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there are loads of factors that make outcomes vary including the fact that 30 years later that mortgage may represent so little in the scheme of costs that it adds nothing to affordability ....
the homes we bought in the 1970's were a lot of money at 30-35k .... that was at a time our rent was 109 dollars a month ...well today that 30k mortgage is paid and taxes are 10-18k a year along with all other costs . in fact the utility bills are more then that paid off mortgage represents .
so in affordability really nothing much was added as far as affording to stay in place . the thought that retiring a mortgage from 30 years ago means " free or even affordable housing " is insane as anyone in the tristate area can tell you ......
Our last child is off to college. Suddenly, we had no need for a 3000 sf house in the burbs. So we sold it and moved into a condo half that size. Best move we ever made.
It's interesting to read articles about how Baby Boomers are having problems unloading their massive houses. Because the upcoming people just are not interested (Or can't afford) such extravagance.
OP, depends, my friend bought a house in Queens for $570k exactly 6 years ago, now it's worth $1.3 Million. you go tell him house is a wealthy destroyer. He will just laugh at your face like you are a little boy talking.
OP, depends, my friend bought a house in Queens for $570k exactly 6 years ago, now it's worth $1.3 Million. you go tell him house is a wealthy destroyer. He will just laugh at your face like you are a little boy talking.
And someone just hit a $780M lottery jackpot, therefore it's laughable that anyone should be poor.
OP, depends, my friend bought a house in Queens for $570k exactly 6 years ago, now it's worth $1.3 Million. you go tell him house is a wealthy destroyer. He will just laugh at your face like you are a little boy talking.
6 years isn't that long of a time period to come to any conclusions and unless he sells that there is no way to tell where his valuation will turn up 20 years from now. That level of appreciation is not typical for long term Real Estate which has historically appreciated only at inflation or at most a percentage point above inflation. Also, the transaction costs of selling real estate is very high. Real Estate is also subject to neighborhood changes which can affect it's value either positively or negatively which is an additional risk but you get no additional return for these risks.
One **THINKS** that good neighborhoods cannot be affected adversely, think again - just recently a VERY prime area here in LA was the subject of huge controversy when the government was planning to relocate a huge homeless population in a park right in the center of that city!!! Home values would've plummeted. There were hundreds of homeowners from that city protesting at the courthouse.
Also, one needs to calculate real return minus costs... down payment opportunity cost, running costs, interest payments, property taxes, HOAs, any local taxes and deduct out the rental value received. So no, the net gain is not what he thinks it is.
For instance, the S&P500 has gone up 389% since 2009 which makes your friend's Queens appreciation look like chump change and to get that kind of run up you did not have to do anything - no maintenance, no property taxes, no HOAs etc.
Sure it can. I was spending over half of my take home pay on my mortgage+taxes+insurance. I could have used some of that money towards investments. I was most def. house poor.
OP, depends, my friend bought a house in Queens for $570k exactly 6 years ago, now it's worth $1.3 Million. you go tell him house is a wealthy destroyer. He will just laugh at your face like you are a little boy talking.
Leverage which often comes with homeownership is fun until it isn’t
And someone just hit a $780M lottery jackpot, therefore it's laughable that anyone should be poor.
house overall go up 3-4% per year long term, if you bought a $500k house, and put down $100k, your return for year 1 is $20,000, means if you only considering your down payment, it's 20% per year...
Investing 101.
Just make sure when you add the total of the housing cost, that is less than rental fee, then you are in good shape.
house overall go up 3-4% per year long term, if you bought a $500k house, and put down $100k, your return for year 1 is $20,000, means if you only considering your down payment, it's 20% per year...
Investing 101.
If, if, if, if... easy peasy. Anyone can do it if they have a down payment and credit. Life 101.
OP, depends, my friend bought a house in Queens for $570k exactly 6 years ago, now it's worth $1.3 Million. you go tell him house is a wealthy destroyer. He will just laugh at your face like you are a little boy talking.
everything is deal and timing dependent ... i bought my house in queens in 1987 for 169k ...... last year the house hit 1 million .. that sounds great ... except the fidelity insight growth model i have been using since 1987 would have taken the same money and turned it in to more than 4 million in nothing special fidelity funds .. even a total market fund would be more than 3.60 million ..
we sold the house in 2002 for 350k ... but i actually took that money , rented and used the money to buy manhattan real estate which produced multiple 7 figures for us .
you could subtract out rent and taxes and buy many homes today . so everything is relative to time frame , location , resources and deal . over all the appreciation in queens over the decades lagged manhattan by a lot. the real good appreciation was where you bought early on in the bad areas which were gentrified ..
many old good areas turned bad and the bad areas turned good ...... the areas that were around subways tended to be pretty bad over most of the past ...today those areas were gentrified and cost almost as much as manhattan ...
Last edited by mathjak107; 04-01-2019 at 03:07 PM..
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