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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: microhoogle! who wrote (27963)	3/10/2005 10:24:44 AM
From: Tradelite	Read Replies (1) \| Respond to of 306849

re your question about why pay the "huge interest upfront for 7 years"....... Well, one reason might be that the homeowner is in a high tax bracket and will benefit greatly from the mortgage interest deduction. I live in an area where people are well-paid in good jobs, so owning a home, even if only for 7 years, usually adds to, rather than subtracts from, their bottom line when they sell. We also have had fairly steady price appreciation here for many years, so it's usually possible to turn a profit when a house is sold. Actually, it has been estimated that houses turn over in the Washington, DC, area every 5 years. Like anything else, it's just a number and doesn't apply to everyone.

To: microhoogle! who wrote (27963)	3/10/2005 12:22:20 PM
From: GraceZ	Read Replies (2) \| Respond to of 306849

What is interesting about that 7 year average is that I've known people who have done exactly that and made a tremendous amount of cap gains moving every seven, moving up to nicer and nicer houses and others who continually lost money until they were forced to rent dumps. What I do know is that people who buy at the low end of the cycle, stay in one house for years and years can beat renting. One of my tenants who wanted to buy my rental way back when would be seriously ahead right now if she had done that. As it stands now she is about a year away from not being able to afford to rent my house due to the fact that her income is fixed (she is retired) but rents are subject to inflation. This is happening even though we've had below average inflation in rents for the ten years she's lived in the property and I've been slow to raise her rent. She will need subsidized housing for the rest of her life as opposed to being able to cashout with 150k. If she owned the property at the time she wanted to buy it (I offered to help her get financing and she backed out) she'd have lower expenses than she has now and she could afford to live in the property for the rest of her life. It's a three bedroom and she could have rented out the two other rooms for more than the entire mortgage payment. Instead she's one step away from the poor house.