Our single daughter (who actually does residential and commercial property appraisals as part of her job) decided to take advantage of the lunatic tax credit and buy a home at that time.
By purchasing a little post WW2 bungalow 2/1 with large back yard in a low crime working class neighborhood, she now has a fixed housing outgo which is half of comparable rents in that city. She predicts that the house will neither gain nor lose market value, which is fine with her. If inflation drives up rental prices she is protected. Her property taxes are already at the max millage allowed by law, so by having an essentially stagnant market value, she has a pretty firm grip on that aspect of living cost.
She absolutely rejects the notion of buying more house than she needs just because (right now) she can afford it. The other day she told me that she has 1 year living expenses in savings, at a reduced living standard, of course. Yeah, I’m bragging /grin
That is the smart way to do it.
Kudo's you raised a realist.
I have an interesting take on homes. They are in La-la land not the real world compared to other investments.
* 1st you get a tax break for the mortgage, gov't underwriting.
* 2nd the banksters win that game, look at the interest you pay.
* 3rd, unless you make > than 250k single and 500k married cap-gains on the sale of your home it is tax free.
* Now compare that with Cap Gain taxes or Dividends on Stocks or Bonds? How come there is no parody? Why it is sold as an "investment" than why the heck isn't it playing by investment rules?
* Not to mention the maintenance, frankly they are all money pits.
We have been sold a bill of goods, I ain't buying it anymore. If I had to do it over, building it yourself with the cash you have as you go is the only way to go, bag out of this whole Mortgage paradigm it is not in the real world.
Flat Tax with no Mortgage Deductions work for me, Paging Steve Forbes.....