Quote:
Originally Posted by BruceH
I have to agree with Topless. You need a place to live, but you don't need 4000+ square feet to heat/cool pay taxes on, maintain. Most people spend way too much on their homes, that is the problem, not home ownership. Having a reasonably sized house allows you to pay it off before retirement, then, you will be able to write a check for a lot more than $600. You will be living in your house for much less than an apartment. Also, the reasonable house costs less to maintain, ie, taxes, utilities. And $10,000 is not a small amount of money when the time value of money is factored in.
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Needing a place to live in not a rationale to enter into a RE investment. That's a rationale for convenience. Owning will always be more convenient, no debate.
The question is how much are you giving up for that convenience? To a limited U.S. average income, it's a luxury that leaves them retiring on a prayer.
And you really don't have to buy a lavish home to over-leverage yourself.
It's a basic fact that incomes are not rising and job creation has been falling for for decades (yes while corporate earnings and the stock market hit new all time highs). They will have LESS money to invest in their retirements once that mortgage check is written each month. In other words it's eating up a larger and larger % of their income as time goes by because home ownership carries other costs that are not fixed like their 30 year mortgage. Neither are their living expenses fixed either. Rather than cutting back on what they spend on housing they cut back on what they spend in their IRA/401K/savings. The return on the average real estate investment after costs are weighed do not make up for this lost income in their retirement accounts.