5 ms·

That's the shoeshine-boy story: "you can't go wrong with bricks and mortar". Coming at the end of a decades-long rise in leverage it's easy to see why people sw

by mrec 11y ago

That's the shoeshine-boy story: "you can't go wrong with bricks and mortar". Coming at the end of a decades-long rise in leverage it's easy to see why people swallow it without too much examination, but the Great Unwinding is arguably upon us, and you're assuming (and ignoring) a whole bunch of things. > because payments toward ownership build capital Money invested outside of property also builds capital. Money not spent on mortgage interest builds capital. Money not spent on maintenance builds capital. Money not spent on property transaction-related costs (surveys, legal fees, Stamp Duty in the UK) builds capital. Owning property when a major housing bubble collapses burns capital faster than your wildest dreams. (Not everywhere has a housing bubble at the moment, but an awful lot of places do.) Obviously you can argue with a lot of that, but the picture is nowhere near as clear-cut as you're making out.

bane 11y ago
Don't think about today. Think about 30 years from now. Markets swing up and down. In 30 years you can own your property or you can keep renting somebody else's property and paying their mortgage for them. If you rent, you're likely paying all those additional fees in addition to a share of the mortgage for the owner. Property owners aren't charities and are under no obligation to take on those costs when they can get somebody else to take them on for them. It really is as clear cut as that.
- mrec 11y ago
  > It really is as clear cut as that. Sentences like that are a huge red flag. It cannot be as clear cut as that. You can't ignore price levels when making that kind of blanket statement. Think of it as a reductio ad absurdum: if it's always better to buy, then it's still better to buy when buying costs 25x the annual rent, right? 50x? 100x? 1000x? 1000000x? People really do fall into thinking like this; it's exactly how bubbles happen. Buying my current place would probably cost about the equivalent of 35 years' rent (before taking into account opportunity costs etc). That's longer than I expect to live. I could just about swing it, but my savings would be gone, I'd suddenly be stressed about losing my job etc. You might think it's still clear-cut, but it's far from obvious to me. If prices weren't completely ridiculous, sure, I'd probably go for it. But they are, and that matters.
  - bane 11y ago
    I didn't downvote you... Considering buying costs at multiples of renting basically doesn't occur in reality, so it's not worth spending brain-cycles thinking about it. > I'd suddenly be stressed about losing my job etc. Is your rent free? Job stress affects both kinds of home tenancy. > That's longer than I expect to live. Well, I hope that's not true. I'm dipping into the wine now, so I'll toast to your health and long life!
    - nommm-nommm 11y ago
      > Well, I hope that's not true. Do you think everyone on HN is 16-22 years old?
      - bane 11y ago
        57 is pretty young to die. Average life expectancy in most of the world is >70. So somebody expecting to die in the next 35 years would have to be over 35, at which age I'd hope they would have learned about basic economics and arithmetic. This isn't a very difficult discussion since it can be pretty easily rooted in readily available information and pretty basic calculations. There's even on-line calculators that will do the hard work of adding numbers together if people can't be bothered. The hard realities that lots of people can't seem to get into their noggins are pretty simple: - housing costs money, are you recouping that money in some way? owners do eventually, renters do not. Period. - property owners don't run charities, all those things house owners pay for explicitly, renters pay for implicitly, they just don't get the itemized list - renting a bedroom out of some guy's basement is not the equivalent of buying (or renting) a house, if you think they are, you've entered into a conversation you cannot possibly understand and you need to back slowly away - owners get many more options to sway the cost of housing into their favor than do renters, in surprisingly common cases, owners can even make money off of their property
        nommm-nommm 11y ago
        Don't be rude.

by mrec 11y ago

bane 11y ago

Don't think about today. Think about 30 years from now. Markets swing up and down. In 30 years you can own your property or you can keep renting somebody else's property and paying their mortgage for them. If you rent, you're likely paying all those additional fees in addition to a share of the mortgage for the owner. Property owners aren't charities and are under no obligation to take on those costs when they can get somebody else to take them on for them. It really is as clear cut as that.

mrec 11y ago
> It really is as clear cut as that. Sentences like that are a huge red flag. It cannot be as clear cut as that. You can't ignore price levels when making that kind of blanket statement. Think of it as a reductio ad absurdum: if it's always better to buy, then it's still better to buy when buying costs 25x the annual rent, right? 50x? 100x? 1000x? 1000000x? People really do fall into thinking like this; it's exactly how bubbles happen. Buying my current place would probably cost about the equivalent of 35 years' rent (before taking into account opportunity costs etc). That's longer than I expect to live. I could just about swing it, but my savings would be gone, I'd suddenly be stressed about losing my job etc. You might think it's still clear-cut, but it's far from obvious to me. If prices weren't completely ridiculous, sure, I'd probably go for it. But they are, and that matters.
- bane 11y ago
  I didn't downvote you... Considering buying costs at multiples of renting basically doesn't occur in reality, so it's not worth spending brain-cycles thinking about it. > I'd suddenly be stressed about losing my job etc. Is your rent free? Job stress affects both kinds of home tenancy. > That's longer than I expect to live. Well, I hope that's not true. I'm dipping into the wine now, so I'll toast to your health and long life!
  - nommm-nommm 11y ago
    > Well, I hope that's not true. Do you think everyone on HN is 16-22 years old?
    - bane 11y ago
      57 is pretty young to die. Average life expectancy in most of the world is >70. So somebody expecting to die in the next 35 years would have to be over 35, at which age I'd hope they would have learned about basic economics and arithmetic. This isn't a very difficult discussion since it can be pretty easily rooted in readily available information and pretty basic calculations. There's even on-line calculators that will do the hard work of adding numbers together if people can't be bothered. The hard realities that lots of people can't seem to get into their noggins are pretty simple: - housing costs money, are you recouping that money in some way? owners do eventually, renters do not. Period. - property owners don't run charities, all those things house owners pay for explicitly, renters pay for implicitly, they just don't get the itemized list - renting a bedroom out of some guy's basement is not the equivalent of buying (or renting) a house, if you think they are, you've entered into a conversation you cannot possibly understand and you need to back slowly away - owners get many more options to sway the cost of housing into their favor than do renters, in surprisingly common cases, owners can even make money off of their property
      - nommm-nommm 11y ago
        Don't be rude.