Is a house even a good investment?

I was thinking about it i think it's a crappy investment. First of all, you pay double just in interest through the lifetime of the house. Plus to don't even own it until you finish paying the 30 year mortgage. Miss one payment and you lose everything. Since the economy is collapsing, house prices will stay low for a long time now so no equity will be created.

Sure, everyone needs a place to live but is it a good investment?

The house that you live in is not an investment at all, it's your residence.

Consider though - let's say you buy a house. You have mortgage payments of $800 per month for 20 years. You rent it out for $900 per month this year but that rent goes up 4% per year (very conservative) for the next 20 years.

In 20 years, the mortgage is paid off and your renters over the past 20 years made the mortgage payments. If the value of the house didn't increase at all (not likely), you now own a piece of real estate that you didn't pay for. Whatcha think? Good investment?

Of course this is simplified. There will be taxes and maintenance and periods when you have no tenant. But then, there will also be an increase in equity. When all is said and done, you get a house (or the cash when you sell it) for free.

None of that works if you live in the house. If you're living in the house then it's nothing more than your residence. The only way it becomes an investment is if you pay less to live in it than you'd pay to rent a similar home. In that case, the difference you save is money earned. That won't happen in the first few years you buy it but in the later years (as rents have increased but your mortgage hasn't) you will be receiving the benefit in terms of a lower monthly payment for housing.

For example: your mortgage is $800 per month now and similar rent would be $900. In ten years, if rents only increase 4% per year, your rent would be $1332 per month but your mortgage payment is $800 -- you'd be saving $532 per month in housing cost. (again simplified)

So, sometimes a house is a good investment. Often it's not. It all depends on how you manage it and how long you plan to keep it.

That is the problem right now. People, rather than looking at buying a home as just what it is, a place to raise your family, are using it as an investment. Sure there are tax right offs and etc.... but again the primary reason to to have a stable place to raise your family.

You are thinking too hard about it.
if you are going to live there permanently,,, then YES, it's a sound investment.
Also, If you have a 30 year loan and pay half your mortgage every pay day, you will have the house paid for in 22 years. You are cutting off tons of interest that way. (actually, you can do this with all bills!)
Interest rates are low right now,, so you can get a great rate.
Also,,, Do yourself a favor,, buy within your means,,, dont get something you cant afford if you were to lose your job! I mean,,, you can Always get two part time ones and make the mortgage!

while your out look is what it is. They are not making any new land. Real Estate in any economy is a good investment if you are prepared to make the investment properly. What I say by that is have your finances in order and have not less than 6 months projected monthly expenses in an emergency fund that is used just for that and then replaced if need be when used if ever. Yes you have to be prepared for all the expenses that come with owning but you do that with any thing that you buy from a car on down the line. Life ain;t easy but having something is better than having nothing now isn't it

In the long run owning a home is always a good investment. You can write off the interest and PMI on your taxes. If you take good care of the home and buy in a solid or upcoming area the value will increase over time. You may need to own the house for a long time to see a large return on your money. Yes, you pay a lot in interest but usually there are no prepayment penalties so you can pay it off in less than 30 years. You can also use the equity in the home for other things like improvements, vacations or education. There is a lot of speculation that starting in February 2009 the home values will increase because we have a new president, no matter who it is. That will also help our economy.

If you have a good down payment, can qualify for a loan with a good interest rate with payments you can afford and you will live in the house for at least 5 - 7 years...then it is a great investment. There are significant tax savings available for home owners, there is the "pride of ownership" aspect and over time most real estate still appreciates. Plus, unless you purchase with what is commonly referred to as either a "land contract" or "agreement to sell" in which the seller retains the deed until the contract is paid in full; you do own the property while you are making your payments.

And, actually, in many parts of the country even in the current economic condition housing prices have stabilized and are beginning to rebound; so how long housing prices will stay low really depend on your immediate location.

just for dollars. renting is cheeper. but when you get older and can't work any more' what i call living on my pennies. it is best to owen a house. be cause you sure can't aford to pay rent drawing your pennies. i make now per mouth about what i made each week while i was working.

It can be a good investment, or it can be a lousy investment. It depends on the property. It depends on how much you pay for it. It depends on the economy. And it depends on various other factors.

To address your specific questions/comments:

YOU: First of all, you pay double just in interest through the lifetime of the house.
ANSWER: Sometimes, yes. It depends on the interest rate and length of the loan. But remember: You're borrowing the money. If you want to pay all cash, that's fine, too, and then you won't pay any interest at all. It's your choice. Further, interest is tax deductible. So, depending on your tax bracket, if you pay $10,000 in interest in a year, your actual cost (after maybe a $2,500 tax savings from the deduction) is roughly $7,500. And the interest rate on home loans is pretty low compared to other loans. If a home loan is 6%, once you factor in the interest deduction it's only costing you about 4%.

YOU: Plus to don't even own it until you finish paying the 30 year mortgage.
ANSWER: You may not own it (free and clear), but you control it. You can sell it. You can borrow against it. You can rent it out. There are plenty of people who bought homes in 1984 and sold them in 2004 and made huge amounts of money...even though they still had 10 years to go on the mortgage.

YOU: Miss one payment and you lose everything.
ANSWER: Not correct. Even in good times, it usually took about 6 missed payments to lead to foreclosure. If anything, that's even longer, now.

YOU: Since the economy is collapsing, house prices will stay low for a long time now so no equity will be created.
ANSWER: Maybe and no. Maybe house prices will stay low for a long time. But define "long." Two years? Three years? Five years? Eight years? That's really not all that long. And consider: If house prices are low, they're more affordable.

As for "no equity will be created": No. Equity isn't created just because the economy is "lifting all boats." Equity's created from mortgage paydown. Equity's created by improving or rehabbing a property. Equity's created by buying a property in an improving area. Equity's created by buying a property for under market value (maybe a foreclosure, maybe a fixer-upper, for instance). There are dozens of ways to create equity.

You're also overlooking the leverage you have from buying a property. (Intelligently buying a property, that is.) Let's say you put 10% down on a $200,000 property. And let's say that, in 10 years (because "house prices will stay low for a long time") the house is worth $260,000. That's 3% appreciation (straight line, not compounded) a year. That's well below historical averages. Let's look at the numbers: Your return on investment is $60,000 on a $20,000 investment. That's 300% over the 10 year period, or 30% a year. Think you'll get 30% annually on your investment in a bank? Or in the stock market? I doubt it.

Buy a home with FHA financing, and put 3% down. (3.5% as of January 1). If you put 3% down on that $200,000 house and it only appreciates 3% a year, you're looking at 100% annual return on investment.

And that doesn't include the paydown of the mortgage. On a conventional 30-year mortgage, you'd have paid off about $28,000 of the principal. On a 15-year mortgage, you'd have paid off about $101,000 of the $180,000 principal.

And that doesn't reflect any built-in value going in. Suppose the true market value of the property is $215,000, but you're getting it for $200,000. There's an additional $15,000 in equity. (And there are properties like that out there.)

Finally, that doesn't reflect the fact that a house is more than investment--it's a place to live. So, leave aside the 30% (or 100%) return on investment...leave aside the tax benefits...leave aside the principal paydown...leave aside the equity you can have going in by buying smart. Forget all that. Over the next 10 years, you're going to have to live somewhere. True, you can rent, possibly paying a bit less. But you're going to have to pay someone for your living accommodations over the next 3,652 days. So, since you're going to be paying anyway, why not get some economic benefit from it?

Hope that helps.

Research has shown, that the average house value, adjusted for inflation, will stay the same.
Most people don't understand inflation and still believe, their house is gaining value, when it isn't.
Naturally, short term, real estate goes up and down, but in the long term, it is a horrible investment. If you can time the market, you can make a fortune, but lose it too, as many find out.

If real estate would be such a good investment, why would anybody sell? Why would realtors sell, why would companies build Buildings and sell them?

However,if you have a location, like a beach or vibrant inner city, it could be a good investment.

It's a good investment, but only if you can afford it without taking out a mortgage.

in my view, owning a house is a big waste of money in the long term.
if your filthy rich and own so many houses that you lost count, its good investment.
just do some remodeling, which cost a lot of money
make some payments on a house you wont use, lot of money
and sell it in a couple of months(if you can, lmfao)
then it can be a quick buck, but for the average joe, BAD INVESTMENT
just for the maintanence alone is a $h!tload
then the morgage and montly payments, hell no.
i'd rather pay rent and use the extra money on other stuff instead of mortage

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