So I kind of lost sight of where this post started. My two cents would be as follows. The two homeowners here who bought in 1999 obviously have done well. The facts seem obvious right? They purchased the home before the big runup, the median price to median income was reasonable, and to summarize they bought the homes to live in. So while there was a real estate depreciation cycle in their rear view mirror, the risk of another one at the time they bought was remote. I doubt that in their wildest dreams they anticipated the appreciation they got. Thus I don’t believe they purchased the homes as investment vehicles. They purchased them to raise a family in, and live in. Everything else was gravy.
Now the person who bought in 05 is the antithesis. He purchased at the top of the market. In short, he could not have bought at a worse time if he tried to. He MAY indeed have purchased for the same reasons that the other two homeowners did, but that doesn’t matter. It is clear he bought something he could not afford and is now suffering because of that.
I guess my point is that I really do not believe that the argument about investing instead of buying is noteworthy. You buy a home to live in it. You buy a home ONLY if you could afford it because if you cannot, eventually you will lose it. The most successful people I know didn’t forego buying a home because they felt they needed to invest in the stock market. They have their home, and they have their investment money and they are seperate.
While many people inadvertently made hundreds of thousands in housing because of the timing of when they bought and sold, I believe the vast majority of them simply caught the tide at the right time. This post is not advocating buying a home now. It is advocating that you should only buy a home you can afford, and you should buy a home because you love the home. Finally the timing of when you buy the home WILL have tremendous impact on the performance of the home as an investment.
