Buy a house or dump everything into stocks

[slakjaw]

Alright, I have been saving for quite some time now and I finally have a decent chunk of money in the bank. I have been thinking about buying a house lately but now that I have it narrowed down to a few places I am chickening out. so pelicantes, what do I do? put 15% down on a house or just dump it all into the stock market and sit on it.

I am scared that home values will continue to decline over the next 10 years. On the plus side though I would have a sweet garage for the Porsche.

[mjshira]

I think you addressed your own question.

[slakjaw]

You mean the garage for the porsche?

[Dantilla]

Real estate will never be worth zero, and it provides a roof over your head.

I know a guy who bought a bunch of WaMu stock less than two weeks before the failure because "It couldn't get any worse".

I'd go with real estate.

[slakjaw]

I keep thinking the same thing. It beats 1000 in rent every month... I guess I just get nervous.

[mjshira]

study the historical appreciation for the given area you live in and would be buying RE in. compare to historical rate of return in stock market post bottom/near bottom. based on your risk tolerance pick your option.

also important, how long until you would need this investments initial amount or expected return? if you have a long horizon that should color your decision. if you go stock, don't put it all in single company or industry.

[cl8ton]

Well both are bargains now days….
In my opinion, I would go for the real estate!

[Arizona_928]

You can live in a car, but you can't drive a house... spend your money accordingly

[porsche4life]

Originally Posted by slakjaw

just dump it all into the stock market and sit on it.
\.

Why not just pile all your money up and burn it? Seriously buy a house. Or at least some land. Something TANGIBLE. Stock is just a piece of paper.

[p911dad]

You say you have been saving for quite some time, so you know how hard it is to accumulate cash. Right now the stock market is a total crap shoot, to enter the market now is very risky, and since it took you a while to accumulate your bundle to chance on losing it literally overnight would not make much sense.
I say buy a house in a good neighborhood with the thought of selling it someday; in other words, pick one that has the popular features common to the wants of most people to make it easily saleable when you eventually take that path. Pick a good location in a district that has top rated schools. These are things that cause a property to keep its value.
This is an excellent time to buy a house in many areas of the country with prices down and inventories up. Although on "60 Minutes" tonight they aired a piece with the prediction that another major wave of foreclosures is coming in the next three years, caused by option ARMS resetting to higher interest rates. Doom and gloom. This will likely cause a further fall in market values, and of course will also probably drive the stock market further down as well.

[911Rob]

Real Estate

[Eric Coffey]

Originally Posted by 911Rob

Real Estate

Ditto.

As someone (else) in the RE biz, I would certainly feel comfortable purchasing a home these days (and am looking myself). That said, just like the stock market there are always good, and not-so-good buys out there. Also, like others have mentioned, I wouldn't touch the the market right now. But, I suppose you could consider doing both by using more leverage to buy the house (i.e. lower down payment), which would free up the remainder of those funds to invest as you see fit.

If I remember right, you were looking at homes at/under $200k. So here's a quick scenario: $200k house, 30 year fixed loan @ 5%. If you only put 10% down instead of 15%, your mortgage payment would be about $55 higher per month. If you only put 5% down, the payment would be about $110 more. So, if you can swing a higher monthly, you can keep more funds free to invest. Assuming you went FHA, you would only need to put 3% down (that is going to 3.5% as of January 1st though).

[Wickd89]

Real Estate. At least your primary residence. Who likes paying rent.

Now, RE is not considered a real investment in some parts of the country because it does not appreciate like other parts of the country, but getting a good deal is smart.

[competentone]

House.

[Rearden]

Neither. Keep the cash.

[tiwebber]

Real Estate. Might not be rock-bottom yet but hunt around and look for deals.

[MT930]

Real Estate! Just buy it right !

Home First ! all else will fall in to place.

[YTNUKLR]

I would give it a little while before doing anything, at least a couple months; stay cash. November has shown a huge downturn in consumers' willingness to consume. It's going to be a bumpy ride, but the house you buy will be significantly cheaper because of it (more than your $12,000 annual rent payments).

j.m.H.o.

[turbo6bar]

Stay in cash and wait for the killer RE deal. The time spent waiting could pay off huge. There is minimal risk of housing prices going up. When you have your new home, put away some bucks for a rainy day and then think about equities.

[rammstein]

Be sure to consider what your mortgage payment would be, and how much of it woud be going to interest specifically. Now compare to renting. If you were paying $1800/mo in rent, and $1800/mo in interest on a mortgage, it strikes me as pointless to buy. We can all safely say values aren't going up for at least a few years, so appreciation shouldn't be a factor in your decision making. Sure, you can write off interest payments from your income for tax purposes, but even with that, at least in Miami, I'm better off renting.

That's what has kept me from buying (that and lack of down payment until recently). Your area may be different than mine, but do that math before you buy anything. Is there an association for the subdivision you are looking at? That's a whole additional can of worms.