Homestead mailing list

[Gene GeRue <genegerue AT ruralize.com>]

> If I might restate your question: What could you invest in today while you 
> can still earn surplus cash (today while the blossom still clings to the 
> vine) that later when you can't earn any cash will provide you with a 
> *reliable* source to meet your even very modest cash needs?    My thought 
> on the question is that there might not be anything that will do that.

Well restated. Here's the thing. I am not so much talking about myself. My 
retirement plan includes five sources, spreading the risk. But on this list 
we wrestle with how people can most successfully live the homestead life, 
and unless we accept that the end years will be spent in some dreary, 
state-supported care facility---can you imagine a more horrific end for our 
free, independent sorts?--then it is useful to develop a good plan.

Yes, of course nothing is certain, except death. Yes, of course change is 
inevitable. But also of course, homesteaders are more self-reliant than the 
masses. And I am becoming of a mind to challenge naysayers who say what 
can't be done, by demanding that they give a superior replacement to that 
which they deride.

> The often heard pronouncement that "God only made so much land" so real 
> estate is as close to a sure investment as you can get - is an equally
> cryptic saw and the gods surely have something nasty up their sleeves for
> that as well.

Not the ethereal gods, but the politicians, who, along with doctors and 
preachers, often preen themselves as gods. I expect that taxes and zoning 
and building requirements will become ever more onerous. If they don't, 
great, but I plan for it. And in my book I advise finding a place of 
traditional distrust of government with its attendant low taxes, and 
getting out far enough where the bureaucrats are more likely to leave you 
in peace.

The point I'd make is the relative value of housing
> has varied very greatly in human history.

Housing is taking a higher percentage of income because of the factors of 
fixed supply and increasing demand. Unless population plummets, land will 
continue to rise in price. History indicates population will increase. If 
sociopolitical policy is successful in holding or decreasing population, 
the rise of land value will not stop, but become more modest. I see land 
increasing in value even if population becomes static. Note the popularity 
of second homes, the second typically away from cities. The only way I see 
land values falling is if there is a sustained economic decline.

> Now days residential real estate has two components in its 'value', the real
> or pragmatic component and speculative component.   This has always been 
> true to some extent, but now the speculative component seems to be 
> inflated beyond all reason.  That speculative component is just like 
> playing the stock market, that is, it is gambling.

Absolutely, and those who do it full time have become highly knowledgeable 
and the common man has become much more knowledgeable regarding real 
estate. Far fewer steals and fast profits made in the better areas anymore.

I had a front-row seat to the real estate speculation phenomenon, in 
California in the 1970s. As population increased rapidly, houses rose in 
price faster than ever before. Investors, always looking for opportunity, 
seized upon real estate as a starving cat seizes a rabbit and with not much 
more subtlety. As California goes, so goes the nation. The braggarts wrote 
books and lectured and the masses swooned over becoming millionaires "with 
no money down." And so it has been for thirty years. Which is why 
successful real estate investment today demands greater sophistication.

> My parents are in Florida just a little north of the place hit by two
> hurricanes this season.   Right now undamaged real estate in Florida is
> worth a fortune because . . . .

I have never recommended Florida and doubt that I ever will. The list of 
negatives is long. If your parents need warmth, suggest they investigate 
Arizona soon.

It's all a matter of odds and taking one's best shot at stacking the deck in
> one's favor.  But the way I see it, it is better to rely on the perennial
> ability to do something like add value to, say, a piece of wood than it is
> to cast your bread upon the waters and hope to find it after many days.

I hope you are always able to do so.

Now go back up to the top, to your first sentence. The question that you 
well restated includes: "when you can't earn any cash."

I'm still waiting for the alternative to investing in the stock market 
and/or real estate. Neither is perfect. But what is better?