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It's a good investment because it reduces your lifetime housing cost to zero. You can achieve that in other ways or basically just not care about it. There w
by sjg007 8y ago
It's a good investment because it reduces your lifetime housing cost to zero. You can achieve that in other ways or basically just not care about it. There was a women in NYC who paid $25 a month since 1950... she got a deal. It wasn't zero and she didn't make money but she got a deal.
- larrik 8y agoNot zero (taxes, upkeep, etc), but yes. This is the main thing.
- CydeWeys 8y agoTaxes, upkeep, etc., is easily going to run into the tens of thousands of dollars annually depending on where you live. It's very far from zero. I don't get OP's argument at all. You're never going to get housing costs anywhere close to zero unless you're grifting off someone else or living on the street.
- sjg007 8y agoAppreciation.
- CydeWeys 8y agoThe long term average return on a primary residence doesn't even keep up with inflation.
- sjg007 8y agoYou are mistaken.
- rifung 8y ago"Home prices look remarkably stable when corrected for inflation. Over the 100 years ending in 1990 — before the recent housing boom — real home prices rose only 0.2 percent a year, on average. The smallness of that increase seems best explained by rising productivity in construction, which offset increasing costs of land and labor." From Nobel Prize winner Robert Shiller https://awealthofcommonsense.com/2013/04/robert-shiller-on-real-estate-investments/ https://awealthofcommonsense.com/2013/04/robert-shiller-on-r...
- sjg007 8y agoWhen corrected for inflation equals zero. And 1990 was 29 years ago.
- ApolloFortyNine 8y agoTens of thousands? I'll admit I don't know the property tax nationwide, but in my county in Virginia it's under 1% (5 minutes to downtown Richmond). A modest $300k home would have a tax of only $3000. And your maintenance is not going to be anywhere close to 10s of thousands, and it's extremely unlikely you'll even average 10k a year over 5 plus years.
- rifung 8y ago> It's a good investment because it reduces your lifetime housing cost to zero I think that depends on your definition of good. If you put the money you would have used for your down payment and what you would save by renting vs owning towards the s&p500 by the end of the 30 years your investment's yearly growth is more than your yearly rent. Of course, lowering your expenses is less risky than growing your investments while keeping expenses the same so it's not a completely objective decision. The biggest problem with this strategy is that most people end up having lifestyle creep and do not save as much if they rent vs being forced to save via a mortgage.