Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I think that one of the biggest factors in homes not being an investment is the chronic moving that most people do. 3 of my neighbors have lived in their homes for 40 years. What they pay in property tax and maintenance isn't even close to rent. They are doing it the right way. Buy a modest home and live there for a long time.
Too many people though have "invested" in a big home in a nice area. The home is either their retirement money or their kids college money. Now with values spiraling down, they have no "plan B".
If there's one thing to learn from this housing bubble is that fake money will eventually come back to haunt you unless you have real money lying around to cover your fake money losses.
The little guys (us) need need to build up savings and pay down the principal.
A home is a place to live. As others have stated, most people move around every 3-5 years.
That's why I like to advocate people put around 10% down on their home. Why? Because you pretty much end up paying 2-3% closing costs as a buyer and end up paying 5-6% real estate commission as a seller. So you are pretty much in the hole for 10% of the real estate costs right off the bat.
I made 200% in nine years out of my first home--thank you bubble!!. I plan on living in the home I'm in now (single story, 2950 s/f) until sometime after retirement which is another 20 or so years from now, and then downsizing. The money I take out of this less the money to buy the new home will pay for some traveling we'd like to do after we retire. But it's not earmarked for living expenses. That's what the 401K/IRA money is for.
We bought this house before we sold the other one--two mortgages for two years--while property values were beginning to rise, but before it got crazy, and still have over 10% equity (my local Realtors tell me 20%, I'm not buying that) with property values stabalizing and homes beginning to sell again around here. (and not just bargain priced foreclosures and short sales, either.)
The money I take out of this less the money to buy the new home will pay for some traveling we'd like to do after we retire. But it's not earmarked for living expenses. That's what the 401K/IRA money is for.
That's the way to think and plan for retirement. So many people feel like their home is their retirement cash cow (reverse mortgages, home equity lines etc).
But you should always have a 2 modes of income sources. Obviously housing is the most expensive factor in a retired person's monthly expenses (although healthcare expenses may one day overtake that and become the most expensive).
So hopefully by the time you reach 62-67, your home would be paid off and you can live off your investments/cash savings and use SSN as the last method.
But people either don't have the means to save or just plan old bad luck in life. That's just the way things are in the US. Remember SSN was never intended to be the sole source of income for elderly people. But SSN know is and people are growing older and even more dependent on it.
I made a lot of money off the sale of my first house which I immediately rolled into retirement savings, then I rented for a couple of years because I sold my last house near the market's peak and there was a lot of talk in the media of a housing crash. I think I made the right decision! As I rented, I saved aggressively for the down payment on my next house, which I moved into last week. I did not buy nearly as much house as I qualified for. This house is well above the median house price in this area, but it is still not an expensive house at all.
That's the way to think and plan for retirement. So many people feel like their home is their retirement cash cow (reverse mortgages, home equity lines etc).
But you should always have a 2 modes of income sources. Obviously housing is the most expensive factor in a retired person's monthly expenses (although healthcare expenses may one day overtake that and become the most expensive).
So hopefully by the time you reach 62-67, your home would be paid off and you can live off your investments/cash savings and use SSN as the last method.
But people either don't have the means to save or just plan old bad luck in life. That's just the way things are in the US. Remember SSN was never intended to be the sole source of income for elderly people. But SSN know is and people are growing older and even more dependent on it.
We're not planning on SSN being around when we retire, and saving with that in mind. And our home should be paid off about the time we're 60. We're already paying extra on the principle to make that happen.
Our fiends can't understand why we don't drive luxury type cars in our income bracket. They are also the ones complaining about being broke all the time and being worried about saving for retirement--some have a total of $25K saved, and are 50 years old. So it's not just the people who don't have the means who aren't saving.
I have always advised people than any home that is larger and/or more luxurious than basic needs is an investment. Food, Clothing, Shelter the basic three human needs. If those needs are simply met, then all the rest becomes a luxury. Dig down deeply when you think about this. Then purchase a home, your next meal, or even a coat with that in mind. I guarantee you'll keep money in your pockets. Think of quality, durability, etc before buying whether its a home, a car, a meal, etc.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
So it's not just the people who don't have the means who aren't saving. 
