tag:blogger.com,1999:blog-22020163.post5148252418053237411..comments2023-10-24T07:28:50.297-04:00Comments on Thinking on the Margin: Housing Prices Not Likely to Rise for Years or Even Decades?Brian Hollarhttp://www.blogger.com/profile/09365101283657395331noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-22020163.post-75583747874595250372010-10-10T23:46:13.663-04:002010-10-10T23:46:13.663-04:00Why rent if you can afford to buy?
Paula MWhy rent if you can afford to buy?<br /><br />Paula MPhilippines properties for salehttp://www.avidaland.com/properties_home.phpnoreply@blogger.comtag:blogger.com,1999:blog-22020163.post-49440278593706106522010-01-14T15:29:57.461-05:002010-01-14T15:29:57.461-05:00Houses are not a lousy investment!
That said, pe...Houses are not a lousy investment! <br /><br />That said, people should remember what housing is an investment in and not to use that investment for something it is not. <br /><br />Housing prices are ALWAYS tied to rents and wage prices! If there is no or little inflation, than housing prices should also remain steady (fallacy #1 of the bubble, if inflation were ~3%, then housing prices SHOULD NOT have risen ~6%, a basic definition of an unsustainable).<br /><br />Second, houses are NOT a liquid asset, the idea of a mortgage is to pay it off! If you need an investment that you need to take out bit of it over time, invest in stocks or something, a house really is one share, you can not off load 10% of a house. Refinancing only helps the bank, first due to closing cost, second the amortization is always front loaded, so even if one never "cashes out equity," resetting the amortization on a loan is generally a bad deal (banks think it a great deal if you keep paying interest and don't touch principle).<br /><br />If one is able to purchase and rent to Brian, then you have an inflation hedge, locked in at purchase price, let Brian pay for the loan and maintenance overhead, then one transferred Brian's money from him to the bank also into hard asset. Good deal.<br /><br />Brian's desire to remain free in his choices of shelter and not be tied down or deal with maintenance or other hassles can now be quantified by looking at the money he spent for services of housing instead of owning housing (which we know is greater, else no one would have an economic insentive to rent to him).<br /><br />I'd say problem with real estate is the population had forgotten what it is for and what it does not do.Kevinhttps://www.blogger.com/profile/00261766465382455822noreply@blogger.com