Quote:
Originally Posted by c1pher
DC and California are atypical of national market trends. Nationally, houses from 1963-2008 earned, on average about 4% per annum. Obviously that means some markets gained and some have lost.
And again, although your house gained in value $200k, you’ve probably paid double at this point of what the original sale price was just with interest included. Tax deductibility on mortgage interest only maybe gives you a third of what you paid back. Again, not saying you won’t make money, but it will be far less than you think. And I am providing a rule of thumb. There’s clearly variability in all of that.
The other thing to consider is that for most people, a home is a major investment. You are putting a lot of trust into one instrument that it will gain value, when typically you invest in your 401k or stock market, you will diversify whatever you put in across several different markets and investment types. A house is a singular market and opens you up to wider market ups and downs.
I’m not here to tell anyone what to do, just sharing my experiences. I will say that while your home in DC May have gained $200k, my navy friend in Hampton Roads has lost $70k in value from the original purchase price.
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and yet, unless the house value goes to $0, you will still come out ahead when you move on after 30 years compared to renting for 30 years.
it seems you are looking at it of paying mortgage vs not paying anything almost.
2k/month for 30 years on a mortgage is the same as 2k/month for 30 years of renting. you are still going to pay the same amount over that time. Sure, you can maybe add another 50-75k over 30 years in maintenance if you are going for top tier costs, but after 30 years, you have a rent free place to live vs continuing to pay rent for another XX amount of years.