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> I think for most folks actually living in these high cost areas, capital appreciation is not the primary motivation. It's somewhat subconscious. Why pay $300
by MrKristopher 8y ago
> I think for most folks actually living in these high cost areas, capital appreciation is not the primary motivation.
It's somewhat subconscious. Why pay $3000 rent when you can pay a $5000 mortgage when you and all your friends agree that the house purchase is a great thing? The average buyer isn't seeking capital appreciation, but they are confident that the house is a good purchase.
- timcederman 8y agoJust curious, are you in the area? It's anecdotal, but the folks I know here who are buying tend to do it because they are either sick of the landlord/tenant dynamic, or because of their family. In addition (also very anecdotal, but N of >10) the ones I know who are buying for investment are usually more focused on solid rental cashflow rather than capital appreciation (although it of course still factors into the purchase decision).
- MrKristopher 8y agoHi, yes, in the area. I hear from friends who buy (also very anecdotal). It seemed to me that people generally saved heavily toward a downpayment, then bought when they could (i.e. not worrying about how leveraged they were or what the rent/buy calculators said). Interesting that the investment buyers are looking for cash flow; I didn't like the numbers (4 cap!?). But maybe if you have enough $$ that rate is fine.