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Many people say it, many realtors categorically deny it: a home is not an investment. Pick a house because you want a house. Or don't.
Very sound advice, there...
FWIW looking back to the late 50s, my father was congratulated by everyone he
knew because he was able to sell our then 10-year-old post-war duplex for slightly
more than he paid for it whereas most houses were depreciating even though we
were in the middle of the booming Northern Virginia suburbs.
I doubt that the general RE boom will revive itself anytime soon. As a home owner,
I wish it would, but I'm not sure that's the best thing for the country as a whole.
I think well located, desirable homes will appreciate, but at a reasonable
and stable rate. Nice to have, but nothing to hang your hat on.
Many people say it, many realtors categorically deny it:
a home is not an investment.
I disagree.
Quote:
Originally Posted by Zoidberg
Pick a house because you want a house. Or don't.
I agree.
Most people consider their house to be an investment.
It's a leveraged investment in real estate where the investment
aspect is subsidized by the government. It's a store of value.
It's not like making the insane decision to buy an automobile
or furniture on time where it's a race to see which item/asset
goes to zero first: ... The loan < or > the vehicle/couch/etc. ...
Housing prices have fluctuated up and down over the years making
housing in some periods bad investments and some periods good.
When you consider the tax-deductibility of the interest, property
taxes, and tax-free nature of personal home capital gains, ignoring
the investment aspect of owning a home is nuts.
While lots of people are doing the "tisk-tisk" -stupid home investors -,
it wasn't long ago that it was just accepted that housing prices
would keep going up and up.
My savings account is an investment. It sux, but it's still an
investment that returns me a whopping 44 cents each month from
a $5,000 investment.
Sometime in the future, housing prices will, indeed, experience a
long-term sustained rise in price. At that time, it will again be a
good investment. Until then, not so much.
Quote:
Originally Posted by Zoidberg
... federal government decided that homeownership was an endeavor
worth subsidizing. One wonders if that was such a wise decision,
Not me.
I see, and have never seen any reason to allow home mortgage
interest to be tax deductible or to allow people to walk away with
hundreds of thousands of dollars in capital gains tax-free ( and then
move to New Mexico to build trophy houses ).
People have argued with me that "it's a desireable behavior to own
a home and it should be rewarded ..." ... a slipperly slope that is ...
Recent statistics have indicated that, adjusting for income, homeowners do not feel less stress or better life satisfaction than renters.
I do not fall in that statistic.
Quote:
Originally Posted by Zoidberg
Also, more alarmingly, homeowners tend to move far less (even when there's no other reason to stay), and as a result have much higher rates of long-term unemployment.
Hummmm. In the past 50+ years I have never been forcibly unemployed.
Quote:
Originally Posted by Zoidberg
Many of us have forgotten that it was only a few decades ago that the federal government decided that homeownership was an endeavor worth subsidizing. One wonders if that was such a wise decision, since things like health care, etc. are getting less subsidy as a result.
What subsidy was this? The ability to obtain income tax relief on mortgage interest?
Quote:
Originally Posted by Zoidberg
Many people say it, many realtors categorically deny it: a home is not an investment. Pick a house because you want a house. Or don't.
I agree. I hear people say, we spent all that money on a xxxxx because it is a good investment and we can claim the loan on our taxes.
xxxxx could be a kitchen, pool, extra garage, patio, fence, fireplace,,,
But to a degree I generally consider a purchased home a better investment than a rented home. There are situations where renting is a better solution.
... homeownership was an endeavor worth subsidizing. ...
What subsidy was this? The ability to obtain income tax relief on mortgage interest?
I'm sure that's what he meant.
You get to write off the interest on the loan(s) used to purchase
a house ( subject to limits ) whilst any other interest that is not
a cost of obtaining income is not deductible.
You get to write off the property taxes.
Gains from the sale of a house is not taxable ( subject to limits )
whilst any other gain from the sale of investment assets is taxable.
It's a form of social engineering - like all the tax breaks on solar panels
for your home and stuff - like getting a tax break on charitable deductions.
Only in part. FHA, Fannie Mae, Freddie Mac, etc.. are all underpinned and guaranteed by the federal government. They pose a competition to the private lenders out there, and as such, all of us with home loans have cheaper loans as a result.
Only in part. FHA, Fannie Mae, Freddie Mac, etc.. are all underpinned and guaranteed by the federal government. They pose a competition to the private lenders out there, and as such, all of us with home loans have cheaper loans as a result.
Actually, they don't really compete with private lenders; they allow private lenders
to make instant profits by selling just-issued mortgages to Fanny and Freddie, recouping
their actual capital investment plus "instant" interest profit whereupon the private
lenders can turn around and lend that same money again.
Very few private lenders want to keep the mortgages that they've placed; they want
to unload them as fast as possible.
... they allow private lenders to make instant profits ...
... lenders can turn around and lend that same money again. ...
I'd call that a subsidy then.
The government takes tax money from someone and gives it
to someone else so that someone else can make more money
than they would without that "lubricant."
Just guaranteeing a loan/deal is a subsidy also. It might not cost
any money to guarantee 'A' or 'B' or .... alone, but sooner or later,
the government has to make good on maybe guarantee 'G.'
The government takes tax money from someone and gives it
to someone else so that someone else can make more money
than they would without that "lubricant."
Just guaranteeing a loan/deal is a subsidy also. It might not cost
any money to guarantee 'A' or 'B' or .... alone, but sooner or later,
the government has to make good on maybe guarantee 'G.'
Yep. Subsidy and social engineering combined. I am, however, in favor of both
Freddy and Fannie (though both need of far greater oversight) as well as the tax
break on mortgage interest. I just think helping people plant community roots is
worth the cost.
It's just my opinion and I'm sure you don't hold it against me ( but reserve the right to take cheap shots at me about it)..
Never fear...
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