From A Reader:

Subject: WSJ's bad advice

Kerry,

You posted a link to a WSJ article basically telling people not to buy a house in most instances.

Much of what it said was just wrong.

For one thing, even if you assume 4% growth, we're talking about 4% of the total value.

So, if you put 10% down, in a year you've had a 40% roi (less the interest paid during that year).  I have yet to see that in any of my stocks.

The author also completely missed the aspect of control.  Homeowners don't have to wait for the super to fix something and if they've got a fixed rate mortgage they don't have to worry about rents raising (taxes, but not rent).  Homeowners will also never get a note saying "I don't like you anymore.  You have 60 days to leave."

You can also refinance to take advantage of lower rates.

 

Is home ownership a free ticket to cushy retirement?  Of course not.  But it's also not the doom of wasted opportunity the author paints (even the author admits you can walk away with a quarter million in cash if you move from a high market to a low one).

My Reply:

Those are very good points. 

The principle of leverage in an appreciating market has always been the main reason I have always been a big fan of real estate investments.

The issue of control and not being at the mercy of a landlord is also very near and dear to me, and why I have never felt comfortable renting a home.

Thanks for writing. 

Kerry

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/22/2007 11:14:00 PM Send this post: