launch its first Gingerbread House Competition this year.

And if you want to participate, you better hurry: The deadline to sign and submit your application is 5 p.m., Friday, Nov. 7. The competition is open to all gingerbread house makers, regardless of experience. The public will be able to vote for their top three favorites. I think this would be a fun competition for families!

The entries will be on display at the winterfest celebration on Dec. 6. Only 25 applicants can be accommodated. Entries will be selected on a first come, first served basis. So now is the time!

Prize packages include everything from tickets to local shows, gift cards to local businesses and more. Check the Go Downtown Raleigh website for more information and to download the registration form.

The ice rink will open on Nov. 22 and remain open until Feb. 1.

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WRAL

Millennials Rent Because They Want To – Raleigh, NC

Joseph Coupal - Tuesday, October 28, 2014

In a Rent.com survey, 41 percent of property owners and managers noted seeing an increase in millennial renters over the past year. This observation from landlords seems to support what many market analysts have been reporting: Millennials are foregoing homeownership for renting. In fact, homeownership of Americans ages 25 to 34 has declined nearly 8 percent since 2006.

But what is motivating the younger generation rent instead of buy? Here are five possible explanations.

1. Purchasing a home means acquiring more debt. The most obvious reason millennials are opting to rent is the crippling debt many find themselves with in their early 20s. According to the Institute for College Access & Success, 7 in 10 college students who graduated in 2012 have student loan debt. The average amount: a staggering $29,400 – and many others graduate even deeper in the hole. The amount of student loan debt has increased an average of 6 percent per year since 2008, and there is no sign of the trend stopping.

With student debt looming, it’s no wonder millennials favor a monthly rental check over additional mortgage debt. While mortgage payments can be more affordable than rent in some cities, recent graduates likely don't have the funds necessary to make a down payment. Beyond having money for a down payment on a home, some millennials simply don’t qualify for a mortgage. Whether they are saving up for a down payment or choose to rent as a long-term housing decision, renting allows millennials to move out quickly without the immediate financial squeeze that comes with homeownership.

2. Apartment life is more affordable than owning a home. In addition to the upfront cost of a down payment and a mortgage, managing a house comes with a lot of additional costs: Homeowners must pay property tax, maintenance and repairs, utilities and perhaps even association fees on top of their mortgage. An apartment requires rent and utilities, which is much more manageable for a millennial on a tight budget.

3. To take advantage of apartment amenities. Many apartment complexes offer amenities such as fitness centers, pools, a concierge and on-site maintenance – perks that don’t usually come with your first home purchase. Though renting an apartment in a building that has luxury amenities can come with a bigger price tag, the features cut down on other bills. Instead of paying for a gym membership and rent, renters in these buildings can pay one price and get both. In fact, the idea of having access to amenities is so appealing to some young people that they plan to rent for a while.

4. To enjoy city life. Many young people choose to live in urban areas because they like the atmosphere. They can walk to grocery stores, take public transportation, find night spots easily, see live concerts and access great restaurants. Millennials drawn to the energy of metropolitan areas likely can't afford to own a home there. If city living is a priority, they'll sacrifice homeownership to get the location, and that means renting.

5. To maintain flexibility and freedom. Recent college graduates want to have the freedom to move around. They're just beginning their careers and haven't decided when and where to settle. For this reason, renting an apartment instead of moving right into homeownership is often the smarter choice. Young people can move for a new job or to simply try out another city without being tied down to a mortgage. Rather than settling down immediately after college, millennials are focused on finding the right job, a city that fits their personality and trying new things.

For more information on renting apartments in Raleigh, NC, contact Auston Grove Apartments.

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money.usnews.com

Dtown Oktoberfest This Weekend in Raleigh, NC

Joseph Coupal - Wednesday, October 22, 2014

If you live in an apartment in Raleigh, NC enjoy Dtown Oktoberfest on Saturday October 25th. The Motorco Music Hall invites the community to don their lederhosen or drindl and raise a Spaten mug to Dtown Oktoberfest. The free, family-friendly event begins at noon.

Good beer and celebrations will be the order of the day with Motorco dressed as a traditional beer hall, inside and out. It wouldn’t be Oktoberfest without a little Oompah, so expect to hear music from The Little German Band accompanied by traditional dancers from 1PM-4PM. Fifteen dancers and musicians on stage and counting...

While Bavarian Oktoberfest-goers are said to consume 35,000 gallons of beer, Motorco can’t promise to fulfill that demand. However, there will be plenty of Paulaner beer from Munich, served in Liter & 1/2 Liter Steins. Parts&Labor will be serving Traditional German bratwurst with all the trimmings will be available as well as Guglhupf German pretzels.

The Little German Band

Oompah party music from America! Equally at home in a Bavarian fest tent or an American barbecue, the Little German Band and Dancers bring Oktoberfest to you year-round. Join us for "Ein Prosit der Gemütlichkeit", and maybe a Chicken Dance or two.

Stick around for the evening adult show from 6pm-11pm that will include themed dance routines from burlesque troupe The Vaudevillain Revue along with the Little German Band.

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wral.com


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