61–70 of 99 posts
I could easily refute all the points in that article if I had the time. I'll suffice to give this example: "A" buys a $100,000 house, "B" rents a $100,000 house. Both pay about $1,500 per month. At the end of 15 years, "A" owns an asset worth $100,000, "B" owns nothing. You decide.
Earlier quoted context omitted.
Another good reasons to own is that when you own a home, no one can kick you out. When you rent, whether you live there next year is at the landlords discretion. A landlord may decide to sell next year, to renovate, to find tenants who never complain, to let their children live there, etc. Also, fixed mortgages stay the same price, but rents rise.
I understand that your point probably is "as long as you pay your mortgage and taxes, no one can kick you out". I think the likelyhood of being kicked out in both instances is extremely low if you continue to pay your rent/mortgage.
I'll buy a home with cash. Never with debt. Mortgages are pointless. I'd rather pay my rent to a landlord than a bank.
Mortgages are an excellent inflation hedge. Consider it--you borrow a large pool of dollars to buy the home. The value of the dollar drops through the floor. Now you are paying back the loan which was for a fixed amount and doesn't change with dollars worth half as much.
Earlier quoted context omitted.
Read the article. The author is definitely saying nobody should buy a home again. He structured the article as advice using his own personal experience.
Just because we had different interpretations, you shouldn't assume I haven't read the article. To me, there is a difference between saying: "From my personal experience, when my friends ask my advice, I present them these reasons for not buying a house," and: "Nobody should ever buy a house." If nobody bought a house, who would we rent from? Update: fixed spelling
James is saying: don't buy a home and make it your primary residence. He is fine with buying real estate (homes, condos, apartment buildings, REITs, etc) as investment properties.
An added interpretation of mine: he assumes that you would have a property management company take care of the landlord duties for you. In the case of REITs, it's really hands off.
Sources:
By the way, this is going to sound like a contradiction: but I think housing is a great investment right now. I think housing prices have gone down far enough and I can list the reasons why housing as an abstract investment concept is going to go higher from here.
- from the linked article
Rather than spend $100-200k+ on a down payment for a house (which is like throwing money away since it is completely illiquid as long as you own the house) you can put that money in a portfolio of diversified REITS (REZ is an ETF of residential REITs, for instance) if you truly believe in housing. You can do it with some leverage as well if you believe in the idea (like 90% of Americans do) that you should leverage up 200% the single largest investment in your portfolio (your house).
- from http://www.jamesaltucher.com/2010/02/never-own-a-home-again/
Life is not all about money! Buy a house because you want someplace to be your own, that you can customize, and really be part of a neighborhood, and not worry about asking a landlord for permission. I bought a house because all the apartments I looked at for the price were dumps, and in a house at least I had incentive to fix the stuff that made it a dump.
Earlier quoted context omitted.
Mortgages are an excellent inflation hedge. Consider it--you borrow a large pool of dollars to buy the home. The value of the dollar drops through the floor. Now you are paying back the loan which was for a fixed amount and doesn't change with dollars worth half as much.
But surely the interest makes up for this. It wouldn't make financial sense for the lender otherwise; why lend money to homeowners if it won't beat inflation than, say, invest it in the stock market?
I think his post is a bit extreme. It depends on a lot of factors on whether to buy a house or not. I think most of his reasons aren't really valid for not owning a home. I'll make some comments on his financial arguments: A) If you pay off your home fast, you won't have anymore mortgage payments. And you actually own something that you might be able to sell later, getting some money back. If you rent, you won't see…
The problem is that many in the US have been brainwashed into believing their house IS an investment and this justifies purchasing above their means, because "at least I'm not throwing the money away in rent."
This is a beautiful piece of link bait. His advice might make sense if you live in New York, but it doesn't work at all in most places in the country. If you live in the suburbs you can't find places to rent. If you have kids and care about where they go to school, you don't want to follow this advice. If you live in a city like Cleveland or Detroit or a hundred other Midwest towns where the price of a house can appr…
.... and he ends with this sentence: By the way, this is going to sound like a contradiction: but I think housing is a great investment right now. Go figure.