Quote:
Originally Posted by Europeanflava
Let's be real here. Homes are for people with kids to raise them in. They are not a good investment for people with no kids to live in. Before anybody shouts out equity I will tell you this.
1. You'd get better equity by living in a cheap apartment and investing any extra money in the stock market and proudly watch it grow for 10/20 years. Screw a investment where you pay property taxes and any maintenance is on your dime. Yeah I said it.
2. When you live alone you don't need as much personal space. This makes apartment living superior to the single individual.
3. It is a myth that houses are assets. They aren't. Just stop paying the taxes on that home and see how fast Uncle Sam steals it from underneath you. The only real assets In life are your investments, the money you save at the bank, and your job. Anything else your just renting for a fixed amount of time (with the car being the only exception).
Just my opinion on why homes are a bad investment for single people and why renting for those people is a better option.
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That's more the viewpoint of a young person, I'd say.
1. Homes are not just houses. They are homes. They represent a standard of living, a way of life. You pay not just for a house, but also for a neighborhood, where people stay for years and one can develop relationships with, even on just a casual basis.
2. Your property taxes are tax deductible. When calculating your stock investments, subtract whatever amount you would have saved on income taxes on the last 10 years, and then add back the amounts you spent for repairs & maintenance.
3. Don't forget to include you HO insurance as an expense, compared with the less costly renter's insurance.
4. Don't forget to subtract from your stock investment profits whatever value you assign to loving your home and having hte ability to paint or change it in whatever way you want. Also subtract from your profit whatever value you assign to your green space of your yard and how you use it: fruit trees, flowers, awesome trees, and just the breathing room and space free from being sandwiched inbetween other people.
5. Subtract from your stock profits the cost of maintaining your yard vs. the pleasure you get from it, and the food you grow, and the space.
6. Subtract from your stock profits whatever the ding in your credit rating takes from not being a homeowner. Owning a home is viewed by creditors as more stable, and you get points for that in your credit score. Whatever the lower score costs you in increased interest rates for your car or other items, subtract that from your stock profits.
7. Subtract from your stock profits the increasing rent over 10 years vs. your home mortgage remaining the same (not incl. homeowner's insurance and property taxes).
8. Subtract from your stock profits any extra amounts for utilities you may not have as much control over. In a house, you are 100% in control of your utilities. In an apartment, radiant heat and such from surrounding apartments will seep into yours, so you are at least somewhat limited in controlling your costs. You are also likely to have more of a bug problem, since they will come in from your neighbors' apartments.
9. Subtract from your stock profits any irritation cost from noisy neighbors. Parties, loud electronics, etc. You share walls with neighbors. This is much less likely to happen in a single-house neighborhood (plus, the quality of the neighbors is higher in a homeowner neighborhood).
A home is more than an investment. It represents a more stable way of life than apartment living, including your more stable neighbors. It is ALSO a financial investment, but that's not its main purpose.
Real estate is less risky than a stock investment. It is more guaranteed to appreciate over time than a stock, but real estate is less liquid, and it costs you to sell it.
I am looking for a forever home to retire in. I could live in an apartment and not have to pay for repairs. It's appealing. But it would cost a LOT to rent in a good area by good neighbors vs buying a home in such an area. You simply can't rent in the good areas. That's why they're called the good areas: they don't have rentals.
I also want a yard, a little space of green to call my own, to breathe, to offer my pets some room to run in, to have a small garden and a few fruit trees. Ahhhhhh....a much nicer way of life than living in a cubicle next to others who are living in cubicles, and who change every year. No telling who the neighbors will be next year.
Another good point to owning a home in one's senior years: Once it's paid for (and it will be, by the funds from the sale of my last home), I have a roof over my head for the rest of my life, if I pay the property taxes. I can even let the utilities be cut off for a while and live in it, if necessary. Or not use the a/c for a while, to cut the cost of utilities. I will never be homeless.
So it depends on your goal. If it's strictly to invest, an apartment may be the way to go, if it's a cheaper apartment. If it's a way of life that includes the things that a home offers, then that's the way to go. You can make a good profit either way.
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