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Author: John3haha Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: Re: Condo down payment source (long) Date: 10/27/2003 1:54 PM
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I do not have the figures in front of me, but my general understanding is that long term returns from common stocks have been significantly higher than long term returns from equities. I am personally a big believer in putting a large chunk into equities when you have the luxury of 10+ years to let it grow.

Condo prices have also risen more slowly in general than traditional single family detached housing in my personal area. They seemed to go through a deeper downturn about 11 years ago than single family housing did. I am not a real estate expert, though I started working in that area six months ago oddly enough.

I would try to look at average 25+ year growth rates in values for real estate compared to equities, after inflation.

Also, it is incredibly easy to spend a lot of additional money right after buying a house for furniture and lawn mowers and all sorts of stuff. Try to set aside something for this in advance. Then try to be frugal. We're still using a fair bit of furniture bought 16 years ago with the proceeds from three scalped college football tickets.

I would echo the comment about how it can be hard to own real estate together prior to marraige. I can be done. My brother in law has been successful, though they started with a formal "renter" vs. "owner" set-up at the beginning. Not very romantic or fun.

FWIW, my DW and I waited an extra three years or so and lived in extremely cheap and awful apartments to save up for our house. We did not want to pay transaction costs for a starter home, a big home with kids and then a home to retire in. We also wanted to be married for two years before deciding on what house to buy. Frankly, the transition to being a married couple was pretty darn hard for me. The mind shift from individual to couple is big.

So far, it has been about 10 years and we are still hopeful of staying in the same house through retirement. We selected a neighborhood with a mix of retired folks and young parents. We got a house that was more practical than dream. We may finally remodel the 1965 kitchen this year, and have cash set aside for the initial price estimate (it could well rise). There has been luck involved in this result, do not get me wrong. We also made the decision not to move for work unless a job is very, very compelling because we love our local community. YMMV.

Best of luck, whatever your choice.

JohnH
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