How's your neighborhood holding up?

[sparksharp]

When taxes exceed the potential financial return of owning a home the "American Dream" disappears. We all become renters but who will be our landlord? China?

Interesting statement! And definitely food for thought!

If one stops to think about it, why should there be a financial return on owning a home?

For that matter, why should there be a financial return on anything? Hell, why don't we all just go back to the barter system?

[RjRobb2]

Originally Posted by cp1969

If one stops to think about it, why should there be a financial return on owning a home?

That question is irrelevant.

There are two types of assets - appreciating and depreciating. Houses happen to be the former so you can receive a return on owning a house. The same can be said with jewelry, baseball cards, and antiques. Why should you receive a return on owning those items? Because there is a demand for them and they appreciate in value.

[cp1969]

That doesn't answer anything and the question is not irrelevant. The reason those items you mention appreciate in value is because they are scarce. Houses are not scarce.

We have long held that houses should be an appreciating asset. Why is that so? They wear out over time unless considerable money is invested in them to pay for repairs and upgrades.

What qualifies something as a depreciating asset? Isn't it the fact that it wears out?

[brianjb]

Houses have to be maintained like anything else. As far as being an appreciating asset...homes are not. The land that the home is on is an appreciating asset. Technically the houses are depreciating, especially when you figure in the cost of maintenance. The land goes up. We only have what we have. You can't create land that is in the perfect location. So the homes that happen to be in a desirable area will be worth more based more on their location than the homes themselves.

[TinaMcG]

Originally Posted by Samantha S

I think I know the house you're talking about! 145th-ish and Mission or so? French style with the pool? (Of course it's probably not the only house in that boat )

We looked at it too. For the same reason - the pictures were great! By that time the price had fallen and we thought it might be a bargain. It was a "hot mess." Needed at least $250k in repairs and restoration and would still take years to recover that in market value. Plus it was on septic, which means you would be forced to pay major bucks in the coming years to bring in city sewer lines.

Our agent said, "There is no way you're buying this house."

No Samantha, the house we looked at was in western Olathe. Now it is being sold 'as is" witn no repairs offered. It's too bad. It was in good shape, and pretty lavishly furnished when we looked at it.

[lifelongMOgal]

Originally Posted by cp1969

That doesn't answer anything and the question is not irrelevant. The reason those items you mention appreciate in value is because they are scarce. Houses are not scarce.

We have long held that houses should be an appreciating asset. Why is that so? They wear out over time unless considerable money is invested in them to pay for repairs and upgrades.

What qualifies something as a depreciating asset? Isn't it the fact that it wears out?

As I understand it:

An appeciated asset is one which has a higher market value than its taxable value.

As it applies to an owner occupied home: Look at the book value or mill rate at which the real estate property tax is reflected in contrast to the purchase price. The market value is historically nearly always higher (in MO & KS significantly so). Therefore, in most cases, homes are generally considered an appreciated asset.

A depreciable asset on the otherhand, is tangeble personal or real property employed for income. It has an assigned economic life of more than a year and may be depreciated, per an assigned schedule, from income it was employed to generate.

* I am not a CPA nor an attorney. The above statement is my personal opinion and understanding.