This is totally a biased article against home ownership. Not one positive toward home ownership...I can't believe the author would be so biased.
Why a house is a terrible investment (2013)
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Re: Why a house is a terrible investment (2013)
#12This is awful analysis. Almost every one of the bullet points is just wrong, or at least terribly spun. I mean, one of them argues that homes are "heavily taxed" when of course they are the source of the biggest single deduction category in the whole budget, another claims with a straight face that the ability to leverage the investment via a (again, government subsidized!) loan is a bad thing!
Now, obviously not all investments are winners, even if they are "good" investments in principle. And there are all sorts of very good arguments about why homes should not be subsidized in the way they are, and that our government has made them "too good" in a way that harms the public as a whole. But nonetheless homes in almost all of the US are absolutely good investments. They have been for going on three quarters of a century now and certainly don't show signs of stopping.
Re: Why a house is a terrible investment (2013)
#13Houses do pay dividends. You have to live somewhere, and you get to live in your house for free (in the analogy where it’s discussed as an investment.)
The alternative is much worse in many markets.
Re: Why a house is a terrible investment (2013)
#14Anyone who responds to this article by saying their particular house was a good investment didn’t read the article.
Re: Why a house is a terrible investment (2013)
#15There was a flyer on my door yesterday. We pay cash for your home, close in 3 days. Avoid realtor fees. There is only one problem, I have to live somewhere.
I'm not huge fan of being a homeowner, but if I decided to rent, my rent would be almost twice what my mortgage is.
Re: Why a house is a terrible investment (2013)
#16I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is, functionally, the cost of interest + upkeep, which would often easily amount to less than rent.
If I stayed where I rented last year for ten years, the total cost over ten years (assuming the rent is never increased) (rent is always increased) is $132,0000. Even if my house cost that much to maintain over ten years plus interest (it won't), I'll still break even on the principal and enjoy the benefits of home ownership.
That's not to say that home ownership is always the right choice for everyone in every stage of life. But to sweep a broad generality like "houses are a terrible investment"...
Re: Why a house is a terrible investment (2013)
#17The point is quality of life... Under the bridge is free...
The article doesn’t say that buying a house is a bad idea — just that it’s a bad investment. There’s many reasonable motives for buying a house, you’re just better off making sure that those motives are strong enough by themselves and you’re not doing it “because it’s a good investment”
Re: Why a house is a terrible investment (2013)
#18My financial roadmap has "buy and live in a duplex to quadplex in Texas" on it, just for creditor protection purposes.
Re: Why a house is a terrible investment (2013)
#19For a lot of people the "investment" piece of owning their home is secondary to having a home to live in and raise their family in. Especially in the US, there are tax benefits to owning, and depending on the market owning could make more sense than renting.
Re: Why a house is a terrible investment (2013)
#20I bought a house in 2015 (at 32) and it was the best thing I ever did. Even though I had to move away, I turned it into a rental property, and it’s earning $380 a month in profit. I’ve been using that profit to pay down the principal and add to my 401(k). My only regret is that I didn’t buy a lot sooner.
I mean, in the past 7 or so years, all the boats have been rising. What would your returns have been if you put them in stocks? How great was and is the risk you take by taking tenants versus the risk you take by buying stocks?
You do both to diversify (equity and real estate). Having the property as a rental is very tax efficient as well (you get to depreciate a property that appreciates in value). Also, no one is going to let you leverage equity purchases with debt like you can with real estate.
Disclosure: I own several rental properties to round out my investment portfolio.