House prices

[Denis]

Originally posted by Stefan:
When you rent an apartment you're paying rent to the landlord and your rate goes up every year when you renew your lease. Heck, ours went up from $1595 a month to $1725 a month two months ago when we renewed our lease--that's a $130 jump per month, or $1560 a year. At my last job I would have needed a 3.9% raise (plus taxes) just to cancel that out.

When you buy a house you're paying rent to yourself. Sure, it may be expensive out-of-pocket every month but you get that money back and then much much more. Your rate never goes up every year and it just magically appreciates in value. If you live in a slow-growth area you'll need home improvements to make it worth more, but if you live in a high-growth area you don't need to do a damn thing. Buy a house today for $250,000 in a 10% growth area and you can sell in five years for $402,000. That's a net gain of $152,000 over five years (average $30,400 a year) for doing nothing! As I've mentioned previously, its like having a second job.

PLUS the interest on mortgages is tax-deductible... so you end up getting a $3,000-$10,000 check from the IRS every spring in addition to the gains you're already making.

There really is no reason for anyone to rent unless they're under 25 and don't have a career/established credit or if they're in the military and move around a lot. As a renter you get screwed out of so many benefits.

Owning your own home is the American dream. Always will be.

True, but as you're seeing now in this area, soon it will become impossible for a first time buyer to afford anything. I've seen 60 year old condos with no amenities double to over $200K in just 3 years. Good for the current owners but not anyone looking for their first place. A 20% down on those units is $40K. Of course there are means of creative financing, but these usually lead to larger monthly payments which will exceed the recommended 30% of gross income for many young house hunters, leading to greater debt. Additionally, many of those who provide services to the community, such as teachers, firefighters, policemen, and laborers, must move a good distance away from the communities they work in to be able to afford housing. This leads to those nasty commutes that we're all too familiar with.

[95Batmobile]

Originally posted by Stefan:
</font><blockquote>quote:</font><hr />Originally posted by Everglades W68:
Having said that, I hear lots and lots of people talking about making a fortunes in real estate. It sounds a lot like the stock market of late 90's.

In other words, a bubble. The only question is how far down prices will come and when.

Some people talk about it being a bubble, others disagree. I side with the naysayers. Housing is all about simple supply and demand. As long as the region's population is increasing, housing demand will continue and new developments will go further and further into the countryside. Heck, the latest hot spot for housing here in D.C. for the past 3-4 years has been all the way out in Charles Town, West Virginia.

The bubble won't burst in any city as long as that city's economy continues to grow and create new jobs.</font>[/QUOTE]General "rule" ... when the economy takes a dive, like it just did, what, 1 or 2 years ago, Real Estate is always the first to come back.