A risky investment that most think is a good
Originally published on Dec 9, 2012, but then sent back in time.
Would you buy a:
- Non-diversified investment, with a
- 30-year commitment, for
- Ownership that gains 1% APR, but costs 2-4 times that much, and
- Won’t break even for at least 7 years, assuming that the market stays healthy?
I have just described the average single family home real estate investment.
The best reason to buy a house? You want to live in it! If you love your house then by all means BUY IT! But don’t buy more house than you want as a way of saving money. There are much safer ways to save money.
Lots of folks think that this housing market is a fluke, but might actually be a return to more appropriate valuations.
Earlier I mentioned that you only get a 1% rise in price. How can you check this? Use Zillow-or-similar to do your own real estate assessments. Compare a new house to a 200-year-old home. In most cases, if the homes are comparable, then the price per square foot will be extremely close.