Discussion in 'Economics' started by wilburbear, Nov 11, 2010.
how about an old fashioned rooming house = 3 squares and a bed and a bath down the hall.
Let's look at renting vs. owning, in the last 7 years, (because that is when I bought), simplified.
The $10,000 down payment could have been put in the bank at 1.5%, if that rate were maintained, and $1000 more added per month, I'd have approx. $100k in the bank, instead of $25k in "equity",
"Equity" is a word devised by bankers to distract you from "interest",
You forgot to subtract your cost of rent and loss of interest tax deduction.
^^ Along w/ Leveraging the Equity to buy additional 'NIV' Rental properties during the ~mother, bull market~ and not having to pay any "rent" for 2 of those 7 years.
Property taxes have increased by nearly $100 per month since inception in 2003.
I also never included 5 years of contribution towards said mortgage from unmentioned spouse. Payments never materialized anyway.
The actual mortgage payment is higher than $1k.
As I stated, an oversimplified observation.
I'm living here, I'm not moving, I make improvements more for my own satisfaction than any $ value.
Home ownership is, for most, a leveraged investment that does well during inflationary times. And, it's coming.
As part of fixing Social Security, Medicare, and paying down the National Debt Congress wants to eliminate the mortgage interest deduction so home buyers will have a great incentive to rent vs own because homes are money pits, even if they are new.
People confuse the facts. You do not own your home until It is paid for.
But if you were smart bought before the bubble took a 15 year loan and now own your home free and clear you do have more freedom. Ie: financial freedom For one thing
For the new future though borrowing today to buy a home is too risky with the nomadic work life and renting is a better idea for the millenials. Besides the millenials have a new boat anchor it's called the 100k college loan..
Indeed KOS. Today's grads are going to have a hard time getting approved for a loan with the student loan ball and chain hanging around their necks. That's strike one. If Obama and Co. kill the mortgage interest deduction that's strike two. I suppose the slew of vacant, or soon to be vacant, houses on the market is strike three.
Now, the question becomes, can the US economy continue to grow with an increasing number of vacant homes? In the short run, the answer is yes because the Fed is hell bent on creating inflation so those houses that BAC is about to foreclose upon will appreciate in value. Someday the interest will come due on all this printing and that will spell trouble.
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