This is an increasingly accepted view. Similar to what I posted earlier. My parents house appreciated 1000% in 30 years, it was worth 10x what they paid. It was an investment that paid for every car they ever owned and expensive college educations for two kids plus a good chunk of their retirement. I've been in my current house for 15 years and it is worth about 5% more than I paid for it. It is the biggest difference in financial terms between baby boomers and everyone else. Unless your area becomes the next hot market, your primary home is not going to be a good investment in terms of return. It may end up being cheaper than renting if you are there long enough but not if you are moving. Put it this way, the interest on a 300k mortgage at 4% is $515K over 30 years. Your rent would need to be triple your mortgage payment if you exclude appreciation. If you include appreciation of 3%/yr, after 30 years your house will be "worth" 728K - the 515K you paid in interest nets 213K or $591/month in rent equivalent after 30 years. Is your rent going to be $600 more than your mortgage P&I + taxes + PMI + maintenance?
Hard to see on a starter home and even worse for one you plan to spend 5 years in. Homes just aren't the investments they once were.
Build your emergency fund, fund your retirement accounts as much as possible, for the love of God take full advantage of your companies 401K match.
Meet or beat the 50/30/20 rule; Spend no more than 50% of your earnings on stuff you need (housing/food/transportation), 30% on stuff you want (everything else), and 20% on your savings/retirement fund. The last number is the most important if you ever want to be financially independent.
I'm certainly not a financial adviser and I have no idea about the conditions in CT, but I'm really surprised that your house has only appreciated 5% in 15 years. I know there was the bubble burst in that time but I thought most places had increased significantly since the bottom. I was fortunate that I got my home in 2010 and it's appreciated 80% since then. Even if I go back to the price it sold at in 2006 before the bubble, it's still up 30% since then. Add in the tax benefits of interest and property tax (which may be more limited in 2018) and the fact that when you sell, most or all of the profit isn't taxed and I can't see a reason not to buy a house if you can afford it.
My advice for a 25 year old person with the means to buy a house:
1) Get rid of all debt - particularly credit card debt. There's no reason to pay double digit interest on money you don't have. Low interest car or student loan debt is more tolerable but you still want to get rid of it as fast a possible. Pay off the higher interest debt first while maintaining the lower interest debt. Eat raman, get rid of as much of luxury things you can live without, put on a sweatshirt and turn down the heat and pay off as much debt as you can. You have your 40s and beyond to be comfortable.
2) As to the 50/30/20 rule, there's no reason to spend 30% on things you want at that age - lower it. Your late 20s early 30s will still be amazing without spending 30%.
3) Don't get married or have kids until you can afford it. You're going to live longer than you parents and way longer than your grandparents. 40 plus years with a spouse is more than enough - wait until you're 35 or so. Your kids will be out of the house when your 60-65 - that's good enough.
4) Go ahead and live with someone who can do 1) and 2) above until you're ready to have kids and can afford it.
5) If you can do 1) and 2) go ahead and buy a house as soon as you can. Buy the worst house you can afford and can fix up in the best neighborhood you can find. If you are handy, you can create at ton of equity/worth in a fixer - particularly if you don't have kids to deal with. Know your limits. It's stupid expensive to find contractors for things you can't handle.
6) Sell your first house in 2 to 5 years depending on market conditions. If you can get 250k in profit, it's not taxable. That profit is in your pocket tax free.
7) Take the profit and equity and buy the next worst house you can fix in the best neighborhood you can find. You have 5 years this time because you can only take the free tax from profit once every 5 years.
8) Rinse repeat buy, fix, sell every 5 years until you have enough money to buy the house you want to spend the rest of your life in. You can turn about 5 houses over between 25 and 47 or so. If you get married in that time frame, you take 500k in profit without taxes. If you do it right, by your late 40s, you can buy a great house with no mortgage.
9) Make sure you never get emotionally attached to a house so that you can't do the 5 year turn over. It's all a means to an end.
Good luck!
