“The last recession we had-the home values went DOWN in my area-EVERYONES home values went down by 35-40%so-----NO MORE EQUITY!!!”
If you own your house outright, that means you don’t owe on a mortgage. Therefore, regardless whether or not if the property values drop due to economic downturn, you still have equity, albeit less. It is an asset that can be liquidated for whatever it is is currently worth. For those that used their home like a bank, and kept refinancing and pulling out the equity and spending it, the last downturn was disastrous. I would agree, these people would have been better off renting.
In California, the longer you own your home, due to Prop 13, your property valuation for tax purposes remains somewhat stable. By law, your assessed valuation can only be increased no more than 1% per year. Therefore, since we have owned our home for 24 years, we pay much less property tax than someone who may have purchased more recently at a higher price than we paid in 1994.
Between our property tax and HOA dues we pay approx. $600.00 per mo. for a home that would rent for $2500.00 per mo. So even if we have to replace a water heater or heating system once in a while, we are still spending way less on housing than if we were renting. And our HOA dues cover the exterior maintenance, landscaping, insurance, water and garbage.
If we hadn’t bought a home when we did, and paid it off, we couldn’t afford to live where we’ve both lived all our lives. And David’s ancestors came here from Italy during the Gold Rush in 1849, and were dairy ranchers. His family has a long history here. So, in my mind, being a homeowner has been one of the best decisions we ever made in our lives. But, homeownership isn’t for everyone. It requires commitment and financial discipline.
I sure would hate to be holding 24 yrs. worth of rent receipts instead of a paid for mortgage and a deed of trust on our home.
Eddie