I agree. The American Dream is definitely to "own a home". But in reality its not necessarily a good investment. In theory all the money going into the house is "lost" not going into your retirement account and earning a higher rate of return.

Egghead wrote: I would advise anyone who can buy to do so, presuming they a) will be paying roughly the same as they do to rent, b) they are aware of the inevitable extra costs such as insurances and upkeep, and c) they plan to stay put indefinitely.

One thing a lot of people don't think about is the upkeep. If you can only afford to pay the bills, you might want to hold off. Things go wrong often when you own a home. You have to have the money to fix it when they do.

I would advise anyone who can buy to do so, presuming they a) will be paying roughly the same as they do to rent, b) they are aware of the inevitable extra costs such as insurances and upkeep, and c) they plan to stay put indefinitely.

I know owning a home is always better than renting, but should you not also worry about being in an area where many of the owners owe more than their house is worth ? Maybe when you make that low ball offer you make sure that at least the neighborhood that your ready to become a part of is at least holding their value and not on a financial decline.

No disrespect FG because I agree with your opinion 100%

None taken at all. This is certainly on most home-buyer's minds. "What will the future foreclosure rate be in this particular market?" How many homes are owned by the banks that haven't hit foreclosure yet? In some of the worst markets, there are a glut of foreclosed homes on the banks books, and are gradually being let into the market.

smcc - My sister lives in Huntington Beach CA suppose to be next to Newport Beach CA in valued homes and she has not said a word. However, I read state demographic numbers that say California has seen an "out-migration" as people seach for their next opportunity. To counter that... I also just read that while things have been slow... Silicon Valley is going to ride again!!! My sister and her spouse took off with three other couples RV-ing to Alaska from mid-May to mid-September (how do they afford it?). To add to this their house is worth at least four times what they paid for it. Where do the jobs come from to support $500K to $1M homes??? I

I wish my own home was worth 1X the amount I put into it! And I did not buy high at all, I bought a home several years ago that was valued at the lower 20% of pricing for square feet in my area (in Tallahasse, FL), a nice community and remodeled it wisely, thinking that I would make a profit.

Your sister is very very fortunate to be in this position. It a basic supply and demand concept in any market.

You know Wanderer, I want to go back to California but right now is just not the time. When I was there you could find a house you could afford but then the commute would be unbearable. Anything close to the East Bay, forget about it.

Now that the bottom has fell out, I could find a house, but how stable would my job be in California ? Being in IT you would think your job would be a strong point, but not there.

California is the first to feel the hardship and the last to recover from it. Hopefully things will turn around..................

smcc - My sister lives in Huntington Beach CA suppose to be next to Newport Beach CA in valued homes and she has not said a word. However, I read state demographic numbers that say California has seen an "out-migration" as people seach for their next opportunity. To counter that... I also just read that while things have been slow... Silicon Valley is going to ride again!!! My sister and her spouse took off with three other couples RV-ing to Alaska from mid-May to mid-September (how do they afford it?). To add to this their house is worth at least four times what they paid for it. Where do the jobs come from to support $500K to $1M homes??? I :moneybag:can't believe it.

You know Wanderer, I want to go back to California but right now is just not the time. When I was there you could find a house you could afford but then the commute would be unbearable. Anything close to the East Bay, forget about it.

Now that the bottom has fell out, I could find a house, but how stable would my job be in California ? Being in IT you would think your job would be a strong point, but not there.

California is the first to feel the hardship and the last to recover from it. Hopefully things will turn around..................

I know owning a home is always better than renting, but should you not also worry about being in an area where many of the owners owe more than their house is worth ? Maybe when you make that low ball offer you make sure that at least the neighborhood that your ready to become a part of is at least holding their value and not on a financial decline.

No disrespect FG because I agree with your opinion 100%

Good point. In Arizona whole areas are distressed and just because you bought it right may not be enough to sell because of the geographical area. As a point the states of Arizona, California and Nevada have the largest residential home problems. Add in an out-migration from California and you could have less people available to serve as buyers (this discussion for thought only). In answer, yes the area may be a problem due to over building, unfinished properties, a high foreclosure rate plus a declining assessed valuation. Not a good combination. In Minnesota (land of 10,000 lakes) lakeshore properties aren't selling due to lack of "qualified buyers" and just plain buyers. Remember, despite all this false happiness "hype" on great home owner rates, most people will have a hard time qualifying (note FHA was looking at 580 FICO Scores as a minimum with better rates at 680 to 720 and all this effects points and so on going in plus FHA was looking to cap the sellers ability to contirbute thus shifting it to the buyer so as to minimize FHA's risk since there fund is running short of money) all by year end 2010!!! I heard last week maybe one in five buyers would qualify. Don't lose site of job stability. You might have to relocate to work and eat... the ability to sell could be very important! In the rural United States the ability to sell has been a challenge due to the lack of jobs so the out-migration includes moving from rural to urban (this has been true for many years - you just didn't hear about it). WOW ... did I get on the roll. For myself moving every two to five years, I found it necessary to give up on buying houses as I couldn't break even or in some cases even sell the property on a timely basis. You really need to pay attention!

I know owning a home is always better than renting, but should you not also worry about being in an area where many of the owners owe more than their house is worth ? Maybe when you make that low ball offer you make sure that at least the neighborhood that your ready to become a part of is at least holding their value and not on a financial decline.

No disrespect FG because I agree with your opinion 100%

I agree with both Wanderer and CCE. Everyone has to have a place to live. With that said, take time shopping and comparing homes. Know the prices in your area, they are all different. Then once you found it, make a low-ball offer. Most sellers will at least counter unless the low-ball offer is really that low, or absurd. This is pricing in risk, and you shouldn't be embarrassed to do so. Most sellers in this market are happy to even get an offer. Especially if the home has been on the market for longer than 6 months.

Home ownership is certainly one of the most gratifying and rewarding experiences in life. This is where we raise the kids, find stability and build wealth, if done right.

Mortgage rates will eventually rise, the bottom is close, or already in. It will not go to 0% or even close to that.

Assuming that she is going to live in the new home for some time to come... I would recommend that if your friend is renting or leasing a place, and she is financiallly able and stable, to go with it. Nobody knows what's in store for us, but sometimes we have to make wise decisions based on today, not tomorrow. If she shops around and gets a good deal (there are many good deals out there) with the right rate, she should be in good shape.

Good thought... it is always scary to buy a house... you need to do a good job of buying and have faith. Unlike the 1970's when you could flip this house and double your income it is touch and go but, you own it and unless your job requires a lot of moving and relocating it certainly equals a long term investment. I moved twenty-three times since 1964 so I finally had to give up home ownership as even in good times two to five years does not genrally work on "flip this house"!

Home ownership is certainly one of the most gratifying and rewarding experiences in life. This is where we raise the kids, find stability and build wealth, if done right.

Mortgage rates will eventually rise, the bottom is close, or already in. It will not go to 0% or even close to that.

Assuming that she is going to live in the new home for some time to come... I would recommend that if your friend is renting or leasing a place, and she is financiallly able and stable, to go with it. Nobody knows what's in store for us, but sometimes we have to make wise decisions based on today, not tomorrow. If she shops around and gets a good deal (there are many good deals out there) with the right rate, she should be in good shape.

I just bumped into a long lost friend the other day and decided to talk over a cup of coffee. We catch up on our common friends and acquaintances and life in general. She later shared with me her dilemma on whether to she should take on a mortgage to get a house of her own.

I shared with her my thoughts that before making that big decision, she needs to evaluate whether homeownership is right for her. My take was that not all of us need a home. If she only needs to buy a home because she believes that having a home means being successful, she needs to step back and think hard about her decision.

Any other ideas out there?