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Buying a home is usually a bad investment
2022 Jun 17, 1:16pm 3,217 views 35 comments
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30
FortWayneHatesRealtors
2022 Jul 1, 10:50am
Onvacation says
you only live once. on death bed you will never regret having a good life.
zzyzzx says
California renters could save $112,000 vs. owning over 5 years
But they'll spend it on frivolousness instead of saving it.
you only live once. on death bed you will never regret having a good life.
31
Patrick
2022 Jul 1, 10:56am
Patrick
2022 Jul 1, 10:56am
zzyzzx says
Exactly. It all depends on the numbers.
The prices in coastal CA are generally too high to justify buying vs renting the equivalent.
https://www.dailybulletin.com/2022/06/29/california-renters-could-save-112000-vs-owning-over-5-years/
California renters could save $112,000 vs. owning over 5 years
Exactly. It all depends on the numbers.
The prices in coastal CA are generally too high to justify buying vs renting the equivalent.
32
Eric_Holder
2022 Jul 1, 11:14am
Eric_Holder
2022 Jul 1, 11:14am
Onvacation says
"Half of my money I spent on women, booze and fast cars. The rest I wasted".
zzyzzx says
California renters could save $112,000 vs. owning over 5 years
But they'll spend it on frivolousness instead of saving it.
"Half of my money I spent on women, booze and fast cars. The rest I wasted".
34
B.A.C.A.H.
2022 Sep 23, 12:28pm
B.A.C.A.H.
2022 Sep 23, 12:28pm
Onvacation says
Do you live in California? Do you know about Proposition 13?
B.A.C.A.H. says
I looked on Zillow up my own dinky 53 year old stucco sh*tbox on a dinky lot in an undesirable neighborhood of 95148 (San Jose). It said $1.2 M.
SELL!!! Sell it while you can!
Do you live in California? Do you know about Proposition 13?
35
WookieMan
2022 Sep 23, 1:27pm
WookieMan
2022 Sep 23, 1:27pm
If you can lock in a decent price, rate, and plan to live there 7 plus years, you'll do much better owning. Doesn't matter if renting is cheaper in the moment unless you might buy and then move quickly. Owning will beat renting 10 out of 10 times over 7-10 years. Also, very few are disciplined enough to invest the savings of renting versus owning.
Fact is you're still paying the landlords PITA at minimum. Likely a 20% mark up. Out side of CA and Prop 13 as BACAH mentions, rent is generally more expensive than owning. No chance in hell I could rent my house for $1,200. It would be 2,200-2,600/mo. I'm paying down the principle and can still save or invest the remaining $1k/mo.
Patricks basis for this site still holds water. But it's primarily a California or East Coast phenomenon. Where I'm at there's no point in renting if you don't have to.
Fact is you're still paying the landlords PITA at minimum. Likely a 20% mark up. Out side of CA and Prop 13 as BACAH mentions, rent is generally more expensive than owning. No chance in hell I could rent my house for $1,200. It would be 2,200-2,600/mo. I'm paying down the principle and can still save or invest the remaining $1k/mo.
Patricks basis for this site still holds water. But it's primarily a California or East Coast phenomenon. Where I'm at there's no point in renting if you don't have to.
.
https://www.cnbc.com/2019/04/18/wealth-manager-buying-a-home-is-usually-a-terrible-investment.html
A lot of people will tell you that buying a home is a good investment, but “that couldn’t be further from the truth,” says Peter Mallouk, a certified financial planner and president of wealth management firm Creative Planning.
“In reality, it’s usually a terrible investment,” he says. That’s because, at the end of the day, owning a home takes money out of your pocket: “You’re paying property taxes, you’re paying maintenance, you’re paying insurance. There are all of these other things that happen with your home that you’ve got to pay for.”
Young homeowners in particular have figured that out the hard way: Underestimating the hidden costs is the No. 1 reason millennials who do own homes have regrets.
Over time, your home might increase in value, Mallouk says, but it probably won’t appreciate enough to offset all of the costs. Instead, if you took what you’d save from not buying a house and invested it in something that’s likely to grow in value, such as stocks and bonds, chances are you’d end up with more money in the long term.
Say you live in Brooklyn, New York, and pay $2,500 a month to rent. If you buy your own place, you might pay $5,000 a month between your mortgage, taxes and other maintenance costs, Mallouk gives as an example. (Other financial experts estimate that, thanks to home ownership costs, buying could cost you about 40% more than renting.)
“If you take the difference and you save it, that extra $2,500 you’re saving in a diversified portfolio is almost certainly, over a long period of time, going to grow to be worth more than what your home equity would have been worth if you had just put the money into a home,” he says.
Ramit Sethi, self-made millionaire and author of “I Will Teach You to be Rich,” has made the same argument. Think about it this way, Sethi suggests: “Generally we can assume that over the long term, if we invest in a low-cost diversified index fund, we get about 7%” in terms of annualized returns. “Can you beat that in your area, over time, with real estate appreciation?”