.

[4theCYcle]

I agree. Do what you want. Sounds like a fairly cheap house. If you would have been renting this whole time like most people right out of school, you would have "lost" a similar amount of money towards apartment payments.

A home is a place to live. Not an investment.

I disagree. When purchasing many factors should be considered. I won't go into them; however, the more research you do instead of emotion buying, the better off in the long run. Some risks are involved, but a person can still make a wise decision when buying in order to save themselves hassle and money for other things to spend on.

If a person purchases a starter home and has the ability to put sweat equity into their home, then collecting rent while living there they can make it an investment to allow for growth/purchase of a bigger home later on.

 

[mcblogerson]

I agree. Do what you want. Sounds like a fairly cheap house. If you would have been renting this whole time like most people right out of school, you would have "lost" a similar amount of money towards apartment payments.

A home is a place to live. Not an investment.

Unless you turn that house into a rental for 3 years. Then your house becomes an investment property and you can file the loss on your taxes. You'd get back a significant portion of that 25k, be able to depreciate the propertys taxable value and expense all kinds of "rental property" items for your new house. ...so I've heard from a guy I know who's done this twice in the last 10 years.

 

[cycloneworld]

The $25k is a sunk cost and shouldn't be considered at all. The things that should be considered are current/ future finances and current/future home.

But it might be a recoverable cost cost if he waits and the market improves.

Using your logic, if I buy stocks...the purchase price is a sunk cost and shouldn't be considered at all when I sell it. That doesn't make much sense.

 

[SCNCY]

But it might be a recoverable cost cost if he waits and the market improves.

Using your logic, if I buy stocks...the purchase price is a sunk cost and shouldn't be considered at all when I sell it. That doesn't make much sense.

When it comes to stocks, if you can make a better return somewhere else, then you should sell and go.

 

[ArgentCy]

That is an interesting debate. IT really is never a good idea to hold on to an investment with the "hope" that the value comes back. Real estate is a little different as it is not liquid and a place for you to live. Probably just depends on the individuals specific situation.

 

[Rather]

But it might be a recoverable cost cost if he waits and the market improves.

Using your logic, if I buy stocks...the purchase price is a sunk cost and shouldn't be considered at all when I sell it. That doesn't make much sense.

Sure it does. This is a fundamental principal of microeconomics. You should sell a stock and buy a different one to buy one of better future value if you see one. The price of a stock at any time in the past is irrelevant.

http://www.lifehack.org/articles/communication/how-the-sunk-cost-fallacy-makes-you-act-stupid.html

In this case, his home is not just an investment, but the concept holds. All that matters is current factors: current home value, current value of desired home, projected future value of home, current vs future interest rates, etc. The home losing value is a factor in his current situation, but he should not make his decision based on unrecoverable costs.

 

[ISUME]

When you put the upgrades in did you plan on them paying for themselves or did you want the upgraded feature?

Do you really think you will stay in the next house longer than 5 years or is it just another step to a bigger house?

 

[Cyclonepride]

The way I look at it, if you are buying within the same market, you are both buying and selling under similar market conditions, so in most cases it will be a wash if you aren't too antsy on either end.

 

[cycloneworld]

Sure it does. This is a fundamental principal of microeconomics. You should sell a stock and buy a different one to buy one of better future value if you see one. The price of a stock at any time in the past is irrelevant.

http://www.lifehack.org/articles/communication/how-the-sunk-cost-fallacy-makes-you-act-stupid.html

In this case, his home is not just an investment, but the concept holds. All that matters is current factors: current home value, current value of desired home, projected future value of home, current vs future interest rates, etc. The home losing value is a factor in his current situation, but he should not make his decision based on unrecoverable costs.

But his new house won't see any higher projected value than the current one. So he's not really selling his current house in order to put money towards his new one because it will appreciate more. Since he is buying in the same market, I would assume his new house wouldn't be a big asset improvement over his current one (ie. it won't make him more money than the current house).

 

[roundball]

But his new house won't see any higher projected value than the current one. So he's not really selling his current house in order to put money towards his new one because it will appreciate more. Since he is buying in the same market, I would assume his new house wouldn't be a big asset improvement over his current one (ie. it won't make him more money than the current house).

A) different properties appreciate/depreciate differently, even within the same market or even the same block

B) there are several factors impacting the overall cost of owning a house other than the purchase price

C) none of that changes the fact that Rather is correct; what mtown paid for his house in 2007 is a sunk cost and doesn't matter...what he still owes does, but that's not the same thing at all

 

[roundball]

I agree. Do what you want. Sounds like a fairly cheap house. If you would have been renting this whole time like most people right out of school, you would have "lost" a similar amount of money towards apartment payments.

A home is a place to live. Not an investment.

A) A home can be an investment, but too many people treating it as such is one of the things that lead to the housing crisis we're still crawling out of. A lot of greedy people bought/built more house than they needed expecting the value to just rise and rise and rise, and the next thing you know, the bubble burst and a boatload of people are underwater on their mortgages. We'll learn someday. Maybe.

B) As someone who spent over a decade as a renter, I find it hard to be sympathetic towards people whose homes "lost" a few thousand dollars in value...I don't even want to think about the tens of thousands that I "lost" in rent payments that built exactly zero equity.