Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (115185)	6/9/2000 3:14:00 PM
From: chic_hearne	Read Replies (1) \| Respond to of 1571766

Re: You happened to live in a market that is not appreciating very fast. In places like Silicon Valley, SF, Detroit, Portland, OR......people are seeing their houses double and triple in value in a couple of years. For them housing has been a very lucrative investment. Ted, I don't believe you. Scumbria said there's no sign of inflation. chic

To: tejek who wrote (115185)	6/9/2000 3:41:00 PM
From: pgerassi	Read Replies (4) \| Respond to of 1571766

Dear Ted: OT I begun by looking at the statement that buying a home was only $100 than renting. I thought that he fell into the common traps of not including higher utility payments, property taxes (both included in some rents (well heat, garbage, sewer, and water in my area plus prop. tax)), maintenance costs (anything that breaks in a house you pay for, with renting they pay for), and special easements (read they upgrade the road in front of house, you pay extra taxes based on frontage). Since on a house of $100,000, prop taxes are $1000 (assume 10 mil due to your area (Rochester, MN)), $200 for water/sewer, $1200 in heat (gas), figure $1200 per year for mowing, painting, etc., figure durables at another $600 per year (assume fairly new house, older ones cost more), and summing it up is $4200 per year in "extras". That is $350 per month. At a real difference of $450 per month, it does not begin to look as good. Now you look at the "savings", $7200 per year or $600/mo in interest pretax is about $432/mo post tax. Add another $24 a month for property taxes (in Wisconsin, there is a formula to figure a percentage of property taxes in rent and that kind of removes the advantage somewhat). Thus you "save" only $192 per month. $450 minus $192 is a net loss per month of $258 a month. $258 per month invested in a simple stock fund and assuming 10% increase per year (a typical standard used) for 5 years (60 months) yields about $17000. This does not include what your downpayment would bring similarly invested. Assuming $10,000, you would get $17000. After all the conservative calcs favoring buying a home, the house accumulates about $26,000 (10,000 down, 1.02^5 * 100,000 + 6000) and the investment about 34,000. The investor gets about $8,000 more. If you subtract the up front costs of the loan (1%-2% in points, the commissions paid to the agent, etc), you would lose an additional $3000 minimum. $11,000 for taking less risk? I still think that in most of the country, the homeowner loses. The base causes are that the system is set up to "nickle and dime" the homeowner to death. If the country really wants to promote home ownership, they should abolish property taxes and the standard "user" fees. Pete PS: Oh, I forgot insurance costs (the bank really forces you into "home" insurance (read pricy)).