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Author: qazulight Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 13953  
Subject: Re: Affordable or Market-Priced Home a better de Date: 11/28/2012 1:34 PM
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That's a lot of appreciation. Historically, housing prices have appreciated at close to the rate of inflation.

I don't have time to do more than a back of the envelope right now, but.for argument's sake let's say puts down 20% on either house,

If the expensive house only appreciates at 2%, he gets $49K in appreciation over the ten year term vs. $31K for the cheaper house. But he saves he saves roughly $46K in payments on the cheaper house.

I'm neglecting the difference opportunity cost in the downpayment, but that's probably pretty small.


The OP is considering a house as an inflation hedge. The lessor price house gives up the inflation hedge while allowing for more leverage at the same house note.

Personally, I think I would avoid the whole concept, high or low priced. To me there seems to be a lot of unknown risks.

Cheers
Qazulight
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