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Why I Am Never Going To Own A Home Again

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http://www.businessinsider.com/why-i-am-never-going-to-own-a-home-again-2011-3

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. “But its an investment,” you might say to me. Historically this isn’t true. Housing returned 0.4% per year from from 1890 to 2004. And that’s just housing prices. It forgets all the other stuff I’m going to mention below. Suffice to say, when you write that check, you’re never going to see that money again. Because even when you sell the house later you’re just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: “$100,000 R.I.P.”

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you’re going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn’t work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

etc.

Read more: http://www.businessinsider.com/why-i-am-never-going-to-own-a-home-again-2011-3#ixzz1H5kSZETI

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http://www.businessi...me-again-2011-3

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. "But its an investment," you might say to me. Historically this isn't true. Housing returned 0.4% per year from from 1890 to 2004. And that's just housing prices. It forgets all the other stuff I'm going to mention below. Suffice to say, when you write that check, you're never going to see that money again. Because even when you sell the house later you're just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: "$100,000 R.I.P."

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you're going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn't work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

etc.

Read more: http://www.businessi...3#ixzz1H5kSZETI

Well more fool you!

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http://www.businessi...me-again-2011-3

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. "But its an investment," you might say to me. Historically this isn't true. Housing returned 0.4% per year from from 1890 to 2004. And that's just housing prices. It forgets all the other stuff I'm going to mention below. Suffice to say, when you write that check, you're never going to see that money again. Because even when you sell the house later you're just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: "$100,000 R.I.P."

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you're going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn't work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

etc.

Read more: http://www.businessi...3#ixzz1H5kSZETI

$100,000 R.I.P.

That would be a fantastic anti-establishment/banker/other exploiter campaign if people stuck some figure on a sticker in their window or a sign on their lawns! B)

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http://www.businessinsider.com/why-i-am-never-going-to-own-a-home-again-2011-3

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. “But its an investment,” you might say to me. Historically this isn’t true. Housing returned 0.4% per year from from 1890 to 2004. And that’s just housing prices. It forgets all the other stuff I’m going to mention below. Suffice to say, when you write that check, you’re never going to see that money again. Because even when you sell the house later you’re just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: “$100,000 R.I.P.”

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you’re going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn’t work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

etc.

Read more: http://www.businessinsider.com/why-i-am-never-going-to-own-a-home-again-2011-3#ixzz1H5kSZETI

Housing returned 0.4% per year from from 1890 to 2004?

Mods, can we have a database of websites that are proven to be innumerate, and flags them up by sticking a dunces cap icon next to it whenever an url pops up?

so 114^1.004 = 1.576........meaning houses are only 57% more than they were in 1890?

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Nonsense. There is no such thing as dead money, not in the rental market and not in the purchasing market.

If I have £200,000 I can :

a ) Stick it in some kind of investment. Let's say I earn 4% on it, or £8,000 a year. I now need to find somewhere to rent... at... oh... £666 a month, or £8,000 a year. I am neither up nor down financially.

As rents rise you are losing harder by costing yourself more, but that is a more complex calculation.

B ) Buy a house with it. I no longer have to pay rent, but I do not gain interest on my lost cash. I am neither up nor down financially.

As rents rise you are winning harder by saving yourself more, but that is a more complex calculation.

Take into consideration closing costs, stamp duty, estate agent fees, moving costs, maintenance etc when figuring out which is the better value.

The benefits and drawbacks of purchasing rather than renting are set by the state of the market. If property is increasing in value: buy. If property is decreasing in value: do not buy. (Take into consideration interest rates, rental rates, good deals from desperate sellers etc to figure out the time to buy).

Edited by fadeaway

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Housing returned 0.4% per year from from 1890 to 2004?

Mods, can we have a database of websites that are proven to be innumerate, and flags them up by sticking a dunces cap icon next to it whenever an url pops up?

so 114^1.004 = 1.576........meaning houses are only 57% more than they were in 1890?

I rather suspect we are talking about real returns, as opposed to nominal.

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http://www.businessi...me-again-2011-3

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. "But its an investment," you might say to me. Historically this isn't true. Housing returned 0.4% per year from from 1890 to 2004. And that's just housing prices. It forgets all the other stuff I'm going to mention below. Suffice to say, when you write that check, you're never going to see that money again. Because even when you sell the house later you're just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: "$100,000 R.I.P."

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you're going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn't work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

etc.

Read more: http://www.businessi...3#ixzz1H5kSZETI

But then you're just as guilty as the BTL spivs, you are viewing a house as a method of making money rather than as a home.

I like millions of other parents would rather not live with the threat of a landlord ejecting me and facing up to the impact it would/could have on my children, hence when in the UK I owned a home.

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I like millions of other parents would rather not live with the threat of a landlord ejecting me and facing up to the impact it would/could have on my children, hence when in the UK I owned a home.

The argument in favour of renting highlights all the hassles associated with maintaining a home (which is added to the rent anyway overall), but ignores the greater hassle of dealing with crappy landlords, constantly moving about, having deposits stolen and having to fight to get them back, etc.

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When you take away the speculative aspect of the asset increasing dramatically in price.. home ownership is not that enticing for most people.

When you talk to people about 99% of their rush to get in a house, is to 'get on the ladder'. But say you could fortell the future and knew 100% that 20 years from now houses would not have increased in price at all. How eager would Gen X and Y be to buy into houses?

I would argue for most it would be much more freedom and ease to have an apartment. Think about going on vacation, when you own a home you have to arrange a bunch of things. In an apartment you just go.

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When you take away the speculative aspect of the asset increasing dramatically in price.. home ownership is not that enticing for most people.

When you talk to people about 99% of their rush to get in a house, is to 'get on the ladder'. But say you could fortell the future and knew 100% that 20 years from now houses would not have increased in price at all. How eager would Gen X and Y be to buy into houses?

I would argue for most it would be much more freedom and ease to have an apartment. Think about going on vacation, when you own a home you have to arrange a bunch of things. In an apartment you just go.

You could think of it as a kind of attachment......like renting or owing a pet, say a dog....some have to own possess stuff, others are more free agents and can let go more easily and carry on regardless. ;)

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Nonsense. There is no such thing as dead money, not in the rental market and not in the purchasing market.

If I have £200,000 I can :

a ) Stick it in some kind of investment. Let's say I earn 4% on it, or £8,000 a year. I now need to find somewhere to rent... at... oh... £666 a month, or £8,000 a year. I am neither up nor down financially.

As rents rise you are losing harder by costing yourself more, but that is a more complex calculation.

B ) Buy a house with it. I no longer have to pay rent, but I do not gain interest on my lost cash. I am neither up nor down financially.

As rents rise you are winning harder by saving yourself more, but that is a more complex calculation.

Take into consideration closing costs, stamp duty, estate agent fees, moving costs, maintenance etc when figuring out which is the better value.

The benefits and drawbacks of purchasing rather than renting are set by the state of the market. If property is increasing in value: buy. If property is decreasing in value: do not buy. (Take into consideration interest rates, rental rates, good deals from desperate sellers etc to figure out the time to buy).

Everybody walks about with £200k in their back pocket don't they?

What about the £186,582.07 interest on a £200k mortgage at 6% over 25 years?

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The appearance of articles like this in the media indicates that the market bottom is in place in the US. If I was a US citizen then I would definitely be looking to buy now, at 40 or 50 percent down from peak price.

Not so-sorry but still some ways to go in quite a lot of places. I still watch Orlando and area (because we have a rented house there) and until developments that are mothballed are at least re-commenced then this is not the bottom, far from it. Go along highways 27 and 50 and see what I am talking about. This and the hundreds of empty properties.

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They problem is life is very short. And fretting about buying or not and putting your life on hold is not a great idea. This article is written quite well:

There's something both fascinating and unsettling going on here, and perhaps it's not so much to do with the clocks as with time itself, or the way we perceive it. Maybe there's something about the certainty, the unavoidabiltiy of that journey down towards zero that taps into something buried deep within the collective psyche.

Parachutists call it ground rush. Apparently while you're falling through the sky and before you open your parachute the perception is that you're dropping towards the ground at a perfectly manageable speed. Yes it's exhilarating, but there's plenty of time to look around you and take in the wonder of it all.

But that's an illusion caused by the lack of visual cues. It's only when you drop below a certain height and suddenly become aware that the ground is rushing up to meet you that you realise how fast you've been falling all along.

More sobering still, maybe there's an analogy here for the way we experience time over the course of a human life.

For most of our lives we drift along on the assumption that there's always going to be time left ahead of us to develop, modify, and realise our many and varied dreams in that portion of it, still unused, called the future.

And we're happy enough with this arrangement right up to the point where we become aware that we've run out of future. What happened? Of course the ground has been rushing up towards us all along, we just didn't realise how fast we'd been falling.

Maybe it goes some way to explaining the lure of the countdown clock. A thousand days to go - still a long way away. Five hundred days - still pretty much still talking about the future. A hundred days - anybody know how many months that is? Fifty days - wait a minute, hang on, that's less eight weeks.

I know this very well, when you jump with clouds in the sky and it passes you in a second or two you think blimey I'm going quite fast here.

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Interesting. As its from the US (I didn't check the state) I wonder if it is now time to start thinking about buying in US again, if this kind of depression is all pervasive.

It is not here almost at all. Thus proces will continue to fall certainly in real terms, and for now in nominal too.

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The appearance of articles like this in the media indicates that the market bottom is in place in the US. If I was a US citizen then I would definitely be looking to buy now, at 40 or 50 percent down from peak price.

Until Time, Newsweek, Barrons, New York Times, WSJ, LA Times, Seattle Times, Chicago Tribune and Boston Globe are all saying this, we don't have a bottom in US real estate! The first few bullish articles does not mark the top of a bull market, so why should this mark the bottom?

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Until Time, Newsweek, Barrons, New York Times, WSJ, LA Times, Seattle Times, Chicago Tribune and Boston Globe are all saying this, we don't have a bottom in US real estate! The first few bullish articles does not mark the top of a bull market, so why should this mark the bottom?

??? I feel the same way as the person speaking does sometimes, it reminds me of my childhood in the 1980s....

I do wonder though as to how long it can last in China though as there are enormous issues in China to do with lots of things!

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Until Time, Newsweek, Barrons, New York Times, WSJ, LA Times, Seattle Times, Chicago Tribune and Boston Globe are all saying this, we don't have a bottom in US real estate! The first few bullish articles does not mark the top of a bull market, so why should this mark the bottom?

The bottom is Detroit where no jobs = $100 homes. That is the bottom.

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When you take away the speculative aspect of the asset increasing dramatically in price.. home ownership is not that enticing for most people.

When you talk to people about 99% of their rush to get in a house, is to 'get on the ladder'. But say you could fortell the future and knew 100% that 20 years from now houses would not have increased in price at all. How eager would Gen X and Y be to buy into houses?

I would argue for most it would be much more freedom and ease to have an apartment. Think about going on vacation, when you own a home you have to arrange a bunch of things. In an apartment you just go.

Spot on.

In my line of work (houses!) I know very well how much those big maintenance bills are, and how much hassle it is sorting out the maintenance; though of course a lot less hassle than leaving it and letting a bigger problem develop.

That is why I am renting until I am prepared to accept the same maintenance headache at home as I get at work. And that will only change when the financial case for buying becomes compelling as it did the last time I bought in 1996: the mortgage was £350, the rent £625.

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I rather suspect we are talking about real returns, as opposed to nominal.

In which case without the "other" numbers the figure is meaningless.

What have other investement classes returned in real terms?

I would bet most of them are negative

tim

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Housing returned 0.4% per year from from 1890 to 2004?

Mods, can we have a database of websites that are proven to be innumerate, and flags them up by sticking a dunces cap icon next to it whenever an url pops up?

so 114^1.004 = 1.576........meaning houses are only 57% more than they were in 1890?

I suspect he means real returns over inflation.

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Everybody walks about with £200k in their back pocket don't they?

What about the £186,582.07 interest on a £200k mortgage at 6% over 25 years?

You're missing the concept.

That would cost you the same as it would have cost you in opportunity cost/lost positive interest if you had £186,582.07 in a bank account at 6% and had used it to buy a house.

You always pay money to live somewhere. If it's rented you owe the landlord. If it's bought you lose interest on your savings. If it's leveraged you owe the bank. Most people lose a mixture of lost interest on savings (deposit) and leverage owed to the bank (mortgage).

Roughly these numbers all work out to be a similar amount of money.

This is why house prices and therefore rents being high are dangerous to the economy. Too much cash going round in circles for nothing that actually generates wealth.

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This is why house prices and therefore rents being high are dangerous to the economy. Too much cash going round in circles for nothing that actually generates wealth.

But but...... :D

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Until Time, Newsweek, Barrons, New York Times, WSJ, LA Times, Seattle Times, Chicago Tribune and Boston Globe are all saying this, we don't have a bottom in US real estate! The first few bullish articles does not mark the top of a bull market, so why should this mark the bottom?

OK, fair enough, there may be another 3 to 5 percent or so to fall over the next year or two but if you could buy now with a long term fixed mortgage and with the Funds rate at 0.25 percent there seems to be very little down side risk. Certainly when compared with the possibility of further money printing, currency crises or sudden interest rate spikes. The US economy is now growing fairly strongly (at least when measured in fiat money) as their crash has been and gone. The UK is of course still hugely overvalued.

Edited by Left the UK 2009

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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