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Answers (11)
- Joan Braunschweiger, "Morris County NJ"
- Contributions:1543
I wish I could be one of those people who has the ability to lay out some impressive numbers to well....impress you.
Even if I was one of those people, there are so many unknowns coming down the pike, I think those numbers can only take you so far. So many variables and yet the impact fluctuations in those variables has on different things, no one can really know. Lots of predictions are made. Some educated guesses. Some are better than others. None are perfect.
Do your own analysis, using as many variables in your life that will factor into the equation, personal ( for example, how is important is owning a home to me?), financial (how much can you comfortably afford), employment (how stable is my job? will I need to relocate in 5 years?), location (most important thing, without a doubt, in resale value), and many, many other things which only you can determine what is important to you.
If you want to buy a property purely for investment purposes, where you know, with quite a bit of certainty you will do well on this investment(in x amount of years), with enough research, that can probably be done.
That does not necessarily mesh with buying a home to live in. In other words, the property that will give you the highest return on the dollar (again, in x amount of years, and I'm not really sure why I keep feeling compelled to say that) may not be in a location desirable to reside in, for personal, employment reasons, or whatever.
When most people buy a residence, they do it because they want to feel as if their money isn't thrown away toward rent, to make the place their own, and like it or not, it is the American Dream. People will perceive things the way they want to and sometimes perception doesn't necessarily mesh with reality.
How much of a wise investment it is I suppose depends on how you weigh each of those variables in your personal equation. If you happen to find something that fulfills both the investment and personal side equally well, you have hit jackpot.
I don't think it is as easy as that for most people. Like I said, too many variables and many of these unknown: job loss, death or disability, natural disaster, invasion by aliens, relocation.....you get the idea.
Everything is so individual, so personal, everybody has different priorities, different life events.
I apologize because I realize that I spent a lot of time not really answering your question. Kind of in a ramblin' mood.
Even if I was one of those people, there are so many unknowns coming down the pike, I think those numbers can only take you so far. So many variables and yet the impact fluctuations in those variables has on different things, no one can really know. Lots of predictions are made. Some educated guesses. Some are better than others. None are perfect.
Do your own analysis, using as many variables in your life that will factor into the equation, personal ( for example, how is important is owning a home to me?), financial (how much can you comfortably afford), employment (how stable is my job? will I need to relocate in 5 years?), location (most important thing, without a doubt, in resale value), and many, many other things which only you can determine what is important to you.
If you want to buy a property purely for investment purposes, where you know, with quite a bit of certainty you will do well on this investment(in x amount of years), with enough research, that can probably be done.
That does not necessarily mesh with buying a home to live in. In other words, the property that will give you the highest return on the dollar (again, in x amount of years, and I'm not really sure why I keep feeling compelled to say that) may not be in a location desirable to reside in, for personal, employment reasons, or whatever.
When most people buy a residence, they do it because they want to feel as if their money isn't thrown away toward rent, to make the place their own, and like it or not, it is the American Dream. People will perceive things the way they want to and sometimes perception doesn't necessarily mesh with reality.
How much of a wise investment it is I suppose depends on how you weigh each of those variables in your personal equation. If you happen to find something that fulfills both the investment and personal side equally well, you have hit jackpot.
I don't think it is as easy as that for most people. Like I said, too many variables and many of these unknown: job loss, death or disability, natural disaster, invasion by aliens, relocation.....you get the idea.
Everything is so individual, so personal, everybody has different priorities, different life events.
I apologize because I realize that I spent a lot of time not really answering your question. Kind of in a ramblin' mood.
well said sunnyview. i think the idea of ownership over renting is different for many. i know here in hawaii it has to do with a sense of place. "my place" something that will always be mine, which has little to do with individual wealth but more to do with something that will never be taken away. now culturally that may be different as we are on an island and its not like you can just pack everything in a car and move 100 miles away, most people do not even move out of their own neighborhood because there is a definite comfort with being "where you are".
- sunnyview
- Contributions:25139
I don't know about the argument that the desire to own a house or land as away to increase wealth is recent. In talking to my grandmother who grew up during the depression, she said that her family always were sharecroppers who farmed someone else's land and then had to pay them rent plus a portion of the profits. For that reason, she always focused on owning since in that situation she grew up in renting was not a road to financial gain. It was basically just a way to work for your keep plus a little extra.
In the early 40's. she felt compelled to buy a house of her own so that no one could take it from her and so that she always felt that she had the financial security. Maybe that's not exactly the same as "wealth" but I think many of the financial and emotional goals that people seek to achieve today with homeownership are similar. I think that the difference is that the get rich mentality sort of corrupted the legitimate value of owning and made it seem just like easy money for the taking.
In the early 40's. she felt compelled to buy a house of her own so that no one could take it from her and so that she always felt that she had the financial security. Maybe that's not exactly the same as "wealth" but I think many of the financial and emotional goals that people seek to achieve today with homeownership are similar. I think that the difference is that the get rich mentality sort of corrupted the legitimate value of owning and made it seem just like easy money for the taking.
- Dan, "the_country_hick"
- Contributions:4699
I NEVER looked at buying a house as a way to accumulate wealth.
Instead I accumulated wealth as a way to be able to buy a house.
When I buy, my payments will be unbelievably small.
Instead I accumulated wealth as a way to be able to buy a house.
When I buy, my payments will be unbelievably small.
- jdsdaddy
- Contributions:551
What's all this talk about the dream of home ownership? No one dreams about it anymore. Instead, a house has become an entitlement that people expect to be handed to them on a silver platter.
Isn't a dream supposed to be achieved through a process of hard work, discipline and a bit of sacrifice? Well, just browse through this forum and you'll see people with no savings, no credit, and even no income who want a piece of this dream, without having hardly to lift a finger. And you'll find no shortage of people from the real estate industry encouraging them on.
Meanwhile, the people who actually worked and saved and sacrificed look at the wasted dollars being spent by the government bailing out those most responsible for this crisis and we ask, "What happened to our dream?"
- James Callas, "ABBAUSA"
- Contributions:958
Never lose hope and never lose your dream for a home of your own.
Some of the time the expectations of home-ownership is so high and so extravagant that it goes beyond what is practical.
Some would rather rent than own home a basic home, but guess what you are normally building equity with home-ownership and each house you own and market moves you up a little bit each time.
Owning your own home without a mortgage is a still an attainable dream.
Don't lose sight of it and give yourself time to achieve it.
Good Luck!
James Callas - Realtor®
- Dan, "the_country_hick"
- Contributions:4699
Going back in time very few considered buying a house as a way to improve their wealth. They looked at it as simply getting a place they could call their own. It was about ownership and controlling your life not economic reasons for wealth creation.
Over the past dozen years or so something changed. Buying a house stopped being about getting a place to live. It was transformed into make big profits quick by buying one of these things.
Hopefully the concept of buying property to make huge returns is dead and will remain buried. It was a faulty premise to start with.
If people can see that buying a house pays off long term (over 10 years) and once more buy a house to live in forever real estate will be on solid footing. If it once more becomes a get rich scheme it will never be a stable market again.
Investments are defined as something you put money in to create a profit. A house should be defined as something you live in. Depending on a house to cover your retirement expenses does not work. After all, if you sell the house you will spend all that money in rent anyway.
Over the past dozen years or so something changed. Buying a house stopped being about getting a place to live. It was transformed into make big profits quick by buying one of these things.
Hopefully the concept of buying property to make huge returns is dead and will remain buried. It was a faulty premise to start with.
If people can see that buying a house pays off long term (over 10 years) and once more buy a house to live in forever real estate will be on solid footing. If it once more becomes a get rich scheme it will never be a stable market again.
Investments are defined as something you put money in to create a profit. A house should be defined as something you live in. Depending on a house to cover your retirement expenses does not work. After all, if you sell the house you will spend all that money in rent anyway.
This is just off the top of my head and has probably been said before in many different ways, but long term home ownership is probably more like a forced savings account rather then an "investment", per se, or a good one at that. Home valuation has been significantly different in Eugene, OR over the last 30 years versus Hilo, HI.
Not that a forced savings account is all bad, as many people just do not have the ability to voluntarily put away $1,000 a month into a safer, more consistent program.
Now if we are investing based on future valuation, then there needs to be the admission that depending on circumstances there is significant risk in place when leveraging a property with a 30 year fixed. A dip in the market or loss of income can greatly affect the "investment" over the first 1/3 or 1/2 of the life of the loan causing loss. Projecting for valuation is not a guarantee and truly is an investment, but also probably is much shorter then the "long term" investment touted for home ownership.
Not that a forced savings account is all bad, as many people just do not have the ability to voluntarily put away $1,000 a month into a safer, more consistent program.
Now if we are investing based on future valuation, then there needs to be the admission that depending on circumstances there is significant risk in place when leveraging a property with a 30 year fixed. A dip in the market or loss of income can greatly affect the "investment" over the first 1/3 or 1/2 of the life of the loan causing loss. Projecting for valuation is not a guarantee and truly is an investment, but also probably is much shorter then the "long term" investment touted for home ownership.
- dacolan
- Contributions:1073
The dream is alive and well. I promise you.
Perhaps this is the root of the problem. Much like saving for retirement (401K, IRA, etc.), I believe buying a house can be a good goal for achieving long-term personal financial security and stability, but the ingrained cultural indoctrination that home ownership should be embraced as a "dream" to which all should aspire does a disservice to us all.
Many happy, healthy, successful families have been raised in rentals, and as history (and Prof. Shiller) has demonstrated, investing in the residential RE market will net you less than 1% annually on avg after adjusting for inflation. It should be viewed and evaluated for what it is, not glorified as the ideal family environment or investment.
Perhaps this is the root of the problem. Much like saving for retirement (401K, IRA, etc.), I believe buying a house can be a good goal for achieving long-term personal financial security and stability, but the ingrained cultural indoctrination that home ownership should be embraced as a "dream" to which all should aspire does a disservice to us all.
Many happy, healthy, successful families have been raised in rentals, and as history (and Prof. Shiller) has demonstrated, investing in the residential RE market will net you less than 1% annually on avg after adjusting for inflation. It should be viewed and evaluated for what it is, not glorified as the ideal family environment or investment.
- Dunes....
- Contributions:3894
Thought you might enjoy this article from CNNMoney which suggest there is Switch taking place...
By Nin-Hai Tseng, reporterJuly 28, 2010:
"With homeowner markets stressed, it appears renting has become more appealing than owning. Between 2004 and 2009, the number of renter households rose nearly 10% or by 3.4 million, according to a 2010 study of the Joint Center for Housing Studies of Harvard University. The rise was most dramatic in the Midwest, where growth of renter households swung upwards by 15.4% between 2004 to 2009. The South added the biggest number of renter households with a 1.2 million increase from 2004 to 2009, the study states.'
"In May, U.S. Housing and Urban Development Secretary Shaun Donovan testified before a House committee that the financial crisis proved the need for a better balance between ownership and rental housing. And HUD senior official Raphael Bostic last week told the Washington Post: "In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go," Bostic said. "You're not going to hear us say that."
http://money.cnn.com/2010/07/28/real_estate/housing_debate_rent-vs-buy.fortune/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
Interesting Article or at least I thought so..something to consider
By Nin-Hai Tseng, reporterJuly 28, 2010:
"With homeowner markets stressed, it appears renting has become more appealing than owning. Between 2004 and 2009, the number of renter households rose nearly 10% or by 3.4 million, according to a 2010 study of the Joint Center for Housing Studies of Harvard University. The rise was most dramatic in the Midwest, where growth of renter households swung upwards by 15.4% between 2004 to 2009. The South added the biggest number of renter households with a 1.2 million increase from 2004 to 2009, the study states.'
"In May, U.S. Housing and Urban Development Secretary Shaun Donovan testified before a House committee that the financial crisis proved the need for a better balance between ownership and rental housing. And HUD senior official Raphael Bostic last week told the Washington Post: "In previous eras, we haven't seen people question whether homeownership was the right decision. It was just assumed that's where you want to go," Bostic said. "You're not going to hear us say that."
http://money.cnn.com/2010/07/28/real_estate/housing_debate_rent-vs-buy.fortune/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29
Interesting Article or at least I thought so..something to consider
- Rob Graham, "Rob Graham"
- Contributions:171
I think the dream has only been delayed for some. In fact the dream has become a more realistic reality for those who can now afford a first home at a great interest rate. The dream is alive and well. I promise you.
Is a paradigm shift going on, that my extend past the current valley of decline? Many who dreame
I know there are many who are suffering through this economic down turn, but the reality is those that could afford a home still can and have only been marginally affected. They can get loans, they can document their income, the have stable employment and good credit scores.
There has to be a financial benefit, that can be understood in layman terms, that show real value in today's market.
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