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Fixers would just rot. What incentive would there ever be to invest in real estate if you can only 2000 dollars when you resell?
The incentive to invest is because you will own your home not rent... If you are talking about investing purely to resell well tough i say. Homes are meant to be lived in not an "investment" for the sole purpose of making money in my opinion. But it's been that way for awhile and society just rolls with it like other things.
I just don't think a house made out of 40k in materials should be valued many hundreds of thousands of dollars.
I just don't think a house made out of 40k in materials should be valued many hundreds of thousands of dollars.
I think you are fighting a losing battle there that only leads to madness. Are you mad that you have to pay more than a nickel for a sandwich in a restaurant or for clothing? Materials costs in a post-scarcity society like we live in are nil. Supply for everything short of space ships is determined by regulations & classism, not by materials availability.
Because you don't live in a house all your life. This isn't the 14th Century. You move from home to home as your needs dictate.
From the time I graduated college, here's where I've called home.
1) A small, incredibly cheap apartment on the wrong side of the tracks.
2) A year later, a nicer apartment in a better part of town.
3) When I was traveling 80% of the time, and because my father passed away, I moved home for a year to support my mother.
4) When I couldn't take it any more, I moved back out into a nice apartment in the entertainment district of my city.
5) When I met MrsCPG, she didn't want to live in my cool bachelor pad, so we got another apartment in a quieter neighborhood.
6) We bought a house in a neighborhood that was just beginning to gentrify. 14 years and about $30K in renovations later, we sold it for 3.5X more than we paid.
7) Because we had three children and would have gone broke paying for private schools, we moved to a nice suburb with top-notch schools, gritting our teeth all the way.
8) Ten years later, when our last child graduates next Spring, we'll be putting it on the market and moving into a cool downtown apartment while we plan Phase III of our lives.
9) After that, who knows?
The incentive to invest is because you will own your home not rent... If you are talking about investing purely to resell well tough i say. Homes are meant to be lived in not an "investment" for the sole purpose of making money in my opinion. But it's been that way for awhile and society just rolls with it like other things.
I just don't think a house made out of 40k in materials should be valued many hundreds of thousands of dollars.
In any popular areas to live it's not the house that has the most value, but the land.
Reselling for a profit sometime in the future is a big part of why people buy homes, not the only reason but it's a big reason.
Also many people do buy homes as investments to rent out and never live in them. People have been doing that for a long time though hundreds of years.
The incentive to invest is because you will own your home not rent... If you are talking about investing purely to resell well tough i say. Homes are meant to be lived in not an "investment" for the sole purpose of making money in my opinion. But it's been that way for awhile and society just rolls with it like other things.
I just don't think a house made out of 40k in materials should be valued many hundreds of thousands of dollars.
Ok, what I'm trying to get at is why the relationships between the supplies and demands are what they are. Why is the supply of free and clear housing or its cash equivalent so low relative to population?
Quote:
Originally Posted by ncole1
Yes, the question is about why.
I stopped reading through the thread when it took a tangent. I think it is a question on the mentality of why people don't want to pay off their homes. Which is because they want or feel the need the spend their cash somewhere else. Then there are mechanism put in places to let people use their equity so their house never gets paid off, interest only loans, reverse mortgages. People also get sold on the idea of refinancing to a new 30 year loan to 1) reduce their monthly housing cost 2) cash out to pay for their children's college expense 3) go on vacations 4) medical expenses
Yeah true . It seems a lot of people also use a home in order to start or fund a small business . I watch shows like Bar Rescue and The Profit and a bunch of the business owners say stuff like "I took a mortgage on my house to open this business " or " I borrowed money to keep this business going " of course these are businesses in trouble but there's got to be a lot of successful businesses out there that were started with home equity too .
Using the equity to invest in positive cash flowing real estate can be smart too
loans or equity lines can be good or they can be dangerous if used the wrong way
Gotta know what you are doing combined with some good luck
I think it is a question on the mentality of why people don't want to pay off their homes. Which is because they want or feel the need the spend their cash somewhere else.
There is a question of morality baked into that - a mortgage payment is just a bill.
Is the same moral quandary in place about people not buying tons of food in bulk or not paying off their electric bill?
This is interesting. I had always heard people associate cheap houses with high crime, but there are plenty of cheap houses in the Rust Belt and South and I have a hard time believing it's all just ghettos.
They aren't all ghettos, but usually there is something "wrong" about the area.
Take the little Indiana town I mentioned in my thread on the personal finance forum - Anderson. This used to be a site of a GM plant, BorgWarner, Delco Remy, and all sorts of automotive stuff. Most of those businesses, and the jobs that went along with them, are gone now, and there hasn't been much in the way of replacement jobs. The town's population is declining, and the housing was built up for a much higher population level, so you have an oversupply of housing for the current population level, plus it's not a desirable place to live without many local jobs. The local government is short of money - roads don't get repaired, the schools are not to the quality many expect, etc. There is no natural scenery around there to move for, and not much reason to be there unless you are a local or just looking for substantially cheaper housing that is somewhat commutable to Indianapolis.
Compared to Indianapolis, crime is negligible, but the town is ugly and many houses and businesses are literally falling apart. There are probably half a dozen towns like this that I've seen throughout central Indiana that are not dangerous by any means but are not the least bit desirable for most folks.
You see much the same thing in southwest Virginia, except even more severe. The area was basically 100% dependent on coal and failed to diversify the economy. Now with the easy to get coal gone, increasing mechanization reducing the demand for workers to mine what coal is left, and unfavorable government policy, you have a complete and total mess. This area is hours away from any reasonable job center, the state government in Richmond has forgotten it, the federal government pounds it with regulation, the population continues to decline, and it's easy to see why housing pricing are cratering and there is no reason for optimism.
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