Ah, real estate.
I don't remember all my conclusions from "running the numbers" but do recall irritation at people who urge others to "stop throwing money down that hole called rent" without mentioning "and start throwing money down that hole called interest" -- especially given that wacky "you pay off [future] interest first" -- I mean, wtf?
So maybe the moslems have it right with the injunctions against usury and interest in general. On the other hand--and I think this is an important point--cultures that do allow this kind of thing seem to thrive economically relative to ones that don't.
I think in the long run, the current systems works out well a majority of the time. There will always be the spectre of a neighborhood going down the tubes bringing the property values with it, but in general real estate holds value--not always in the current bubbley way we see now, but at a more sustainable level as an increasing population (who tends to like what population centers offer) lives in the same amount of space. Barring large scale catastrophe of course, but that would change the playing field all over the place.
I dunno about a church buying someone a house...though I would say the recepient might be incurring a debt of similar magnitude to a mortgage, but of a different color. Communities that tight-knit have their pros and cons.
As for family buying...well, there's something socially darwinistic (maybe not just socially!) about that that gives one pause. It's cool and all but doesn't neccesarily fit well with level playing field ideal. (On the other hand, I think in the long run I might benefit from a similar family trust, so I'm not one to bite the hand that may well feed me...)
Another thing to remember is, and maybe this is just one of those terrible media constructs and blahblahblah, but our standards in housing have increased. That house I bought with Mo, minus that lovely back "greatroom" and refurbished attic is more common for the mortgage-free world you're thinking of... 4 smallish rooms plus a bathroom.
30 years, or even 15, seems like superhuman long term thinking to me. And fact is a lot of people who change course with a different home before the mortgage is due up. At this point, I have no interest in real estate that won't be income producing, ideally something where I could rent part out and the difference between mortgage payment and incoming rent would be comparable to my rent now.
--Kirk Sun Apr 24 17:52:54 2005
EB,
That just floors me how expensive a condo is. Our new house (1950 sq ft) will be a little over $200k after it is done on 1/3 acre. I think that is a lot of money. Can't even imagine getting a condo for $495k ... it better come with its own massage therapist or something.
As far as real estate goes I think that the current system does have significant economic advantages. The only true rip off is the 7%+ that real estate agents gets (at least that is my experience). I am in the wrong business.
--Beau Sun Apr 24 22:48:49 2005
I wonder how much of the problem is the Boston-area syndrome where a condo costs that much. In a year, my girlfriend and I plan to move to Chicago where, in the suburbs at least, we've seen AMAZING listings of condos, probably comparable to the ones you listed, for around $200k. That's about half the price of the ones you listed. . .in the Boston area, right?
Also, from what I understand, in our country, we can claim interest on tax returns and get a bit of it back at the end of the year, so it's not that incredibly bad, and if you wanted, you could use it to pay off more of the mortgage.
I guess the way I see it: if I can pay just as much on a mortgage and maybe a little more paying for utilities while building equity, why not do it? Then I can use that equity for a possible future buy. It does help, though, to have someone going in on it with you and planning that mortgage on one income while getting two incomes while planning around both incomes and possibly only having one income for awhile.
I had this great talk with a guy at a bar once, and he just gave me these great tips to avoid having troubles with a mortgage, and he didn't even give me a business card or anything. He was just having a conversation and stuff. It was great.
As for the abstract or psychological side of things, yeah, I can kind of understand where you're coming from with pretty much handing your fate over to a financial institution, possible disaster, the difficulty of planning for that span of a time, etc. etc. Sadly, I fall back on the fact that life is ephemeral, good things happen, bad things happen, if I can change something "small" to get something out of it, why not do it (the equity instead of rent argument), but as I said above, that requires some good planning and trying to make it so mortgage payments are round about rent payments.
And hey. . .shit happens.
--Mr. Lex Mon Apr 25 09:28:34 2005
snaps to the comment on real estate agents getting their slice of the pie. i might consider paying someone $5-$8K to sell my home, but $30-$40K? puh-lease. what can they do that i can't? and i'd be a sight more honest about the house's problems, too!
yikes. i just don't trust re agents as far as i can throw 'em.
--FoSO Mon Apr 25 16:31:17 2005
From my own experience of dealing with much smaller annoying labors, I guess it wouldn't be a horrible ordeal to have a real estate agent doing the legwork of listing the home, marketing the home, sweet talking the potential buyer, probably haggling a deal, possibly cleaning up before a showing, etc. etc.
I guess my question is would I hire a designer or what have you, like on one of those shows on TLC, to recommend some changes to make before showing the home.
--Mr. Lex Mon Apr 25 18:23:48 2005
A good RE should be able to help a bit with recommendations.
I haven't seen those TLC shows much...you have to walk a fine line between making it look worlds better without too much expense, and over decorating so people have a harder time mapping their own lives and possessions onto the place.
"Buyers Brokers" are another whole ball of wax.
--Kirk Mon Apr 25 18:47:09 2005
Those redesign and refashion shows on TLC are strangely enjoyable.
--Mr. Lex Mon Apr 25 19:09:02 2005
Yeah. I kind of dig on the whole "queer eye" thing myself.
--Kirk Mon Apr 25 21:30:39 2005
Have you seen "What Not to Wear"? For some reason, that show, along with the girlfriend, has inspired me to get a haircut soon even though, in many ways, I have a hard time agreeing with their hardline attitude toward style. . .not always enough qualifiers in their presentation of the material makes it seem like they have a "dress nice all the time, even when lazing around the house, playing poker, etc. with the guys type of thing."
--Mr. Lex Tue Apr 26 09:27:36 2005