I've got my work (pun intended) cut out for me here, don't I, with 80 posts to respond to no less!
Bear with me, please, as I tackle one at a time (and continuing as long as I can sit still in front of this keyboard...). And I'll try to stop the disturbing visions of us all gathered 'round the forum in our underwear. (How did you know what I was wearing??)
Isn't it possible for some areas of the country to have homes appreciate faster than rental inflation? In other words, a 63-year-old might have the value of their $300K real estate rise faster than the value of their investment portfolio, especially if rents are rising rapidly.
Yes, as we all have heard, real estate market conditions vary greatly from location to location. The blog post you are referencing was MY reply to ONE reader's question about what I thought would work better for ME in MY hometown. YMMV, of course. (Note: I don't provide advice on my blog-- I share my personal story and my personal opinions.)
We've also heard that over the long haul, home appreciation rates tend to average only slightly more (<1%) over the long-term rate of inflation. (I do have a link to this data somewhere on my blog.) As we all know here, past performance is not a guarantee of future returns, but as they say, history does tend to repeat itself.
Many "senior citizen" homeowners are exempt from or pay reduced property taxes. As far as the rest of the numbers, while I don't disagree with anecdotal evidence, I'd be interested in a study. Got any links?
Again, everyone should enter their OWN assumptions. Mine are based on where
I live, my investment style, my preferences and values, my outlook towards the future, my evaluation of past history, etc. YMMV.
If you haven't already, I'd encourage you to try out the rent vs buy calculator at
Financial Calculators from Dinkytown.net. Make sure you take into consideration an annual allowance for maintenance, repairs, remodeling projects, HOA, etc (personally, I budget 1.5% of the value of the home in the HOA field to cover all of these). Some other work-arounds I've tried are to enter your current home equity amount in the down payment field and your current home value in the price field.
Then there's the issues of reverse mortgages or downsizing.
Yes, but reverse mortgages come with a price, of course. Downsizing was what we picked and it has worked out well for us.
I think that many people, investors or otherwise, will feel more secure in a home they own (reverse mortgaged or not) than in a home subject to the vagaries of landlords, rising rents, and décor restrictions. There's a strong emotional component to ER decisions that has to be recognized, or an "investor" will flee at the first sign of discomfort.
Very true. This is a good example of the personal part of personal-finance. One sees the hassles of renting, while the other sees the hassles of owning. We prefer renting, for a wide variety of reasons right now. I'd be happy to share them later, if you'd like.
If you're suggesting diversification then perhaps that 10% return is a bit high. What's your recommended portfolio asset allocation and where is the returns data coming from? The reason we're asking questions like this is because, on this board particularly, that issue is subject to a lot of data mining. Even after resolving that issue there's a significant sentiment that future S&P500 returns will be more along the lines of 6-7% before taxes... which would make a diversified portfolio's returns even lower.
I addressed my specific portfolio holdings in my intro thread on this forum. I also shared my strategy on my blog (and an outdated portfolio reveal).
Re: S&P returns - I invest globally, not just in the US. It's also my personal preference to use long-term historical data as a reference than attempting to predict the future. My crystal ball doesn't seem to work, dang it!
Uhm, yeah, I think you could say that for most of the experienced posters on this board. We'll raise our hands if we think things are going too fast...
Not sure how I deserved this sarcasm, but let me clarify that I
know that everyone on this forum is brilliant. No question about it. Perhaps you misinterpreted my request for REWahoo's feedback to make sure I understood his/her question first b4 continuing on. I was sleepy. It was ME that was slow, not you or anyone else here.
Sorry. I know it's not a pretty sight.....
