Thursday, May 28, 2009

My House Is A Piggy Bank

This article in the local newspaper: AZ Homes Near 2004 Prices states that home prices in Arizona are almost down to 2004 levels. I knew that, because I have been watching the neighborhood where my rental house it located.

Sometimes I think about my decision to buy a home when I did. I did buy in 2004. I thought the prices were rising out of my reach and I was making more money than I thought I ever would again (that was probably true). The problem with my logic was that I was only thinking about how much of a loan I could qualify for with my income. I thought that houses would be too expensive if I saved a larger down payment and waited 5 years to buy.

I think the excitement of buying my own home had a lot to do with it too. It was my hobby. I decorated it, made throw pillows and curtains and landscaped the backyard. It was a lot of fun. I'm actually glad that I did it. I have learned so much from that house and it is providing a huge amount of incentive to pay off my mortgage early. I'm sure that if I had a 'dream' of home ownership that I was saving for I would not be nearly as disciplined about adding to the fund. There would be lots of other fun things to spend that house money on. Let's see, trips, a boat, a camper, a horse...the list is endless. But with a mortgage and a big mean bank waiting to take my house away if I don't pay, I have plenty of motivation pay off the mortgage and that increases my equity. So I would say that buying a house was a good decision, not in the way I thought it would be, like, increasing home values, but as a giant piggy bank that I am chained to until I fill it to the brim with money. But now that it is a rental, once my piggy bank is filled, it will start paying me every month. That's when the fun begins!


Over the Cubicle Wall said...

Very true. Once you jump in the water, there is a lot of incentive to learn how to swim. Standing on the shore, learning to swim can just be a good thing to do 'later'.

You're so close to that piggy paying you back!

Daizy said...

Exactly. It's all about motivation. Although I am still tempted to sabotage my plan and buy a camper. Look but don't buy!

Over the Cubicle Wall said...

Let the piggy buy it for you in a couple of years.

Daniel | AZ Homes said...

Prices are low, but I think they'll go lower. Keep watching the market. You'll see. Once rates go back up, you can bet the market will go down again. Even worse, what's going to happen when N. Korea gets nuked?

KoBold said...

North Korea won't get nuked.
Most probably they have used BOTH bobms they had for the underground tests.
Too bad isolation keeps the communists in power. See how (relative) wealth erodes communist power in Vietnam.
Or Eastern Europe, for that matter.

Anonymous said...

Do you know that "a big mean bank" would still take your house away if you stop paying monthly. Paying ahead to increase equity does not count as regular monthly payment for interest/principal. In the mean time, you have to suffer with minimum living. Putting your extra payment into a mutual fund is more beneficial in a long run. Because it is more liquid and it earn more interest than you pay toward the house.

Daizy said...

Daniel, the good part of renting out the house is that I am not concerned about housing prices too much. As long as I have a paying renter I have time to wait out the housing market. N. Korea will blow itself up by accident then we won't have to worry about it.