The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Tradelite who wrote (518)	8/29/2001 3:54:59 PM
From: J. P.	Read Replies (2) of 306849

Knew you were gonna come back with that.... Well, rents back in the late 1970's and 1980's were probably much below 1000 bucks a month for a house. If you took the marginal dollar and bought GE or bonds or Cisco, or Microsoft, or Dell, or the SP 500 fund or an annuity with the excess money would you have more today than you do with the house? Don't know, because that's the opportunity cost, you decided to buy a house with the money. Plus, you can't spend any of the money unless you sell the house. In addition, if you have a 30 year mortgage you still have to keep on shelling out the 1700 bucks to pay the principle and juice on a 180K loan for 7 more years... So basically over 23 years you've kept your principle and made a theoretical profit of 300k on 500K and got a decent place to live to boot, a nice profit but you can't make the blanket statement that it was the absolute best use of the marginal dollar (but it was a good one). I think you've done real well, but just want to point out that there are other perspectives on this.

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