Many ... Americans have been forced to accept that they'll be living in their current place for a long while, even if they'd planned to flip or trade up. While sales of low-cost housing are picking up, for many, a house is back to what it traditionally was: a long-term financial commitment, a sturdy shelter and a place to hang your hat.
Tuesday, September 15, 2009
No more housing ATM
From yesterday's Wall Street Journal:
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The question today is whether one should purchase a home in light of the workforce mobility that now exists. In other words, people are moving more often today than the 1940s, 50s and 60s. So, to commit to a financial obligation for 30 years may not be the best decision--especially in a housing market where values are very questionable. Transaction costs could easily erase an equity gain. However, as the federal government provides greater incentives to own; and because home ownership is so engrained as part of an American "dream," people will continue to make bad financial decisions.
ReplyDelete"in light of the workforce mobility that now exists"
ReplyDeletewell in the future I think more and more companies will realize the power of telecommute and the internet anyway. So you wont have to move.
Im a web developer and have only worked in an office job once. Most of my work is either contract work or telecommute and I make more than I ever did in a cubicle.
The MI deduction makes it better than rent (if you have a job).
ReplyDeletePeople with families in stable communities don't move for a job. They stay with family and find another job.
My front yard looks like crap, but it is my yard.
"My front yard looks like crap, but it is my yard."
ReplyDeleteActually its the banks. Thats the problem, most people dont realize that until the bank kicks them out.
Thats the problem, most people dont realize that until the bank kicks them out.
ReplyDeleteOR
Do what the vast majority of us do and simply pay it off and live virtually free for the rest of our lives.
Anon 10:03:
ReplyDeleteI won't say that it is free to be paid off. You still have to pay county taxes which are not insignificant, HOA dues, insurance, and utilities. And on top of that there is general maintenance that needs to be done. Surprising how much this all adds up to. It still beats having a mortgage though..
property tax = rent paid to the government
ReplyDelete"Do what the vast majority of us do and simply pay it off and live virtually free for the rest of our lives."
ReplyDeletePaying a mortgage until you are 70 years old and then dying 2 or 3 years later isnt much of a "virtually free for the rest of our lives"
1. A lot of people pay off there home before the age of 70.
ReplyDelete2. After 30 years of owning the place the chances are your monthly payments will be low compared to what rents will be unless we have have no inflation over the next 30 years.
3. My bet is that the person who is paying taxes and maintence only on his home is going to be spending a LOT more money than the person who is renting.
4. When the home is paid off, you how have an asset you can sell or give to the kids. When you rent you only have what you have the money you were able to save on the side.
The one arguement I hear about renting is that one can rent a place for cheaper and save the rest. In the cases you can do that more power to you. I have however observed that most of my family members (parents, aunts, uncles ect) who were renting ended up saving little money even though some where making as much as those who owned a home. All of the people in my family who are over 65and own a home are now retired and living comfertably. Every one who is over 65 and renting are still working for a living and do not have enough assets to retire on.
Paying a mortgage until you are 70 years old and then dying 2 or 3 years later isnt much of a "virtually free for the rest of our lives"
ReplyDeleteYet paying rent til the month of your death is?
"Yet paying rent til the month of your death is?"
ReplyDeleteWhere did he claim that?
They just pointed out that the bank owns your home, not you.....
and that paying 4 times higher than rent for 30-40 years is not exactly "living virtually free"
you morons need to take some kinda remedial reading course in night school or something....probably an investment/finance class wouldn't hurt you either.
Being a realtor, of course I am biased when it comes to investing in a property.
ReplyDeleteBut another way to approach this rent vs own problem which wasn't mention in the previous comments is to buy a house and rent it out, so that it pays for the mortgage, while you're living somewhere else, paying a rent. By the time the mortgage is paid for, you can move in. Of course it depends on what the current market situation is. For example in Canada, the housing market seems to be recovering faster than in the US, slowly lifting the prices back up. But until the prices are high again, buying property to rent it out is for sure a sensible approach.
Elli
Take care,
Elli
"and that paying 4 times higher than rent for 30-40 years is not exactly "living virtually free"
ReplyDeleteyou morons need to take some kinda remedial reading course in night school or something....probably an investment/finance class wouldn't hurt you either."
1. Few would disagree with the statement that paying 4x more than rent is dumb. However the assumption of paying 4x more was never part of your original arguement. Also you do not have to pay that much more to own in many areas of DC so I do not know why making that comment has any relevence.
2. calling us morons is like the pot calling the kettle black.
3. You may actually be shocked by the number of people on this board who have Masters degrees and above in degrees relating to finance and economics.
They just pointed out that the bank owns your home, not you.....
ReplyDeleteNot to pile on, but this assertion is pretty fatuous, as well.
If you want to be pedantic about it, anyone with equity in a property is a co-owner with the bank.