The times, they are a changin'. Great article in The Times real estate section this weekend, Seizing the Moment to Cash Out and `Go Rental', in which the tremendous appreciation in real estate values has prompted many old timers to sell the farm, look for a rental, and put a great deal of cash in the bank.
The appreciation has been so "enormous," Mr. Schneider said, that "I can't even do the mathematical computation in my head." He said that he and his wife bought the apartment for less than $100,000 and sold it for nearly $1.7 million.
The Schneiders will use interest from their windfall to cover living expenses, including their $3,800 monthly rent. They will also use some of the profits for travel, and for college funds for their three grandchildren. (via The Times)
But with interest rates slowly rising, the days remaining to easily sell apartments at high prices may be numbered. The lesson from this is if you want to sell, sell quick, and if you want to buy, buy quick, or risk waiting for lower prices at higher rates in the future. MGR
Read also Rates Remain Flat...For Now. (Bankrate)
Read also Owning vs. Renting, You Can Do The Math. (The Times)
but in the end, you own *nothing*. This doesn't make any sense, for younger/middle aged people, as having an asset is more important than getting quick cash.
For older people, it doesn't make sense either. Sure, you probably won't run out of money before you die, but you still end up with nothing. No assets when you die means a greater potential burden on those who must make arrangements (because your family can't sell anything to pay for the burial/associated fees)
It would make more financial sense for retirees to sell their giant expensive house, and purchase a much smaller house/condo/whatever. They can then use the government's "one time use" capitol gains exemption and pocket the profit from the sale.
This way, they have no mortgage (although a small one would make sense, as you can use it as a tax shelter by claiming the interest against your income), and still have an asset.
Then again, a fool and their money...
oh, and thanks for the email =)
there should be a preview....
"capitol gains" should be "capital gains"