01-29-2016, 07:44 PM | #23 |
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I sort of hope there is a crash, but I don't think it's actually going to happen. There may be a correction, but not as drastic.
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01-29-2016, 07:51 PM | #25 |
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THIS!
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01-29-2016, 08:08 PM | #26 |
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It's funny how people look at their primary residence as some sort of piggy bank. I've never followed that train of thought. My house is a place I live in first and foremost. Even if my house depreciates in value, even below what I paid initially, I'm still ahead of the alternative...renting. There you get zero back on the money you've spent for living expenses. You have to pay for living expenses some where either in a home you've purchased or a place you're renting. I guess there's an alternative where you wouldn't pay an living expenses where you're living with someone else such as your parents.
I know this is a generalization, but typically those that sweat their home values are those that don't plan on holding on to their homes for any length of time. Me personally, I actually would prefer prices to drop because I would have to pay less in property taxes. I went about buying both my properties with a relatively conservative plan and I'm not underwater on either house even with a massive correction. And real estate is just like stocks. The "losses" from a crash/correction is only on paper. You only realize those losses when you convert to cash. Also, it's funny how people sweat how their primary residence needs to appreciate in value when the same people won't bat an eye on buying a large depreciating asset such as a car. Or in most households....cars. |
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01-29-2016, 08:15 PM | #27 | |
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01-29-2016, 08:24 PM | #28 | |
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Those that do get in trouble are people which buy to the max the bank tells them they can "afford" or get into homes based on payments only which some times involve "liar" or interest only loans. And many of these people approach buying a home for speculation purposes and not viewing the home as a place to live. |
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01-29-2016, 08:28 PM | #29 | |
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01-29-2016, 08:30 PM | #30 |
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I will likely never break even on my townhouse. At this point, as long as I can sell for more than I owe and the tax breaks put me at a break even point or ahead vs renting, I'll call it a win.
Homes are paper money. The actual value isn't realized until you sell it...appraisals be damned. Personally, I don't see homes as much of an investment since most people don't buy cheap, fix up, then sell.
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01-29-2016, 09:18 PM | #31 | |
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01-29-2016, 09:36 PM | #32 |
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I forget how old I am or how young some are still with some of these comments. There is absolutely nothing wrong with viewing or making your home an investment for the future. Sure it's nice to have rental properties all over the place. But how many do you actually own free and clear? We bought our current home here in Plano back in 2001. I refinanced to a shorter term and lower rate and now have 5yrs to go to pay it off (or sooner if I choose). Meanwhile, if need be, I can put my hands on over a quarter mill liquid from just this house that I have lived in for nearly 15yrs from a monthly payment that folks in so Cal or NY pay for a efficiency apartment.
Is all about location and perspective. And of course needs. |
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01-29-2016, 10:08 PM | #33 |
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In my opinion there are much better vehicles to hang your hat on for your future. I agree having real estate should be one of the pillars in one's savings/investment portfolio. But to put a significant amount of your money into an asset vehicle where it is NOT liquid at all nor is it a cheap means of pulling money out. The only way you can easily tap into the equity of a home is through a home equity line of credit. Which still has an associated cost and risk with it. If you need all the money out of your home, you're dealing with the time it takes to actually sell the house which is dependent on current market conditions and the obligatory 6% commissions to be paid out on the selling price.
I purposely chose not to pay off my homes early. I have 30 years fixed loans on both properties at a low interest rate (3.25 and 3.75%). I have no incentive of giving up that cheap money when I feel the extra money I would sink into the properties are better utilized in other investment vehicles. |
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01-29-2016, 10:23 PM | #34 | |
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01-30-2016, 11:38 AM | #36 | |
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funny to hear all these people saying home are not a good investment, its prob the only smart investment people ever make in their lives. Its the only investment where you get tax write-offs, where people lend/give you money to own it over 30 yrs...the value of all homes have to go up over time as the value of the US dollar must keep falling as our national debt keeps climbing. You will lose money if you time the cycles poorly otherwise prices will go up if you outlook is more than 5 yrs. Yes we will have a correction soon, matter of fact, think we are pretty much there...I expect a 20-25% correction but we will never see the 50% correction we saw from 2005-2010 as that was a once in a lifetime thing...credit will never be that loose again in our lifetime again imho. Look at the cap rates for commercial real estate, all time lows...there are no real good investments in RE anymore unless its residential. There is only 2 reliable ways to establish true wealth in this country...own a successful business(low odds) and real estate(high odds). Here is the only way to see if you are building wealth, at the end of each yr calculate your net wroth, if that number isn't going up every year you are NOT getting wealthy. It doesnt matter if you make 100K a year to 500K a year, if you spend most of it at the end of the month you end up with the same thing, nothing...investments will build wealth. |
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01-30-2016, 11:39 AM | #37 | |
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http://www.zillow.com/homes/Barringt.../3243972_zpid/ http://www.zillow.com/homedetails/20.../5090037_zpid/ There are some 500-700k homes but the amount you'd pay in taxes (mostly because of the large lots) and the amount of reno you'd have to do wouldn't make it worth it IMO. Plus there is nothing really around there (gas, grocery, etc...) and you'll probably hit a deer every other day.
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01-30-2016, 11:59 AM | #38 | ||
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So to say that owning something that doesn't earn money is very absurd. When my mortgage becomes paid for in the next 5yrs or less, I will have accomplished multiple things: eliminated my largest debt - acquired the most tangible asset most humans can have: property/real estate. For as long as I can remember, becoming debt-free is and should be everyone's # 1 priority. That in turn allows for all sorts of possibilities including economic growth and security. *edit* I may have misinterpreted your post, if so, I apologize. I took it to mean, that owning (clear) anything including your home or even car (which mine is also paid for) is not worth doing or is somehow not smart? My train of thought and advice to everyone is to try and reduce your debt load! That in turn increases your income as it is not vanishing away constantly. I learned this from a dear Millionaire friend when I was in my 20's. He at the time was in his 50s.
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01-30-2016, 12:10 PM | #39 |
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Barrington looks pretty! That house for just under a million looks amazing!
When I look at homes compared to peak rates in So. Cal I don't get a feeling we are at a peak. When I think of peak, I think of nearly a decade ago. In what some agents say are typical markets, houses double every decade (true in my mother's case from early 70s to early 2000s). Take a fraction of that thought process and you will see that in the past 10 years many houses haven't gone up much at all (if anything not even factoring inflation) in 10 years given that the recession was a huge "correction". I have neighbors who paid more than me at the peak in the mid 2000s. Here we are 10 years later and the houses aren't worth more than they paid. There are specific areas that are still very "hot". These areas are often funded by money from China. I get nervous thinking about the day that money from China stops coming. Many of these areas are huge draws to "just" Chinese people. Makes you wonder if the Chinese stop buying, who will be paying $8mm+ for homes in a densely Chinese populated area. Then again, even with .001% of the population buying homes, that means over 13,000 homes will be purchased. I remember reading an HSBC ad while traveling in Asia that read, "Every minute there is a new millionaire in Asia" |
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01-30-2016, 12:17 PM | #40 | |
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People who say, use super low interest rates, 3-4%, to leverage money to invest in long term investments. Use $18,000 a year to fund 401k (or other retirement fund) vs. Use $18,000 a year to pay down principal on one's mortgage. $1 in 1986 is $2.16 today. There are people paying "$1" who started their mortgages nearly 30 years ago. Or is this not proper thinking as the 80s had much different interest rates therefore comparing apples to oranges. |
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01-30-2016, 04:26 PM | #41 |
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01-30-2016, 04:49 PM | #42 | |
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02-01-2016, 10:09 AM | #43 | |
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02-01-2016, 11:30 AM | #44 | |
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So here's a question for you... Which would you rather own/have: $250,000 in a 401k or IRA? or A paid for $250,000 home? Now keep in mind, this scenario is for the common folk who may be earning say $75k annually. Not the 1% or someone knocking down a substantial regular income in mid to upper six figures and above.
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