What Age Should You Buy By?

[Anonymous]

Anonymous wrote:The property ladder is a trap. You just get bigger houses bigger mortgages, never get it paid off.
Buy a house where you want to live. Don't trade up to a huge place with a crappy commute.

That's not necessarily true. Eg buy house for 500k (at 6% interest rate) with 10% down. appreciated to 800k after 10 years. assume inflation rate was 3%, and real appreciation rate on house was basically zero. After 10 year period, the balance on loan would be 376k. Equity net of sale costs would be 250k. So now i can turn around and buy a 900k house using equity from previous house and borrow 650k, which is a 464k loan adjusted for inflation. The person can buy a new house that is almost 30% more expense after inflation adjustment with a similar mortgage balance as their first house they bought.

[Anonymous]

What I love about my townhouse is 1)slow appreciation, which means slow increase in property tax, 2)low home insurance, 3)fixed P+I, 4)little maintenance since it’s new. And when it appreciates, the leverage means I gain more than if I were to invest an equivalent amount in the market, and the first 500k of equity is tax free

[Anonymous]

Anonymous wrote:

Anonymous wrote:The property ladder is a trap. You just get bigger houses bigger mortgages, never get it paid off.
Buy a house where you want to live. Don't trade up to a huge place with a crappy commute.

That's not necessarily true. Eg buy house for 500k (at 6% interest rate) with 10% down. appreciated to 800k after 10 years. assume inflation rate was 3%, and real appreciation rate on house was basically zero. After 10 year period, the balance on loan would be 376k. Equity net of sale costs would be 250k. So now i can turn around and buy a 900k house using equity from previous house and borrow 650k, which is a 464k loan adjusted for inflation. The person can buy a new house that is almost 30% more expense after inflation adjustment with a similar mortgage balance as their first house they bought.

Yeah, but all the other houses have also appreciated at similar rates, including what you want to turn around and buy. I'm team buy-a-house-if-it-works-for-you, and it's very much worked for me so far. I just traded up from my starter house after seven years, having doubled my down payment thanks to appreciation. But it's not the only sane choice and it does have drawbacks.