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Donald Trump Reminds Us That Real Estate is a Solid Investment

I guess everyone has a blog these days, including Donald Trump. Now, this man may not know a thing about hair! But I’m pretty sure we can all agree that he knows a thing or two about real estate.
I was just checking out his blog today, and found an interesting little post about the doom and gloom articles out there. Writer Gary Eldred, PhD reminded us that historically, real estate has been a great investment. And that while there have been times when prices have flattened out, or were driven down by outside forces such as job layoffs, real estate always makes a recovery.
But all the while, there have always been doom and gloom writers telling us what a horrible investment real estate is. To give you a rough idea of how real estate has performed over time, in the 1940’s in the Sunset district, you could buy a brand new home for about $5000 (which in today’s money is about $55,000). That same home today is worth anywhere from $650,000 to $800,000 or more. Even if you take inflation into account, that’s about a pretty nice return on your investment if you ask me.
Anyhow, the author of the blog post shared some of the doom and gloom passages that have been published throughout the years, and I thought I’d share them here with you too. Hope you enjoy, and hope you take the bad news from the media with a grain of salt.

“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” (Time, December 1, 1947)

“The days when you couldn’t lose on a house purchase are no longer with us.” (House Beautiful, November 1948)

“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000.” (Business Week, September 4, 1969)

“The median price of a home today is approaching $50,000 . . . Housing experts predict that in the future price rises won’t be that great.” (Nations Business, June 1977)

“The era of easy profits in real estate may be drawing to a close.” (Money, January 1981)

“In California . . . for example, it is not unusual to find families of average means buying $100,000 houses . . . I’m confident prices have passed their peak.” (John Wesley English and Gray Emerson Cardiff, The Coming Real Estate Crash, 1980)

“If you’re looking to buy, be careful. Rising home values are not a sure thing anymore.” (Miami Herald, October 25, 1985)

“Most economists agree . . . [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980s.” (Money, April 1986)

“The baby boomers are all housed now. They are being followed by the baby bust. By 2005,real housing prices will sit 40 percent below where they are today.” (Harvard Economist, Gregory Mankiw, “The Baby Boom, the Baby Bust, and the Coming Collapse of Housing Prices,” Journal of Regional Economics, Fall, 1989)

“Financial planners agree that houses will continue to be a poor in­vestment.” (Kiplinger’s Personal Financial Magazine, November 1993)

“A home is where the bad investment is.” (San Francisco Examiner, November 17, 1996)

“Your house is a roof over your head. It is not an investment.” (Ev­erything You Know About Money Is Wrong, 2000)

“But the real question is, how will [housing prices] look longer term? As I’ve said in the past, I do not think that housing values will be higher five to ten years from now.” (Yale Economist Rob­ ert Shiller, quoted in Newsweek, January 27, 2005)

So if you’re on the fence about San Francisco real estate because of all of the negative predictions, it might be ok to jump off and take an honest look at what’s really going on in the SF housing market. At least, that’s my humble opinion.