Whadda ya think,

[free4now]

It would be really interesting if SWR calculations like FIRECalc could somehow include homeownership in the mix. It wouldn't be easy to do... have to probably manufacture some data or go monte carlo on home appreciation. But it would be useful. When I'm doing the calculations of SWR including my home I often end up making assumptions that are conservative, like assuming no appreciation.

In the end, it's almost always appreciation that drives whether buying a home is an economically beneficial move. In order to decide whether the home makes sense for you, you have to take into account volatility and worst cases. Assuming 6-7% constant appreciation will give you an over optimistic SWR. For the same reason that assuming 10-11% constant stock growth minus 3-4% inflation gives you an incorrect SWR of 7%.

 

[Nords]

In the end, it's almost always appreciation that drives whether buying a home is an economically beneficial move.

Completely disagree.

People look for the sleep-at-night security of owning their homes in nice neighborhoods with good schools. The fact that the govt subsidizes their financing makes it all the more attractive, and we tend to downplay rising taxes or maintenance & repair hassles. And if your home value rises at the same rate as inflation then you suddenly become a real-estate investment genius with backyard-barbecue bragging rights.

I think that if home ownership was all about price appreciation then we'd all be landlords.

 

[SteveR]

It would be really interesting if SWR calculations like FIRECalc could somehow include homeownership in the mix. ...  

In the end, it's almost always appreciation that drives whether buying a home is an economically beneficial move.   

I agree with Nords. I disagree with the above statements. If your home were stricly for investment purposes and you could liquidate it without having to find somewhere else to live I agree with putting it in the FIRECalc mix since it allows the sale of assets during retirement. The problem is that unless you plan on living on the street you will have to pay either rent or the purchase price for a different home. If you go smaller and cheaper you can invest the difference to live on during retirement. Otherwise, unless you are a termite and can eat your house, it should not be in FIRECalc but would be in your estate for your heirs.

 

[cute fuzzy bunny]

I somehow agree with both Nords and Steve, although I also agrere with fireme to some degree.

Cant eat the house, but I think the presence of one may affect whether one buys reits or not, certain types of bonds or not, and it does provide some inflation protection of a portion of your assets while also being a neat place to live!

For example, my 400-and-something dollar home with no mortgage results in my holding less bonds and I dropped my REIT holdings all together. I hope to god I dont have to explain either of those decisions.

 

[free4now]

I agree with most everything said here tooo... when I said:

In the end, it's almost always appreciation that drives whether buying a home is an economically beneficial move. 

I should have probably bolded the word "economically". There are often more important considerations than pure economics like the "sleep at night" factor and the ability to make the place your own with your modifications. And I think those factors do drive whether buying a home is the right decision.

 

[Sundance Kid]

My thanks, to all that have responded, to my initial question. It certainly, isn't an all or nothing, easy solution situation. Basically, you have to do your own calculations, based on your financial situation, to arrive at a decision that you can live with.

Is that decision based on Want, or Need? Only the individual, can answer that.

I , would like to upgrade, from where I live now. Not because, I'm in poverty but, because the DW deserves something better, in our retirement years. So do I!

I think, the advantages of owning one's own home, for the next 10-20 years, (before being carted off to the aslyum,) outweigh the rental aspects.

So,-- Im settled in my own mind! (for now)

LOVE, this forum!!

 

[free4now]

Note you really need to try out a calculator and see how the numbers work out. Vary your assumptions between conservative and liberal. I like the motley fool rent v. own calculator:

http://partners.leadfusion.com/tools/motleyfool/home10/tool.fcs

 

[cute fuzzy bunny]

So what does the DW deserve... a bigger house or better financial security? A hundred or two extra a month for a mortgage and property taxes or a couple of maid visits and a few nice dinners out once or twice a week?

My wife would live in a shoebox if I served maine lobster tails once a week. Instead, I buy her something in a shoebox on a regular basis (her one vice, and my allowance to call her imelda marcos without all the black bras) and keep the lobsters coming.

Find the true finery grasshopper. A bigger house has its ups and downs.

 

[JonnyM]

Re: Whadda ya think, well ta tell yaz da truth...

I wouldn't have a problem with "beginning" a new mortgage at 65 if the property was "the one". It hopefully wouldn't be a BIG mortgage and the monthly outlay would be fairly modest, but what's wrong with shelling out some sheckels is someday DW and I find the perfect place. The quest for finding it is one of the pursuits we plan to enjoy in our upcoming ER years.

We've timed the current abode to be paid for when I pull the plug in just a couple months now, and yes I'm getting very annoyed getting up to go to work of late. So essentially if no pot of money falls out of the sky the next home if more costly will be a trade up, if less costly will be a trade down. The point is that once you're in the game in an area the experienced appreciatation along with the rest of the country you not only had a place to live all that time but you hedged your ability to own a property somewhere else later, within reason. Our choice will likely be somewhere a bit away from it all, and hopefully not so popular, hence not so pricey, but we don't preclude the possibility of trading up a bit if it's just to wondrous to pass up, hence a tidy size mortgage that won't hurt the cash flow too terribly much.

I can't see renting on much more than a temp basis. What if you found a place you DID really like. You'd be at the mercy of your Landlord who could toss you at a moments notice to move their relatives in your place! No good...

 

[Sundance Kid]

JonnyM:

Your post pretty much goes along the same lines I'm thinking. Renting, would have to be, short term only, for the reasons listed here, by you and others.

Thanks!