it was to illustrate the point real estate increases in value while cars do not.

and i would rather influence someone to buy property over a possession

 

Haha lots of interesting varying opinions.

Housing here isn't that expensive, a decent house for a young guy can be had for ~$150k. $30k isn't all my savings, just a big chunk of it saved up and sitting in stock now.

Thanks for all the input but I've decided that given a used S2k was going to be a little bit of a stretch for me and still be able to stick to my plan, it's silly of me to spend that much.

Like I said before, I really cannot get the C6, turn around, and sell it. My friend has to hold onto the car in his possession for 3 months before he can either sell it or return it to GM, and he's limited to doing this twice per year. He has tons of people asking him to do it all the time, and given that he's just outright offered to do it for me means a lot, and it really would not be proper for me to take him up on it, turn around, and sell it at a profit. Not to mention he could risk getting fired if someone suspects he was using his employee discount to make a profit on the side.

 

Homes increase in value but cars don't - no question there.

But my point, and reason for bringing up the Bay Area housing market, is that this isn't the whole story. Here, there are plenty of people who own homes that have appreciated like crazy, but they still can't afford to cash out on that appreciation.

The problem is that all homes in a given market will appreciate at more or less the same rate. So, if you buy a home for $500,000, and it appreciates 20% over some period of time, you can then sell it for the increased value of $600,000. You've pocketed $100,000 in appreciation (ignoring taxes and interest for simplicity).

But that doesn't mean you can go out and buy a home that is $100,000 better than the one you just sold, because other homes in that market have also appreciated 20%. Unless you add money on top, you can only purchase another home that is equivalent to the one you just got out of.

This is fine, but now the basis for your property taxes is higher because your new home has a higher book value. This is why many people in the Bay Area, and other hot housing markets, own homes that have appreciated ridiculous amounts, but still can't move into a "better" house. The only surefire way to cash out in these situations is to sell your home, pocket the appreciation, and buy a house in a cheaper market.

Don't get me wrong, I'm not disagreeing with what you've said. I just think it's a good idea to be cautious and not make such a big decision based only on an increase in value on paper. This is why I think the Bay Area housing market is relevant. That having been said, I have no idea if wherever Kremlin is from is subject to this problem.

 

Wow! Given this info, definitely go for the house. I would have skipped buying my S2000 in favor of a house if our home prices were like that. Hell, even a mere mortal can pay off a $150k house within a lifetime...

 

Hehehe.. People in my area whine about housing prices, but in all seriousness, it's quite cheap. My parents' house is a MANSION compared to my Aunt's place in Atlanta, and while hers is worth about $1M USD, ours is worth about $280K USD.

$150k USD here can buy a very nice brand new condo or a 10-15 year old house in a nice neighbourhood.

 

FWIW, I'm a mortgage loan officer. You can build equity in a house. You cannot build equity in a vehicle, unless it's extremely rare classic, in which case you'd have to pay cash money to purchase. If Canada is like America, you can deduct the interest you pay on your mortgage from your income taxes at the end of the year. Get a good real estate agent, purchase a house, possibly a foreclosure, that you will automatically have equity in (preferably about 20%). Wait 6 months to a year, and then cash out the equity you have to buy your toy of choice, or get a home equity line of credit. Remember, patience is a virtue.

 

Just from your posts it seems that you have a good head on your shoulders. Not knowing your circumstances (i.e. how long you plan to live where you are, etc.) it is difficult to give this kind of advice.

However, if you plan to stay in one place for a while, a house is probably a good decision. I don't know what kind of tax advantages (or liabilities) you have in Canada, but would advise you to keep a little of your savings for unexpected repairs, tax, etc. That actually goes for any of your choices (whether its calling the plumber or replacing expensive tires).

 

I'm Canadian and this is how I understand it.

US - Amerians can write off their homes, or a certain portion, against their income tax thereby encouraging home ownership.

Canada - Our home payments are paid with after tax money.

It seems to me many people will tout how much money they've made on their homes, but people forget the real estate overvaluation that was evident here in Canada (Toronto) in the late 80's. It was just 2 years ago that many home values finally exceeded their late 80's price....

With the deplorable return on the stock market everyone is screaming about how secure and wonderful real estate is, while forgetting the real estate market crashes and fluctuations that have occurred over the last several decades. I have friend's who say they've made $100k on their homes in the last 2 years (but after real estate fees (5% in Canada), renovations, updates and moving expenses that figure can sometimes be halved.

I'm not saying homes are a bad investment (they're not like cars), and while many people have made money on real estate, many have also lost their shirts. Over the last few years interest rates have plummetted and most have seen good gains, will that remain true in the future?

 

Another possibility: buy the Corvette, drive it for three years, then sell it for what you paid for it. Would you still feel guilty?

 

Forget get about the house ...Get the car..get it out of your system..go broke and then start saving.

What I am saying....it would be nice to buy a house if you can afford it. Otherwise get the S first, enjoy it and buy house at 25.

My best buddy was driving SLK at 21..no house..
He went to work for a CPU designer/manufacture company at 22..bought another Merc..no house
He is now 26...two House (probably worth easily 1M) with 2 Merc (1 new 1 old) and S2000.

If you are not feeling the house right now, get the car. Otherwise get the house, find a roommate, get a used NSX next year.

BTW, my house went $90k in 6 months.