Problem is that people see Real Estate as very long term investment.
Most of the time, it's not.
You can make 100-300% in 2-3 years on one project and move on.
If this thread is all about buying a "standard" home in a "standard" location at a given "standard" timing, spending thousands on worthless in-home stuff to impress your friends, you won't make any profit in the long run.
I live in a condo... I bought it because it was in pre-construction (low-price / high 1st year appreciation), very unique waterfront location (long term appreciation) and it's located in a region where all babyboomers will want to retire in the next 5-10 years, near to all services. I bought for these reasons. Not based on my feelings. It is an investment to me.
Bottomline is: don't pretend that your home is an investment if you did not bought based on economic reasons, but only from your feelings.
Quote:
Originally Posted by jayeff
People talk about any increase in the value of their homes as if it were profit. But unless you have died or are otherwise leaving the property market, it isn't: you will usually be paying a similar %age increase in the price of your next home. And since most people (prior to retirement) move up the housing ladder, translated into dollars, that percentage increase often more than wipes out any nominal "profit".
The reality is that house purchase sets most people on the credit treadmill more surely that anything else in their lives. Particularly when people see prices rising and are tempted to take the maximum loan they can afford, they can end up with nothing if anything goes wrong. Many suffer less dramatically, but are forced to use other, more expensive forms of credit, to get by.
In Long-Term Perspectives on the Current Boom in Home Prices Robert Shiller of Yale University points out that US house prices - in real terms - were almost unchanged between 1900 and 2000. From that perspective it is almost impossible to see the astonishing leap in prices since 2000 (which seems to have blinded people to that longer term reality), as anything other than a bubble waiting to burst in a very big way.
Owning a home is not only about its investment value (or otherwise). You can, for example, personalize a home you are buying in ways which you may not be allowed to do if you live in a rented home. But there are also practical downsides, such as once you "own" a home, you will likely be less willing to pursue opportunities if they involve a move.
As this article in the Denver Post a couple of days ago suggests, home ownership is becoming a nightmare for many people. "Fed officials heard stories from Denver, Cleveland, Philadelphia and New York, where neighborhoods are deteriorating as borrowers struggle to pay loans or abandon their homes in foreclosure". "Some 1.2 million foreclosures were reported nationwide last year, up 42 percent from 2005, according to Irvine, Calif.-based RealtyTrac". |