the real estate market is scary.... just like a rollercoaster ;)

check it out -
youtube.com/watch

ps- what happens after a roller coaster goes up, up, up, UP UP UP? THAT'S the scary part for me...

David,

Actually, in you have a point. Home ownership is a liability, plain and simple. Of course, so is your rent payment. The big question is what is the cost-benefit of owning vs renting? Financially speaking, anywhere except SF and a few other localities where tenants rights are as strong as they are here, I'd say that owning is hands down the winner.

Even here, though, I'll tell you a story: a guy came into my office yesterday and was asking about buying into a starter home or condo. He'd just gotten paid $40k to move out of his apartment of 10+ years and he still could not afford to buy even a TIC that would be big enough for he and his wife and daughter. Its sad but true. I mentioned to him that the years of subsidized rent and that big payout at the end were a major factor in the fact that he was unable to afford to buy a home, and that if he'd bought a home when he got to SF 20 years ago, he might have got a $400k payout instead of just $40k. (I still believe he can do it mind you, but it'll be harder now than 20 years ago when he didn't have a 6year old to feed).

When you look at the numbers over the course of 10 years or more its still heavily in favor of owning. But, I think a dedication to a place and a purpose over a long time is the real gem of wisdom. Just moving whenever the wind blows in the name of "flexibility" is probably not the wisest financial plan for a owner or renter. Especially, in SF where renters are penalized so harshly when they move (or when they first move here) because their long time neighbor's rent is so heavily restricted.

I always advise my home buyer clients that they should only buy a home if 1) you want to live there and 2) if you can afford it. Not because its an investment. By the way it can be a better alternative to renting, but its a liability, not an investment. The worry about being able to leave their job and the house of cards is independent of owning or renting, it more has to do with lifestyle and financial choices than to do with owning or renting. (i.e. live within your means).

I'll also comment on the replies of Weazie and Emily's replies. It doesn't matter in the short run what an income property is worth. What matters is that the tenants pay the mortgage/expenses until its worth more than you bought it for. Everyone is always fixated on price when they should be more worried about cash-flow. If you always take care of the cash-flow, inflation will take care of the price. Nice work Weazie ;]

Mike

David's right that home ownership does cost in terms of flexibility, and for some that is very important. In addition to not being able to move, you can't do "crazy" things like quit your job and backpack around the world, if you worried about that monthly mortgage. (And not that I advocate such things, skipping town on a broken lease is a lot less costly.)

Lots of real-estate and bank web sites have "Rent versus Buy" calculators, so you can project how much over the long run each will cost (factoring in such things are rent versus mortgage, interest rate of the loan, tax bracket (mortgage interest is deductable, and at the beginning of your mortgage, that's almost all of what you are paying), etc.). And mortgage payments never increase, whereas rent always does, so over time, it becomes "cheaper" to own.

In my case, renting was comprable to mortgage payments, *and* they were deductible, so it was actually cheaper a yearly basis to buy. Again, the market is probably different now.