Quote:
Originally Posted by GigoloMason
The thing you seem to be missing is the ONLY thing working in joe blows favor when 'owning' a home is that he gets the opportunity to take advantage of leveraging and everything that comes with it.
He's taking making (simple numbers) a 100k investment when he doesn't actually HAVE 100k. That's great if the house appreciates ahead of his additional expenses as he generates a return on money he 'doesn't have', but you seem to be ignoring the downside. Only difference is a bank will give you a loan to buy a house, but is far less likely to issue that same loan against a stock cert for the average person.
Problem with leveraging is that it can cut both ways, if the house depreciates you can get stuck with a loan you can't buy yourself out of because you can no longer sell the house untill you can service the lien.
Leveraging IN ITSELF isn't good or bad, it's just a powerful tool. You can use a chainsaw to cut down a tree or to cut off your arm depending how you apply it. Homes in my opinion are actually far riskier for the average person because in essence they're investing money they don't have and crossing their fingers, even if most choose not to look at it that way.
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The thing that you seem to be missing is that even if real estate never appreciated...let's say prices and wages were frozen today and would never change again for the rest of our lives....you're still better off buying because when you retire you can live rent free, because your house is paid for.
Having a paid for house is the only reason most people are even able to quit working when they're old. A renter will always have that expense.