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(Reason Magazine)   New survey suggests owning a house in U.S. is dumb   (reason.com) divider line 242
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19443 clicks; posted to Main » on 30 May 2011 at 12:00 PM (3 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2011-05-30 11:48:14 AM

hockeyfarker: that sounds like a good deal and everything Gumby but one assumes you are still paying interest on your loan because that's how loans work so no, you are not recouping all of your money. that said, if you're being paid a housing allowance, you are most likely better off buying. for others it can be more complicated.


I totally get that. For me, I'm coming out better than if I just rented. If I rented, that would be $1600/mo that I'd never see again, and that really adds up over four years (and I'm planning a follow-on tour here, so it may be 8-9 years).
 
2011-05-30 11:59:16 AM
God damn reason.com is dumb.

"If you want to know how people feel about an asset, all you need to know is what they pay for it."

How they *feel* about an asset. LOL. Uh, no. That tells you that they're willing and able to pay that much for the asset, and that they bought.
 
2011-05-30 12:08:28 PM
Houses won't really be a good deal again until they go back to requiring the buyer to provide 20% of his own cash as a down payment.
 
2011-05-30 12:08:34 PM
It is dumb if you finance more house than you can afford. Which is what way too many people did in the not-too-distant past.
 
2011-05-30 12:11:16 PM
As someone looking to buy a house in the immediate future I'm getting a kick.

/Currently renting a 10th story apartment in a building where half the elevators are out of order and the AC is patchy and they're planning on jacking up the rent... not gonna miss renting much.
 
2011-05-30 12:12:47 PM
Buying a house is great if you're planning on never moving and keeping the same secure, stable job for twenty+ years.
 
2011-05-30 12:13:06 PM

middleoftheday: I wonder how many "rent is like throwing your money away" people are upside down on their mortgages.



So everybody loses. I finally get it.

/just kidding, I always got it.
 
2011-05-30 12:16:09 PM

Semper Gumby: I love having color in my house. I was tired of boring white walls and neighbors. Tired of renting and being told I can't have a dog.

I love that whenever I have to move away, I'm going to recoup all of the money that I've been paid for housing every month, instead of just tossing it to the breeze.


When you own a home and move, you pay an average of $60k to do so after eveyone gets theirs from you.
 
2011-05-30 12:16:45 PM
As one of those rubes who own all I can say is "I like it."

i.imgur.com
 
2011-05-30 12:18:53 PM
There are millions and millions of homes in the US. They come in all shapes and sizes. They're located in cities, towns, on farmland, in forests, and deserts. They're new and old, expensive and cheap.

Maybe it's a teeeeensy bit foolish to generalize about the entire country's real estate market.

Maybe - just maybe - some homes are a good investment and others are not.
 
2011-05-30 12:24:46 PM
The problem with owning a home is that it makes it marginally easier for the police/FBI/etc. to find and detain you. Apartment-living has its own set of issues, but it also has attractions for people who want to keep a low profile and move around without calling attention to themselves.

Just sayin'....
 
2011-05-30 12:25:01 PM
Owning a house in certain areas might be a mistake, because that's the nature of real estate.

But to blanket the whole country with that statement is just... yeah.
 
2011-05-30 12:27:19 PM
This thread is more fun if you change "houses" to "horses" when you read it.
 
2011-05-30 12:27:50 PM

basemetal: Kyro: basemetal: And it's free rent once you've paid it off.......early if you were smart have basemetal money.

Luckily I seem to be hitting the sweet spot where all the initial repairs and unexpected costs upfront are finally going away. I do not miss renting. At all.

We purposely did not buy a McMansion, there is only the two of us and four cats, (shup, two of them were inherited when my dad died). We kept it nice, affordable, with a decent yard that I could sculpt.Then we were able to still afford a life, and a little extra a month. Paid that f*cker off in about 12 years. Not everyone can do that, I understand, but just paying 50-100 a month shaves off sooo much time and interest. Now, I will divest myself from this green thread.


You know, I'm pretty conservative when it comes to money but I went the opposite direction to paying off early. 30 year fixed mortgages are the cheapest they have ever been so I refinanced and I'm putting the extra $100 a month I'm saving over my previous mortgage and sinking it into my IRA. I will probably never again in my life be able to borrow twice my annual salary for below 5% interest so I figured it was a way to take advantage of the debt economy. I never looked at a house as an investment, more as a liability to be managed. The community I bought into has been on Forbe's 20 most affordable communities with great schools for the last two years (I've been here 6), so I think I did ok on that front =)
 
2011-05-30 12:30:29 PM

noYOUare: mjsee: middleoftheday: I wonder how many "rent is like throwing your money away" people are upside down on their mortgages.

If the US didn't subsidize home-ownership through the tax code then people who couldn't really afford to buy wouldn't be as tempted.

I feel the same way about the divorce rate.


I dunno...we didn't get married thinking "Hey! It'll lower our taxes!" but maybe some folks do...that said, I don't think we should get a tax break for being married.
 
2011-05-30 12:32:26 PM
Living in a house you own is awesome. Night and day.

Sure, it is a little more responsibility; but worth it. And, it is cheaper than renting.
 
2011-05-30 12:32:33 PM
I paid my house off in 2005, paid a little extra every month on our 15 year mortgage that started in 1997. I think if you don't buy more house than you can afford in an area with good schools buying is a good deal.
 
2011-05-30 12:33:19 PM
Next time I overpay the mortgage on my duplex using just the rent I've collected from my tenant I promise to feel uncool for nearly a full second.

What a terrible investment this property has proven to be, yes indeed.
 
2011-05-30 12:33:45 PM
Houses shouldn't be investments unless you're doing some serious renovation, and you should only be doing that if you're got construction and housing experience.

Houses are places to live. You should put a hell of a lot down so you can sell if life happens and you should plan on living for a long time.

The recent trend that I think is the biggest problem is that people used to rent until they could get their 4 bedroom home for the wife and 2 kids but now people are buying their way up the housing ladder in situations where they HAVE to sell after short periods of time and usually don't yet have the financial stability for large downpayments and these kinds of people are just asking to get screwed by any sort of small economic jitter.

My advice for most would be wait to buy until you can put 25% on a place you could see yourself dying in.
 
2011-05-30 12:35:03 PM

rmoody: Buying a house is great if you're planning on never moving and keeping the same secure, stable job for twenty+ years.


This is a very important note.
 
2011-05-30 12:36:02 PM
came for a comparison between buying your own home and living in your mom's basement. Leaving disappointed.
 
2011-05-30 12:39:31 PM
i372.photobucket.com
 
2011-05-30 12:46:08 PM

Perducci: Maybe - just maybe - some homes are a good investment and others are not.


If you look at it as an investment, you're doing it wrong (for the vast majority of people who are buying a place for the purpose of living in it).
 
2011-05-30 12:46:45 PM

basemetal: basemetal: Paid that f*cker off in about 12 years. Not everyone can do that, I understand, but just paying an extra 50-100 a month shaves off sooo much time and interest.


Yep, my base is ~$1300 but I've got it topped up to $2000. We owe $180k on a house that's worth $500k+. Paid just over $300k six years ago.

/11 more years and it's paid off.
//I'll be 45.

12349876: Houses shouldn't be investments unless you're doing some serious renovation, and you should only be doing that if you're got construction and housing experience.

Houses are places to live. You should put a hell of a lot down so you can sell if life happens and you should plan on living for a long time.

My advice for most would be wait to buy until you can put 25% on a place you could see yourself dying in.


No, you should always, always, always get it inspected by a reputable, licenced inspector. If in doubt, get a PE to sign off on the house.

/I've seen some houses where you can see yourself dying in.
//Like, in the next five minutes if you don't leave.
///Sir, where the _fark_ is the support wall?
 
2011-05-30 12:48:41 PM

randomjsa: Owning a house in certain areas might be a mistake, because that's the nature of real estate.

But to blanket the whole country with that statement is just... yeah.


While this is true there IS something to be said about macro trends. Farkers were actually pretty early in calling the housing bubble because some of us looked at things like the price to earnings ratios in the 20 largest markets and saw that housing was becoming unaffordable to your average person even with zero down, interest only loans. If you aren't gaining any principal and you're paying 60+% of your takehome you have zero incentive to keep that house in a market slump.
 
2011-05-30 12:49:24 PM
Treating an individual house as an investment is dumb.

As a place to live, they're pretty solid.

//Disclaimer: as a long-term, bulk investment housing is actually pretty good. It's just people that buy a single building and expect it to appreciate steadily in value for near-guaranteed gain within a single decade that are retarded.

mjsee: I dunno...we didn't get married thinking "Hey! It'll lower our taxes!" but maybe some folks do...that said, I don't think we should get a tax break for being married.


People that are already living together often do. And, yeah, it's generally a mistake from what I've seen.
 
2011-05-30 12:50:14 PM
Homeowners are strapped with the crux of the tax load... Makes more sense than ever to rent now.

/10 years in the same house
//Still have equity, just not like before the bubble bust.
 
2011-05-30 12:51:23 PM
Or live in a part of the country where real estate has been pretty stable.

Also, a pretty good rule of thumb is that if you do the opposite of what the general public is saying you will do all right. So its probably a great time to buy.
 
2011-05-30 12:52:19 PM

theMagni: No, you should always, always, always get it inspected by a reputable, licenced inspector. If in doubt, get a PE to sign off on the house.


By "dying in" I meant living in for decades until old age and mother nature takes you to the great beyond. As opposed to buying a condo that you know won't be big enough to handle kids.
 
2011-05-30 12:52:59 PM

hipcheckgrl: This thread is more fun if you change "houses" to "horses" when you read it.



:D


it is, thanks!
 
2011-05-30 12:54:35 PM
I only owe $30K on my house, so I'm getting a real kick, etc.
 
2011-05-30 12:54:54 PM

Jim_Callahan: Treating an individual house as an investment is dumb.

As a place to live, they're pretty solid.

//Disclaimer: as a long-term, bulk investment housing is actually pretty good. It's just people that buy a single building and expect it to appreciate steadily in value for near-guaranteed gain within a single decade that are retarded.

mjsee: I dunno...we didn't get married thinking "Hey! It'll lower our taxes!" but maybe some folks do...that said, I don't think we should get a tax break for being married.

People that are already living together often do. And, yeah, it's generally a mistake from what I've seen.


this. had i know then what i know now, i would not have gotten married.
 
2011-05-30 12:57:00 PM

Goimir: DarthBrooks: In other news, it's always a safe bet to try and make money off Americans who think renting is cheaper than owning stuff.

Exactly. When you rent, you pay for whatever it is you're getting, and the owner's lunch as well.

Yes, you pay property tax. It's included in your rent.

Yes, you pay upkeep costs. You pay ALL that stuff.

If landlording wasn't about making money, people wouldn't do it.


That would make sense. However, there are plenty of wannabe landlords that rent out with negative cash flow every month. They are subsidizing your rent. Why?!?!?!!? Because they don't care about the monthly cash flow, only the perceived capital appreciation. When housing crashes that perceived capital appreciation is gone.
 
2011-05-30 12:58:09 PM

Pockafrusta: Homeowners are strapped with the crux of the tax load... Makes more sense than ever to rent now.


How do you figure that?
 
2011-05-30 12:58:36 PM
Reason- always there to convince us to stay enslaved to our corporate masters.
 
2011-05-30 12:59:15 PM

rmoody: Buying a house is great if you're planning on never moving and keeping the same secure, stable job for twenty+ years.


This is very key.

CSB: People at work tell me I should look at buying a house, because they think I'm going to stick around after they finish paying for me to go through grad school. lol
 
2011-05-30 01:03:21 PM

larrylboberry: That would make sense. However, there are plenty of wannabe landlords that rent out with negative cash flow every month. They are subsidizing your rent. Why?!?!?!!? Because they don't care about the monthly cash flow, only the perceived capital appreciation. When housing crashes that perceived capital appreciation is gone.


Ten years ago I could see this happening widely but I'm pretty sure most of those folks are bankrupt by this point. I doubt many without an excess of wealth are still playing that game anymore.
 
2011-05-30 01:05:41 PM
Never understood why people get excited in a "hot" real estate market. They are so obsessed with how much they're making on their sale, that they seem to forget that whatever they want to buy will have gone up in price too, and if you're moving "up" in house, probably by a lot more than you made selling your house
 
2011-05-30 01:06:15 PM
I'm closing on a short sale this Friday (maybe) so I'm getting a kick out of all the replies.
 
2011-05-30 01:06:35 PM

larrylboberry: Goimir: DarthBrooks: In other news, it's always a safe bet to try and make money off Americans who think renting is cheaper than owning stuff.

Exactly. When you rent, you pay for whatever it is you're getting, and the owner's lunch as well.

Yes, you pay property tax. It's included in your rent.

Yes, you pay upkeep costs. You pay ALL that stuff.

If landlording wasn't about making money, people wouldn't do it.

That would make sense. However, there are plenty of wannabe landlords that rent out with negative cash flow every month. They are subsidizing your rent. Why?!?!?!!? Because they don't care about the monthly cash flow, only the perceived capital appreciation. When housing crashes that perceived capital appreciation is gone.


These are the ones that make you wait a month to get a replacement stove or fridge. The other way to tell is if you wake up one morning and find a sheriff's sale notice on your door.
 
2011-05-30 01:07:09 PM
Renters are flushing money down the toilet. Owners at least keep some money and equity and get a write off for the interest.

Which is a shame because it ensure generational poverty, or makes escape much harder. Can't buy without a down payment, but can't save enough to HAVE a down payment.

Rent should be tax deductible up to the cost of a mortgage payment. Or maybe the money returned from the deduction goes into an escrow account that you can't touch until you use it as a down payment on a house.

mekkab: I hate sharing walls with anyone. I seriously do not want to farking hear you. Apartments/Condo/Townhouse are all out.


^

Jim_Callahan: Treating an individual house as an investment is dumb.


Your house is not an investment. In fact it is a liability because it takes money out of your wallet. Investments put money IN your wallet. Your house becomes an asset when you rent it to someone else for a profit.

larrylboberry: That would make sense. However, there are plenty of wannabe landlords that rent out with negative cash flow every month.


Huge write offs might be part of the motive.
 
2011-05-30 01:10:23 PM

middleoftheday: I wonder how many "rent is like throwing your money away" people are upside down on their mortgages.


IF you were conned into buying something you damn well knew you couldn't afford, it's your fault. Not mine, not the real estate agent's, and not the banks. Most people who bought and took a 'balloon' were speculators who thought they would flip the house before the balloon kicked in and got farked when the market tanked. Oh well. Ya pays yer money .. Ya takes yer chances. Anyway, this thread has inspired me to do some math. We bought this house in 1987. Paid 163K for it. It will be paid off next year which the following numbers correspond to. Current resale value is 285K, but let's call it 250 just for arguments sake. After refinancing once, we have averaged an 1,100/month mortgage payment that includes taxes. Ergo: 1100/month x 12 = 13,200 x 25 = 330K that it's cost us to live in a 3-bedroom ranch on about 1/3 acre of property at the Jersey Shore for 25 years. So let's say we sell it tomorrow (we could) for 250K. Now we have 330K (total cost over 25 years) - 250K (current value) = 80K. 80K divided by 25 years = 3,200/year divided by 12 = 266/month 'rent' including taxes over the past 25 years. Are we going to MAKE money, no? Never expected to.
 
2011-05-30 01:16:54 PM

Semper Gumby: It's ~975sqft, two (technically three) bedrooms, one bath, great yards.


Yep, same here. Bought a small, but solid 960 sq/ft house well under what my wife and I could afford. The 15-year mortgage + property tax is 14% of our monthly net income. It's in a nice rural (protected farmland) area, yet still only 5 minutes from the local commuter rail, and 15 minutes from a mall.

I love listening to movies as loud as I want, having a spacious backyard, and slowly making improvements to the place (next month, I'm installing solar panels). Renting is cool for some folks who want to stay mobile, but to me there's no comparison.
 
2011-05-30 01:19:05 PM
This survey has been paid for by the Institute of Commercial Property Investors, who thank you for paying the entire mortgage on their properties plus an extra $400 a month.
 
2011-05-30 01:22:55 PM

apeiron242: Your house becomes an asset when you rent it to someone else for a profit.


Even then it's still as much a liability as an asset - if your tenants stop paying their rent or when they move out you find they've either neglected or trashed the place and you need to put in some serious $$$ to be able to rent it out again. There's a lot of risk in being a landlord, especially if you don't have a lot of spare cash lying around.
 
2011-05-30 01:23:27 PM
1100 square ft.
2 car garage.
Nice yard.
It's a modest, well built house and most of my friends have a much nicer one.
Installed new windows, redid kitchen, next is bathrooms.
I paid if off in 10 years and my Jeep is also paid for.
No kids, no wife, no bills.
 
2011-05-30 01:25:52 PM
I'm very happy I put my money in the bank instead of a house. I'm building my retirement hobby farm right now, and I'm spending the money on that, instead of trying to unload a house in this market. Rent's cheap, and I don't have to maintain anything. And I walk away when I'm ready.
 
2011-05-30 01:25:54 PM
I own my house because I wanted this particular property. I like the house. I like not being bothered by a landlord. I like being able to paint or alter it however I wish. I like not being in an apartment building, having to listen to my neighbors' music/fights/farking. I like being able to have pets and my own yard for them to poop in.

I didn't buy it for an investment, hoping to "flip" it for a quick profit. I bought it because I wanted it and wanted to live there as long as my circumstances permit. I didn't buy out of my price range, and I got a traditional mortgage from a traditional bank.

Yeah, I have to fix stuff when it breaks, but I'm not dependent on the whims of someone else to get it done. (I can choose the company that fixes it, ensuring a quality job rather than "Cousin Joe's neighbor's son who will do it for $20" and I can set my own schedule.)

If that's "dumb", so be it. I'm comfortable with my choice.
 
2011-05-30 01:26:46 PM
My wife and I are paying about $1050 a month for PITI and getting over $450 back every month in equity. If we rented, we'd be paying more money for a smaller and lesser quality apartment, and the amount we'd be paying would go up every year based on what the landlords need to pay for taxes and insurance. I'd say we made a good decision.

/YMMV
 
PJ-
2011-05-30 01:26:48 PM
Houses are not investments, they are lifetime purchases.
 
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