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post #3 of Old 05-11-2010
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I saw in an article this morning that said, adjusted for inflation, housing prices have only risen 1% over the past 120 years. Obviously a statistic like that has to be taken with a grain of salt but I think it goes to reinforce the idea that home ownership isn’t the great investment some would like to have you believe. Those who bought in the 1970’s or 80’s and sold before the mid 2000’s meltdown might have made a huge windfall but it’s a big gamble with no guarantees. With home values having peaked in the mid 2000’s, we’re not likely to see any significant appreciation in the next 5-10 years and I wouldn’t be surprised if some markets still have double digit percentage price drops still to come in the next few years.

If you do buy a house, I’d only recommend buying something where you can put 20% cash down, where the mortgage payments will be below 33% of your take home pay, and where you plan on owning it for 30 YEARS until its TOTALLY PAID OFF. If you plan to sell in less than 10 years, as many people your age would, it’s a huge gamble and right now the odds to have any significant equity by that time let alone to make enough profit to afford an “upgrade” are not so good.

So it really doesn’t look “irresponsible” at all to sit out the housing market now or for the foreseeable future.

s/v Spindrift
Beneteau Oceanis 400
formerly Lippincott 30
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