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tatupu70
2012 Jan 10, 4:45am
Also remember, if you borrow 100% at 4% and inflation is 3% home needs to rise 7% to cover fact you borrowed at 4% and inflation is 3%.
I agree that considering only appreciation in housing--it is a bad investment.
But if you borrow money to buy a house, its value decreases with inflation, so your home value really doesn't have to rise to offset inflation.
Also remember, if you borrow 100% at 4% and inflation is 3% home needs to rise 7% to cover fact you borrowed at 4% and inflation is 3%.
I agree that considering only appreciation in housing--it is a bad investment.
But if you borrow money to buy a house, its value decreases with inflation, so your home value really doesn't have to rise to offset inflation.
Good catch, and why does Tatapu, Patrick and others think housing has to be an investment and pay itself off? Nobody buys a car and expects it to pay for itself. We might as well all take the trolly instead of owning our own vehicles since we take a hit on those too, but instead we pay for car ownership because of the perks of getting us to point B faster. Home ownership perks may cost extra too. Nobody said every product in this world has to put cash in your pocket. iPhones don't nor does apartments, therefore, I don't feel owning has to be cheaper then renting to be a good buy and I completely go against Patrick and its herd.
Good catch, and why does Tatapu, Patrick and others think housing has to be an investment and pay itself off?
I don't think Patrick does believe housing has to be an investment. He's just reflecting one of the most commonly held thoughts in the U.S and debating it.
tatupu70
2012 Jan 12, 5:40am
Good catch, and why does Tatapu, Patrick and others think housing has to be an investment and pay itself off?
I don't. Just that if someone were to buy a house solely for appreciation, it was a bad move. If it's an investment, then you should get cash flow (rent) that exceeds cost. Or if it's your residence, then you get all sorts of other benefits.
RedStar
2012 Jan 13, 5:56am
Congrats Sub-Oink, I hope you stay happy. I am in a similar position, having bought just over a year and a half ago.
I may have lost about ten percent since then, but I plan to live here for quite some time and having a mortgage that is less than my apartment rental in the Bay Area rocks. Plus the dog seems to be very happy having a yard:)
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Well, so its about a year now that I bought and here is my current status:
Unlike the patrick.net predictions, I am not underwater, my house is not worthless or worth less and I am not hating life but loving it. Best decision ever. It feels good not to pay rent to somebody and making their retirement plan come true. This summer we did so many updates and improvements, would have never done that in a rental. And the best part - we refinanced our house at 4% and now our payment is actually not what our rent used to be but $280/m less. (and thats for a much bigger house) - Who could have know that interest rates would go even further from where we locked in and that my payment is now way less than rent used to be is definitely an xmas gift.
When I was talking about it last time, everybody jumped the gun on me and told me how I will regret my decision come xmas 2011. How I will be in total financial distress and will regret that I bought and eating ramin noodles. - Quite the contrary.
Well, folks?
The doom and gloom as predicted just didn't kick in, did it now?
I'll be back next year and repost - till then, keep up the good gloom and doom work, post the graphs that prove it and happy thanksgiving and merry xmas!!
:)
(Rumbling sound of an earthquake...)