Posted on 06/28/2010 7:07:58 AM PDT by Gordon Pym
After a very long search I have been offered a job in southern CT. I'm nowin the process of finding a place to live down there but I am arguing with members of my family about the merits of buying a large house from a distressed buyer at a discount price (more than we need but they argue "a good investment") or a smaller house for very short money perhaps even for cash to reduce housing cost as much as possible.
The argument seems to come down to the following:
a large house will sell for more than a small one 10 years down the road so the difference between purchase and sale prices will be much more so it will be a better investment.
A small house will reduce costs the most so it will be the most prudent use of money. The additional money that would be tied up in the big house could be put into another tax deferred investment and would be more accessable should it be needed in the future. Housing is a cost not an investment.
I keep hitting a wall of stories of people who bought a house forty years ago and sold for five times what they paid. My contention is that when the high property taxes are factored in any gains would be offset But that doesn't seem to have an effect and I aam out of ideas
Help.
I’d go short and find a home that I love with potential down the road per location. You will find some great deals. Good luck!
Those days are gone forever; lessons learned both economically and by politicians. Go small.
I think you are near a bottom in the housing market. An investment in real estate may prove to be a good investment.
However, your holdings should be diversified. You should get the smaller house, if the maintencace of the larger house will result in your not being able to save - i.e., diversify your investments.
Be sure to factor in larger taxes, maintenance and utilities for ten years into your math.
Good luck with the new job. As for the home purchase situation, since you are going to CT, I’d recommend renting for at least 6 months to get the lay of the real estate situation there. Property taxes are exorbitant, according to friends of mine who escaped CT to VA last year.
Further, I don’t know what city you’re going to, but extra care should be given to whether the property you buy is even remotely being considered for an eminent domain taking. As we all learned from the Kelo decision, your property is fair game for the locals.
Agreed. I am amazed at some people on FR including military types. The world changed in 2008. We may never see America circa 2007 and earlier again. People are talking about the F-22 and F-35 like it matters anymore. I guess they just live in TV dreamland. Keep paying for cable and sat TV because that money and your viewership support your slavery.
CT has $80 billion in unfunded liabilities (cushy pensions/benefits for state workers) and 3.5 million residents. Who is going to pay for that?
1. you left out cost of energy for a big house
2. more purchasers in future for small house than large house
3. why not look for rental house for short term?
4. IMHO, short term house prices down another 25%, then inflation like 70s will be used to resolve debt crisis.
Your statement assumes a real recovery. Even if the kenyan is defeated in 2012, it'll take awhile for the economy to recover, and that's assuming the GOP has the guts to repeal Obamanomics. From a neophite real estate owner from CT: Many of those Mcmansions built 5 years ago are now selling at 1/2 their initial price and the owners still can't unload them. Don't forget the property taxes. IMHO, purchace a well built starter home. They don't cost as much, taxes are lower and they'll always be a market for them.
Let me just ask one question.
Do you like working on and around your house ?
The bigger the house/property , the more work / cost to maintain it. For example , I just spent the WEEKEND trimming bushes around my home. Bigger houses also cost more to heat/cool , paint, roof, mow the lawn(I have a $3500 riding mower, a $350 chain saw, a $300 hedge trimmer, a $300 string trimmer, a $300 walk behind mower, two snow blowers, plus rakes, shovels,ladders, etc.)
Therefore, if you would rather play golf or go to your boat,go skiing in the winter, etc. Buy a smaller house.
The baby boom is over. This is particularly important in a high tax state that is a net looser in population. As they loose more taxpayers where will the get the money to keep services equal? If you feel that real estate is horribly undervalued, then proceed as stated; buy big, sell big. If real estate is not done adjusting down, then it would be best to wait. Note, new home sales were down 33% last month. This was caused by the tax credit for home buyers ending. My suggestion, given that 33% drop, would be to wait another 6 to 9 months before you buy anything. The subsidized home market ended 2 months ago, what does the un-subsidize housing market look like? We don’t know. Adopt a wait and see position, my recommendation.
The other thing I forgot to mention, I don’t know what business you’re in, but unless you work for the government, at some point you will almost certainly face a loss of income. Your taxes however will steadily go up. Another argument to go small.
People who talk about buying a home as an “investment” are stuck in the past, days that may never come back- and these are mostly the same people who voted for CHANGE- ha
Who IS going to be living in CT ten years from now and what are their incomes going to be and how will they be earning them? Demographics and marxist economics suggest a lot of wealthy corporate CT homeowners who are either boomers or moving into boomer years won't be around in 10 years, commuting to Wall Street from manicured tract mansions in CT.
And a lot more may be defaulting on their mortgages in the next 3 years when the tax-loving democrats get their hands on their bonuses, salaries, and 401K’s
The real estate market hasn't bottomed out yet- think 1990 prices or lower as a “good deal”
I'd be verry conservative and go with a smaller but quality home in the best school district and safest town you can afford- something you can rent out if you ever have to
We live in a townhome and pay $50/month for yard and common area maintenance, and it includes a pool. The enjoyment of yard work is way over-rated.
location, location, location. Buy the home that offers the best value for the price, and whichever one you can most comfortably afford. Do schools play a role in your decision? Also take into account, neighborhood stability and the amenities in proximity. I would check out the shopping areas and parks/recreation areas near both houses, and assess the clientele as well.
I live in a State much like CT (NY).
My house is not an investment. It is a joint-venture with the Gov’t.
We have very high property and school taxes. We have little price appreciation over the last 10 years. Upstate NY is losing people steadily as there are few new jobs in the area. Add in maintenence and repairs, and its a money-loser.
You guys replying to the right FReeper?
I’m for the smaller house.
With lots of land. ;-)
It'll workout fine, don't listen to the naysayers.
Disclaimer:This comment is based on my guess that you probably won't listen to any of the other good advice given anyway.
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