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If a house is an expenditure, then no one needs to calculate or project a residual value. We would "give them away" at resale, to use a popular and inaccurate term.
But, if one thinks they could or would resell for money at some point in the future, then one may be wise to invest their funds and leverage into a property that would provide the best return while providing safe and pleasant shelter.
That calculable residual value and the desire to keep it high as possible is exactly what makes a home an investment. Positive or negative ROI can be generated.
When people buy with the intent to "give it away," because it is only a house, then it will be reasonable to remove the residual value from the equation and consider it only an expenditure.
I don't think we are there yet, and lenders will not support that philosophy at all.
Who ever thinks of "giving" a home away or for that matter a car you've owned or a boat you might want to sell? All you can expect for it though, is what someone wants to pay for it. If it has been maintained and updated it should generally retain its original value or might sell at a profit... but the days of someone buying a house; keeping it for 15 years and then trying to sell it with no updates for a profit having done nothing to it are over.
Like Peter Schiff says a house is like a car in that it will depreciate over time...unless the owner goes to the pains of keeping it updated and new or makes improvements to it , he or she shouldn't expect to make a killing on it when they go to sell it.
Who ever thinks of "giving" a home away or for that matter a car you've owned or a boat you might want to sell? All you can expect for it though, is what someone wants to pay for it. If it has been maintained and updated it should generally retain its original value or might sell at a profit... but the days of someone buying a house; keeping it for 15 years and then trying to sell it with no updates for a profit having done nothing to it are over.
Like Peter Schiff says a house is like a car in that it will depreciate over time...unless the owner goes to the pains of keeping it updated and new or makes improvements to it , he or she shouldn't expect to make a killing on it when they go to sell it.
It wasn't posted in a literal sense, hence the "quotations". The point is that the title is not supported in the article in the manner it's presented. Peter Schiff is also wrong because over the long term real estate has appreciated with smaller peaks and valleys along the way. A house should not be compared to a car.
It wasn't posted in a literal sense, hence the "quotations". The point is that the title is not supported in the article in the manner it's presented. Peter Schiff is also wrong because over the long term real estate has appreciated with smaller peaks and valleys along the way. A house should not be compared to a car.
Isn't that pretty much due to the factoring in of the land that's a part of the home purchase, along with the updating/maintaining issue?
Put this way...
Is a house in an undesirable location, with no updates whatsover (probably needing work) going to do much appreciating in today's market?
Kinda like a Hyundai that's been ridden until the wheels are falling off. It's good for parts (maybe the land, basic structure).
However, buying a classic Corvette is a whole other ballgame.
It'll appreciate. A good amount if you keep it pristine.
Really not true of the old Hyundai, no matter how well you treat it.
Of course, people refuse to read any farther. The man is spot on:
"They should be thinking of it as a great place to live."
If only people bought a home to live in it, we won't be in this mess today. Instead, a million folks got greedy and they fed the greed of their bankers and brokers.
I think he's been taken out of context (the usual media spinning, sensationalist headlining baloney). Nothing is good to invest in right now, except some BRIC ETF.
After looking at I don't know how many houses, with so many of them being somewhere in the foreclosure process or a short sale, and seeing some that were overpriced because they couldn't sell for less because it would be a short sale I have to agree with this. I did a basic search with the county deed office online before scheduling a showing and the number and dollar amount of HELOCs and refinances taken out were insane. So many of these sellers would've been walking away with a five or six figure check and a clean credit history if they didn't get greedy.
Like Peter Schiff says a house is like a car in that it will depreciate over time...unless the owner goes to the pains of keeping it updated and new or makes improvements to it , he or she shouldn't expect to make a killing on it when they go to sell it.
If Peter Schiff really says a house depreciates over time(like a car ), then he is not too bright
If Peter Schiff really says a house depreciates over time(like a car ), then he is not too bright
It's not the house, really.
It's the land.
The house, unless it was designed by a famous architect or is constructed from rare materials, should not appreciate very much all by itself.
It is the effort put in to keep it in good repair, updates to keep it current (unless it's a historic building, then it's more about keeping the original stuff in good working order).
Isn't that pretty much due to the factoring in of the land that's a part of the home purchase, along with the updating/maintaining issue?
Does it matter if it's the house or the land? Appreciation is appreciation. Are you trying to deflect the point or just split hairs to be splitting them?
The house, unless it was designed by a famous architect or is constructed from rare materials, should not appreciate very much all by itself.
It is the effort put in to keep it in good repair, updates to keep it current (unless it's a historic building, then it's more about keeping the original stuff in good working order).
This is my feeling as well... The home itself depreciates because it breaks down and deteriorates, certain parts of it rather quickly without being properly maintained. I don't think any RE professional here would argue that the majority of people do not even attempt at maintaining their house near as much as they should.
So, in the end the "asset" or "commodity" is the location. Neither term is technically correct, but just going with it for this thread. In that regard, I personally wouldn't use Moynihan and Schiff together to try and make a point. That's like MADD commenting about bar owners selling the booze. There's no real debate that the one hawking or selling the product that is killing people isn't going to take on the blame themselves. Even when they dole out the booze irresponsibly.
If you want to have a discussion about homes as investments - dig up some old Barney Frank or Frank Raines. There you will find a beginning of the transition to "investing" in homes - most notably packaging and trading mortgages being such a great idea that they decided everyone should have one (or two!). There's plenty of "blame" to go around for sure... from the crooked appraisers to the lenders who controlled them to the RE crack agents. All the way to the idiotic no doc loan signers.
and lastly, I know this is crazy talk - but in its truest definition an investment can <gasp> LOSE </gasp> money. We've lost track of that possibility in these days of the government backing everything.
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), then he is not too bright
