Quote:
Originally Posted by asphaltgambler
He had demonstrated that the stock market had consistently out performed real estate over the last twenty years. To the tune of 11% vs 6% averaged. That the current real estate market will bounce at or around the bottom for a while until.......................
chime in with their point of view?
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And, that return probably doesn't take into account the fact that stocks really have no "ownership" costs. A few bucks to make a trade, but you're not spending $15K for a new roof on a stock.
Home ownership has many costs that most people don't calculate into their "return on investment" numbers. Most believe if you bought 10 years ago for $100K and sold for $150K, you've made a profit of $50K, and that's just not a good calculation.
I agree with the point of view. I view a residence home as a liability, not an asset. Because the home generates no income, but incurs liabilities (costs).
Now, it's a necessary liability b/c you need to live somewhere. To minimize the liability, I paid mine off as soon as possible, so there is no loan liability on it anymore. But there's still plenty of other liabilities remaining even with no mortgage - property taxes, maintenance, utilities, repairs, insurance, etc. These are costs that a renter doesn't incur (other than sometimes utilities).
Essentially, I did what RPK suggests. I bought a smaller sized home than most (on the small side for the area), in a great area, put a good amount down and paid it off fairly quickly (less than 10 years). I learned it from my parents, who did the same thing throughout their lives, and if I can end up financially where they are right now, I'll be very happy with that.
Again, I'm not saying it is not a good idea to buy a house, I think that it is. But I think there's a right way (or a "better") way to do it, and also I think it needs to be viewed realistically as a financial "investment" (which i think most do not do).