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People living in the property are almost always buying it as both a place to live and as an investment. Investment is not the same as speculation. Even withou
by alphabettsy 5y ago
People living in the property are almost always buying it as both a place to live and as an investment.
Investment is not the same as speculation.
Even without guaranteed appreciation in value people will buy homes because they have an asset compared to alternatives like renting. When renting you’re guaranteed a loss on rent paid.
- motioncuty 5y agoThats just homes, there are tons of other property classes outside of personal residential.
- thebean11 5y agoIt's all relative. If home prices drop while you're renting that's a huge gain relative to owning property.
- alphabettsy 5y agoYou’re right that it’s all relative, but that’s not necessarily true. Where I live buying is much cheaper than renting and even if my home is worth 25% less than I paid for it by the time it’s paid off I can come out ahead because I still have an asset worth let’s say $100k and I’ve spent less money than I would renting. That’s without factoring in the other reasons people buy homes.
- thebean11 5y agoIf your home is down 25% isn’t all or most of your equity “gone” anyway? Guess it depends how slowly, but if it happens immediately you basically lost your entire down payment
- kangnkodos 5y agoI expect my property, my house and yard, to appreciate less than the S&P 500. I expect the value of my property to go up a little, but not a lot. By choosing to buy property, instead of living in the cheapest rental I could find, there is an opportunity cost. And I'm OK with that. If money was the only goal, renting something extremely inexpensive and investing would give me a better financial return.