So, you built Facebook into one of the most popular sites on the web. You're a billionaire. What do you do with your piles of money? Rent, of course.
Mr. Zuckerberg isn’t ready to build a massive estate similar to many other tech titans’ homes. He doesn’t even want to be a first-time homebuyer – or leave the neighborhood. According to Gawker, Zuckerberg’s new home is another rental in the College Terrace area just seven blocks away from his old house. ... Now, Zuckerberg resides only a few steps away from Facebook Headquarters.In this housing market, all the smart people are renters!
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What's someone going to say to him? You haven't captured the American dream Mr. Zuckerberg. Real estate is a poor asset to own in the era of a devalued dollar and large state and federal government deficits. Rent and have no regrets.
ReplyDeleteI love how tickled people are by the fact that he's renting. It makes perfect sense for a single guy with a business that could change radically in just a few years - the fact that he's worth billions doesn't mean those rules don't apply, and clearly he gets that.
ReplyDelete"I love how tickled people are by the fact that he's renting"
ReplyDeleteMakes us feel better about our own choices...
"Makes us feel better about our own choices..."
ReplyDeleteEspecially when we don't have a billion dollars. It's funny how things have changed. Years ago at work, people couldn't stop talking about housing. Now it's a topic that is shunned. Years ago, there were so many new vehicles on the roads. Today, older vehicles dominate the landscape. People were a lot more jolly when their properties were appreciating. As a renter who was (but not now) chastised for not owning, I have a smile as wide as a football field.
"Years ago at work, people couldn't stop talking about housing. Now it's a topic that is shunned."
ReplyDeleteWasnt that the sign that things were bottoming out and its time to buy?
@ MH:
ReplyDeleteHe's a billionaire. What makes sense to him is MAKING MONEY. If he felt making money could be done via RE, he'd have done it.
It's got nothing to do with him being single or his business changing. The fact that he's not investing in RE while in a volatile industry is testimony to the fact that he believes RE is better avoided and isn't a source of protection.
That must burn.
Home builders are competing with demand for previously owned homes an struggling to get credit to start projects.
ReplyDelete"Unfortunately, a severe lack of construction financing, and widespread difficulty getting accurate appraisal values, continue to limit builders' ability to prepare for an improvements in buyer demand in 2011," Bob Nielsen, the NAHB's 2011 ch home builder from Reno, Nev., said in a statement.
Mortgage insurers shares tumbled in early trading after MGIC Investment Corp. posted fourth-quarter results far below analysts' expectations.
ReplyDeleteMGIC Investment's shares plummeted 12% to $10.22 in recent trading as the biggest mortgage insurer for both Fannie Mae and Freddie Mac reported a loss of 93 cents a share; analysts polled by Thomson Reuters were expecting a loss of 58cents a share.
Sure looks like the housing market is turning around!
He seems like a fairly intelligent person who understands that buying a house nowadays is almost like buying a car. Home-ownership isn't the always increasing investment it used to be...it's 2011 people.
ReplyDelete"MGIC Investment's shares plummeted 12% to $10.22 in recent trading as the biggest mortgage insurer for both Fannie Mae and Freddie Mac reported a loss of 93 cents a share; analysts polled by Thomson Reuters were expecting a loss of 58cents a share.
ReplyDeleteSure looks like the housing market is turning around!"
It sure does. To think, back in mid March 2009, you could have bought this company at $0.86 cents. Now, even with the disappointing earnings, they are trading at over 10X their value!!!
Sonny, back in March of 2009, you could have bought every company on the cheap. Nice try!
ReplyDelete"Sonny, back in March of 2009, you could have bought every company on the cheap."
ReplyDeleteOf course you could have. Want to know why???
Because that was the "bottom" and things have indeed "turned around" since then.
Had it not "turned around" prices would have kept falling...$0.85, $0.84, etc.
Bottom of the stock market and bottom of the housing market are two different things. The housing market, like the stock market, is supported by government intervention and not true market forces. So what is the bottom is not a call you can make champ!
ReplyDeleteThe housing market, like the stock market, is supported by government intervention and not true market forces.
ReplyDeleteLooks like we agree on this - the govt has pumped enough liquidity into the system as to push up the prices of Stocks, Housing, etc.
Still, the fact of the matter is that housing has indeed "turned around". Whether that turn around is sustainable in the long term is somewhat debatable, but make no mistake about it - it has "turned around".
"So what is the bottom is not a call you can make champ!"
ReplyDeleteSerious question -- when is it finally OK to make that call? Dont say its the end of govt involvment. Govt involvement has been a part of the market (in varying degrees) since 1934.
For example, govt has been supporting milk prices since that time too. In 1929, milk was 28.8 cents per gallon. In 1933, it had crashed to 20.8 cents.
In 1934 & beyond, economists argued that the support policy was "unsustainable". Ackerloff argued that prices "should" get down to about 15.5 cents to reflect true market prices. Still, since govt manipulation never completely left, here is what happened to prices since:
1929 - 28.8
1930 - 28.2
1931 - 26.2
1932 - 21.4
1933 - 20.8
1934 - 22.4
1935 - 23.4
1936 - 24.0
1937 - 25.0
1938 - 25.0
1939 - 24.4
1940 - 25.6
1945 - 31.2
1950 - 41.2
1955 - 46.2
1960 - 52.0
1965 - 52.6
1970 - 65.9
I dont have the data after 1970, but I can assure you its at all times greater than the 1933 "unsustainable" "manipulated" price of 20.8 cents per gallon.
So again, when was it OK to make the "milk has bottomed" call? 1935?, 1936?, 1940?
Sonny, have you ever heard of inflation? Home prices never go down...history shows that. Keep believing in artificial stimuli sonny.
ReplyDeleteSonny, have you ever heard of inflation?
ReplyDeleteYes - it bailed us out before. It will bail us out again.
So again, look at that chart. Given the incredible deflation we had back then, milk should have bottomed at 15.5 (the same as other asset classes which were not subject to govt manipulation).
Yet, inflation eventually reappeared, and by the time the govt relaxed its intervention, we never did see 1933 prices again.
"Home prices never go down...history shows that. Keep believing in artificial stimuli sonny."
Im pretty sure the same sarcastic remarks were made at those who said milk prices had bottomed in 1933.
Nevertheless, the fact remains, when look at the price chart, when was it ok to declare "milk prices have bottomed" 1935? 1936?, 1940? How much higher did it get before the "its unsustainable" types woke up and said, gee, I guess we never will see 1933 prices again???
In 1933 there were about 125,578,763 million people in the U.S. Did you ever think demand (population increases) had something to do with price increases in milk? The Great Recession has delayed two million household formations over the past few years. Did you know that there are more than 5 million homes for sale? Do you know how many years it will take to reduce that inventory to a healthy equilibrium? I am finished educating you. You can enroll in the University of Maryland and take my class because the free session is over.
ReplyDeleteMBA: Mortgage Purchase Application decline in latest survey
ReplyDelete"The four-week moving average of the purchase index suggests weak existing home sales through the first couple months of 2011. As the MBA's Fratantoni noted: "[P]urchase applications remain quite low, indicating that home sales are unlikely to pick up any time soon."
http://www.calculatedriskblog.com/2011/01/mba-mortgage-purchase-application_19.html
What choo talkin' 'bout Willis!? The Spring Selling Season is here! Its 2005 all over again! (Except unemployment is pegged at record highs)
"In 1933 there were about 125,578,763 million people in the U.S. Did you ever think demand (population increases) had something to do with price increases in milk?"
ReplyDeleteThat had very little to do with it. govt would pay farmers to deal with the surplus to keep prices high (even though demand was incredibly small).
Still, regardless of cause, when was it safe to say "milk had bottomed" 1935? 1936? 1940?
Also, to bring this back full circle, all I keep hearing for the past 2 years is that this isnt the bottom and that the true bottom is some point in the future. Well, this is what home prices have done in DC since they bottomed, as well as the snarky bearish remark that has corresponded with the data.
2009
Mar 166 - "its just a shelf to a lower bottom"
Apr 167 - "Nothing but a mere blip"
May 169 - "its just the foreclosure moratorium"
Jun 173 - "prices will crash when QE ends"
Jul 176 - "its just the 8K buyers bribe"
Aug 180 - "the bagholders will be underwater by spring"
Sep 181 - "bribe is over, its all downhill from here"
Oct 180 - "SEE SEE, I TOLD YOU SO!!!"
Nov 179 - "Told you it was just a blip"
Dec 179 - "we'll be below 165 by the fall"
2010
Jan 177 - "anyone buying now is a sucker"
Feb 177 - "who thinks 165 is the bottom now huh"
Mar 175 - "down to 165 in no time"
Apr 179 - "wait, its just a dead cat bounce"
May 182 - "its just QEII"
Jun 186 - "this is NOT sustainable"
Jul 187 - "rapid decline starting next month"
Aug 187 - "govt manipulation, nothing more"
Sep 187 - "wait till QEII ends, its gonna tank"
Oct 187 - "next spring will be brutal"
So again, here we are 18 months later and with prices 12% higher than when that little "blip" started. Serious questions:
How high do they have to go before you conclude it "might" have been a bottom? 190? 195? 215???
How long do they have to stay above 165 before you will concede March 2009 "maybe" was the bottom? Mar 2011? Sep 2011? Sep 2012?
Only reason it didn't go lower than 166 is because the Fed stepped in and bought Fannie and Freddie paper. The Republicans are taking control now so be patient because the spigot will be slowing to a drip.
ReplyDelete"Only reason it didn't go lower than 166 is because the Fed stepped in and bought Fannie and Freddie paper"
ReplyDeleteSo thats it huh? Thats the answer to the mystery? So, even though:
- the foreclosure moratorium
- the alt a tsunami
- tightening loan standards
- quantitative easing
- the 8K buyers bribe
- Mr. Mortgage's the quickening
- the ending of quantitative easing
- the increased rates on jumbos
- QEII
- the end of QEII
- increasing foreclosure rates
- high rates of unemployment
- the option arm tsunami
- the continuing diminishing mortgage apps
- 5% or greater rates
- etc, etc, etc.
have done nothing to prevent prices from rising for the last 18 months, this time, THIS TIME, the end all, be all answer that sends it all crashing down shall be "the repubs stopping the purchase of fannie and freddie paper"?
Really?
So let me ask you. 3- 6 - 9 - 12 months from now, if prices continue to stay above 166, will you concede "the bottom is in" or will you simply find yet another in the never ending line of excuses for why the bottom is not even close?
Id like to believe it is the former, but im pretty sure it will be the latter. If so, please let me know:
How high do they have to go before you conclude it "might" have been a bottom? 190? 195? 215???
How long do they have to stay above 165 before you will concede March 2009 "maybe" was the bottom? Mar 2011? Sep 2011? Sep 2012?
David is that you? Tell us how proud you are to be a homeowner.
ReplyDeleteNo, im not David. I do remember him, but I am not him.
ReplyDeleteNeverhteless, even if that was true, does it change anything?
Specifically, does it change when, if ever, you conclude the bottom has passed? Specifically:
How high do they have to go before you conclude it "might" have been a bottom? 190? 195? 215???
How long do they have to stay above 165 before you will concede March 2009 "maybe" was the bottom? Mar 2011? Sep 2011? Sep 2012?
Larry, is that you?
ReplyDeleteLet's face it, buying a house is a PITA, and Mark is far too busy making another billion or two.
ReplyDeleteI applaud the man for doing the sensible thing and waiting to see how mansion prices fair. Then again, I bet he rents a nice pad.
Home prices must still fall 23 percent for home prices to revert to their long-term mean. So, there will be two scenarios. One, is that home prices will fall further once government support diminishes. Two, prices do not decline, but, prices do not increase until fundamentals (incomes, household formations) catch up and create a real floor for increases to occur.
ReplyDeleteBeing a home owner I have to say that I really do prefer owning over renting. But early on the wife and I agreed not to look at the house as an investment. We built what we wanted, paid cash (rented a tiny place and saved like mad for a long time), and despite several leaks and the usual homeowner PITAs we are happy with our choices.
ReplyDeleteNo connecting walls, we know every family around us, we have plenty of parking, and are far enough away from other houses anything short of a Woodstock concert the noise doesn't reach us.
The people we know who have really suffered in this market clearly bought when they should have rented. Their job situation changes and they would benefit greatly from moving, but they can't. And they will be underwater in an inferior (or no) job for years to come.
The American Dream of owning a home is a sales pitch. We need to understand what a home really is and then make our choices accordingly.
Frankly, I am amazed that the Feds haven't stepped in and wiped all of the underwater loans out of existence. It seemed like they were going to. They did stop taxing loans that are forgiven as income. Having known people who lost everything they had left to pay the taxes on a forgiven loan a few years ago I don't see this as even close to fair.
As far as a billionaire renting, hey, that's cool. In the right setting the hotel will provide space, food, all services, and the door man will kiss his butt when he comes and goes and all he does is cut a check. Not bad for a kid. Good for him.
jj
@ MH:
ReplyDeleteHe's a billionaire. What makes sense to him is MAKING MONEY. If he felt making money could be done via RE, he'd have done it.
Well, yeah, there's that too. Obviously I trust that Zuckerberg's got a pretty good head for business. I just meant that as far as his example applies to the average, non-investor prospective buyer/renter, it's often less about money and more about lifestyle/intangibles. Of course everyone HOPES that their home will turn out to be a profitable investment, for most people there are other more pervasive forces at work in that decision to buy..
Don't shun the guy for renting just because everyone's saying "now's the right time to buy!" So far, he's made a few billion dollars, so it's safe to assume that he knows a thing or two about money.
ReplyDeleteAw, c'mon. Let's talk about confirmation bias, here. Guy's a billionaire. He could drop a couple of million on property and not bat an eyelash if it dropped 80% in value--as long as he liked the place. It's not comparable to buying a car--this is comparable to you or I buying a dinner at a fancy restaurant. We might go here, or we might go there, or we might eat at home, but we're certainly not going to look at it as an "investment."
ReplyDeleteAnyway, my house has increase in value by about 15% since just before the peak of the global bubble. In the last few months, the houses on my block have finally crossed the point where monthly rents have passed mortgage payments. That's because I bought on the cusp of the gentrification zone in DC. So the problem isn't that money can't (or couldn't) be made on RE--it's that it can't be made by the credulous.
Gee, I didn't know he still rents. Smart move for Zuckerberg, though.
ReplyDelete