4 ms·

Well, it's a three bedroom, 2 1/2 bath with a two car garage. I've been in it since '93 Just after I turned 27. I'm the first owner. Original as built price ~$

Well, it's a three bedroom, 2 1/2 bath with a two car garage. I've been in it since '93 Just after I turned 27. I'm the first owner. Original as built price ~$85,000. I'm not on the either coast and property prices were, and still are, a lot lower here. Last appraised value ~$122,000 (appraised 5 years ago), and similar sized homes in the same neighborhood are currently going for ~$135,000+. I'm in a nice neighborhood with relativly low crime compared to other parts of the city. In the intervening 18 years I have changed jobs once and stayed in the same city, and the new job is closer to home. I did refinance once to shave 2% off my interest rate so it will be another 7 years till it's paid off. Yes, mortgage interest does add up, but when you are renting an apartment you are basically paying the landlords mortgage interest anyway. If I did need to sell to move for a job I'd be able to roll the proceeds into the new home and have a much smaller, shorter mortgage to begin with. If I had rented for the same time period I would not have any built up equity. It would hurt to sell though, this house has seen me get married and gain two children. There are a lot of memories here.

pdubroy 15y ago
I'm not sure that really proves your point. You've made about 2.8% annually over 13 years, not including your borrowing cost, agent fees, etc. On the other hand, the S&P 500 returned 8.25% annually between 1993-2006. Say you put 10% down ($8500) and spend $800/year total on taxes, repairs, etc. (probably low). If you'd invested in an index fund, you'd have made $42,000.
- Mz 15y ago
  If you'd invested in an index fund, you'd have made $42,000. And also likely have moved several times at an average cost of around $2000 per move, seen rent increases above what his current mortgage is and so on. The odds are poor that all other things would have remained equal. I owned a house at one time. I benefited by about $2000/year over the time I owned it. When I refinanced, I got my escrow back and had no mortgage payment for a month. Then my payments after that were lower. No landlord in the world is going to drop by your apartment and leave you with a nice hefty check, say "Don't bother to pay me rent this month and, oh, next month your rent is going down. Cheerio!"
  - pdubroy 15y ago
    Great, then it worked out for you. I'm not saying there are no advantages to owning a house, but it's not a magical investment vehicle. Many people seem to just compare the purchase price to the sale price and think, "Wow, what a gain!" without considering all the other costs, or as what they could have made with another investment over the same period.
    - camiller 15y ago
      I never said it was an superior investment vehicle vis-a-vis investing in the market. Compared to renting is a different story.

pdubroy 15y ago

I'm not sure that really proves your point. You've made about 2.8% annually over 13 years, not including your borrowing cost, agent fees, etc. On the other hand, the S&P 500 returned 8.25% annually between 1993-2006. Say you put 10% down ($8500) and spend $800/year total on taxes, repairs, etc. (probably low). If you'd invested in an index fund, you'd have made $42,000.

Mz 15y ago
If you'd invested in an index fund, you'd have made $42,000. And also likely have moved several times at an average cost of around $2000 per move, seen rent increases above what his current mortgage is and so on. The odds are poor that all other things would have remained equal. I owned a house at one time. I benefited by about $2000/year over the time I owned it. When I refinanced, I got my escrow back and had no mortgage payment for a month. Then my payments after that were lower. No landlord in the world is going to drop by your apartment and leave you with a nice hefty check, say "Don't bother to pay me rent this month and, oh, next month your rent is going down. Cheerio!"
- pdubroy 15y ago
  Great, then it worked out for you. I'm not saying there are no advantages to owning a house, but it's not a magical investment vehicle. Many people seem to just compare the purchase price to the sale price and think, "Wow, what a gain!" without considering all the other costs, or as what they could have made with another investment over the same period.
  - camiller 15y ago
    I never said it was an superior investment vehicle vis-a-vis investing in the market. Compared to renting is a different story.