I Have a House

[Strazos]

I think what I'm really trying to get at is what gets you more money in the end: Doing what Merusk described, or simply investing the money? I don't mean investing in stocks neccessarily (which can crash, ZOMG), but even something as simple as an IRA or something - compound interest is a wonderful thing.

[UD_Delt]

I live in Lakewood, Ohio just outside of Cleveland if you want to run a zillow search on the area. The housing market here is definately more reasonable than certain areas and probably more in line with the majority of the country outside of DC, Vegas, So. Cal, etc... We're probably on the lower end of average due to Cleveland (Ohio in general) being in a decline the past few years. Of course an overall decline just means the housing market doesn't grow as fast since I think (someone correct me if I'm wrong) the housing market in general has NEVER seen a decline.

Lakewood itself is an inner ring suburb but still remains nicer. I live on the west side of lakewood which is mostly 22 - 30 post-grads and new families. I credit the gay population on the east side of the city for keeping the urban sprawl at bay. I believe Lakewood may be second or third in gay population per capita and I have to give em credit for maintaining and even increasing property values in what otherwise would be declining areas.

I don't rightly understand your second question. Are you saying that you see no benefit in assets that aren't liquid? Equity in a house is the equivalent of a 401k. Would you say a 401k is also worthless? How about a Roth IRA, also useless?

Yes, we do plan on eventually buying a larger more expensive house. But given the equity in the current house we will be paying the same if not less for it. I'm still undecided on whether we will keep the current house and then rent out the top half or if we'll just sell it off. Financially renting out the top half is the better plan since the house would actually generate a  liquid profit in that case but I don't know if I want to put in the effort.

[UD_Delt]

I think what I'm really trying to get at is what gets you more money in the end: Doing what Merusk described, or simply investing the money? I don't mean investing in stocks neccessarily (which can crash, ZOMG), but even something as simple as an IRA or something - compound interest is a wonderful thing.

Somewhat old data but:

1926-1996 Average annual rates of return

             Small Stocks 12.5%
             Real Estate  11.1%
             DJI          10.0%
             Bonds         5.2%
             T-Bills       3.7%
             Inflation     3.1%

Source: http://www.investorhome.com/history.htm

You get compound interest in real estate as well.

[Strazos]

I don't rightly understand your second question. Are you saying that you see no benefit in assets that aren't liquid? Equity in a house is the equivalent of a 401k. Would you say a 401k is also worthless? How about a Roth IRA, also useless?

Yes, we do plan on eventually buying a larger more expensive house. But given the equity in the current house we will be paying the same if not less for it. I'm still undecided on whether we will keep the current house and then rent out the top half or if we'll just sell it off. Financially renting out the top half is the better plan since the house would actually generate a  liquid profit in that case but I don't know if I want to put in the effort.

I don't see house equity as being the same as a 401k or an IRA. With a 401k or IRA, you simply take the money out (with penalties at certain times, I know). But how do you get money out of equity? Again, unless you're flipping an extra home for profit, you can't do anything with home equity unless you sell the house to move into something else, or you take out a loan - both of which put you back into debt (unless you move downmarket).

Also, for what it's worth, at least in my area, that Zillow thing is woefully wrong. It's showing prices of at least half of what they actually are. For instance, for my previous residence, Zillow gave a price of something like 94k. The house was bought for at least 121k, 14 years ago. The same house appraises for around 200k now. Same for my current residence.

[MrHat]

We recently bought a town home for about 250k in Abingdon, MD. Rather than piss rent away like my parents did for a few years.  In a nutshell, we pay more than the (two of us) $1000 in rent we were paying for a 2 bedroom place (we pay about $1800 a month), but the cool thing is money is is money out, we spend 1800 and we get that in equity.  You dont' piss away 1000 dollars.

Now, back to a more needed subject, we don't have a fence (need to get one for the dog), and we don't have a deck.  I've been hearing various things about home improvement regarding getting all your money back on investments in the house.  I've taken that with a grain of salt.  We need to finish the basement (going to add a bedroom and bathroom, so $++).  Do you guys think we'll get our deck money back?  Just curious.

Oh, and since we bought it April 1st, shit nearby (not as nice as ours) has been selling for 270-280k (but they have decks!).

[Strazos]

It's kind of hard to say, since appraisers don't attach +$x  for having a deck (at least that I have seen). Though I imagine you could appraise the house before you put the deck on, get a nice deck built, and then appraise again.

Just don't spend a stupidly-expensive amount for a damn deck. Diminishing returns would definately come into effect.

[Abagadro]

My dear departed grandpappy always said that homes are never really an investment because when you sell one you almost invariably end up buying one just as or more expensive to replace it.  This seems to be true for most people I know except for 70 year old retirees that liquidate equity and move into assisted living or something.  It all depends on the market. If you have an appreciating real estate market that gain can outpace the amount you are sinking into it with interest payments, property taxes, insurance, etc.  If it is a static or declinine market it won't and renting may in fact be a better use of your money.  We've been spoiled by a good real estate market for 15 years so it has been a good idea.

I never think of my house as an "investment."  I think of it as a roof over my head with which I can do whatever the hell I want.

[Strazos]

See? I knew I wasn't talking completely out of my ass, maybe only partially.

[Lantyssa]

If you don't want a house, there are always condos.

[UD_Delt]

My dear departed grandpappy always said that homes are never really an investment because when you sell one you almost invariably end up buying one just as or more expensive to replace it.  This seems to be true for most people I know except for 70 year old retirees that liquidate equity and move into assisted living or something.

That just doesn't make sense to me. Let's just look at the first part of your saying and that you always buy a house "just as" expensive as the last one.

You buy your first house for $200,000. That $200,000 comes out of your pocket basically. You live there for 5 years and build up $50,000 in equity.

You buy your second $200,000 home. $50,000 comes out of your last house and $150,000 comes out of your pocket. You live there for 10 years and build $100,000 in equity.

You buy your third home for $200,000. Now only $50,000 out of pocket and $150,000 is rolled over from equity. You live here for 5 years and pay it off.

That money you were paying in mortgage is now yours to do with as you please and you have a $200,000 piece of equity that belongs to you and your family.


For simplicity sake I took appreciation out of the picture just assume that the appreciation of your current house would roll into buying a similar next house which accounts for the rise in real estate prices.

How again is that not an investment?

[Strazos]

So um...where's the return on your investment over 20 years? Sure, you have $200k in equity, but that was your money to begin with.

If you don't want a house, there are always condos.

They still have mortgages, you just don't have to deal with the yard as much, and you share walls. /shrug

[UD_Delt]

So um...where's the return on your investment over 20 years? Sure, you have $200k in equity, but that was your money to begin with.

Umm.... how about the house itself. A free place to live. What does that add up to in the coming years?

Sure, you could have tucked your money in a mattress (or paying someone else's mortgage ie. rent) and have nothing to show for it. Or you could have a free place to live for the rest of your life. Your call...

Ask yourself this...

Why is renting an option? Why does the concept exist?

[Strazos]

Inability to own property where you want to live?

You don't plan on living in the area long enough to warrant actually buying a house?

The price of homeownership too high for what an individual feels they need as far as lodgings?

[UD_Delt]

Inability to own property where you want to live?

You don't plan on living in the area long enough to warrant actually buying a house?

The price of homeownership too high for what an individual feels they need as far as lodgings?

And there's your problem in a nutshell...

You're looking at it from the wrong side. All of those answers are from the perspective of the rentee. You need to look at the question from the perspective of the renter.

Why is renting an option?

The answer is... Because it's profitable.

Landlords aren't renting places to do you a favor or because you can't afford it. They are doing it because they understand the financial advantage to building equity and are more than happy to let you pay their mortgage for them while they reap the future gains.

[shiznitz]

Owning a home is nowhere near a 100% financial homerun compared to renting. Renting is viable because there are no cash flow surprises. No one who has owned a home for more than five years has escaped a major emergency expenditure of some kind. Here are some of the costs of homeownership that have not been mentioned:

1) taxes
2) taxes
3) insurance
4) maintenance

Yes, all of those expenses get factored into rent in one way or another but they are smoothed. If you live in a area with net population declines, renting would actually make good sense since rents should decline or stay flat.

Renting for life is a perfectly viable option as long as the renter actively saves money. Renters whose income grows faster than their rent will also do fine. Home ownership is popular for psychic reasons and because it forces people onto a budget they might otherwise not be able to honor.

For the record, I am a homeowner of five years and no more mortgage. We just spent $75,000 on a new kitchen last fall (the existing one was a mid-1980s nightmare) and financed it with a home equity line, since paid down as well.

[Sky]

Don't turn this into yet another 'Strazos is just a kid'-thread.

You fuckers never listen.

I was hoping for some info on the homebuying process, and I get a tired rent vs own debate. Here's the skinny: it's a different case for everyone. It makes sense for some to rent, some to own. Discussion over.

Now. Any info the homeowners can pass on the buying process that might be helpful to those in the market to buy?

[Strazos]

Um, make sure all the pertinent tests are done on the water, etc? Just found out we have Radon-ized water, and this place is at least 15 years old.

So now I have to deal with lots of Poland Spring water. I think it tastes funny.

[HaemishM]

Now. Any info the homeowners can pass on the buying process that might be helpful to those in the market to buy?

Work up your wrist muscles. You'll be signing things. A lot.

Also, read up on foundation problems, and find out what to look for. Foundation troubles are a major bitch in some areas, and a major expense. Check the insulation in the attic. If it only comes up to the supporting studs, it's not enough, and you'll pay for it in energy costs. Also, see if you can't talk the seller into at least a 1-year home warranty. If you can't, get one yourself. Unlike electronics, you do not want to own a home without a warranty, just to cover the shit insurance won't, like an air conditioner that blows up or dies.

[Strazos]

Also, go with a Realtor who does the real estate thing full-time - they'll generally work a lot harder than someone who only does it on the weekends for a few extra bucks.

[UD_Delt]

Here are some of the costs of homeownership that have not been mentioned:

1) taxes
2) taxes
3) insurance
4) maintenance

Actually I mentioned each and every one of those in my initial post in the thread but thanks for playing.

Any info the homeowners can pass on the buying process that might be helpful to those in the market to buy?

Things I would do again:
City Inspection + Private Inspection
Always make any offers pending both inspections
What we did was make an offer close to the ask price but then put a clause in place that the seller was responsible for making any repairs or compensating us for anything resulting from the city inspection. I then made sure I was present for the city inspection and told the inspector to be completely thourough since I was the home buyer and wanted to make sure the city wasn't going to bitch about anything in a few years. This basically got us comped for a driveway, painting of the entire house, a couple new windows, new back stairs, and a few other things here and there.

Make sure to visit the prospective house when it's raining or after a snow melt if at all possible.

If you are buying an older house (ours is nearly a century home) make sure to specifically tell your inspector whether or not he should look for asbestos and/or lead paint. The trick here is that once you know about it and it's documented you are now responsible for it. Check the laws of your city but ours is basically a don't ask, don't tell sort of policy.

Look closely at the neighbors/neighbors property and meet them if at all possible. Our neighboors are night and day and unfortunately we had only met the good neighbor before buying the house. It probably wouldnt have deterred us anyway but would have been a nice-to-know kind of thing.

Know your real estate agent if you have one. We picked ours because he lived and worked in our city and was also the owner of two rental properties in our city. He was invaluable as far as offering advice and experiences from his own rentals.

Look at A LOT of houses. The market is starting to change and houses will probably last on the market longer now. When we were looking a few years back houses were going fairly quickly. We only looked at a dozen or so houses before picking the one we bought. It was only listed for about 2-3 days and we were the first of 3 offers that came in on it. Now you should have more time to spend looking at a lot of different houses without the fear that one is going to be snatched out from under you.

[bhodi]

If you plan on doing home improvements, make sure you READ your homeowner's association rules and county codes/rules carefuly, make sure you file all the paperwork with them, and make sure you get bonded and insured people to do the work.

Remember, the homeowners associations WILL FUCK YOU. They will fuck you for not conforming to specific colors, using specific types of paints, fence too high, fence too low, door the wrong color, deck too big, deck to small, not using the right type of wood, even something like having a deck too close to a backyard pool.

They will fuck you. Hard. MAKE SURE FINAL PLANS ARE OK'D. Don't get fucked, they will make you tear it down if it's outside. They have lawyers and they don't fuck around.

They will find out. Don't think you can get away with it. There are people in your neighborhood with nothing better to do than obsess over other people's houses and what they are doing with them. They will run to the association in a heartbeat.

Congratulations on your new house! :)    (they will fuck you over the smallest shit, I am not joking!)

[Merusk]

UD gives a lot of good adivice.

Definatly, above all do the home inspection with a certified home inspector. (Yes, they have certifications for this, but Billy & Joe-bob can go out and sell HI services without that cert.. at least around here.)  If for some reason the homeowner objects, (which I'm not even sure they can) just walk away.  They know something's wrong or about to go wrong, and they don't want it to come out.

I'd also add to keep an eye on the price you're looking at.  Our relator kept pushing us to look at more and more expensive homes.  It finally reached the point that I said, "Look, if I'm going to pay that much for a house I may as well build new and not have to deal with any of the problems all the houses you're showing us in this range have."   And so we did.

That's my next bit. Look at the price of new homes in your area.  You can often get a new home for about the same range as an older home. You then save a bit more because you don't have to worry about the heater, furnace, pipes and  have a significantly better insulation value than your typical older home.  The downside is you don't have a yard or landscaping beyond whatever the builder provides (which isn't much these days until you hit the middle-upper price range) , an established community, often have to deal with construction noise and mess and the paranoida of strange folks hanging around at all hours. Newer homes also lack a certain 'charm' that older homes have, which is why I wanted an older home first.

You also have to deal with homeowner's associations in most communities. (see Bhodi's post)  It's another layer of red tape you have to go through if you want to make any kind of improvements.  Some people (like me) see these as a boon, they keep the neighborhood up-to-par and provide benefits like pools and homeowner-parks.  Some people like to buy houses knowing they have HOAs, getting a list of the rules of the HOA, and signing-off that they've read and will abide by the HOA and then bitch when the HOA actually enforces those rules. This boggles my mind.  ( I'm talking people who want to keep their RV on their front lawn year-round when the HOA rules say "24-hours on the street".  The busybodying stuff where people call at 24-hours and 5 mins gets my goat, too.) 
 
If you talk it over and decide to put in an offer, decide right then what your exact limit is.  The whole process is like buying a car, with the hemming and hawing and lowballing, but also runs the risks of an auction if there's more than one bid on the house. Like any auction, some folks get bid-blind and pay wayy too much in the heat of the moment.  Once you hit your limit, just stop, say "well, you win" and look around some more.  I lost a house in a bid-war and I don't regret it.  I know the other people paid way too much for a 1,500 Sq ft house w/ knob-and-tube wiring, a musty basement, ceiling plaster dryrot and gutter problems. 

Stay paitent.  It gets very easy to get frustrated while looking and just say, "Fuckit, I'm done"

Also: there is NO "perfect" house. All homes, even new ones, will have issues.  It's a matter of how many and what kind of issues you're willing to deal with.

[Bunk]

Congrats!

 I have begun the preliminary work on becoming a homeowner myself soon. Hate to give up my 6 minute commute, but we need more room and some actual equity.

I'm in the same boat. Paying $700 a month for a one bedroom apartment 4 minutes from work, but buying something I can afford is going to force me to the burbs and a 30 min+ drive. Probably about 6 months from having the savings and downpayment.

[Morfiend]

Man, prices here are so far above the prices you guys are talking about, it is insane. My friend bought a house down the street from me 18 months ago for 570k, today he could probably get 725k.

[Merusk]

You bought in Cali, I'm talking freaking Ohio.  Yes, worlds of difference.

[shiznitz]

On inspections, water damage is something the new homebuyer will often not notice. Check ALL windows (don't forget skylights) and wood floors for signs of water damage. Unfortunately, a recent paintjob can conceal water damaged areas. If the house is on the side of a hill and has a basement, ask if the house has some kind of drainage system (french drain is most common) in the basement and if that system has a warranty.

Another item: light switches and outlets - the placement of these can be completely asinine in some houses. In my house, the master light switch activates a single outlet in each bedroom. This outlet is usually closest to the door, thus requiring ugly extension cords if you actually want to use the switch for lighting. We subsequently had most of the switch-outlet pairings changed at $150 a pop.

If the house has central air, ask when the compressors were last replaced. They tend to last 7-10 years only and run $1,000 to replace.

[Strazos]

Same.

Also, I wish our HOA would do something about the fuckers that put up a basketball net in the street behind their property, which incidentally faces our property. From time to time me and my mother just sit in the kitchen and wait for the kids to come close to hitting our parked cars with their damn basketball.

Put the net by your own damn cars, fuckers.

/rant

[UD_Delt]

Man, prices here are so far above the prices you guys are talking about, it is insane. My friend bought a house down the street from me 18 months ago for 570k, today he could probably get 725k.

I'm curious what you get for 570k. My house at 158k was a duplex, each unit was 2br/1bath around 1100 sq.foot. Total house is around 2400 sq. feet. Only about .1 acres of land though on a street of mainly duplexes.

We're starting to look at single family homes now since we're about 2 years out from our target move date. We're looking in the 180-200k range in the same city which should get us a single family home with 4 BR, 2 bath in about 2000 - 2400  sq. feet and .2 acres on a nicer street w/ mostly single family homes.

[Broughden]

I think what I'm really trying to get at is what gets you more money in the end: Doing what Merusk described, or simply investing the money? I don't mean investing in stocks neccessarily (which can crash, ZOMG), but even something as simple as an IRA or something - compound interest is a wonderful thing.

Somewhat old data but:

1926-1996 Average annual rates of return

             Small Stocks 12.5%
             Real Estate  11.1%
             DJI          10.0%
             Bonds         5.2%
             T-Bills       3.7%
             Inflation     3.1%

Source: http://www.investorhome.com/history.htm

You get compound interest in real estate as well.

That 11.1% looks good on its face but does it take into account property taxes, insurance, home repairs and other associated home ownership costs over the terms of the 70 years?
I would imagine that would put a big dent in the 11.1%.

[Yegolev]

Now. Any info the homeowners can pass on the buying process that might be helpful to those in the market to buy?

Single biggest tip is to make pals with a realtor.  I was selling and only for part of the time looking to buy.  If there's a secret beyond the old reliable "it's who you know", I missed it.

As to the other bullshit in this thread, personally I will only leave this house if blasted out with dynamite.  The constantly-increasing property values of everything within a two-hour commute of Atlanta make me sad at tax time.  I don't plan to sell, so it's not an investment so much as a financial drain.  If you want to invest in land, do it around Atlanta.

[Abagadro]

My dear departed grandpappy always said that homes are never really an investment because when you sell one you almost invariably end up buying one just as or more expensive to replace it.  This seems to be true for most people I know except for 70 year old retirees that liquidate equity and move into assisted living or something.

That just doesn't make sense to me. Let's just look at the first part of your saying and that you always buy a house "just as" expensive as the last one.

You buy your first house for $200,000. That $200,000 comes out of your pocket basically. You live there for 5 years and build up $50,000 in equity.

You buy your second $200,000 home. $50,000 comes out of your last house and $150,000 comes out of your pocket. You live there for 10 years and build $100,000 in equity.

You buy your third home for $200,000. Now only $50,000 out of pocket and $150,000 is rolled over from equity. You live here for 5 years and pay it off.

That money you were paying in mortgage is now yours to do with as you please and you have a $200,000 piece of equity that belongs to you and your family.


For simplicity sake I took appreciation out of the picture just assume that the appreciation of your current house would roll into buying a similar next house which accounts for the rise in real estate prices.

How again is that not an investment?

Sorry, just got back into the thread.  Your numbers are a bit off there. There is no way you are building up 50k in equity into a house and you are not building up 10k per year as you have formulated.  With a standard 30 year mortgage, in the first 5 or even 10 years you are hardly paying anything to principal (maybe a couple a hundred a month at most). In those time periods you will rack up between 10-20k in equity.  You would lose that much just in realtor sale fees in the three sales at 3% of the sales prices (18k in your example).  You have also paid around 15-20k in property taxes during those years.  At the end of your hypothetical you have a free and clear house worth 200k. Great. If you want to cash it out you then have to sell the house (and find another place to live) or borrow it again. If you'd taken the 500 bucks a month less you would pay in rent than into a mortgage (plus insurance and taxes) and put it into a stock fund or CDS, after twenty years you would 200k in cash that would continue to earn income and would likely produce enough to pay your rent.  Like I said, depends on the market in both housing and rentals. If there is a rental glut you can come out significantly ahead monetarily renting as opposed to buying.  There are other big advantages to home ownership but I don't think the "make money on your house" one holds much water.

And very few people move from one house to another at the same price level. It usually goes like this (in the best of circumstances):

Young couple buy a condo for 75k. Sell it for 95k after putting in 5k of remodel and 5k of condo fees.  They take their 5k of equity left after realtor fees and combine 5k out of pocket and buy a starter home for 150k.  Pay on that for five years, spending 5k in taxes, 2k in insurance, 5k in remodeling/maintenance and then have a kid so sell it for 180k and move into the 4 bedroom in the burbs for 250k having had 20k in equity after all the fees/closing costs, etc.  They then live in that for 20 years until the kids leave and then sell that to buy a house in Arizona for 500k.  You never realize any cash flow from any of that.  Investments are about generating cash flow. A house is therefore not really an investment. The only time it is really cashed out is if you hold for a really long time, get lucky with an appreciated market and then move into something significantly cheaper.  Real estate can be an investment, but owner/occupied stuff doesn't really qualify in my opinion.

This was my grandfather's viewpoint and he died with a big shitpile of money made in commercial real estate and hotels so I give his word some weight.

[Broughden]

Sorry, just got back into the thread.  Your numbers are a bit off there. There is no way you are building up 50k in equity into a house and you are not building up 10k per year as you have formulated.  With a standard 30 year mortgage, in the first 5 or even 10 years you are hardly paying anything to principal (maybe a couple a hundred a month at most). In those time periods you will rack up between 10-20k in equity.  You would lose that much just in realtor sale fees in the three sales at 3% of the sales prices (18k in your example).  You have also paid around 15-20k in property taxes during those years.  At the end of your hypothetical you have a free and clear house worth 200k. Great. If you want to cash it out you then have to sell the house (and find another place to live) or borrow it again. If you'd taken the 500 bucks a month less you would pay in rent than into a mortgage (plus insurance and taxes) and put it into a stock fund or CDS, after twenty years you would 200k in cash that would continue to earn income and would likely produce enough to pay your rent.  Like I said, depends on the market in both housing and rentals. If there is a rental glut you can come out significantly ahead monetarily renting as opposed to buying.  There are other big advantages to home ownership but I don't think the "make money on your house" one holds much water.

Thank you for that. That was the exact thing I was curious about, and asked about above.

[Cyrrex]

Abagadro, you aren't really wrong with any of that...but there are other things to consider.  I think a lot of the numbers people are throwing out there aren't really helping to clear up the picture, so I'll try to simplify.  First, a couple of generalizations (which is to say, not ALWAYS true, but often enough):

-Property values tend to be constantly on the rise.  In some places, the rate is so fast as to be ridiculous.   RIDICULOUS.  An interesting truth with this is that the rates of increase in value are probably higher near large cities, and lower as you get further out into the suburbs (I am sure there are exceptions).
-Interest rates fluctuate.   More than likely, there will come a point where rates are lower than what you are currently paying on a loan.

Now, depending on the specifics of the above, you may be able to live in a place for only a few years time and then choose to sell.  It is entirely possible to build up an equity that virtually allows you to "upgrade" your living conditions without a significant increase in your monthly mortgage.  Depending on how lucky (or intelligent) you were in the process, you may even have a nice chunk of cash leftover.

Alternatively, you may choose to stay where you are and consider re-financing.  If you find a sweet spot where your property value has increased significantly and interest rates are low enough....it's almost as good as having a bunch of leprechauns line up to throw gold at you.  Sure, sure, your monthly payment might increase a tad.  Your loan gets pushed back to 30 years again.  These things suck, but the giant sacks of cash tend to ease the pain a bit.  The big risk here is if something happens in your life that forces you to have to sell the property soon after you borrowed against the equity (getting fired, divorced, bombed by Iran).

Mileage will vary, of course, depend on all the variables...but having been through all of the above (3 purchases, 1 re-finance) in the last 8 years, I can say without reservation that owning is highly preferable to renting.

[voblat]

Mileage will vary, of course, depend on all the variables...but having been through all of the above (3 purchases, 1 re-finance) in the last 8 years, I can say without reservation that owning is highly preferable to renting.

I kind of agree with most of what you are saying, but Abbagadro has a point too, most commonly, the equity of a house is never realeased, as house price rises are on the whole used to purchase a bigger , better house.
As an investment, houses are good, not for the owner, but for their survivors. Viewing a house as an investment for your childrens future lessens the pain.(although inheritence tax in the UK takes a vast chunk if you have any sort of value to your estate)

To the part I quoted, I will also agree, unless you have to borrow 95%+ to purchase. because if the housing market sees a 10% correction, as is seeming very likely at some point, housing accross uk/us and most of europe is vastly overvalued, you are indeed in severe trouble.

[Cyrrex]

Mileage will vary, of course, depend on all the variables...but having been through all of the above (3 purchases, 1 re-finance) in the last 8 years, I can say without reservation that owning is highly preferable to renting.

I kind of agree with most of what you are saying, but Abbagadro has a point too, most commonly, the equity of a house is never realeased, as house price rises are on the whole used to purchase a bigger , better house.
As an investment, houses are good, not for the owner, but for their survivors. Viewing a house as an investment for your childrens future lessens the pain.(although inheritence tax in the UK takes a vast chunk if you have any sort of value to your estate)

To the part I quoted, I will also agree, unless you have to borrow 95%+ to purchase. because if the housing market sees a 10% correction, as is seeming very likely at some point, housing accross uk/us and most of europe is vastly overvalued, you are indeed in severe trouble.

Sorry if I made it sound like I thought Abagadro was wrong, that wasn't my intent.  I was only trying to illustrate the other dimension of it, the whole "sacks of cash" part that can be had.  I live in a market where values have hyper-inflated over the last 10 years, so the examples I draw my experience from are more obvious (also, hindsight is easy to apply).  There are potential downsides, not least the one you mentioned....but in a way, that supports the idea of owning > renting even more....because the longer you rent, building ZERO equity, the harder it will be for you to get into a house (or whatever).