Scales for mortgage investment

Homeownership Vs. Stock Market Holdings

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Homeownership Vs. Technology Holdings:

A frequent bridge the Millennial & Gen Z’s is that of proper allocation of accumulated wealth utilizing self-direction.  Often, as the free market principles of modern economics dictate, these generations find themselves picking up and moving from city to city in search of better employment.  In this circumstance, homeownership would simply be foolish as the costs of entering a mortgage would end up being a sunk cost upon the quick sale of property.  The following, however, will explore the benefits of capital investment VS. that of housing.

In a 2017 interview on CNBC, Warren Buffet discussed the utility of purchasing property as a tool of investment, “ If you know you’re going to live in a given area, or think it’s very likely, for a considerable period of time and you’ve got a family, the home is terrific… a 30-year mortgage is the best instrument in the world.” These words come from the lens of Buffet weighing the future upside of capital investment. These words carry as Buffett is frequently quoted as one of the greatest investors in the history of market trading.  The secret to the fruits of housing as a security against that of a common stock or position on an index fund is that of varied & projected appreciation.

Buffett cites an example wherein his $20,000 investment in a beach-town property (past monetary value in terms of 1970’s inflation) turned into a present value of $11m sale in the year of 2015.  Most experts in the housing market don’t believe we will see similar levels of property appreciation in the next 50 year market cycle, but that should not dissuade future homeowners from viewing the subjective value of their property as that of a fluctuating variable working in their favor.

Cons of Owning Common Stock with relation to Property Ownership:

– Quality of the stock is completely out of the individual’s control

– The stock is not easily liquidatable, and subject to various taxes upon sale

– Stocks are subject to daily fluctuations based upon unrelated news

– The trajectory of any given stock is difficult to forecast

In a future blog, I will discuss the costs & baseline values surrounding the purchasing and holding of residential property. In the meantime, check out analysis on first time home purchasing from Haley Thayer (Broker) here on YouTube: