3 ms·

This is a great point and it equally applies to housing. Not just which neighborhood you live in, but whether you own a house at all. Spend a quarter million do

by Lucent 8y ago

scarface74 8y ago
This is a great point and it equally applies to housing. Not just which neighborhood you live in, but whether you own a house at all. Spend a quarter million dollars minimum and get locked into a mortgage for decades for what actual improvements over a mediocre rental? Nicer baseboards? What I got for buying a house is a fixed housing expense. When I got married, my wife - who was already living in one of the best school districts in the state with her (now our) two sons. We moved into a 3 bedroom apartment,1630 square feet for $1200 a month. Within three years, rent had gone up to $1700 a month. We moved into a house - slightly further north but still in the most affluent county in the state and one of the top 30 in the nation - and now pay $2050 a month. We have 3000+ square feet 5 bedrooms, 3-1/2 baths, a separate large office, a garage, not attached to other apartments, and privacy. The apartment we left two years ago is now renting for $2150. Our mortgage will never go up, our insurance and property taxes will go up slightly. My parents bought the home they live in now in 1978 and their mortgage was $650 a month. In 2008 when they paid off their mortgage, they were still paying less than $1000 (insurance and property taxes go up). 30 years later. In 1978 it was a stretch, by 2008 it was nothing. They live in a small town, we live in a major metro area. Now, they don't have to worry about rent - just insurance and a reduced property tax amount since they are over 65. A house is a great inflation hedge. I would mention that in the two years since we bought the house, the value has gone up $30K+. But, since we have no plans on moving to a cheaper area, equity is meaningless.

by Lucent 8y ago

scarface74 8y ago

This is a great point and it equally applies to housing. Not just which neighborhood you live in, but whether you own a house at all. Spend a quarter million dollars minimum and get locked into a mortgage for decades for what actual improvements over a mediocre rental? Nicer baseboards? What I got for buying a house is a fixed housing expense. When I got married, my wife - who was already living in one of the best school districts in the state with her (now our) two sons. We moved into a 3 bedroom apartment,1630 square feet for $1200 a month. Within three years, rent had gone up to $1700 a month. We moved into a house - slightly further north but still in the most affluent county in the state and one of the top 30 in the nation - and now pay $2050 a month. We have 3000+ square feet 5 bedrooms, 3-1/2 baths, a separate large office, a garage, not attached to other apartments, and privacy. The apartment we left two years ago is now renting for $2150. Our mortgage will never go up, our insurance and property taxes will go up slightly. My parents bought the home they live in now in 1978 and their mortgage was $650 a month. In 2008 when they paid off their mortgage, they were still paying less than $1000 (insurance and property taxes go up). 30 years later. In 1978 it was a stretch, by 2008 it was nothing. They live in a small town, we live in a major metro area. Now, they don't have to worry about rent - just insurance and a reduced property tax amount since they are over 65. A house is a great inflation hedge. I would mention that in the two years since we bought the house, the value has gone up $30K+. But, since we have no plans on moving to a cheaper area, equity is meaningless.