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House: shelter or piggy-bank
Old 12-23-2007, 11:22 AM   #1
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House: shelter or piggy-bank

I still don't understand the now-current attitude of considering the 'equity' in one's house as the primary thing, to be considered first and foremost.

A house is shelter: keeping the outside and the inside separate; keeping the wind and the dust 'out there;' keeping the rain, snow, ice & sun away from the tender skin of me and mine; putting a barrier (however flimsy) between 'us' and 'them.'

"Be it ever so crumbled, there's no place like ..."

OK, it's nice that the value of the property has appreciated ... or, it's a shame that prices have gone down since you moved in.

Yet, since about 1970 +/-, it seems that the 'amount the house is worth' has become a national obsession. Houses are lousy investments (1% to 2% per year, historically ... even Series E Treasury bonds do better, over the long haul) ... but a shelter/house/apartment/'home' is a cherished place.

Without wanting to go into gory details, I know this for a fact, having been a homeless bum for about 5-6 years (a nasty divorece plus another nasty family dispute). Living rough, without a known, safe place to put your stuff, is dirty, smelly and dangerous. To give just one example, the simple act of getting one's body clean means you have to be naked and vulnerable, while you do so, and there are plenty of human predators out there who will make off with your stuff (& clothes) without a second thought, even if you don't wind up beaten bloody and/or raped (men or women).

If you can't afford a house, rent. Or build your own place. Put up a yurt on leased land.

But find a place to create shelter, make it a home, and forget the 'equity' nonsense.
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Old 12-23-2007, 11:48 AM   #2
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we have battered this to death in the past. my feeling is whether a home is worth a million dollars or 200,000 it still is a consumption item until the day its sold. like fine artwork or the jewelry you wear you are enjoying it, it cost you money . adding a homes value to your net worth makes no more sense then subtracting out years of future rent if you didnt own a home..


unless you were going for a loan ,or inheritance tax purposes why bother
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Old 12-23-2007, 11:52 AM   #3
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Remember when you could buy your house from Sears?

Sears Homes 1908-1914

Maybe Costco will get into the act once people start seeing homes as shelter again....
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Old 12-23-2007, 12:06 PM   #4
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Remember when you could buy your house from Sears?

Sears Homes 1908-1914

Maybe Costco will get into the act once people start seeing homes as shelter again....
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Old 12-23-2007, 12:20 PM   #5
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After the divorce in 1983-4 I just wanted my own place - a place of refuge after work, a quiet place to sleep when on midnight shifts, and a workshop to build radio control airplanes - & bought a house I could barely afford on my own. Took half my net income to make the payments initially but I thought eventually it would be paid for. It was. To me the only time the price of the house matters is when it's bought and when it's sold.

But I had to live somewhere, and buying - with a fixed rate of course - "locked in" the cost of housing, the only variable that I couldn't control being property taxes. In my early 20's I had to move from a single apartment to a shared one because the rent was rising faster than my paycheck. I didn't want to put myself in that position again. And I bet that it would appreciate at about the rate of inflation and would eventually be paid for, then the only expenses for housing would be maintenance, utilities and prop. taxes. The sharp rise in prices about the time I retired was just luck, no planning on my part.

I don't understand the idea of using the equity to buy more stuff - the idea is to get out of debt, not dig the hole deeper.

Being homeless to me was also one of the ultimate terrors - how can one start over from scratch with zero resources? It'd be hard to get a job serving fries... Wondering where the next meal is coming from? I cannot imagine....

Maybe some time you can tell how you did it?
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Old 12-23-2007, 12:41 PM   #6
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I have read a number of articles and financial reports that mention, matter-of-factly, that most folks have their home as their major investment. I have never thought this because I have to live somewhere and that place is not an investment, it is a pragmatic part of 21st century living. If I ever decide to sell my place and move into an apartment or rental unit, I will then consider the funds that I obtain from that sale as part of my investment portfolio. But, not before.
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Old 12-23-2007, 04:36 PM   #7
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Remember when you could buy your house from Sears?

Sears Homes 1908-1914
We have a LOT of Sears homes in our neighborhood....all over town for that matter. On our street, in our block, 3 out of 9 homes are Sears'. The next block up, all but 2 or 3 are Sears'.
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Old 12-23-2007, 05:05 PM   #8
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Yet, since about 1970 +/-, it seems that the 'amount the house is worth' has become a national obsession. Houses are lousy investments (1% to 2% per year, historically ... even Series E Treasury bonds do better, over the long haul) ... but a shelter/house/apartment/'home' is a cherished place.
Personally, I would be perfectly happy knowing that my home appreciated 1% to 2% per year, if I could be assured that other homes would appreciate at about the same rate. This would allow me to move if/when I want or need to do so, and would assure me that I wasn't going to be closed out of market after market as time passes.

It seems to me that people are more mobile than they were before 1970, whether out of necessity or desire. This can present problems if home appreciation doesn't keep pace with the rest of the country.
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Old 12-24-2007, 03:05 AM   #9
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actually home appreciation is irrelevent if you dont sell it. and if you do well then its no longer a consumption item and if you have money left over then it goes to your net worth.


and a reverse mortgage against it is a liability. its just a balloon payment loan due upon sale or death.
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Old 12-24-2007, 05:21 AM   #10
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Home appreciation is very relevant in one aspect: the RE taxes that you do and will pay in the future. Watch for Counties to keep raising them as long as they can get away with it, and then they will look to the Sales Tax to make up any decreased in RE tax collections.
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Old 12-24-2007, 05:26 AM   #11
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same as rents, they usually catch up eventually to match
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Old 12-24-2007, 01:20 PM   #12
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Home appreciation is very relevant in one aspect: the RE taxes that you do and will pay in the future. Watch for Counties to keep raising them as long as they can get away with it, and then they will look to the Sales Tax to make up any decreased in RE tax collections.
Exactly this housing cycle is perfect illustration of the sticky nature of taxes. When housing prices soared, cities and counties debated, deliberated, and delayed lower property tax rates, to lower home owner taxes. Now that property assessment have gone down and city/county revenue are threatened to drop you'll see citys raise property taxes rates quickly, "in order to keep from laying off teachers, firefighters, and cops."


My challenge of my 2006 property tax assessment filed almost exactly a year ago, still isn't even scheduled for a hearing. I am sure my case is a good one because my 2007 assessment is 6% below what I argued my 2006 should be, and Honolulu prices have held up pretty well overall.
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