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If house wasn't percieved as investment, the average American won't move every 7 years or so. Good or bad investment is another question.
Ask the majority of buyers and they worry about resale value before even buying. Why? Because they don't intend in loosing money when they sale. And they expect to sale it sooner than later. Those who say it is not an investment probably mean it is not a good investment.
Back to OP: From your info my suggestion is sell if you are going to make money. Make sure that your assumptions are correct though. Here is what you said
1) There is always new house competition and people would like to buy new ones.
2) "we'll probably be dead" before the area gets overdeveloped.
So, demand and supply tells me the more you stay at a given home, the less likely you will get more money. Make sure you figured the transaction cost to find the optimum year to stay in a house. Easier said than done, heh?
It's so sad. You folks should look up "investment" on any number of sites and rethink some of your replies...
Primary residence - the place I'm going to live in - the place I'm going to raise my kids - the place where I hang my hat up every night - the place I'm going to plant things and watch them grow - where my future grandkids will bounce on my lap... etc etc
It's the fact that we got away from this type of thinking that contributed to putting us in the place we are today. I understand that there's inherent risk in a home purchase and that life can deal a blow that puts one in a position of selling before we want to - illness, job loss, etc, etc. However, the mentality of moving properties to "stay ahead of the curve" is a crazy notion propagated by the RE industry and those who profit on home turnover, commissions, writing paper, appraisals, inspections, building, developing, and any number of things that depend on DEBT... We made a turn away from putting down roots and falling into a trap of flipping, teardowns, HELOCs, and PAPER.
Those who turned homes into financial vehicles / instruments / derivatives and hedged or bet for/against them ruined it for the vast majority of us. Until we gut the horribly dated and archaic RE system we continue to use today, I don't see how anyone could logically "invest" in a depreciating asset... Because anyone calling a home an investment today should be committed. Values are going nowhere but DOWN in the near term and anyone who is buying today is making a leap of faith. From a pure investment perspective, that is a very foolish notion.
I think there can be a difference between calling your house an investment and being concerned about the financial ramifications of home ownership and selling.
I think there can be a difference between calling your house an investment and being concerned about the financial ramifications of home ownership and selling.
Absolutely, you should always be smart about buying a home and you should be involved in your community, keep it up through maintenance, love, and care.
First google hit on defining "investment":
"investing: the act of investing; laying out money or capital in an enterprise with the expectation of profit"
My entire point is that your main driver for buying your PRIMARY residence should NOT be turning a profit. Chasing that only makes the people in the RE industry money, not you.
Absolutely, you should always be smart about buying a home and you should be involved in your community, keep it up through maintenance, love, and care.
First google hit on defining "investment":
"investing: the act of investing; laying out money or capital in an enterprise with the expectation of profit"
My entire point is that your main driver for buying your PRIMARY residence should NOT be turning a profit. Chasing that only makes the people in the RE industry money, not you.
Why exactly you do that? To increase the value of your house and that of the community!
Why are all those HOA are behind the residents for not taking care of their lawns? Protecting community investment!
Why people are outraged because of the foreclosure and shortsale in their neighborhood? Protecting community investment!
I guess you don't like the word investment. Let's call it something else then: protecting and growing your asset value. Now I need to go and find a word for that
I don't agree. I could be concerned with not losing thousands of dollars. That doesn't mean I think my house will make a profit. And if I don't think my house will make a profit I certainly don't consider it an investment.
The OP raises some valid points and as someone that IS an experienced real estate investor I think I have some insights that might be useful.
First, as disclaimer, I only once lived in a area that could be considered chock full of "new construction" and my experience with it, in the Chicago region was not particularly good. I understand that Texas is probably very different than that BUT the factors that effect the "mass builder" areas ARE FAMILIAR to me and I think will be true in Texas (as well as most parts of the country where 'mass builders' are active).
Generally IF YOU WANT TO SELL your home for a profit / more than you paid you have to do some SIMPLE calculations. You need solid sales data on what recently closed transactions have taken place. I understand in Texas this may be more difficult than in other areas, but I still believe the info IS available generally from real estate agents.
You also need solid numbers not just for what you paid for your house, but also the numbers that tell the story of how much you've spend on improvements. maintenance, taxes, etc.
If take off your "wishful thinking" goggles and put on your "real life" glasses you may find that there is currently some likelihood that you could sell your home at a profit. If that is true you then need to determine where you would like to move to and how far your money would go as you "climb the property ladder".
The "what if" part of the equation is tricky -- maybe the area that appeals the you NOW will decline in value and the area you are leaving behind will become more desirable. The patterns of employment and development that largely drive these things can generally be determined by looking at historic trends, but there are shifts and new hot area pop up. Maybe a bigger concern for many people now is that some areas definitely "cool off" when there are lots of foreclosures and distress sales. Of course lower quality homes also tend to age poorly, so that drives some people's desires to "shop new"...
I would ABSOLUTELY consider the money spent on a home as a kind of 'investment' that has some potential to increase in absolute value AS WELL AS a finite possibility to decline in value. There are NO guarantees that you will make money but just as it is possible to know the "table odds" of what a particular hand of poker is worth playing given how big the "pot" is I do think that with foresight and a level head one can often (but not forever...) move up in both size/ quality of home as well as potential for appreciation...
That is NOT to say you should pay no heed to the other important factors surrounding the ownership of a home -- by all means GET INVOLVED in making wherever you live as nice a place as possible, spending both your time and some appropriate amount on physical improvements that are consistent with your neighborhood, understanding both the current appeal of your area and the future direction that things are likely to move towards...
In my market (suburban Chicago) the average home ownership is MUCH GREATER than seven years, largely because I tend to specialize in the more desirable areas, whether people end up improving instead of moving, or are just fortunate to be find a home that suits them for the long haul at a fairly early point in their lives, the mobility is lower. That lower mobility has many other positive benefits, including very stable real estate prices, high performing schools, strong civic ties.
I realize that such a situation is not for everyone and I applaud the OP for their honesty in at least considering that there are likely "best times to sell" in many tract communities.
Okie dokie - stop right there. Your own personal residence should not be viewed as an investment.
Tell me why people that plan on moving in the near future, but wished they owned their own home don't buy a primary residence? Hmmm bad investment maybe.. Nah it's probably something else. Now if they are sticking around and they would like to own their own home what is one of the many reasons they will start looking to buy, again, hmmmm maybe cause they want to build equity instead of paying the landlord. Nah, probably not a factor. Huh?
To the OP although many people do get all goo-goo eyed over brand new homes, an older home with good character with solid bones good location thats well maintained is going to be fine, as long as the market is fine. Same for a new home - some areas that were hit suddenly were left with large tracts of newer homes for sale and vacant, just the same as the older ones. Biggest difference IMO is that the more established neighborhoods faired a bit better since at least some of them had been in there homes long enough for them to be payed off or closer to it - so don't sweat it too much, the money you will spend on a new mortgage and realtor fees could go a long way to fix-up/maintain an older home as long as it's not a complete shack in a crap neighborhood.
Why exactly you do that? To increase the value of your house and that of the community!
Why are all those HOA are behind the residents for not taking care of their lawns? Protecting community investment!
Why people are outraged because of the foreclosure and shortsale in their neighborhood? Protecting community investment!
I guess you don't like the word investment. Let's call it something else then: protecting and growing your asset value. Now I need to go and find a word for that
Play semantics if you want... that's fine. But I'm talking about getting back to how older generations viewed home ownership. It was about PRIDE - not "protecting your investment".
It's so sad. You folks should look up "investment" on any number of sites and rethink some of your replies...
Primary residence - the place I'm going to live in - the place I'm going to raise my kids - the place where I hang my hat up every night - the place I'm going to plant things and watch them grow - where my future grandkids will bounce on my lap... etc etc
It's the fact that we got away from this type of thinking that contributed to putting us in the place we are today. I understand that there's inherent risk in a home purchase and that life can deal a blow that puts one in a position of selling before we want to - illness, job loss, etc, etc. However, the mentality of moving properties to "stay ahead of the curve" is a crazy notion propagated by the RE industry and those who profit on home turnover, commissions, writing paper, appraisals, inspections, building, developing, and any number of things that depend on DEBT... We made a turn away from putting down roots and falling into a trap of flipping, teardowns, HELOCs, and PAPER.
Those who turned homes into financial vehicles / instruments / derivatives and hedged or bet for/against them ruined it for the vast majority of us. Until we gut the horribly dated and archaic RE system we continue to use today, I don't see how anyone could logically "invest" in a depreciating asset... Because anyone calling a home an investment today should be committed. Values are going nowhere but DOWN in the near term and anyone who is buying today is making a leap of faith. From a pure investment perspective, that is a very foolish notion.
This is ridiculous.
So, as I read it, you are saying that if two homes are equal, and a buyer likes the interior paint colors of one a little better, yet the other has location features that will improve its value over time, one should buy the paint and ignore the return because they are NOT making an investment?
And better yet, if a consumer does something really stupid without a real estate agent, it is a stroke of genius?
If your pockets are that deep, more power to you, but it is lame to offer that approach as smart to consumers who may have the opportunity to reduce their housing costs by making a BETTER INVESTMENT.
I have looked up "investment" before, and to consider a home an investment is a responsible approach, and within the scope of the definition.
To plan on a guaranteed 30% annual return on that investment for years and years is a little deluded, and the other side of the irresponsibility coin, opposite denying that a home is an investment.
From Wikipedia:
" Residential real estate
The most common form of real estate investment as it includes property purchased as a primary residence. In many cases the buyer does not have the full purchase price for a property and must engage a lender such as a bank, finance company or private lender. Different countries have their individual normal lending levels, but usually they will fall into the range of 70-90% of the purchase price. Against other types of real estate, residential real estate is the least risky. "
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