Here’s my answer to that question just asked on Quora
Owning your house is the biggest and best benefit. It means you can paint the bathroom whatever color you want, remodel the kitchen, plant what you want in the yard, and on and on…all for your personal comfort and enjoyment.
If you have a mortgage, the interest you are paying is tax deductible (and for about the first 15 years of a typical 30-year mortgage your payment is more than half interest if you don’t pay taxes and insurance from the same payment. And the property taxes are probably deductible whether you paid with your mortgage payment or separately. No part of rent payments are deductible.
Besides that, owning a home has been a good investment over a long period of time. Yes, there are times when the value of a home may go down, but you only “lose money” if you see during one of those times. In 1950 the median (half were more, half were less) home price in the U.S. was $7,354. By 2000 it was $119,600 and today is $236,400. But be careful here, that 1950 house was less than 1,000 square feet with two bedrooms and one bath. Today it’s just short of 2,500 square feet and the majority have at least four bedrooms and three baths.
Nevertheless, buying a home (and living in it) has almost always been a good investment. One way to lose money on a house is to sell it one or two years after you buy it. If you’re likely to live there for at least two years, my advice is rent.
Here’s answer I wrote recently to that question on Quora:
I’d guess flipping shows the greatest short-term potential, but as with most investments return is related to risk, and there is certainly risk in flipping. For example, what if in the remodel process you discover something not in your original estimate? What if the market turns between the time you buy and finish the remodel? What if the adjacent property is bought for something undesirable – pig farm, shopping center, fast-food restaurant, 10-story condo or apartment
Buying something to rent is lower risk but you need to be in it for the long haul. Investors I’ve worked with look at it for a minimum five year project and, depending on cash flow and their financial situation probably longer. The biggest single advantage to buying investment property is in the depreciation, but that’s not of as much value if you don’t have other income on which it can offset your tax bill. Cash flow depends as lot on how tight the rental market is. Portland right now is super-tight, but the City of Portland also prevents no-cause evictions and/or rent increases of more than 10%/yr without paying relocation costs to the tenant which range from $2900 (1-BR or SRO) to $4500 (3-BR or more). This does not apply to Portland area properties outside the Portland city limits
If you’d like the same patient, professional help I’ve given other real estate investors, please contact me.
We continue to buy ever larger homes, now average 2700 SqFt (up 1,000 from 1973). 41% of renters wish they’d bought. Full details here.
I just learned of a new down payment match offer from Guild Mortgage, the largest local mortgage lender in the NW. It’s really simple: you put up 1% of the purchase price of a home and Guild makes a grant of 2% so you qualify for a conventional 3% down payment mortgage. Yes, you just tripled your money. You can buy a $350,000 home with only $3,500 of your money down (plus closing costs). You could buy a nice $100,000 condo with $1,000 down. There’s even more good news in the fine print in the detail flyer my preferred lender, Kelly Parkman at Guild, gave me today
And here’s a short video of Kelly himself explaining it. We’ve worked together for five years and I’ve never seen him so excited.
Contact Kelly at 503/528-9800 or KParkman@GuildMortgage.net or contact me and I’ll help, too
This may not be a surprise to a lot of Portlanders, but our city has been included in a list of the top ten “next tech havens“
So you ask, “What does that have to do with real estate?”
With new jobs comes new population – people who don’t live here today. And those people buy things – groceries, cars, insurance, medical, accounting AND homes. Some will rent, of course, but the gap between the cost of renting and buying in Portland has grown pretty wide, so most will buy a home.
That adds to the number of home buyers, which already far outstrips the number of homes for sale, and keeps the upward pressure on home prices. Last month I listed a very nice condo in Tigard and had ten offers (all over list) in the first week. Maybe not ten, but for nice homes, multiple offers is the rule.
If you’re one of the nine buyers who didn’t get this one, that’s hard and I feel for you.
Of course none of us wants to live where jobs are disappearing (and home prices are going down). If you’re a buyer and your first thought is “Yes I would.”, while that does put you in an easier buying position, you wind up buying a major asset that’s worth less tomorrow than today. I’ve been in real estate in that kind of market and it’s not easy for buyers, sellers, or Realtors.
Today’s market in Portland is difficult but not impossible for buyers, and at least you’re buying a major asset that’s likely to be worth more tomorrow than today.
|A 2016 study from Josh Lehner (Oregon Office of Economic Analysis) illustrates Oregon is currently underbuilt by 24,000 units. In other words, we need to build 24,000 units just to equalize the supply/demand curve. Until we reach a period of hypersupply, Oregonians will continue to feel the pinch of the real estate supply/demand curve https://www.oregon.gov/das/OEA/Pages/forecastecorev.aspx|
Not necessarily the best for quick return (important if you're selling in the next year or so), but the best value in the long term. HouseLogic's "8 Most Financially Savvy Home Improvements are here
the question is how to do it so the value holds up for the long run.
Here's HouseLogic's list of the seven "Kitchen Remodeling Decisions You'll never regret"
The $20,000 figure is from the 2016 "Cost vs. Value" report* that shows costs in Portland for 27 popular remodels . It's for a "minor" kitchen remodel, (a "major" is $61,927 and an "upscale" $122,359). It also estimates how much each project will return in short-term sale price. The "minor" kitchen remodel will increase your short term sale price by $23,197 – 11% over your cost, so a pretty good investment. The "major" adds $48,371 and the "upscale" $87,667, but neither returns more than their cost. Still, if you're going to live in the house for many years, there's no dollar value on the enjoyment you'll get from the new kitchen. The report has figures on 26 other remodels. Want a copy? Let me know and it's on its way.
If prospective buyers could spend a week in a house they're thinking about buying, it would give them a good feel for the neighborhood, including how noisy (or quiet). Now there's a tool that can help with that. Enter the address at HowLoud and you'll get a SoundScore – a 50 to 100 rating (higher is quieter) on the ambient noise level. While it won't tell you about the neighbor who leaves for work at 5:00 AM on his Harley, it will give you a look into noise produced by trains, airplanes, traffic, commercial sites and the like. If this "takes off" it will become similar to a WalkScore as one independent tool to evaluate a neighborhood.
Oregon property taxes can by confusing. Especially due dates and how they are prorated when you buy or sell. Click Here for a simple chart from our friends at Ticor Title