More startup needs to move to low cost areas.
While of course supporting those areas, wary of the longer term gentrification they may bring.
I believe you mean 'wary'?
The house I was born in sold for $4000
21–30 of 157 posts
Re: The house I was born in sold for $4000
#22Homeowners of HN: how do you justify tying up a large percentage of your net worth in a home?
I don't own a house, but here is how I would justify it:
I assume (and you are free to disagree with my assumptions):
- Inflation will exist like it has over the long term
- I need to save for retirement
--- With these two assumptions, a home allows you to take a leverage position against the area in which you live in's rate of inflation (hedge against rent increases with 4x leverage). Additionally, if you commit to paying down your home, you are deleveraging over a long period of time.
If you stay there for 30 years, you can live almost rent free. (you will still need to pay expenses), and will increase your buying power dramatically.
If inflation doesn't exist, or doesn't exist in your market, i.e. Buffalo, you are screwed. But, if you use an expected value, and a long-term history of what has happened, you are making a logical investment.
*additionally, in the US you get a nice tax savings from the interest which ends up having a pretty good value in and of itself.
Obviously, you can alter the assumptions and come up with different investment ideas, but in general, housing is at least logical.
Re: The house I was born in sold for $4000
#23WTF? If an house can be built for $12000, why are flats selling for $100k+ routinely?!?!? If it's just due to land value, then why not build ultra-tall skyscrapers to amortize it?
Location.
It may be possible to build a house for $12000, but land isn't free and the location of the land is part of determining it's price.
Re: The house I was born in sold for $4000
#24Re: The house I was born in sold for $4000
#25Homeowners of HN: how do you justify tying up a large percentage of your net worth in a home?
This largely depends on the relative price of rent vs. mortgage repayments. If they're roughly similar, then it makes a lot of sense to buy a house because after 30 years you own a house. 30 years of renting doesn't leave you with a house.
Re: The house I was born in sold for $4000
#26Homeowners of HN: how do you justify tying up a large percentage of your net worth in a home?
By not buying a house in the bay area.
I just bought a house outside the bay area last year, and tacked on a partial remodel with new wiring, heat pump, water heater, and bathroom.
My required payment -- including escrow for taxes, insurance, and (for now) PMI -- is comparable to the rent for a mediocre single-bedroom apartment in a sketchy area of the south bay. I'll be adding enough each month to have it paid off in 10-15 years.
For that, between the main level and the basement, I have around 2300 square feet that I can use as I wish, and I can modify it freely to suit my needs and wants.
But I would never buy a house in the bay area, at least not unless I had $20m+ in the bank.
Re: The house I was born in sold for $4000
#27In his much-quoted column, Friedman says(http://www.nytimes.com/2013/03/31/opinion/sunday/friedman-ne...): "Every middle-class job today is being pulled up, out or down faster than ever."
Middle income families who rely on manufacturing has been hit hard, with no prospects of an exit.
Re: The house I was born in sold for $4000
#28OP neglects to mention if there were any back taxes or water liens owed. Or if the house had been condemned. All I could find was one lot (not house) under 8K. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
The point is that the house isn't worth even the back taxes on it. That is hard to imagine from a west coast perspective. Even after the bust in 2009, I don't think it got that extreme in too many places.
Not sure if it was 2009, unless the effects in that region were felt only years later.
I was having a look at another cheap house from around the area. Just check out the graph: http://www.zillow.com/homedetails/23-Barrett-Ave-Jamestown-N...
Re: The house I was born in sold for $4000
#29OP neglects to mention if there were any back taxes or water liens owed. Or if the house had been condemned. All I could find was one lot (not house) under 8K. http://www.zillow.com/homes/for_sale/Jamestown-NY/pmf,pf_pt/...
The point is that the house isn't worth even the back taxes on it. That is hard to imagine from a west coast perspective. Even after the bust in 2009, I don't think it got that extreme in too many places.
Fair point! However, if it was a foreclosure it could have been sold at 4K + buyer pays owed taxes / liens.
I'll agree though - the main thrust that Jamestown, NY RE is surprisingly low compared to elsewhere is an interesting one.
Re: The house I was born in sold for $4000
#30I'm from the same town, and now live in the Bay Area. I still can not get used to the housing prices here...which have been increasing recently: http://www.mercurynews.com/portlet/article/html/imageDisplay...
When I visit my hometown, I feel like all the prices are in a different currency.