Very true, but if you bought in the last 2 years, and might not break even on say a 400 grand house for 10 years, what's the point....After a certain amount of time, everything will go up in price when inflation is figured in. But why people were buying into tops is beyond me. It isn't a good time to buy now either....Plus, everyone wants to raise a family and get married and white picket fence...but what about loss of job, divorce, work related move---when you try to sell and can't get what you paid for it, what tradition is that?.....Again, inflation will get you to the nominal number you paid---eventually but that doesn't prove much when you could've done better with your money elsewhere.
How convenient to use San Francisco to talk about LOSSES ... but then not use San Fran again to talk about the house that was bought for $200,000 now being worth $1,500,000 ...
For my house in New England, we have a $1,500/month in "losses" ... BUT ... the price goes up more than $18,000 per year.
... and 10 years from today, I will still be paying the same amount of money on my mortgage while the renter won't be paying the same rent.
... and 10 years from now, my "losses" will 33% of what they are now because more money will go into the premium and less on interest.
For my house in New England, we have a $1,500/month in "losses" ... BUT ... the price goes up more than $18,000 per year.
... and 10 years from today, I will still be paying the same amount of money on my mortgage while the renter won't be paying the same rent.
... and 10 years from now, my "losses" will 33% of what they are now because more money will go into the premium and less on interest.
So I have a question for you lets say you bought 5 years ago. Lets say you bought for 300 and house went to 500 and you knew it was tops.
But you have a family and kids that love the neighborhood,schools,friends etc. You sell it and move to a rental across town or an apartment for 5+ years till it all clears up.
Yes I understand if I was on the sideline the last few years I would have recommended waiting but houses arent like stocks. Other factors have to be involved.
There are WAY TOO MANY factors involved. I don't think one can make a blanket statement either way - and that is why I disagree with BOTH Journeyman and Treehouse. It depends on the house, the location and the individual.
Where are you buying it?
Is it a good school district?
Does the school district even have apartments? (most of the best districts don't ... and that is why they are the best)
How long do you plan on living there?
Do you have a steady job?
Is the area saturated or are more houses going up? (In New England, construction is limited)
Is the area dependent on ONE or TWO large companies, and will it be screwed if one of the companies moves?
Can you afford it?
Do you have the down payment?
I completely agree with you....But you are talking about buying 5 years ago....You did well buying 5 years ago, but don't be surprised if the price you paid 5 years ago is the same one you'll get in 2 years. Then you are back to zero---and have actually lost money using inflation.
I realize this topic from the beginning has left me open for ridicule b/c most people on here are home buyers and there is a bias inherent in that which makes any argument I have useless.
Nah man I like the topic and I just believe with houses everything is depending on your situation. If you have a wife and kids I just think you have to put the investment side alittle out of your mind and buy the best house you can to have a happy home life.
If I was single or it was just me and the wife maybe trying to time would be fun and much much more profitable.
If I was single or it was just me and the wife maybe trying to time would be fun and much much more profitable.
No but you might be pissing people off for openly "hoping" for the housing market to crash. That is a stupid statement to make. That is so anti-American. For you to "hope" a majority of people on this site to lose so much equity makes you a dumb ass. That will the biggest investment anyone can ever make and for you to say you want it to crash is idiotic at best.:WTF:
Sorry didn't notice the date. I just got fired up to see that work HOPE. Yes I am well aware that my house value has dropped a good 10-15%. Thanks to the big 3 and the uaw up here. Everything is from the big 3 on down. The union idiots don't get it. It's going to get worse up here before it gets better.
Yes it's ok to sell a stock. Like stated above you can't compare a stock to a property. Stock you can have a stop loss. A house you need a buyer.
Yes it's ok to sell a stock. Like stated above you can't compare a stock to a property. Stock you can have a stop loss. A house you need a buyer.
Real estate in South Florida is never going to crash - all it has done is level off - there are too many outside influences, i.e., people from the north wanthing to own here, South Americans, Canadians and Europeans - every day is 75 degrees - there is always going to be huge demand here - sucks because if you actually live here you can't get a decent house for under 750k.
Here in where I lived, CA, the house price has actually gone up a bit in the last months or so...
People just don't realized it, but if you're looking to buy, right now is probably the best time to buy, the interest rate is low, it is a buyer's market thus enable you to have choice to choose from.
And let me tell you this, if the stock market are not going to get better soon, expect the housing market will, why, because investor will drop their stock and start to invest in housing again...
Why wait? If you wait for the price to drop 10k-20k more, by then, it's not even worth the wait, you will not have many inventories to choose from, and the interest rate will probably be higher too, it's not worth it.
Also, it's a good time to buy and rent it out too, because the people that went through the foreclosure needs house to live in right? well, the rent price has gone up a lot...
Just realize this, no matter what happen in the world, people still have sex, they still give birth, and they will need a house to live in.
Tell me what you think of my knowledge?
People just don't realized it, but if you're looking to buy, right now is probably the best time to buy, the interest rate is low, it is a buyer's market thus enable you to have choice to choose from.
And let me tell you this, if the stock market are not going to get better soon, expect the housing market will, why, because investor will drop their stock and start to invest in housing again...
Why wait? If you wait for the price to drop 10k-20k more, by then, it's not even worth the wait, you will not have many inventories to choose from, and the interest rate will probably be higher too, it's not worth it.
Also, it's a good time to buy and rent it out too, because the people that went through the foreclosure needs house to live in right? well, the rent price has gone up a lot...
Just realize this, no matter what happen in the world, people still have sex, they still give birth, and they will need a house to live in.
Tell me what you think of my knowledge?
Ill use large # since the math and logic are easier to comprehend.
Home/condo price: 500k
Monthly rent for comparable property: 2.5k
Monthly interest pmt assuming 6% mortgage (historically low btw) 2.5k
This isnt even considering the other expenses of home ownership such as taxes (quite high in some areas), insurance, various upkeep.
Where is a person making a positive return via owning this home/condo instead of renting?
In a housing price environment thats slightly positive flat, sideways, or slightly negative, owning this home/condo would be a horrendous financial decision.
I continue hearing what people paid for their homes, but their interest expenses are NEVER included in that price. A person that buys an average priced home, if they pay the monthly pmt during the 15-30 years ends up paying MULTIPLES more than the "price" at time of purchase.
Also, people quote their home is "worth" X amount. However, I challenge most here today to list their home for this X price. I doubt many would have it sold in 60 days or less. Higher range priced homes in this part of the country often sit on market for 2+ years.
Again, the money spent on mortgage interest (if paying it) taxes, insurance, upkeep should be subtracted from the selling price rather than blowing off what a great selling price one received for their house, but rarely is done.
The past several years, real estate has been good to alot of people. However, the next several years it certainly will not. It will again have its day in sun, but not until after several years of flat to downward prices wash out the never-never-land types who actually believe its normal for real estate to rise 20+% every single year for infinity.
:drink:
Time to pay,
I understand your question, but I am not saying real estate will be a bad investment 30 years from now. In fact, I have no idea what will happen 30 years from now. That same payment you mention could be higher and it could be lower...we do not know today what it will be 30 years from now.
Also, granted I live in a lower priced market, but there arent many condos/apartments I couldnt rent here for 1000 or less per month and I can probably count on my hands the # of homes that rent for 2.5k.
However, I do believe most that bought the past few years bought the top and most current buyers and immediate future are catching falling knives rather than buying bargains.
Most of what Im trying to explain is the suspended animation people have duped into believing about real estate is false.
There is a time when buying is best and believe it or not, there are times when renting is best. However, these ideas that its ALWAYS better to buy vs rent, and that EVERYWHERE real estate ALWAYS goes higher and NEVER and CANNOT decrease in price are myths.
I understand your question, but I am not saying real estate will be a bad investment 30 years from now. In fact, I have no idea what will happen 30 years from now. That same payment you mention could be higher and it could be lower...we do not know today what it will be 30 years from now.
Also, granted I live in a lower priced market, but there arent many condos/apartments I couldnt rent here for 1000 or less per month and I can probably count on my hands the # of homes that rent for 2.5k.
However, I do believe most that bought the past few years bought the top and most current buyers and immediate future are catching falling knives rather than buying bargains.
Most of what Im trying to explain is the suspended animation people have duped into believing about real estate is false.
There is a time when buying is best and believe it or not, there are times when renting is best. However, these ideas that its ALWAYS better to buy vs rent, and that EVERYWHERE real estate ALWAYS goes higher and NEVER and CANNOT decrease in price are myths.
Da Woof and others,
Been reading a few fascinating books (Untapped Riches and Missed Fortunes 101) that talk about getting into ARM loans and taking the money that you save each month and putting it into a Higher return than the home loan payment.
It says it is a arbitrage situation. Lender loans you at say a 4% rate and you take the remaining amount and putting into a safe investment with a 8% return. Just throwing out some numbers but the whole thing is equity in a house is dead money. It is the exact same thing a bank does, it takes money from others and gives them a small ROI and in turn loans into others for a higher rate.
It says to NEVER pay off your loan amount. Throwing it out at a few of you guys for your thoughts hwat am I missing here if somone is diciplined enough to take the money and invest it at a higher rate.
Quick example:
We each have 100k. You take yours and pay off your home with it and the house appreciates 5% the 1st year so you have 105k in equity.
I put 100k into a 10% investment ( I know a little high but the point of the argument) and the end of the year my investment account is 110k and the house appreciates 5% just like yours. So I have 10k profit from investment and 5k from the appreciation of the home. I also paid a very small loan on home of lets say $500 a month or 6k for the year so I am up 4k ( 10k off investment minus 6k in house payments) with making my money work for me.
Both of houses are going to appreciate the same no matter how much equity I already have in the home. Kind oif half ass explanation but something I may do. NEVER PAY OFF MY HOUSE!!! Make your money work for you, not let your bank take the money and make it work for them.
Would love to hear some others take on this matter.
Been reading a few fascinating books (Untapped Riches and Missed Fortunes 101) that talk about getting into ARM loans and taking the money that you save each month and putting it into a Higher return than the home loan payment.
It says it is a arbitrage situation. Lender loans you at say a 4% rate and you take the remaining amount and putting into a safe investment with a 8% return. Just throwing out some numbers but the whole thing is equity in a house is dead money. It is the exact same thing a bank does, it takes money from others and gives them a small ROI and in turn loans into others for a higher rate.
It says to NEVER pay off your loan amount. Throwing it out at a few of you guys for your thoughts hwat am I missing here if somone is diciplined enough to take the money and invest it at a higher rate.
Quick example:
We each have 100k. You take yours and pay off your home with it and the house appreciates 5% the 1st year so you have 105k in equity.
I put 100k into a 10% investment ( I know a little high but the point of the argument) and the end of the year my investment account is 110k and the house appreciates 5% just like yours. So I have 10k profit from investment and 5k from the appreciation of the home. I also paid a very small loan on home of lets say $500 a month or 6k for the year so I am up 4k ( 10k off investment minus 6k in house payments) with making my money work for me.
Both of houses are going to appreciate the same no matter how much equity I already have in the home. Kind oif half ass explanation but something I may do. NEVER PAY OFF MY HOUSE!!! Make your money work for you, not let your bank take the money and make it work for them.
Would love to hear some others take on this matter.
I didnt fully examine your entire post, but first Id like to know your definition of "safe investment". Is this 100%, 90%, 50% guaranteed to earn 8% without default?
Second, find investments that provide steady 8% return. If so, then yes I certainly agree its a wise decision to borrow the 4% money.
Just started reading it. Was thinking the same thing. Now this stuff is all greek to me but when I was skimming thru it something like investing in Life Insurance or something would get you areoun 7% or so, does that make sense I am not sure this is one of the investments. Actually not sure that is an investment, just what i read.
So you don't see a problem if one was to go against society's belief to pay down your mortgagae as they say that is the dumbest thing to do as that is all dead money just sitting there. Carry the loan and use the leverage to start other investments?
