$420k -- Enfield cottage or W Hotel condo?

[Melissa78703]

Originally Posted by sliverbox

People in this country need to get it out of their head that real estate is THE best investment for your money. As seen recently, real estate does not ALWAYS go up. In fact it can come crashing down dramatically. Sure- eventually its probably a good idea for those with stable jobs and families to buy one- primarily to live in, but also as a hedge against inflation but nothing more. But as seen here and in countless stories where people are either stuck underneath a house or need to move quickly, they are also a giant liability because sometimes a house can't easily be sold nor be guaranteed to get the price that even covers the initial investment. To be fair- I too would like to buy a house. But by the time we do so it will be after renting for close to 15 years.

I just have to tell you that I really enjoy your posts. Thank you for this one, because it needs to be said. And ITA, unless you intend to stay in one city for a very long period of time and raise a family, using real estate as an investment is sheer folly. I could tell stories of people who "own" houses in the Austin 'burbs that aren't worth what they were at the time of purchase, and moreover, they probably won't be for a very long time (if ever again in the owner's lifetime). I have one friend who's trying to get out from under a house in the Circle C area ... he had to pass up numerous job promotions because he can't sell it and didn't want to lose it to the bank.

My mom and dad paid 30K for their home 40 years ago. That's what I could sell it for today. Not much of an investment, to my mind, but at least my mom can get their money back, I guess. They bought in the wrong 'burb of the woods.

[sliverbox]

I don't think it is completely about the perception of building weath... people want to own property so they have some sense of permanace and stability. Plus, you can knock down a wall if you want, do the yard, buy applicances and know that they belong to you.

I can agree with that but I'd also add that perhaps the biggest reason people want to buy a home is heavily tied to perception and psychology. As Americans we have been coached and prodded by years and years of propaganda tied to the idealism of the American Dream. Its a pleasant notion where buying a home is supposed to bring instant stability. Perhaps this was a bit more true back when you could keep the same job for 30-40 years, count on a pension, and so on. Look back 30-40 years and there was also far less volatility both in the stock, job, and housing markets. Now all of these areas fluctuate wildly. The rate that people migrate and areas change/gentrify/degrade seems to have reached a fevered pitch. There seems to be this huge desire for people to seek whatever Nirvana they can't get wherever they currently live- I being just as guilty as everyone else. This volatility in turn has led to increase instability and perhaps now owning a home could in many cases actually mean more liability.

Its interesting about the notion of being able to knock down walls, do yard work, etc etc. I suppose everyone's situation is different, but we've rented the same house for 7 years. We have actually landscaped the yard using mostly free materials. We've decorated the interior with the owner's permission. We get along with the neighbors and I use the garage to tinker on things. For all practical purposes it is "our" house. Someday we'll move away leaving it better than when we came. That we rented it versus own doesn't really bother me. I'll actually be really sad when we leave it because it has been a good home.

[hoffdano]

The long established "goodness" of being a homeowner is a contributor to our economic situation. The government has been meddling in this for decades - beginning with tax deductions for mortgage interest and easy credit via Fannie and Freddie. I have believed for a long time that people should buy a home because they want one. Not because of a tax deduction or other incentive. I benefit from the mortgage deduction but I wish it would go away - along with deductions for dependents and even charities.

[sliverbox]

The long established "goodness" of being a homeowner is a contributor to our economic situation. The government has been meddling in this for decades - beginning with tax deductions for mortgage interest and easy credit via Fannie and Freddie. I have believed for a long time that people should buy a home because they want one. Not because of a tax deduction or other incentive. I benefit from the mortgage deduction but I wish it would go away - along with deductions for dependents and even charities.

I totally agree with you. I'd say that mortgage debt has basically replaced production as a means to fuel the economy. If you look back 20 years or so, hardly any growth in the US economy actually came from productivity. Its been nothing short of a windfall situation for banks and the finance industry because Americans will obviously go as far as bankrupting themselves in order to get into that home of their dreams. The last 10 years have especially been like this. All of this is cleverly done of course without the general populace realizing that while economists might say we don't suffer from inflation, the fact is that home prices have inflated astronomically. Given that a home is the largest purchase a family will make, inflation has indeed increased dramatically.

[80SC]

I'll tell you, ten years ago a house in central Austin would have been a great investment. The appreciation of these homes over the last ten years has been truly astounding! Take the house next door -- built in the '50's, two bed one bath.800 sq. ft. ersatz French country ranch, valued at $405,000!

In 2001, this house was worth just over $200,000.

Whoever bought here during that time has really done well with appreciation.

[sliverbox]

I'll tell you, ten years ago a house in central Austin would have been a great investment. The appreciation of these homes over the last ten years has been truly astounding! Take the house next door -- built in the '50's, two bed one bath.800 sq. ft. ersatz French country ranch, valued at $405,000!

Its similar just about anywhere in the Southeast in a major metro. When I moved out of TN in the late 90's, you could buy a house, in the city for like $20,000- I kid you not! I know because a friend of mine who stayed behind bought one for that much and it wasn't a half-bad area and it was a decent house. But this was back when the area wasn't "desirable" by most people in other regions... that was right before the national housing bubble forced them to look elsewhere and wallah- the South and all its insanely cheap real estate. Its still reasonable by national standards but the prices went from being "steals" to just ok really quick.

I sort of wish I had known what was going to happen. I would've bought our future home on the lake, worked a few years in Cali, then moved back. Too late now as most nice areas near my parents are now owned by snowbirds and retirees from New Jersey and Massachusetts.