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I think the big problem of whenever you are doing a comparison of investment vs. home-owning is that one's assuming people who invest don't leverage while home would increase indefinitely into the future.
Based on lowside's estimate, home price would have to increase ~30% (1.05^5) in the 5yr period for his argument to hold true, which brings back the argument of what direction would RE be heading?
For the sake of not diving into that endless discussion, I will simply say that people would have to stop seeing the personal home as an investment. It's a horrible medium (low liquidity, high transaction cost) and it's really a basic human necessity (shelter) rather than anything else.
If you are buying... think it as your home and nothing else. Be happy that you have a home to call your own and stop thinking about it in $ term. Because if you do, what would happen when it starts falling? Can you stand the idea that for every month that you are staying, you are spending thousands (in lost value) to have this "home"? I have personally witnessed what happens to one couple breaking apart during downturn and it's not pretty.
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Nothing for now
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