4 ms·

I feel compelled to reply. You're basically saying that by paying extra money for years you now pay about the same money as a renter next door. What a terribl

I feel compelled to reply. You're basically saying that by paying extra money for years you now pay about the same money as a renter next door. What a terrible way to invest your money. You could have been taking that extra money you were paying in principle payments for years and investing it in conservative investments and making 6-7%. Instead you've wasted it on a depreciating asset that only requires repairs, costs taxes every year, and isn't likely to appreciate in value for the next 3-4 years. Take all of the extra principle payments you have made - calculate what they would have made at a 5, 6, or 7% interest rate. Then, look at your home equity, subtract the amounts you have paid in repairs and taxes, and ask yourself which number is larger. Chances are you have been foolish with your money.

bane 15y ago
Instead you've wasted it on a depreciating asset that only requires repairs, costs taxes every year, and isn't likely to appreciate in value for the next 3-4 years. I'm not sure you understand the difference between a depreciating asset and an appreciating asset. With very few exceptions, a car is a depreciating asset. It's worth less tomorrow than it is today. A house (with few exceptions) is not a depreciating asset. With the singular exception of 2007-2010, home prices tend to rise. Also, I'm sorry to say, unless your definition of "conservative instement" includes a money printing machine, no conservative investment vehicle since the end of 2008 has broken even 3%, and 5% since 2007 let alone 6%. http://www.fhlbdm.com/rg_history.htm http://www.fhlbdm.com/rg_history.htm
- westicle 15y ago
  "A house (with few exceptions) is not a depreciating asset. With the singular exception of 2007-2010, home prices tend to rise." In the words of Shaun Micallef: "All cats are brown, as this exception to the rule proves". http://www.infochoice.com.au/banking/savings-account/term-deposit-interest-rates.aspx http://www.infochoice.com.au/banking/savings-account/term-de... If you compare 5-year term deposits most are in the 6.8% - 7.1% range.
  - bane 15y ago
    Sorry, we don't have those in the U.S. Our equivalent is called a Certificate of Deposit (CD) and those have just finally climbed above the 1% range after a few years sporting near 0% ROI. Put another way, they weren't even worth the time it took to go down to the bank to buy one. Now...if you have something over $100,000 USD burning a hole in your pocket that you won't need to touch for a while, you can purchase something called a jumbo CD, and the 5-year instruments will just break 2.3%.
- wonnage 15y ago
  I don't know where you're getting your numbers from, but even Treasury I bonds were returning 5.93% (according to the calculator at http://www.treasurydirect.gov/BC/SBCPrice http://www.treasurydirect.gov/BC/SBCPrice). In any case, "home prices tend to rise" doesn't make sense if you're trying to justify buying one as an investment. Borrow ten times your net worth and buy a house hoping it'll appreciate. Not exactly a brilliant investment scheme. Also, you could argue that a house is a depreciating asset. Shit breaks and you have to maintain it. If you were a business you'd actually have to account for depreciation on buildings.
  - bane 15y ago
    http://en.wikipedia.org/wiki/Depreciating_asset http://en.wikipedia.org/wiki/Depreciating_asset
    - wonnage 15y ago
      "In the United States, residential rental buildings are depreciable over a 27.5 year or 40 year life, other buildings over a 39 or 40 year life, and land improvements over a 15 or 20 year life, all using the straight line method." Basically the only thing that will appreciate when owning a house is the land it sits on. A really nice house in a crappy area is going to lose value until the demand for the location starts going up again.

bane 15y ago

Instead you've wasted it on a depreciating asset that only requires repairs, costs taxes every year, and isn't likely to appreciate in value for the next 3-4 years. I'm not sure you understand the difference between a depreciating asset and an appreciating asset. With very few exceptions, a car is a depreciating asset. It's worth less tomorrow than it is today. A house (with few exceptions) is not a depreciating asset. With the singular exception of 2007-2010, home prices tend to rise. Also, I'm sorry to say, unless your definition of "conservative instement" includes a money printing machine, no conservative investment vehicle since the end of 2008 has broken even 3%, and 5% since 2007 let alone 6%. http://www.fhlbdm.com/rg_history.htm http://www.fhlbdm.com/rg_history.htm

westicle 15y ago
"A house (with few exceptions) is not a depreciating asset. With the singular exception of 2007-2010, home prices tend to rise." In the words of Shaun Micallef: "All cats are brown, as this exception to the rule proves". http://www.infochoice.com.au/banking/savings-account/term-deposit-interest-rates.aspx http://www.infochoice.com.au/banking/savings-account/term-de... If you compare 5-year term deposits most are in the 6.8% - 7.1% range.
- bane 15y ago
  Sorry, we don't have those in the U.S. Our equivalent is called a Certificate of Deposit (CD) and those have just finally climbed above the 1% range after a few years sporting near 0% ROI. Put another way, they weren't even worth the time it took to go down to the bank to buy one. Now...if you have something over $100,000 USD burning a hole in your pocket that you won't need to touch for a while, you can purchase something called a jumbo CD, and the 5-year instruments will just break 2.3%.
wonnage 15y ago
I don't know where you're getting your numbers from, but even Treasury I bonds were returning 5.93% (according to the calculator at http://www.treasurydirect.gov/BC/SBCPrice http://www.treasurydirect.gov/BC/SBCPrice). In any case, "home prices tend to rise" doesn't make sense if you're trying to justify buying one as an investment. Borrow ten times your net worth and buy a house hoping it'll appreciate. Not exactly a brilliant investment scheme. Also, you could argue that a house is a depreciating asset. Shit breaks and you have to maintain it. If you were a business you'd actually have to account for depreciation on buildings.
- bane 15y ago
  http://en.wikipedia.org/wiki/Depreciating_asset http://en.wikipedia.org/wiki/Depreciating_asset
  - wonnage 15y ago
    "In the United States, residential rental buildings are depreciable over a 27.5 year or 40 year life, other buildings over a 39 or 40 year life, and land improvements over a 15 or 20 year life, all using the straight line method." Basically the only thing that will appreciate when owning a house is the land it sits on. A really nice house in a crappy area is going to lose value until the demand for the location starts going up again.