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Started By
Message
Do not count on a new house holding it's value and saving you money
Posted on 4/13/14 at 6:58 pm
Posted on 4/13/14 at 6:58 pm
Since WWII a home has been a great investments except for those forced to sell in economic down turns like in 08 and here in 88-90.
That will not be the case the next 20 years IMHO.
First anyone can tell you houses cost a lot to own. A roof here, a broken pipe there, a cracked drive, a down tree ect. Insurance, taxes, interest ect.
More importantly now is that baby boomers want to downsize. This is going to keep a cap on prices because the supply of housing, on average, will be larger than before.
Young people starting out that ask my advice I encourage them to build a quadruplex or a duplex or something to rent out until they start having families and have a lot of cash to put down.
IMHO no one should even think about buying a house unless they can put down 30% and be left with a mortgage no more than 20% of their current income. Really and truly no more than 20% of the income of one of the couple.
I think a much smarter, happier strategy is plan to live on one income so that one parent can stay home with children. Spend a few years piling up money with the goal being to live on one income. Buy a small house. Think about paying it off in 10 years.
I wish I had done that.
With all of those things in mind the chances of you getting into a mortgage you cannot afford because of changes in your life will be much less.
I see friends of mine encouraging their children to buy big houses, even signing mortgages or financing homes for them, and think how sad they want their children to labor so much for such a basic of life.
That will not be the case the next 20 years IMHO.
First anyone can tell you houses cost a lot to own. A roof here, a broken pipe there, a cracked drive, a down tree ect. Insurance, taxes, interest ect.
More importantly now is that baby boomers want to downsize. This is going to keep a cap on prices because the supply of housing, on average, will be larger than before.
Young people starting out that ask my advice I encourage them to build a quadruplex or a duplex or something to rent out until they start having families and have a lot of cash to put down.
IMHO no one should even think about buying a house unless they can put down 30% and be left with a mortgage no more than 20% of their current income. Really and truly no more than 20% of the income of one of the couple.
I think a much smarter, happier strategy is plan to live on one income so that one parent can stay home with children. Spend a few years piling up money with the goal being to live on one income. Buy a small house. Think about paying it off in 10 years.
I wish I had done that.
With all of those things in mind the chances of you getting into a mortgage you cannot afford because of changes in your life will be much less.
I see friends of mine encouraging their children to buy big houses, even signing mortgages or financing homes for them, and think how sad they want their children to labor so much for such a basic of life.
This post was edited on 4/13/14 at 7:01 pm
14
Posted on 4/13/14 at 7:03 pm to I B Freeman
I agree with buying an "affordable" house and pay off in 15 years.
And this generation of "Echo Boomers," (children of the Boomers), will soon want to stop renting at 3-5% increase each year, and thus the value of housing will rise, albeit slowly.
And this generation of "Echo Boomers," (children of the Boomers), will soon want to stop renting at 3-5% increase each year, and thus the value of housing will rise, albeit slowly.
Posted on 4/13/14 at 7:08 pm to matthew25
quote:
And this generation of "Echo Boomers," (children of the Boomers), will soon want to stop renting at 3-5% increase each year, and thus the value of housing will rise, albeit slowl
Maybe but the US will be the exception to the rule. Ask the Swedes and the Japanese.
Like the US their population growth has stopped. Ours is still growing, albeit much slower, but is growing among the poor and immigrants.
To grow at 5% one has to think a $200,000 house will be worth $363000 in 10 years--ain't going to happen nationally IMHO.
This post was edited on 4/13/14 at 7:09 pm
Posted on 4/13/14 at 7:36 pm to I B Freeman
Well ok.
One shoe fits all of course.
One shoe fits all of course.
Posted on 4/13/14 at 7:39 pm to I B Freeman
What if we buy the house with our movie tax rebates???
Posted on 4/13/14 at 7:42 pm to I B Freeman
I agree that newly constructed houses do not hold their construction cost value.
Posted on 4/13/14 at 7:45 pm to I B Freeman
I think your wrong because the boomers houses are all filled with shag and paneling. They need tons of renovation. So there may be an increase in available units, but that doesn't mean the house is worth anything as it stands
Posted on 4/13/14 at 7:47 pm to LSURussian
quote:
What if we buy the house with our movie tax rebates???
Posted on 4/13/14 at 7:59 pm to Mr.Perfect
Japs haven't done so hot
This land not houses but you get the picture
The Swedes have not done so hot as country either. It has taken 15 years for prices to double--about a 4.8% return. Not enough to cover cost of ownership.
This land not houses but you get the picture
The Swedes have not done so hot as country either. It has taken 15 years for prices to double--about a 4.8% return. Not enough to cover cost of ownership.
Posted on 4/13/14 at 8:48 pm to I B Freeman
My house is $1250.... Well below 20%
Posted on 4/13/14 at 9:46 pm to I B Freeman
This is something I'll have to face in the next few years. I guess it all comes down to what you want out of where you live, what you can afford, and what you value.
Posted on 4/13/14 at 9:58 pm to I B Freeman
I think they'll hold value fine. I'm just hoping it will keep up with inflation. With the historically low interest rates and the low price I bought at a few years ago, I think I'll be okay. I actually bought a bigger house than I needed because of this reason (with another kid conceived and delivered, I'm glad I did).
I don't look at a house as an investment, but rather a place to live.
I don't look at a house as an investment, but rather a place to live.
Posted on 4/13/14 at 11:10 pm to I B Freeman
I dunno man.. I was paying rent 2 years ago that was more than my current house note and my house is nicer, in a better school district, and much bigger. We have also put in sweat labor to make this house worth at least 30K more than what I payed for it.
I plan for 30-40 years down the road but I live for today.
I plan for 30-40 years down the road but I live for today.
Posted on 4/13/14 at 11:27 pm to I B Freeman
Just a question, I would assume by keeping your mortgage 20% the same would apply to rent.
So a "couple" would need to find a $600/month note if they were pulling in 36k gross per year?
Where do you see all this inexpensive housing coming from?
So a "couple" would need to find a $600/month note if they were pulling in 36k gross per year?
Where do you see all this inexpensive housing coming from?
Posted on 4/13/14 at 11:30 pm to JayDeerTay84
quote:
I plan for 30-40 years down the road but I live for today.
Owned a home for the last 8 years (just after Katrina) Some shitty times for real estate for sure. Sold it for almost 60k profit.
I think there will always be doom and gloom people predicting the housing market to fail.
quote:
I don't look at a house as an investment, but rather a place to live.
As it should be. If you ever profit on your investment you will have to reinvest just to live.
This post was edited on 4/13/14 at 11:33 pm
Posted on 4/14/14 at 1:07 am to Ric Flair
quote:
I don't look at a house as an investment, but rather a place to live.
This. If it happens to make you money later in than that's a plus. I want come home to a HOME not an apartment complex or duplex.
Posted on 4/14/14 at 5:00 am to I B Freeman
quote:
Think about paying it off in 10 years.
If you can qualify for the best rates, you should think about paying it off 30 years from now.
It isn't as good as it was at the end of 2012 but it's still perfectly reasonable (and probably good) to borrow. With the interest tax break your goal should be to beat inflation and that is arguably still available.
Posted on 4/14/14 at 6:08 am to I B Freeman
One size fits all.
If I followed your advice I'd be a minimum 250k poorer. Drawing up plans as we speak. Time to add another 150k to the portfolio.
If I followed your advice I'd be a minimum 250k poorer. Drawing up plans as we speak. Time to add another 150k to the portfolio.
This post was edited on 4/14/14 at 6:15 am
Posted on 4/14/14 at 7:16 am to ItNeverRains
Do you not expect rates to climb substantially? Given the current rates I am aquiring as many mortgages as I can. To each their own I guess.
Posted on 4/14/14 at 7:30 am to JayDeerTay84
quote:
I dunno man.. I was paying rent 2 years ago that was more than my current house note and my house is nicer, in a better school district, and much bigger. We have also put in sweat labor to make this house worth at least 30K more than what I payed for it. I plan for 30-40 years down the road but I live for today.
Same here
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