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The whole point is that historically housing was never a great investment, and can't be viewed as providing a great return, it's a place to live and store some value. But your home shouldn't be viewed as an "investment" vehicle....
So, then, are you saying that it doesn't really matter what you pay for a house or what you sell a house for as long as you like the house? If that's so, then we'll start viewing houses like we did in the 50's and 60's - something we live in for a decade of more, a permanent place to live while raising the kids. It becomes much more permanent in nature. Somehow, over the past decade or two, people started viewing houses as an alternative investment or retirement plan.
However, a home is not a perishable item, therefore it is an investment in the sense that we sell it at some future date. Personally, I prefer to buy low and sell high vs buying high and selling low. Unfortunately, the market dictates which it will be. Therefore, monkeyboy, I find your remark to "Screw the sellers...either they are a fool who paid way too much for a house, and are responsible for crazy price escalation in the first place...or they are a person who has held the home for many years and has seen a tremendous price increase, they can shave a little off their 200% increase in value...." a little puzzling. Like I said, is that what you'll be saying when it's time for you to sell, or are you a renter who never intends to buy?
The whole point is that historically housing was never a great investment, and can't be viewed as providing a great return, it's a place to live and store some value. But your home shouldn't be viewed as an "investment" vehicle....
Buying a home is probably the biggest investment most people will ever make.
I LIKE the way people viewed homes in the 50's and 60's! My husband and I finally got a contract to sell his bachelor pad that we're living in right now and a house to live in for a decade or more and raise the children we hope to have in is exactly what we are looking for! However, we know that we are going into an area where we might not be able to afford the house that we'll want to stay in for that long. So, if it means buying something a little smaller and moving up we're prepared to do it... we are also looking for the best deal we can get but having just sold a house we aren't looking to lowball anyone either. We are looking for houses we can afford if we paid asking price, and if it's worth it we'll pay near asking price for a house if it means we get what we are searching for.
Buying a home is probably the biggest investment most people will ever make.
It probably is the biggest, but historically doesn't have the greatest returns as many people mistakenly believe.
Historically, home prices traditionally have appreciated about the same rate as T-Bills (approx 3-4% YOY). Of course some day we hope to have that mortgage paid off and use it as a vehicle to sell, but please do not expect you have the right to anything above those percentages. A home IS an investment, however if you're making comparisons, the financial returns are not great factoring appreciation, expensive front and back loads (IE buying and closing costs), + the $$ it takes to maintain the property.
It probably is the biggest, but historically doesn't have the greatest returns as many people mistakenly believe.
Historically, home prices traditionally have appreciated about the same rate as T-Bills (approx 3-4% YOY). Of course some day we hope to have that mortgage paid off and use it as a vehicle to sell, but please do not expect you have the right to anything above those percentages. A home IS an investment, however if you're making comparisons, the financial returns are not great factoring appreciation, expensive front and back loads (IE buying and closing costs), + the $$ it takes to maintain the property.
The whole point is that historically housing was never a great investment, and can't be viewed as providing a great return, it's a place to live and store some value. But your home shouldn't be viewed as an "investment" vehicle....
Sure it should by the very definition of the word.
"Investment:
An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
Notes:
The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense. In the financial sense investments include the purchase of bonds, stocks or real estate property"
I don't know what market you've been seeing but historically real estate does provide a ROI. Maybe not the same as a t-bill but you can't live in a t-bill and you can't leverage them as well either.
It matter very much what you pay for your home...but things have an intrinsic value. What makes the house that was 250k a few years ago now worth 600k, when nothing about the area significantly changed. It was foolish people thinking that it would keep appreciating at 15% a year...that is just unsustainable, anthing above the your rate of wage increase can't go on for ever...If you decide it is an "investment" then you had better not get greedy, and realize your gains before a market swing...just like any stock...
I am so proud of you Especially your last comment "I'm aware that one day I'll be the seller" I am a Realtor in Colorado Springs and although I cannot comment on asking prices else where I must say that it is most unusual for our prices here to be priced such that a seller can afford to drop by 20 to 40 k. If they have owned it for 25 years and updated it and the market says it will stand a certain price, then sure the seller may have a great amount of equity in it - but then they deserve it as they have stuck around and paid twice as much for the house as when they bought it. Can they play with the price a bit, sure and they normally do. As always, it depends on the sellers motivation and financial situation as to how much they can give. I am shocked at the prices that people are paying around other parts of the country and unfortunately they tend to come here and think they are entering the same market place as 'back home' - but they are not - Colorado did not see the incredible price increases (bubble) that other places did. Anyway, after all that - good luck on your move.
How about not asking the seller to knock anything off the price of the house. If the house is priced correctly then it should sell for the price offered. If no one is looking, the seller will drop the price on their own until buyers start looking at it again.
Being "priced correctly" is such a fluid term....if sellers keep getting lower offers then what more does it take for them to realize they might not be priced correctly...even if they think thats what their home is worth? What else can you expect than to get lower offers when there are vacant homes down the street for significantly less $....at least this is the case in Phoenix.
A lot of buyers are also thinking of their new monetary investment being the house they are buying. We are worried that if we dont buy at the lowest price and things keep going down then we are going to be in the same place the sellers are in now-and that is NOT a position I want to put myself into. Its not just that we want to gouge sellers out of profits-we are trying to protect our future financial interests as well.
I hope all these sellers get what they consider a fair price for their home and they can make it out of their house without serious financial disrepair-I cant imagine being someone who bought in 02,03,04,05 and is now trying to sell at those inflated prices....
It matter very much what you pay for your home...but things have an intrinsic value. What makes the house that was 250k a few years ago now worth 600k, when nothing about the area significantly changed. It was foolish people thinking that it would keep appreciating at 15% a year...that is just unsustainable, anthing above the your rate of wage increase can't go on for ever...If you decide it is an "investment" then you had better not get greedy, and realize your gains before a market swing...just like any stock...
While you have some valid points there are places it can go on, those are places where no more buildable land is available and people still want to live there no matter what. I don't agree with that kind of thinking, nothing is THAT important to me but there are those that have more money than sense. My brother paid 250k for his house 5 years ago and the one next door sold for 850k last year. I know, that was last year and to that point one down the street just sold for 725k or so. Go figure.........
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Especially your last comment "I'm aware that one day I'll be the seller" I am a Realtor in Colorado Springs and although I cannot comment on asking prices else where I must say that it is most unusual for our prices here to be priced such that a seller can afford to drop by 20 to 40 k. If they have owned it for 25 years and updated it and the market says it will stand a certain price, then sure the seller may have a great amount of equity in it - but then they deserve it as they have stuck around and paid twice as much for the house as when they bought it. Can they play with the price a bit, sure and they normally do. As always, it depends on the sellers motivation and financial situation as to how much they can give. I am shocked at the prices that people are paying around other parts of the country and unfortunately they tend to come here and think they are entering the same market place as 'back home' - but they are not - Colorado did not see the incredible price increases (bubble) that other places did. Anyway, after all that - good luck on your move.
