The price of housing is still too high

The price of housing is still way too high compared with the salary of ordinary people in this country. I expect the housing price will keep the falling tendency in the next couple of years. "falling" here does not mean it will fall in nominal terms, but its real value, while compared with the prices of other tangible assets. Therefore, housing definitely is not a good investment in the next decade and there are much better opportunities where you can invest your money in.

In your first story, you assume that the people who did not buy a house just saved their money and did nothing on investment. This might not be true, since the mortgage payment paid each month is for sure a lot more than the rent. The extra cash saved by the person who only rent can be used for investment. If the person knew about how to invest, his wealth may have been amplified by many more times than the person who bought the house.

To summarize, getting into big debt to buy a house and striving for the so called "positive cash flow" is definitely not a smart idea since there is NO GUARANTEE that the cash flow is always positive. If it turns negative suddenly, what are you going to do? A better idea is to save the extra money paid on mortgage payment and do investment. Of course, you need to learn how to invest.

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• well said. -五分店- ♀ (0 bytes) () 04/27/2009 postreply 16:41:53