It is currently Tue May 22, 2012 4:45 pm




   Post new topic Reply to topic      [ 4 posts ]  Bookmark and Share Oldest Best Reply
Author Message
  A Home Is a Lousy Investment [#permalink]
New postPosted: Sat Jul 16, 2011 10:06 pm 
Offline
Founder
Founder
User avatar

Affiliations: UA1K, SPG & HH Gold
Joined: Wed Dec 04, 2002
Posts: 10350
Location: United States (WA)
GMAT 1: 750 Q49 V42
GPA: 3.5
WE: Information Technology (Hospitality and Tourism)
Followers: 723

Kudos (?): 2491 (2), given: 2628

GMAT ToolKit User GMAT Tests User
Interesting article in this week's WSJ: A home is a lousy investment (doubt many are homeowners here) but nevertheless...

http://online.wsj.com/article/SB1000142 ... re_twitter

_________________
Founder of GMAT Club - Please Review us!
Just starting out with GMAT? Start here... | Want to know your GMAT Score? Try GMAT Score Estimator
Need GMAT Book Recommendations? Best GMAT Books


What are GMAT Club Tests?
25 extra-hard Quant Tests


GMAT Course Reviews | Test Center Reviews | Admissions Consultant Reviews

Facebook TwitterGoogle+LinkedIn

GMAT Club New Features

[May 22] New Update on GMAT Club 2.0 Released!

New Features and Content Coming to GMAT Club on June 5th! See what they are....

 



  Profile  
 
  Re: A Home Is a Lousy Investment [#permalink]
New postPosted: Thu Sep 29, 2011 4:57 am 
Offline
Manager
Manager

Status: Getting ready for the GMAT
Joined: Sat May 01, 2010
Posts: 54
Location: United States (NJ)
Concentration: Strategy, Operations
GMAT 1: 530 Q30 V34
GPA: 3.26
WE: Supply Chain Management (Pharmaceuticals and Biotech)
Followers: 0

Kudos (?): 8 (0), given: 11

Very interesting article bb.


  Profile  
 
  Re: A Home Is a Lousy Investment [#permalink]
New postPosted: Fri Sep 30, 2011 8:41 am 
Offline
Intern
Intern
User avatar

Joined: Fri Sep 30, 2011
Posts: 3
Concentration: Strategy
GRE 1: 1390 Q620 V770
WE: Engineering (Manufacturing)
Followers: 0

Kudos (?): 5 (0), given: 3

Interesting little article, but keep in mind that this comparison really only holds up if you are buying a second home, imo. If you're buying your primary residence, then there is no comparison, as you will stop having to pay rent, and that translates to a huge analogous gain. The article states,
Quote:
So a dollar used to purchase a median-price, single-family California home in 1980 would have grown to $5.63 in 2007, and to $2.98 in 2010. The same dollar invested in the Dow Jones Industrial Index would have been worth $14.41 in 2007, and $11.49 in 2010.
What isn't stated is that the same dollar, spent on renting your apartment in 1980 is worth $0 in 2007 and 2010, and wasn't available to be put into the Dow anyway.

Just wanted to point this out because I've seen other discussions where people don't realize that a primary residence is still a great 'investment', compared to renting!


  Profile  
 
  Re: A Home Is a Lousy Investment [#permalink]
New postPosted: Sun Oct 02, 2011 10:59 pm 
Offline
Intern
Intern

Joined: Sat Aug 27, 2011
Posts: 42
Location: United States (CA)
Schools: Cornell (Johnson) - Class of 2013
GMAT 1: 730 Q49 V41
WE: Engineering (Computer Software)
Followers: 1

Kudos (?): 12 (0), given: 6

Interesting observation by my co-worker:
there's a securitized form of almost all investments.


If you're staying at a place medium term or longer, renting can be compared apples to apples with buying.
The amount of rent is equivalent to a mortgage (plus taxes, association fees, maint., etc) on a depreciating property. The portion of your payment that would have counted toward equity is paid to the landlord instead. (Same point Hammbo made.) This comparison assumes a low down payment but with FHA and even conventional mortgages today, down payments can be very low (<5%).

I've seen some sites index the cost of buying vs cost of renting by city/region. The devil is probably in this detail.


  Profile  
 
Online
gmatclubot
Display posts from previous:  Sort by  

Post new topic Reply to topic  [ 4 posts ] 

 Similar topics   Author   Replies   Views   Last post 
homes

in GMAT Math Questions and Intellectual Discussions

ritula

2

344

Mon Feb 09, 2009 12:11 am

investment

in GMAT Math Questions and Intellectual Discussions

ong

11

312

Sat Aug 05, 2006 8:09 am

investment

in GMAT Math Questions and Intellectual Discussions

puma

3

366

Fri Apr 18, 2008 8:58 am

Investments

in Verbal GMAT Questions

Nihit

5

431

Tue Sep 02, 2008 5:00 am





Who is online

Users browsing this forum: No registered users and 0 guests


Search for:
Jump to:





[ Mobile Version ] GMAT Club MBA Forum Home | About | Privacy Policy | Terms and Conditions | GMAT Club Rules | Contact | Sitemap
Powered by phpBB © phpBB Group and phpBB SEO
Kindly note that GMAT (C) is a registered trademark of the Graduate Management Admission Council, and this site has neither been reviewed nor endorsed by GMAC.