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Which represents better value: coins or real estate?
MrEureka
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At current values, in your area, which do you think represents better value? Yes, I understand that some people consider a home sacred and priceless. Others feel the same way about their coins. But try to be objective.
And to be clear, we're talking about the coins you might buy versus real estate you might buy. Comparing PR70 widgets to a man's castle is not a fair comparison.
And to be clear, we're talking about the coins you might buy versus real estate you might buy. Comparing PR70 widgets to a man's castle is not a fair comparison.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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and functions. if i had 200,000 to blow right now it surely would not
be a coin.
Vacant land of course should not run anywhere near that level of maintence.
Considering upkeep and holding cost and a long term hold the real estate may fall behind coins if we end up with a lengthy depression.
Quick flips if you get the right price on a foreclosure, but you need to be very experienced in these kind of flips (have two clients that have done this for many years one has continued success but the other is struggling having not adapted his business model).
Coins, we all have own thoughts on which series may fare well and which may not. Where as many key dates will most likely fare well the hobby has a tendecy to change focus as to what is hot and what is not. As in real estate some adapt to the market conditions and succeed, others do not and struggle or leave.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>I think it's a mistake to approach this question from a theoretical viewpoint. Instead, imagine exactly what coins you would buy with, say, 500K. Then, imagine what real estate you would buy with the same money. Then, choose between the two base on the perceived value. >>
With half a million, I'd probably opt for a coin. Still.
Hoard the keys.
A difficult question and difficult answer(s).
Comparing a large bunch of $20 Saints in MS-63 and MS-64 to a condominium that is not income producing?
Comparing a large bunch of $20 Saints in MS-63 and MS-64 to a condominium that IS income producing?
Comparing a lunch bunch of $20 Saints in MS-63 and MS-64 to a large tract farm land that produces corn or other products
etc.
Quite frankly, much depends on the expertise of the buyer of the coins or the real estate itself. An ill fitting buyer of good real estate can ruin the real estate through ineptitude and lousy self management. A buyer of good coins can ruin them by listening to experts who says the coins should be dipped to make them look brighter, for instance.
Also much depends on the geographical area of the real estate, the kind of real estate just as the kind of coins that is being purchased.
It is so difficult to compare.
But on a global basis, since real estate appreciated so much more than coins from 2000 to 2006, coins started to look cheaper and cheaper on a global basis versus real estate, then all of a sudden in 2006/2007 real estate reversed course and started to decline significantly while coins did not, the imbalance narrowed down significantly. Has real estate declined enough to make it a better buy than coins?
The best way to compare is to so on a micro-economic and financial analysis and NOT on a macro-economic and financial analysis.
In other words you need a specific financial comparison of what specific coins versus what specific real estate.
Now if you understand half of what I said (I am working on understanding it myself) , you are hereby awarded an honorary degree in Oreville's Economics degree
<< <i>At current values, in your area, which do you think represents better value? Yes, I understand that some people consider a home sacred and priceless. Others feel the same way about their coins. But try to be objective.
And to be clear, we're talking about the coins you might buy versus real estate you might buy. Comparing PR70 widgets to a man's castle is not a fair comparison. >>
Well. since you chose to compare coins to real estate, let me ask you this:
If the coin market were to take a nosedive like the real estate market has over the last two years, would you just walk away from your collection like so many home buyers have done?
Would you trash your collection which has happened to so many of the bank-owned properties when the homeowners forfeited them?
I'm the executor of my Mom's estate, and I have lived in the house since we built it in 1998. (I took care of Mom & Dad for more than 20 years since my siblings were more concerned with their own lives.) The home is a one-of-a-kind in my area. I designed it with 9,000sf on one floor, 13 rooms (not including the 4 bathrooms and laundry room) and handicap amenities on a 3/4 acre lot in Southwest Florida. The garage is larger than most two bedroom condos; so is the billiard room. The walk-in closet in the master suite is larger than most any 2nd or 3rd bedroom, and my 2nd and 3rd bedrooms are larger than most master bedrooms. The kitchen is 16'x32' and the L-shaped lanai which is 65'x45'x15' was specifically planned so that I could smoke out there during a hurricane. In 2004, it was worth in the neighborhood of $2M. In 2007, it was appraised at $920K. Earlier this year, the lousy appraisers who are now being controlled by the lending institutions and provide their "service" like drive-by shootings in L.A. tried to tell me that it isn't even worth $700K. My (ex)siblings want to sell now, and we stand to lose more than $1M. It's ridiculous because none of them need the money. They don't care. It's free cash to them.
It is costing me a small fortune in legal fees, but I'd do the same with my coins................hold on to the bitter end!
Chris
I will say this...I've owned one rental property for about 15 years now and I have been very fortunate with that property. It has paid for itself and paid me a little bit extra every month. And that has been consistent for almost the entire time (I had one bad tenant that ended up costing me some).
With coins, I have sold at a profit and I've sold at a loss...it has been much more inconsistent over a shorter time period (since about 2001).
Based only on this experience, I think that real estate represents the safer investment and the better value because it has many built in safeguards (property managers, inspectors, well documented demographic data that is useful for identifying potentially successfull rental property, etc.)
Never too late in life to get yet another honorary degree, even in times of crisis.
I Oreville, award you, MidlifeCrisis, the doctorate degree in Oreville's Economics, November 29, 2008.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Depends on the timing of a cycle. Now: for 10-20 year investment I would say real estate.
Rare coins are a limited product and for the most part not reproducible.
Real estate could have similar appeal but not usually so. The real estate market has had a big hit; more may yet occur but we may be close to a bottom. Rare coins are lagging in the retreat.
I suspect that the coin market will begin a down-turn soon. How deep, how long will be interesting to watch.
JMHO.
Trime - When we buy coins, we don't buy an index. It doesn't matter how "the coin market" performs. We're talking about the specific coins we would buy right now.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Successful BST transactions with WTCG, NH48400, evil empire,
meltdown, timrutnat, bumanchu, 2ndCharter, rpw, AgBlox, indiananationals, yellowkid, RGJohn, fishteeth, rkfish, Ponyexpress8, kalshacon, Tdec1000, Coinlieutenant, SamByrd, Coppercolor
so when i went through my divorce with 2 kids i was happy we didn't have one...yess i've bought sum 3 houses with my 1st at age 27
so picking up pieces afterwards and watching the current tank of real estate still makes me happy...i'm not in...and houses just aren't easy to walk away from as trailers if a need to move arises
now my trailer is another story...a 2 bedroom park model i paid $3k for 2 blocks behind the mgm with space rent of $250. just added to the intense smile my backyard's skyline beheld and to think gold diggers needed not apply only but added to the happyness...haven't had a a high maintenance material gal yet
well putting sum $6k in it and even upon moving after that parks close i'd still double on my humble n meek lil real estate even think of getting my 2nd in cocoa beach florida as boogie boardin bit me good and 2 space rents isn't much outlay and i'd add another 2 trailer gals to my mix there too...happyness is to each their own and is better shared
coins are different
thank gawd for these boards and members as my collecting choices and $$$ in it was keeping a real estates pace...yuk...but to stumble in here that changes
once i've settled into not having many but the humble # i do have makes smile amplified by 3 years of members here freely offering up soundness...yeah is all i can say as most gals think coins are stupid buys so if n when they go buhbyes...my coins are under their radar
bottomline...both choices are as good as the choice in them is made but i'm really partial to what a coin has over real estate as my most prized coins to me are the ones i giveaway here especially if they land in a y/n's hand
i may live in a sweet trailer with awesome skylines but giving a matty away for x-mas is too hard to put one over the other on value...something still tells me someone will value a free matty pretty high this year
thought ya'll might of liked my lil take here just don't bag to hard on this lil humble disabled american vets opinion and ol bradley of sublime i still say had it right...wealth is what ya giveaway as life is about lovin and music...but racing motorcycles is best value i've ever known
Expensive coins should be insured and insurance is expensive.
The $500,000 must be put up for the coin. The 10 acres in a prime area, or the house /apts., can be purchased with less than 100%, so that the easier transaction may be the real estate.
But I would have more confidence today in the coin. My real estate background is slim.
It will be our primary residence, and the monthly PITI payments (that's principal, interest, tax and insurance for all you non-homeowners) will actually be less than the comparable rental price when factoring in the income tax deductions on mortgage interest and property taxes.
Ya gotta have a place to live, and owning is better than renting for many reasons.
With housing taken care of, I will hopefully be able to turn my focus back to coins in '09.
60 years into this hobby and I'm still working on my Lincoln set!
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Squatters do not fit on coins.
(a landlord's joke)
Practice makes perfect & nobody is perfect. So, practice being nobody.
Most surely one could rent (lease or margin) a coin if one wanted to draw up a contract with a coin lender. While you can't live in a coin, one can't live in their FRN's, stocks, bonds, and art either. Many coins can be easily sold within minutes of hitting a coin shop or picking up a phone to a dealer. Try that with a house.
I tend to agree with Oreville or Tahoe Dale. I feel many areas of the US housing market have years left before they bottom. There are certainly better ways to "invest" than to buy years before a bottom. I have no doubts that precious metals will outperform real estate over the next several years. Coins that are based on their precious metal content will follow that trend. My own home was on the market in 1991 and did not sell. It floundered for 6 years before it finally sold at the very bottom of the market for an additional discount of 33% to the orig asking price. Had I jumped on it in 1990, that would have been my loss, not the owners. Timing is important in real estate, just like anything else. When Sam Zell is getting back into real estate, that would be a good time to jump back in.
But if I had the $500K Andy is offering it wouldn't be going into real estate, but most likely into generic US gold, and silver and gold bullion items. My brother was looking into buying a house in the outer Boston areas. He's been attempting to do this for several years...and thought he missed the boat for good in the 2002-2005 era. I told him to wait and it would come back to him. He's starting to like what he sees in his price range but I told him at Thanksgiving there was probably at least another 10-15% that was going to fall. When the bottom is really in, it will be quite apparent. The northeast took a 30% hit from 1989-1996. We aren't even at that point yet in this neck of the woods. Less we forget that housing prices fell some 80-90% in the 1930's. I suspect we'll see something in metro/urban New England between the 30% of 1990-1996 and the 90% of the 1930's.
roadrunner
<< <i>I think it's a mistake to approach this question from a theoretical viewpoint. Instead, imagine exactly what coins you would buy with, say, 500K. Then, imagine what real estate you would buy with the same money. Then, choose between the two base on the perceived value. >>
If someone dropped $500k on me, I would probably buy $100k worth of coins over time, put a $200k down payment on a mountain property, and stash the other $200k for my children's higher education. Based on that plan, one might surmise that I like real estate twice as much as I like coins. However, this decision is made primarily for lifestyle, as not all of my financial decisions are based on total return at the end of the day.
<< <i>I think it's a mistake to approach this question from a theoretical viewpoint. Instead, imagine exactly what coins you would buy with, say, 500K. Then, imagine what real estate you would buy with the same money. Then, choose between the two base on the perceived value. >>
With farm ground around $5K per acre here, $500K would not get you much ground. $1.5 mil would get you about half a section with enough left over to put a nice cabin on it.
Government subsidizes housing. Artificial prices result, altering the natural supply/demand characteristics of investment in real estate. Worse, government forces lending institutions to lend to underqualified borrowers, further inflating artificiality in the marketplace-- bubbles result. The complexity of investment vehicles and financing cloud the visibility in real estate values. Even today, with the precipitous drop in prices, we may not be at a bottom, no one knows.
Even though there has been some tampering with coin prices, i.e. Hunt silver scandal of the 70's, Wall Street manipulation in the 80's, coins seem less vulnerable to artificiality and are more likely to provide a measured return based on an individual's market skills.
Having said all that, given the $500k of the hypothetical and the choice between either coins or real estate, I would invest in real estate because I'm more comfortable with my skills competing in that marketplace and because I can go to a super-depressed locale and buy where I have limited downside risk. The more I read this board, the more I realize how little I know about competing in the coin marketplace.
Chuck
As to this statement:
"And the better a collector you are, the more likely that you would be "right" in preferring the coins."
I believe that some of the "better" collectors out there could still be "wrong" in preferring coins as an investment. I realize you meant "right" for them, in their minds, but it came across (to me anyway) as though you were saying that a "better" collector would know which coins to choose, and that those coins would, indeed, be a better investment than real estate at this point in time. I would definately choose real estate (and I have) over coins at this time.
<< <i>I
So in answer to your question, rare coins are holding their own, they are at a 5 year high while real estate is at a 5 year low. Thus at this moment rare coins reps a better value compared to real estate, however the real estate I own cash flows and my coins don't. >>
Just taking this one part of Real One's statement, I would say the opposite is true. If coins are at a 5 year high and real estate at a 5 year low, Real Estate would be a better value for investment purposes. Why buy at the high end of the market in either one?
Where I live in Oklahoma, we didn't have a major run up in home prices and prices have barely moved down in the last couple years either. With 500K I would buy (2) 125k Houses and spend the other 250k, half on bullion and half on rare coins. Sorry I know that wasn't the OP's question, but I wouldn't bet on any one asset class in this particular environment.
Real coins are real enjoyment.
Define value
Practice makes perfect & nobody is perfect. So, practice being nobody.
Future appreciation is only part of it. There are also non-financial benefits of ownership, for both real estate and for coins.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>I think it's a mistake to approach this question from a theoretical viewpoint. Instead, imagine exactly what coins you would buy with, say, 500K. Then, imagine what real estate you would buy with the same money. Then, choose between the two base on the perceived value. >>
A home always has more utility than a coin. If housing prices are down then housing is the better value. I have seen some dramatic price reductions in the housing market. In my areas of interest for coins I've seen little downward price movement.
Houses are for living. Numismatics is for collecting.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
As for coins and real estate - they are two different critters. Did you ever go to a real estate show to buy a new right of way, or trade your 10 acres for a lot with more trees; or build a house on a coin, or grow produce on a seated quarter?
Small Town NW Valley Phoenix AZ - Houses selling new 2 years ago for $220k - $240k are today being remarketed after the bank repos them for $100k-$120k and at auction are bringing $65k-$80k. Rents are still $1k+ for the area with very low taxes. Only draw back is with prices going so low, it may draw in a criminal element because of low housing prices. Earning 100% return annually in rent while waiting for the market to turn around is not a bad investment in my book.
Vacation Property - I recently purchased a 3 bedroom condo on a lake in Wisconsin, Sold new for almost $500k, bank took possession and auctioned it off. I paid 20% of the price it sold new for just a year and a half earlier. Very limited downside risk IMO.
Coins - The only thing bringing discounts are the so-so coins, great coins are still demanding good prices, but there is a good amount of downside risk if the market really tanks, IMO. If you can buy and hold, you should be OK.
Banks are in a fenzy trying to liquidate bad real estate off their books which creates a once in a lifetime buying opportunity. Once that supply dries up, the prices will turn around a bit. IMO the "RIGHT" real estate is the wise choice in todays market when buying a house for 50% of the cost to build it (not sale price, but replacement cost) and the land is thrown in for free. We are about to have one more great push in banks liquidating soon as they take possession of a lot of these builders inventory(watch for prices to even go lower than today when this happens, but will be short lived). Then it's over because the people that can afford to live in their homes are not willing to take a $100k hit just to sell, so supply dries up and prices jump. If I had a few million, I would be living on Easy Street. There are so many deals I have passed on waiting for the perfect ones to come in, 6 perfect ones so far with my eye on the 7th.