Home ownership: The cornerstone to wealth?

[ENP]

If you are in your early 20's and home ownership is an option for you, would you take it?

I see it as a good option, buying a 3 bedroom home, getting flatmates in to help pay the rent, etc.

Anyone older who has their own home regret buying it in their early 20's and wished they built up a bigger investment portfolio instead?

 

[Billyb]

Re: Home ownership. The cornerstone to wealth?

If you are in your early 20's and home ownership is an option for you, would you take it?

I see it as a good option, buying a 3 bedroom home, getting flatmates in to help pay the rent, etc.

Anyone older who has their own home regret buying it in their early 20's and wished they built up a bigger investment portfolio instead?

Depends on the future property market. Today's younger generation certainly wont see the gains in property prices that their parents saw. As such, buying a home now probably wont give the returns it used to. Personally, the advantage of buying a home is now should have more emphasis on lifestyle reasons as well as financial reasons.

 

[tech/a]

Re: Home ownership. The cornerstone to wealth?

I think in your lifetime you'll see at least 2 booms.
You dont HAVE TOO have a home to build wealth.
But if you dont you'd better have your money working for you---IE a business

Banks love equity in assets and serviceability---look at increasing both.

 

[medicowallet]

Re: Home ownership. The cornerstone to wealth?

imo there is something to be said about owning your own property. The security and peace of mind you get are worth the opportunity cost (if any).

If your question is about investment properties, there is no blanket answer, but I think property is good for people who are not tolerant of actually seeing volatility (ie property is volatile, you just don't notice it)

As for the future. I believe we are in a bubble, how the fundamentals catch up is a guestimation from anyone.

 

[sails]

But then don't partner and have kids with someone who doesn't work.

 

[howardbandy]

Greetings all --

Investing is buying something, then writing it into your will. You are highly confident that you will never sell it in your lifetime. Buy and die.

Everything else is either a trade or an expense.

Liquidity is one of the most important aspects of any trade. The commission cost and bid-ask spread are also very important.

Houses score poorly on all three -- they are illiquid, have high commission costs, and big bid-ask spreads. The price of houses does not always go up, particularly for any given time period.

In the US, ownership of homes / houses is preventing people from moving from locations where jobs are scarce to locations where jobs exist. Reports indicate that 25 percent or so of houses in the US cannot be sold unless the own makes a substantial payment to cover the drop in value and closing costs.

From all appearances, Australia's housing bubble is at least as large as the one in the US, but it has not yet burst.

Thanks for listening,
Howard

 

[sails]

But then don't partner and have kids with someone who doesn't work.

that was supposed to have "and then split up" at the end of it.

I got interrupted with a phone call and pressed "submit" by mistake...

 

[nukz]

I wouldn't say home ownership is the cornerstone of wealth but i suspect if you have to buy property i would look at agricultural land... I think that will be a good bet(but i should say i'm not in this or property now, i only suggest this if its a must)... China/India has to eat and when they start on a nationwide basis consuming western food there will be great demand for farmland...

That said this all depends on how severe the real estate correction will be.. like all markets correction happen(sometimes the government intervenes with grants) but eventually things catch up... much like the situation in the US right now.

 

[Julia]

Re: Home ownership. The cornerstone to wealth?

imo there is something to be said about owning your own property. The security and peace of mind you get are worth the opportunity cost (if any).

Agree. This is the factor that divorces purchase of one's own home to live in from other investments. I don't care whether the value of my property goes up or down. I simply love living here, in the sense of liking the well designed house, the garden I've created over many years, and the sense of community in the immediate neighbourhood. You just can't put a dollar figure on this.

I'm very hard headed about other investments, but take a totally different view about the home I live in.

 

[skc]

Home ownership is many things to many people, but I doubt it is not necessarily the cornerstone to wealth.

The only avenue you can build wealth with your home is when the property value goes up. You can get the same benefits with investment property + added benefits effect of tax deductions.

Read up about negative equity in US, Japan and other countries and get a perspective on the risks of property/home.

And Howard made some very valid points as well...

 

[nukz]

Re: Home ownership. The cornerstone to wealth?

Agree. This is the factor that divorces purchase of one's own home to live in from other investments. I don't care whether the value of my property goes up or down. I simply love living here, in the sense of liking the well designed house, the garden I've created over many years, and the sense of community in the immediate neighbourhood. You just can't put a dollar figure on this.

I'm very hard headed about other investments, but take a totally different view about the home I live in.

This is very true, this is partly the reason people ask how many property's in the street are owner occupied when buying... you dont want to live in a street full of rentals.

I think we can't rule out the debt card as well, since indebtedness is at a all time high, do people today enjoy living in there own home as much as there parents who were much less leveraged when they purchased?

I've owned and lived in places before i tell you its great fun when you have lots of money... but if you loose your job and are leveraged to the hilt then the dream can turn to a nightmare fast lol