patrick.net

I'd agree that a house is a depreciating asset, unless you have an inflationary economy, which is what we have. Then the house can rise faster in price due to inflation, than it falls in price due to depreciation.

Having a house paid off lets you sleep good at night - plus the landlord can't raise the rent, and you can paint the place any color you want without asking permission, have as many pets as you want, etc.

Depreciation is a concept used in accounting to measure the decline in an asset's value spread over the asset's economic life. Depreciation allows for future investment that is required to replace used-up assets. In addition, the U.S. Internal Revenue Service allows a reasonable deduction for depreciation as a business expense in determining taxable net income. This deduction is used only for property that generates income. For example, a building used for rent income can be depreciated, but a building used as a residence cannot be depreciated.

Is buying a house (ever) a good idea?

With millions of homes sold and bought over time in different economic cycles and markets, sure, sometimes it was/is a very good idea.

I think with this most recent and huge economic meltdown of 2008 opened a window, just for moment, just for a glimpse of the greedy tyranny of the global financial elite. This game has been going on for many decades!

http://theeconomiccollapseblog.com/archives/the-number-one-tool-of-financial-enslavement

In my opinion, a huge red flag is Fannie Mae selling $321k 1 bedroom trendy condos in Sherman Oaks.

http://www.redfin.com/CA/Sherman-Oaks/14141-Dickens-St-91423/unit-207/home/4835790

Is buying a house (ever) a good idea?

It depends. I'd rent forever rather then paying 500K for a crappy 1500 sq. ft. wooden box - I'll let the landlord take the tax break and make a wise use of my money somewhere else. :)

Leopold B Scotch says

We've allowed policy makers and legislation to short-circuit this under the idea that it is everyone's right to have a home, and it's the government's job to make it a near entitlement via its power.

How else you gonna get elected to office?

duckhead says

“Now renting v/s buying is a psychological issue? not a financial one?” It is BOTH, of course you want to buy a house so you feeeeel successful, and fitting in with all your neighbors who have all been taught that buying a house is the American Dream (psychological), then on the flip side your Realtor™ makes bank CHACHING (financial)! It’s a WIN WIN, you feeeeeeel good and your Realtor feeeeeeels good.

Do you...YOU...feeeeeeel like I do?

I'm loving the comments. I think the volume of passionate & conflicting opinions suggest that the question is best answered locally, and personally. It's a good idea sometimes. And like all industries, a few unscrupulous professionals (realtors, bankers, etc...) cast a shadow over the hard-working, honest few. Here's how I came to my own answer. It may differ greatly from yours, in your world and in your circumstances; I respect that. The process of answering may be the same for all of us, though our individual answers will no doubt (and should) vary greatly.

I am comfortable putting more than 20% down. I love this area, (Austin), and see employment options long into the future. I hate moving. I love working on a home--maintenance for me is a pleasure, not a chore. I plan on using every square foot of my new home--i.e. it is neither too large nor too small. I am happy with the current value, even if it never goes up (or declines) down the road. My monthly payment (property taxes included) is significantly less than my current rent. I am a picky homeowner and have been a picky renter. Conditions of rental units often offend me. I like the freedom of having a roommate or family member stay with me unconditionally for long periods of time. I do not, however, care about the tax write-off and I'm not foolish enough to believe I could flip this house in three years (like I did in 2005) and make a profit. Those days, for know at least, are gone. Pragmatism is king... and I'm just being a good subject.

That said, Austin is not San Francisco or Detroit or Miami. The things that make me happy may not make you happy. Rates will likely rise, which means home values may likely decline even more in some areas. But buying a home is a complex, multi-faceted experience--which is why a blog like Patrick's is so valuable to anyone in the midst of that decision-making process...

I bought a home for 325K and sold three years later for 565K. I've bought artwork that I later sold for more than 300% profit. The mustang I paid $3,000 for as a teenager paid for most of my undergraduate tuition.

I've tried to be nice here... in both of my posts. But you should take a closer look at what you believe is truth. There are exceptions to everything. I'm not recommending that those exceptions be the rule for making the decision to buy a home--in fact, just the contrary. But nobody benefits from such absolute statements.

I'm obviously in the wrong place. I've been reading this blog for years now... I guess engaging in a discussion was a mistake.

Buying a house can be a good idea if you:

- have a secure job in a stable industry
- plan to stay where you are for at least 5 years (longer is better)
- live in an area with stable house prices
- would be saving enough money on rent to justfiy the mortgage interest, maintenance, property taxes, insurance, and possible HOA fees
- don't mind doing yard work (or paying someone else to do it)

Scam is just that

She can't help it

“I'm obviously in the wrong place. I've been reading this blog for years now... I guess engaging in a discussion was a mistake.” Absolutely not! I welcome your tail of REAL ESTATE SUCCESS. Good to counter all the negative nancies around here who apparently paid for a round the world trip on the bitter bus. LOL. As always when faced with a big financial decision put aside all negative possibilities and engage in POSITIVE FINANCIAL FANTASIES!!! Good energy will mold reality. Soon you will be tycooning big time.

@patrick,

The new look does not tell which threads are new or I have read it.

No, Scam. Everything I said was true. I bought a home in 2002 and was fortunate enough to sell much higher in 2005, before things went south. I made enough to pay off the mortgage, a home equity line of credit and some nasty student loans. I don't see those days returning anytime soon, and I learned my lesson about buying (and leveraging) more than I ought to have. I shared here openly in the hopes it would help anyone debating about whether or not to buy a home. Apparently, you get off on attacking people not as open-minded and intelligent as you are. I hope you feel better soon.

The last thing I'll say is this: emotion (or hubris) ought to play no part in the decision to buy (or sell) a home.

bubblesitter says

The new look does not tell which threads are new or I have read it.

Oops. OK, that should be fixed now.

Should I add the "unread" image and the "new" blinky to the home page forum too?

bubblesitter says

The new look does not tell which threads are new or I have read it.

Ditto. I like that feature.

Can you see the new/unread thread graphics now?

Can you see the new/unread thread graphics now?

It's fine now. Thanks.

What a joke. :-)

Scam, what do you think about purchasing land and building your dream house the way you like it?

Is it also a bad investment?

KILLERJANE says

I could disagree because paying cash for a property frees up your income and you are actually paying sticker price. Financial stress is reduced. You always have a place to live in hard times without the added mortgage payment pressure of losing your home. Try it, you'll like it !

Depends on what interest rates are really. From firsthand recent experience I can tell you that with todays interest rates, putting an additional 50k down on a home barely makes a noticeable difference in overall payments.

But besides the point, if you're about to buy a house, in my opinion you should already have a sizable amount of not only cash, but retirement savings as well.

I didn't misrepresent anything. If you feel the need to accuse, then prove it. Quote me as saying that people should buy because they'll make tons of money.

I'm guessing you've had some bad experiences with housing in the past. Don't take it out on others, and learn some civility while you're at it. Clearly the "Insult Another User, Get Suspended" rule is only for a select few. Use your loose leash wisely for a change...

You can pay 200,000 cash or 350,000 over thirty long years, said the king to the peasant. I prefer to be the king at a young age.

Can you see the new/unread thread graphics now?

I can see the feature in some threads, but not others. Weird.

For me, one income, not a good idea, in my state, property taxes change the dynamic for me. But, lol, someone did just call and ask about the house I'm selling, and the first question they asked was how much are the property taxes, and they are about $3000/yr. for a 900 sq. foot home.

KILLERJANE says

You can pay 200,000 cash or 350,000 over thirty long years, said the king to the peasant. I prefer to be the king at a young age.

Like you, I don't like paying interest. It's money down the drain. But so is rent.

The rent vs. buy decision ultimately comes down to minimizing the "money down the drain." You could call it minimizing the "crapper index."

“You can pay 200,000 cash or 350,000 over thirty long years, said the king to the peasant. I prefer to be the king at a young age.” CHACHING you said a mouthful there lady jane, also you would be the queen no??? Any way, you know that if you don’t pay over thirty years you’re going to stiff the banker out of a lot of interest? That’s not very nice. They got your back, they have all the useless old people’s money and they pay them .3% interest so they have to eat cat food meanwhilst they loan it out at 10, 20, 50 times that interest so we can buy houses. You have to pay your respects to such a solid scheme!!!!

You can call me the King of England if you want, Scam. Show me the proof. What exactly am I lying about???

My wife is the cupcake. And only I get to call her that...

Austin TX says

You can call me the King of England if you want, Scam. Show me the proof. What exactly am I lying about???
My wife is the cupcake. And only I get to call her that...

I wouldn't worry too much about what "Housing is a Scam" says. He/She is a notorious troll that many people have on Ignore. Scam just goes around accusing people of being lying Realtors. And he/she changes his/her name constantly in an attempt to avoid detection.

Patrick, is there a way to fix the problem of banned folks changing their names constantly?

Shutdown, formerly Scam... I'm not a realtor, builder, banker, mobster or Genghis Kahn. I'm just a person, like you. You should remember that when you post not just here, but anywhere. If you did, perhaps you could keep the same name for more than thirty minutes.

Our brief exchange here reminds me that I have to pick up my four-year old nephew from daycare soon... Best of luck to you.

OMG Realtors are Liars! Everyone is a liar! Everyone is lying to me all the time! It's all a conspiracy against me! I'm totally paranoid!

Austin TX says

Our brief exchange here reminds me that I have to pick up my four-year old nephew from daycare soon... Best of luck to you.

That's insulting to 4-year-olds. ;-)

wthrfrk80 says

Patrick, is there a way to fix the problem of banned folks changing their names constantly?

Actually, if you're banned, you're banned by IP address. Name changes don't get around that.

The one guy who changes his name all the time isn't banned. In fact, the only IP addresses that are banned right now are spammers (mostly Russian for some reason), and one guy who just keeps personally insulting me every time I let him back on.

If you "ignore" a user though, he will be ignored no matter what he changes his name to.

Shutdown... I don't believe there are too many realtors following Patrick's blog. If they are, I'd be inclined to work with them over the unfortunate situations I've had with dishonest, disinterested realtors in the past. Furthermore, nobody--as far as I can tell--is out to get you, deceive you, or profit from your future, ill-informed decisions.

You're among compassionate people here. Why don't you talk about what happened to cause you to distrust EVERYONE? And why not consider refraining from terms like "real-ta__" in the future? It's offensive on all levels...and does little to communicate your real concerns.

Why so quick to judge people? He said he was not a realtor, his exchanges seemed fair, balanced, and honest. He even said home prices are going to decline going forward.

With all due (and not so due) respect... this is about you. Otherwise, I'd likely be engaging someone with a legitimate argument or concern, or talking about things like when rates will go back up, what that may do to home values, shadow inventories, etc... Instead, I'm addressing one person with two screen names about phantom misrepresentations you have yet to clarify.

I'll admit at first your comments, insults and name calling angered me, but now I find them sad. Somewhere in your medicine cabinet is a bottle with more pills than it ought to have. I suggest you log out and locate it.

wthrfrk80 says

Patrick, is there a way to fix the problem of banned folks changing their names constantly?

Actually, if you're banned, you're banned by IP address. Name changes don't get around that.

The one guy who changes his name all the time isn't banned. In fact, the only IP addresses that are banned right now are spammers (mostly Russian for some reason), and one guy who just keeps personally insulting me every time I let him back on.

If you "ignore" a user though, he will be ignored no matter what he changes his name to.

.. so why isn't he banned? Every other post seems like he's insulting another user.

Ignore works nice

zesta says

.. so why isn't he banned? Every other post seems like he's insulting another user.

Yes, he's annoying. I have a hard time banning anyone though (except spammers - I absolutely LOVE banning them).

Why not use the ignore feature, or dislike his comments?

I'm going to have some anti-troll feature which lets you filter by dislike/like ratio soon.