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> Most Americans (and apparently Canadians) think their home is a very good place to park their entire net worth. Meaning they think its guaranteed to appreciat

> Most Americans (and apparently Canadians) think their home is a very good place to park their entire net worth. Meaning they think its guaranteed to appreciate and appreciate faster than all other assets a person has. Most Americans have no choice, because you can't buy 1/3rd of a house or a room in a house, or a basement. You have to buy the whole house and very rarely will a family be able to outright get themselves into 2 mortgages on houses in a desirable area. In other words, you're painting a picture of choice where there is none. Renting has the same underlying problem - you alleviate yourself of depreciation risk, but you take on the risk of being at the mercy of the landlord and area gentrification and being priced out of it eventually. > The American government also subsidizes home ownership in various ways which can play into the fantasy. Not in as many ways as you think. It's rather the higher density urban areas that subsidize the suburban low density single family houses (most of which are very shoddily constructed). > Its just not a great financial investment and every portfolio should be diversified even if it were. Like I said earlier, most Americans don't have a portfolio of investments of any sort. Housing is a relatively stable asset for the risk-averse, and incidentally also provides you with a place to live. > The reality is house prices stay about lock step with inflation on average over the long haul. The reality is that discussing real estate prices without discussing location and separating structure value from land value is a gross and useless oversimplification. Look at property values in desirable urban areas: they far outpaced inflation and have recovered after the housing crash in less than 5 years.

nommm-nommm 10y ago
> being priced out of it eventually This applies to home ownership as well. Taxes can increase to where you can't afford to live there anymore. > It's rather the higher density urban areas that subsidize the suburban low density single family houses (most of which are very shoddily constructed). I'm not sure I understand what you mean. I am talking about, mostly, income tax deduction that applies to everyone. There's also the 30 year mortgage and VA loans and (I think) FHA loans. > most Americans don't have a portfolio of investments of any sort. Many times it because they put all their income into their house because they believe it is their house that it the key to building them wealth!! My only point was this is a common misconception. Housing is for living in, unless its an investment property that generates cash flow but that's not what we are talking about. Buy a house, or rent, there's tradeoffs. There's pros and cons of both. Its different for everyone at different times in their lives. As I said, a house is a great place to live in! My only point is the American/Canadian mindset that buying a house is the ultimate way to build wealth is false. It might, if you are really lucky, but don't bet on it. Especially don't bet your future on it! Yes, you have to buy housing, you need somewhere to live. A house is a good choice for many. A house may be cheaper than renting. It's just not a guaranteed generator of wealth like most people believe. You shouldn't disregard funding your retirement to buy a house. You shouldn't stop saving to buy a house. Diversify your assets.

nommm-nommm 10y ago

> being priced out of it eventually This applies to home ownership as well. Taxes can increase to where you can't afford to live there anymore. > It's rather the higher density urban areas that subsidize the suburban low density single family houses (most of which are very shoddily constructed). I'm not sure I understand what you mean. I am talking about, mostly, income tax deduction that applies to everyone. There's also the 30 year mortgage and VA loans and (I think) FHA loans. > most Americans don't have a portfolio of investments of any sort. Many times it because they put all their income into their house because they believe it is their house that it the key to building them wealth!! My only point was this is a common misconception. Housing is for living in, unless its an investment property that generates cash flow but that's not what we are talking about. Buy a house, or rent, there's tradeoffs. There's pros and cons of both. Its different for everyone at different times in their lives. As I said, a house is a great place to live in! My only point is the American/Canadian mindset that buying a house is the ultimate way to build wealth is false. It might, if you are really lucky, but don't bet on it. Especially don't bet your future on it! Yes, you have to buy housing, you need somewhere to live. A house is a good choice for many. A house may be cheaper than renting. It's just not a guaranteed generator of wealth like most people believe. You shouldn't disregard funding your retirement to buy a house. You shouldn't stop saving to buy a house. Diversify your assets.