That is not what I think. An asset acquired for the purpose of producing income and/or capital gains is an investment.

“Buying land would also not be an investment in your eyes, since it actually consumes money for property taxes until it is sold or developed.”

Land can be an asset acquired for the purpose of producing income and/or capital gains.

“I put 20% of the purchase price down that I had previously invested in the stock market, so I’m going to call that 20% an investment.

You can call it your “little friend” for all I care; you are still wrong.

Buying land would also not be an investment in your eyes, since it actually consumes money for property taxes until it is sold or developed.

I don’t care what you call it. I put 20% of the purchase price down that I had previously invested in the stock market, so I’m going to call that 20% an investment.

And I think it is wrong to call it an investment at all, unless it is an income property. No accountant on this planet will call your primary residence an investment. It is not. It is an asset that has a historical inflation adjusted appreciation on par with my checking account.

No offense Eric, but you are not absorbing this very well, and you do not appear to be able to calculate the costs of ownership either. This is not unique to you, however, and I don’t mean to single you out. You just happen to be the guy talking when I was within earshot. ;)

I love hearing about the great tax “savings” that people get with that interest deduction. LOL! I want in on that card game: for every dollar you give me, I’ll give you 27-cents back… and you’ll think you are winning.

I don’t believe that “real estate always goes up” or that it is a surefire investment. There are times when it is better to hold hard assets like real estate, and their are times when it is better to hold cash and rent. It’s also true that larger condos (above 1,000 sq) have historically underperformed small condos, since the pool of buyers is smaller while the supply of large downtown condos is oddly larger. (This is even more true of the new buildings — 1521 2nd ave is all 1650sq and up).

I just think it’s misleading to say that condos are always a terrible investment. I wouldn’t buy for a year or two, but at that time I think condos will make a great investment.

Although I agree that the return shouldn’t be based on purchase price, basing it only on the down payment isn’t right, either. After all, he also had approx 44 months of payments, taxes and HOA dues (with payment interest and taxes partially offset by tax deductions). And there’s also lost opportunity cost from not investing the down payment and subsequent payments money in something else instead. The 206% return ignores all of that.

(I effectively lost money on a house I sold in Ohio in 2002 after 7+ years of ownership, and “is Seattle housing experiencing a price bubble” headlines appeared with some regularity after I arrived here in 2002, so I’m gunshy rather than anti-condo, a newbie who figures a condo is in my future at some point.)

When the cost of buying, in financial terms, is in step with well-established fundamentals, I believe buying is a good choice. There will always be a cost for housing, renting or buying.

There are other reasons for buying. Psychological satisfaction is one of them, for example. I accept that argument so long as it isn’t justified with talk of “investment strategies” and other such hoo ha.

It sounds like you believe people should always rent. Is that really true?

I left off principal in the inital sum because because
1) by reducing the balance of the loan, it is a form of savings that has no equivalent in renting
2) I didn’t include the tax deduction yet. Once the tax deduction is included, the total number of pretax dollars that I must allocate to principle, interest, taxes, and condo dues is the same as my downstairs neighboor who rents, yet I get the savings from paying down the principal and she doesn’t.