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The other key is to buy the worst house in the best neighborhood you can find, and spend your weekends working on it instead of watching football and drinking beer.
There is money to be made in being a homeowner but it takes hard work, most people just are not willing to pay that price.
Why should they pay the price? This is not a moral issue. If someone would rather relax on the weekend than spend his time fussing with a house, so what? It's his life and his business. Moreover, legitimate experts often disagree about the wisdom of investing in houses. I made tons of money on my first house, whereas my second house in a very good neighborhood barely kept up with inflation, and more recently the value of my relatively modest house in one of the best neighborhoods in the Carolinas gyrates just like the value of everyone else's house as our economy wheezes along. Making money on real estate is often just luck and leverage. Don't confuse being lucky with being smart.
The potential to make money by owning a house needs to be weighed against the potential of being trapped in a house that you can't sell when you need to move to find a job, and against the inevitable obligation to become a weekend janitor.
Last edited by Hamish Forbes; 09-17-2012 at 10:05 AM..
Owning vs. renting often comes down to a lifestyle choice.
I work with several very well to do physicians that have apartments in San Francisco... all in desirable neighborhoods.
All of them could easily afford nice homes... they choose renting because under San Francisco's rent control ordinances they are able to continuing renting for a fraction of what it would cost to buy or even rent somewhere else...
My family comes from peasant stock farmers and as I said before... owning your own home was instilled at an early age... not so much for investment... just as a sign of arrival. To farm families... the land is everything.
It is definitely not for everyone and having to call someone for every task will guarantee the money pit scenario...
Owning vs. renting often comes down to a lifestyle choice.
I work with several very well to do physicians that have apartments in San Francisco... all in desirable neighborhoods.
All of them could easily afford nice homes... they choose renting because under San Francisco's rent control ordinances they are able to continuing renting for a fraction of what it would cost to buy or even rent somewhere else...
My family comes from peasant stock farmers and as I said before... owning your own home was instilled at an early age... not so much for investment... just as a sign of arrival. To farm families... the land is everything.
It is definitely not for everyone and having to call someone for every task will guarantee the money pit scenario...
^^This.^^
It's possible to do well financially under either scenario. The key is to keep your housing costs reasonable (25% or less of gross income) so that you have funds available for savings and investment.
It's possible to do well financially under either scenario. The key is to keep your housing costs reasonable (25% or less of gross income) so that you have funds available for savings and investment.
1. Live with a roommate or roommates while you're single.
2. Make sure your significant other has a well paying job.
3. Don't have kids until you're in your 30s and don't stop working when you do.
4. Start putting money in a 401k as soon and as much as you can.
Actually, I'd say that the social changes being created by the younger generation right now are bigger than anything we've seen in decades. Not pursuing regular employment, not buying houses or cars at nearly the same rate as earlier generations, fewer marriages, lower birth-rates... these are all rejectionist approaches to social change.
Rejectionism can be a very powerful tool. We're barely into the demographics shifts that will take deeper hold in the next decade or so, but there are already a lot of news articles more or less complaining that younger people don't seem to be participating in the consumer economy in the same way as before.
Get used to it.
Agreed. Hopefully the attitude sticks! The financial apparatus disobeyed the cardinal rule of debt-driven serfdom building: don’t milk the young citizenry too much/too fast; it distills frugality & makes them economically wise to deception for the rest of their lives!
Many young people are burdened with excessive education debt. The schools milked these folks for far more money than their product was worth in terms of future income. Then they saw their parent's and older siblings housing "investments" turn into a financial nightmare. This was followed by cars becoming much more expensive and fuel prices exorbitant. The simple result is even the best employed of these people are simply nearly broke after all payments are made. The folks stuck with low income jobs cannot even clear their student debt. For these people buying anything new is simply not possible.
This is the result of the insane "consumer/finance" economy that was sold during the late 70's and 80's. This economy stressed buying on credit instead of manufacturing wages and savings. It was great for the financiers but an unmitigated disaster for most. Instead of flipping houses and burgers we should have used tariffs to protect our existing manufacturing base and short credit to prevent Wall-mart and other economically destructive parasites. Eventually this resulted in a monster like Romney's Bain Capital being considered financial heroes when they were actually industrial and employment piranhas.
I believe the consumer economy has seen its day. I hope we can build a new economy around taking care of our elderly and rebuilding our country. This will require taxing the profits of previous Theftocrocy as well a substantial withdrawal from the world military domination and totally unproductive military manufacturing. That is an expense we simply, like the underemployed young person, cannot afford. It will also require countervailing tariffs to protect our manufacturing and industrial workers wages.
Wall Street will scream bloody murder but we cannot afford their excesses. They looted our people and our country and now they will have to part with their stolen wealth.
Agreed. Hopefully the attitude sticks! The financial apparatus disobeyed the cardinal rule of debt-driven serfdom building: don’t milk the young citizenry too much/too fast; it distills frugality & makes them economically wise to deception for the rest of their lives!
Hi DSOs--
As a 20-something, I know quite a few people that are driving their old cars until the wheels fall off. (One guy has two cars - one is at 300k and the other is at 270k). And when they do buy new cars, it's cars that make economic sense - Honda Civic's, Toyota Camry's, etc. No land yachts, no gas guzzlers, no big ole profit margins for the auto makers. Likewise with housing - I can only think of one friend in my immediate circle who bought a house - and in his case, double income, no kids, already married at 25. The rest are either still at home or renting for the foreseeable future (the latter category includes myself).
Moreover, maybe it's who I surround myself with, but I live in a world of cheap people. Penny pinching is the norm.
Many young people are burdened with excessive education debt. The schools milked these folks for far more money than their product was worth in terms of future income. Then they saw their parent's and older siblings housing "investments" turn into a financial nightmare. This was followed by cars becoming much more expensive and fuel prices exorbitant. The simple result is even the best employed of these people are simply nearly broke after all payments are made. The folks stuck with low income jobs cannot even clear their student debt. For these people buying anything new is simply not possible.
This is the result of the insane "consumer/finance" economy that was sold during the late 70's and 80's. This economy stressed buying on credit instead of manufacturing wages and savings. It was great for the financiers but an unmitigated disaster for most. Instead of flipping houses and burgers we should have used tariffs to protect our existing manufacturing base and short credit to prevent Wall-mart and other economically destructive parasites. Eventually this resulted in a monster like Romney's Bain Capital being considered financial heroes when they were actually industrial and employment piranhas.
I believe the consumer economy has seen its day. I hope we can build a new economy around taking care of our elderly and rebuilding our country. This will require taxing the profits of previous Theftocrocy as well a substantial withdrawal from the world military domination and totally unproductive military manufacturing. That is an expense we simply, like the underemployed young person, cannot afford. It will also require countervailing tariffs to protect our manufacturing and industrial workers wages.
Wall Street will scream bloody murder but we cannot afford their excesses. They looted our people and our country and now they will have to part with their stolen wealth.
I would take it one step further... consumers were encouraged to take out HELOC mortgages for consumer items because it was the only way to deduct the interest... again, an example of a government program with unintended consequences.
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