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FarCenter

(19,429 posts)

15. Buying a house is highly leveraged and has a high transaction cost

Reply to boppers (Reply #8)

Mon Dec 19, 2011, 10:40 AM

Dec 2011

Suppose you buy a house for $200,000 with $40,000 down and a $160,000 mortgage.

The next day, you sell it for $200,000.

It will cost you about $16,000 in realtor fees and closing expenses to do the sale.

So you have immediately lost 40% of your down payment, and now have $24,000 left. Which is too little to buy another similar house.

This is why buying a house immobilizes people and prevents them from pursuing career opportunities that require a move.

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Highlight:

Your choice: A house or a college degree [View all] Liberal_in_LA Dec 2011 OP

that is exactly the choice I made nearly 20 years ago.... mike_c Dec 2011 #1

The 1% don't want any more Baracks marybourg Dec 2011 #2

I'm kind of convinced cyglet Dec 2011 #3

The island of desolation , is over populated. orpupilofnature57 Dec 2011 #4

We chose college (grad school) abelenkpe Dec 2011 #5

No surprise, and as it should be, imo. elleng Dec 2011 #6

We bought a house in our 20s and had to sell it. JDPriestly Dec 2011 #13

If the degree will increase your employability and earning power, it may be worth borrowing for FarCenter Dec 2011 #7

Liberal Arts education is dead. Tech school for all! n/t Ed Suspicious Dec 2011 #11

Liberal Arts education has always been "finishing school for the upper middle class" FarCenter Dec 2011 #14

Who wants to gamble on such an unstable "investment"? boppers Dec 2011 #8

Buying a house is highly leveraged and has a high transaction cost FarCenter Dec 2011 #15

My wife and my student loan payments total more than our mortgate payment. OneTenthofOnePercent Dec 2011 #9

Ours are close. They're definitely the biggest non-mortgage expense we have. n/t iris27 Dec 2011 #12

I think in civilized countries you can have both AND socialized medicine! nt valerief Dec 2011 #10