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Old 06-09-2012, 02:56 PM
Location: El Dorado Hills, CA
3,670 posts, read 7,974,554 times
Reputation: 3748


It's a home. The ability to sell when life changes in the future should be considered, but it's NOT an investment, it's a place to live.
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Old 06-09-2012, 03:16 PM
Location: Florida -
8,238 posts, read 9,994,274 times
Reputation: 15086
It seems that a lot of people are looking at a home as more of an investment than purely a 'home.' In this market, one of the greatest concerns of folks is being 'upside-down on their mortgage.' ... a concern born largely out of the investment dynamics surrounding a home. Likewise, when the market was going up in 2003-2005, many 'cashed-out' on HELOC's based on potential ROI, ... again, an 'investment' mindset. Finally, when folks look at their wealth and assets, the 'value' of a home always comes into play.

A home may be a home, but, since it entails such a large portion of one's financial resources, one who doesn't also see it as an 'investment' ... may find themselves coming-up short when it comes to reselling, refinancing or borrowing.
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Old 06-09-2012, 10:40 PM
Location: Canada
121 posts, read 257,871 times
Reputation: 172
My house is a place to live. I didn't buy it expecting to make a bunch of money.
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Old 06-10-2012, 04:54 AM
64,577 posts, read 66,100,109 times
Reputation: 43002
its all a consumption item . its an expense and represents our cost of housing.

the fact it has a residual value at the end can offest some of the costs of your housing but typically over a lifetime of housing renting or owning will leave you in the negative.

with only 2 components usually driving up the price to 2 to 3x what you paid namely mortgage interest and taxes even figuring the residual value of the house is going to leave you negative .

what a house can do is improve existing cash flow once its paid for. your housing costs may fall way less then rent giving you more each month to live on.

but! a renter who invested wisely over decades can do the same thing by increasing his income with the assets he saved.

one way isnt better than the other. all roads lead to managing our housing costs.

our paid off house in the pocono mountains of pa runs us 8-10k a year ,we are their part time.

just the income we are losing on the money tied up in the house is about 4% conservatively on long term munis. thats a total cost of 20k a year the house runs us including lost income we arent generating.. we went to contract to sell it just this week.

we can rent a similiar house for alot less then that. in this case renting and investing beats ownership.

we sold our full time home in nyc in 2004 .. i paid 169k in 1987 and sold for 335k.. not bad until you see that the fidelity insight newsletter i have been following and investing with since 1987 took that same 169k and returned 1.8 million dollars.

i could have subtracted out all the rent i would have paid over that time frame and still bought 2 homes with it today.

i dont consider a home anything but an expense like any other expense.

Last edited by mathjak107; 06-10-2012 at 05:04 AM..
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Old 06-10-2012, 06:31 AM
Location: Sierra Vista, AZ
16,116 posts, read 20,148,778 times
Reputation: 8204
A home is not a bank account, it is where you live. The last bubble made that clear
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Old 06-10-2012, 07:57 AM
Location: North Beach, MD on the Chesapeake
32,107 posts, read 39,170,046 times
Reputation: 40515
Originally Posted by Boompa View Post
A home is not a bank account, it is where you live. The last bubble made that clear
We said the same thing when the previous bubble blew in the early 90's. After about 10 years or so memories faded, or you had new buyers entering the market, and it happened again.

I also think that a lot of shows like the property flipping ones or Your New Home added to the frenzy. I did find those shows entertaining.

Last edited by North Beach Person; 06-10-2012 at 08:12 AM.. Reason: spelling
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Old 06-10-2012, 08:03 AM
Location: Texas
42,203 posts, read 49,753,916 times
Reputation: 66975
It's a home.

However, as in any purchase, it's best to look at it from a value and strategic standpoint, as well. Even more so in this case, because it's not a consumable or disposable purchase. It's something you will eventually have to sell. You can set it up to be to your benefit.

So we picked a home that is our home and we are happy with it being our home. But we also picked a specific area - both because we really like this area and because we know the value will always stay up. That...and we waited until we were able to get a decent deal on a prime lot.

On top of that, we are prepaying down the mortgage much faster than 30 years, because we feel every cent we save on interest is a cent earned.

So while we don't look at it as an investment, per se, we want to be smart about how we deal with it.
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Old 06-10-2012, 08:10 AM
Location: ๏̯͡๏﴿ Gwinnett-That's a Civil Matter-County
2,117 posts, read 5,092,093 times
Reputation: 3497
Unfortunately it is but it should not be.
Americans (and Canadians) are desperate for an overhaul of the for-profit housing system.

This death pledge (mortgage) as we know it is a total scam. Of course the government doesn't want to fix that. If people weren't slaves to their mortgage, they could actually afford to work less and pay less taxes.

And when housing prices rapidly inflate, it squeezes people out of entire cities. I don't believe we should have wealthy cities and poor cities. I think we should have cities that everyone can afford to live in.
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Old 06-10-2012, 12:01 PM
64,577 posts, read 66,100,109 times
Reputation: 43002
to me what differentiates a consumption item from an investment item is the ability to sell it and either invest in a different asset or spend the cash.

fine art , collectable cars , fine watches are all consumption items while your enjoying them just like a home.

when the day comes you want to sell it and move on your free to do what you want with the proceeds.

with a home we have to either buy another home or rent with the money. even if you downsize and buy a cheaper home by the time your total lifetime housing costs are added up that money will still be gone and used for housing yourself and your family.

if your planning to stay in your home forever whether its worth a million bucks or 100k doesnt matter at all.

it may to the tax man when you die or to your heirs but its a moot point if your living in it
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Old 06-10-2012, 12:15 PM
Location: Needham, MA
6,324 posts, read 9,026,282 times
Reputation: 5324
Originally Posted by QIS View Post
It's both!
I agree.

Clearly, a house is a home where you live and raise your family and make memories. However, you also don't want to put money into a house and get back none of it. If that were the case, you might as well rent.
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