Thursday, April 18, 2013

Housing as an investment? Yes, the idea that you come back

housing should be seen as an investment (well)? For the love of five years of foreclosures, bank failures, and congressional testimony, we learned nothing? Bobcats and coyotes, after all, taking over condemned home with antifreeze-green pool. It was quite Mad Max where I come from.Don not look now, but the sector bounced back, single-family home price rose to 88 percent of U.S. cities in the fourth quarter Overview "house as a nest-egg" is making a comeback. Latest national median price for existing single-family home is approximately $ 179,000, an increase of 10 percent from the previous year, which is the largest meeting since 2005, according to the National Association of Realtors.Still, Yale professor and home-price tracker Robert Shiller says housing remains be a bad investment in the long run. He calculates (PDF) real (after inflation) in the home-price appreciation from 1890 to 1990 around zero percent. "Housing," he told Bloomberg TV, "takes care of, depreciated, he goes out of style. All of these problems. And technical progress in the housing. . So before better "he continued," So why is considered an investment? It was a hobby. It is an idea taking hold in the early 2000s. And I do not expect to come back. Not with the same spirit of "The professor then compared the idea of ​​investing in real estate investment in the car:". Buying a car, camphor, and sold in 20 years. Definitely not a good idea because people do not want our car. It is the same in our house. So not really an investment vehicle. "People in the industry will not buy analysis. "The key to the analysis of real estate investment standpoint is to understand what gives the value of real estate," said Andrew Jeffery, a director of procurement for Cirios, San Francisco shops in residential property investment. "Shiller which deviated by comparing investments home investments in the car. The house, and all the real estate, has the potential to generate cash flow. Car no. Property value comes from what the market is providing some cash flow, which are based on various factors, from the type of property and location of tenant profiles. "He wrote the current homeowners and many candidates, only to see the house as asset prices appreciate and depreciate in market conditions, ignoring their main potential to waste money. Also, Jeffery says it's important for investors to understand how to take advantage of working in housing. Think about it: you put $ 110,000 to $ 540,000 homes. If the price jumps to $ 650,000 when you're ready to sell, you effectively use debt to double your initial investment. Of course, interest payments and income protection to eat, and too many people know the pain as more than their mortgage in their home is worth. However, the mortgage tax deduction to say that thanks to alleviate risks.Jeffery leverage, someone to buy a house and rent will come a leader who will put the same amount of money in the stock market, especially when the point of entry leases include maintenance expenses and help pay off the mortgage. Going by historical data, when the owners retired, the house should be worth more than what equity gains. Plus, he said, "Do you want to have your cash flow fixed-income assets to be removed." There is, of course, a holistic way of looking at housing: as an investment that will at least hold its value as inflation increases, and dividends, home office, kids children playing in the backyard, school bus at the corner, a large salary, but nonfinancially.

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