Housing is inescapably a large part of just about everyone’s financial picture. Whether you rent or own, you are going to pay for the roof over your head. Owning a home can be a major positive part of your portfolio but it has to be treated like everything else in the basket.

Many of the people who put all of their chips on the “House prices will always go up” square have lost but let’s be clear that it was a gamble, not an investment. One of the not so great side effects of this great free society is that people are free to make dumb decisions AND people are free to take advantage of others dumb decisions. Buying a house that is 8-10 times your income with an adjustable rate mortgage is a dumb decision.

Buying a house that is steeply discounted and about 2-3 times your income can be a prudent financial decision.

As we have seen in this thread, the Renting Vs. Owning debate will wage on, there is no right answer for everyone.

I know many people who have a large portion of their retirement wrapped up in their house and figure on the value of their property increasing every year. When it doesn’t increase in perceived market value, they are upset and concerned and looking for someone to turn the market around for them or even ways to bail on their mortgage.

I tried to talk my wife’s single girlfriend from purchasing a home. Now she is locked into a home that has lost tens of thousands of dollars in net worth due to a land contamination issue that was identified after she purchased it. She purchased a home because she wanted that lifestyle but also with the rationalization that she needed a “tax writeoff”. She will be lucky if her “tax writeoff” does not eventually bankrupt her. Plus she is considering job offers out of state but may not be able to take advantage of them because she cannot afford to sell and take the loss, assuming she could even find a buyer.

Lenders used to have a vested interest in the communities they lent in. They knew their profits would be realised only if the people paying them stayed fiscally healthy. And they valued collateral property accordingly.

Then along came “swaps”, “derivitaves” and “mortgage backed securities,” and suddenly lenders realised they could make as much money off the gullible in a few months as they could in a lifetime of healthy borrowers. Suddenly, 110% mortgages made sense and they were able to convince people the “rush” of ownership is worth the risk of fiscal slavery over the next 30 or 40 years, because the “high” prices would magically change borrowers into investors who always sell at a profit in the future. Then they packaged up all those loans into “securities” and sold them off as fast as they could, knowing full well that the crackheads the “products” were based on were all bound for overdose land.

Every party in the exchange of real estate profits from higher prices except the buyers, and every institution in the real estate business are enablers or pushers. But the addicts are STILL convinced they did the right thing. It’s the guy next door who can’t afford his habit that’s to blame.

And why is it that the lenders who entered, just as blithely as their victims, into business transactions based on their own “valuations” are trying to make out that the addicts are to blame for those bad decisions, but the lenders are not? Here’s a news flash for you… if you’re “under water” on your loan, you PAID TOO MUCH! Give the property back to the lender and let him see what he can get for it. Your “credit rating” is already shot. Throwing another 10 years of income at it won’t help either. You were duped, you’re an addict and the only treatment is to quit borrowing and start paying CASH.

Just a tip for all you “investors”, anything that is valued by comparison to what the idiot that lives next door paid is sure to be OVERPRICED. And anything you have to borrow money to pay for is not an investment, it’s an expense.

And yes, a house is a buritto. If you eat it, ie: do no maintenance, repairs, upgrades (all of which cost real dollars and/or time), it rots just like a burrito. The sooner you learn to quit dreaming that housing is an “investment” and not an EXPENSE, the sooner all of us will be able to afford it.

Just keep telling your emaciated fiscal face in the mirror that you’re not an addict, and the pushers will keep you enslaved for the rest of your miserable life.

Peace out!

I am renting my apartment in Hong Kong now, as I am here on work assignment. It can be any time that i may pack my bags and go. Just like a hotel room while U are vacation, so rental makes sense

Then my own apartment at my home country, was rental out just before I moved over. The rental helps me to accelerate the repayment that with a bit of discipline, a 30years loan @ 2.6% took just 3.5 years to clear off. There is no penalty for early redemption. yeah, i did get a renter from hell with the mess they left behind at the end of the rental period, but thats the pro & cons involved.

Assuming that I am out of the job the next day. I won’t have to worry about the roof over my head.

I am planning for my own apartment in HK as I got hit with a rental hike of almost 20% this year. The housing market, what ever BS about economy being bad, is almost the seller’s market. The area’s apartment has a price tag that was like 1/2 of what it was just 2 years ago.

When you can no longer work or wants to enjoy your retirement years, you are still paying rent. That number is going to be up & down like the stock market, BUT you are still paying.

BTW. a Burrito is a consumption item. Housing is both a consumption item (paying rent to myself) AND a source of savings.

haha