Today’s "Twisted Logic Award" has to go to writer Phoebe Chongchua in a Realty Times article entitled "Why to buy a home now".
How’s this for a less than compelling reason to jump off the sidelines?
If you’re renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter."
It’s logic like that that’s made a number of recent home buyers 35% poorer. [Actually degree of pain may vary.]
“the average person who owns a ferrari is 300 times richer than the average person who owns a 10 year old ford, and the average person who eats caviar 3 times a week is 1000 times richer”
So, don’t buy a home, go buy a ferrari and a bunch of caviar!
Well, just take a look at the rental slums vs. the typical overpriced, overvalued home, no wonder it’s 35 times more.
If someone is seriously looking to buy a home to live in, and can afford more than a rental, and the intent is to build equity in a home, then it’s not a bad time to shop for a home, look at all the inventory.
The author is careful to say this, as a buyer, make sure you are sufficiently capitalized, like those 35 times more people.
Toysarefun-
You need to be sufficiently capitalized, and remember the disclosure you often get from financial advisors:
Sure there are cheaper homes out there, but it’s a poor economic climate. If you can’t handle the risk, you are better off waiting on the sidelines.
AZRob-
I think you’ve hit upon a new marketing strategy for our ailing auto industry. : )
way to burst my bubble twist!!! i was convinced that i was a member of the upper class for the last 4 years since owning a home! now my neighbor lives in the exact same house/floorplan and he rents for $1000/mo. i, on the other hand, own (a debt) for about $1000/mo. and now your gonna tell me i’m not 35 times more rich than my neighbor?
that’s right igor…i’m “furious”
Off Topic; but speaking of autos, is it my imagination or have the engineers made the costs of common maintenance skyrocket? Changing a headlight on a few models has become a bummer.
http://townhall-talk.edmunds.com/direct/view/.ef2ae4b/1265
hutch,
they have! everything is also made to not last as long (at least all of the little plastic crap) so you have to replace more parts. my theory is that it is all designed to keep you spending money on the vehicle (or get you to buy their maintenance plan). however, i remember headlights always being tough. had an 85 chevy hatchback in high school and it took me all day to change a headlight. at least now i can google what i want and if need be, take apart an entire new car. lol…with the internet you can now get VERY detailed instructions to do a lot of the little stuff yourself. you can also purchase the parts you need much cheaper online. i just buy the low end model of what i want and then add the bells and whistles myself (mostly audio/video junk).
I am definitely into used vs new. I’ve got 3 vehicles with over 175K miles each, and I put on 2/3’s of that. If my son-in law ever gets one of his 2 project cars out of my way I plan to pick up a 1934 Chrysler.
Igor says: depressed
Hutch-
I’m into used as well. I love a car that has no payments! My old Ford van just turned 200K and is going strong.
I had a ‘72 Vega when I was in college. It was rated the worst built car in America that year, and was forever having mechanical problems. The good thing was that they were mechanical, not electronic, so I did a lot myself.
The headlights were awful to change, but I could easily change the oil and do tuneups. Now I look under the hood and I have a tough time finding the air filter.
With credit tightening now though, I wonder if cars aren’t going to have to be a lot cheaper and simpler if Detroit wants to sell any. Otherwise, who will be able to afford them?
Ummmm, as a general rule, aren’t homeowners wealthier than renters in any housing market, not just in this one?
Slim-
Yep. That’s his point. Buy a home- be richer. Look how well that plan has worked for the thousands that are going into foreclosure. But hey, maybe she figures that the brief time the homeowner could feel superior to mere renters was worth the ride.
Well,
Speaking of cars… I bought my first new car in February ‘02 as an ‘03 Acura TL TypeS. I am just now turning over 93K miles after almost 7 years. It has been the best car I have ever had, bar none. It still drives like it’s new, and except for some scratches here and there, looks almost new. I have no idea why people replace a car after 2-3 years, and I have done almost no work on the car (I’d do it myself if it needed it).
Still, the point is taken. If I owned a Ferrari, I wouldn’t be richer; if I were rich, I would buy a Ferrari. Correlation is not causation.
Heck, I just bought a new car oh well, but supposedly according to Mish, later on this year will be a better time to buy a car when deflation hits. Why did I buy new?, because I’m tired of repairs, poor service, other unknowns, and having to change cars every 4-5 years. I still drive my old car, I love that old car, but it will have to go.
Back to homes, when I made my purchase in 2002, the inventory was garbage, everything I looked at was junk, even the newly built homes were junk, and I had to settle for the best fair priced junker I could find, because I was tired of renting, and moving, and renting, and moving, sharing laundry, bugs, noise, etc. Now, I see homes for sale with beautiful views, the finest woodwork, foundations that were built to last forever, and yeah sure I wish I would have waited another 6-8 years to buy a home!
But, it only costs me about $1100 a month to own a home, it’s not about money or declining/depreciating assets to me. Where I live the cost of renting/buying is kind of close.
NOW, if I lived in a bigger city, FL, or CA, I’d never dream of owning a home.
DocRocz ,
There’s underwater and there’s Underwater. An estimated 10 million mortgages are upside down but appear affordable on paper. I think the number of homeowners that are near the breaking point is much higher than estimated. The job market continues to deteriorate. Stalled foreclosures will eventually break loose, dropping values faster and deeper. That is when the urge to “abandon ship” may become irresistible to a significant number.
Igor says: sad
Their is no ship left to abandon, hit the streets, or go live with relatives.
They didnt know any better, as if their was any trust in this country left to begin with. It’s the dumb, following the dumber, following the dumbest, or something to that effect.
I get tired of hearing the excuses and whining, every story you read is full of people playing dumb.