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In short, abandoning the most important engine of wealth creation and savings in exchange for consumption that many of them will not be able to sustain in the e

by yholio 8y ago

In short, abandoning the most important engine of wealth creation and savings in exchange for consumption that many of them will not be able to sustain in the elder years. Don't get me wrong, surely you can save and rent, but it takes much more discipline and it's not a choice I would say is appropriate for all young people.

YokoZar 8y ago
Houses do not "create wealth". They go up in price about as much as inflation, but you still end up with just as many houses as you started with.
- yholio 8y ago
  Sure, it's a figure of speech to describe accumulation of personal wealth. "Wealth building", rather.
njarboe 8y ago
With how easy it is to get a home equity line of credit and/or refinancing, owning a house is not nearly as good a way to "force" savings as it used to be.
wbl 8y ago
You misspelled stock market.
closeparen 8y ago
The US median mortgage payment is around $1,000/mo. I can comfortably invest much more than that each month while renting a satisfactory apartment and spending freely. I just can't get anywhere near owning an equivalent condo.
- yholio 8y ago
  That math is a bit funny. Rent is pure consumption while mortgage is consumption plus equity accumulation. Of course, owners have less left for investment, but they are already investing a significant part of their mortgage payment. With 15 years left on the mortgage at a 4% interest rate, about 60% of your payment goes to principal and only 40% to interest. And since most people prefer the flexibility of rent to the headaches of ownership, rents tend to be significantly higher than the non-equity part of the mortgage, so ownership is a more efficient way to invest and live at the same time, precisely at the cost of that flexibility of consumption.
  - closeparen 8y ago
    Sorry I wasn’t clear: I can invest well more than the home equity people are building in normal markets. Just not enough to own in my local, extremely expensive market.
dsl 8y ago
I think many people don't want to invest in an asset that gets handed down, if they plan on having no children.

by yholio 8y ago

YokoZar 8y ago

Houses do not "create wealth". They go up in price about as much as inflation, but you still end up with just as many houses as you started with.

yholio 8y ago
Sure, it's a figure of speech to describe accumulation of personal wealth. "Wealth building", rather.

njarboe 8y ago

With how easy it is to get a home equity line of credit and/or refinancing, owning a house is not nearly as good a way to "force" savings as it used to be.

wbl 8y ago

You misspelled stock market.

closeparen 8y ago

The US median mortgage payment is around $1,000/mo. I can comfortably invest much more than that each month while renting a satisfactory apartment and spending freely. I just can't get anywhere near owning an equivalent condo.

yholio 8y ago
That math is a bit funny. Rent is pure consumption while mortgage is consumption plus equity accumulation. Of course, owners have less left for investment, but they are already investing a significant part of their mortgage payment. With 15 years left on the mortgage at a 4% interest rate, about 60% of your payment goes to principal and only 40% to interest. And since most people prefer the flexibility of rent to the headaches of ownership, rents tend to be significantly higher than the non-equity part of the mortgage, so ownership is a more efficient way to invest and live at the same time, precisely at the cost of that flexibility of consumption.
- closeparen 8y ago
  Sorry I wasn’t clear: I can invest well more than the home equity people are building in normal markets. Just not enough to own in my local, extremely expensive market.

dsl 8y ago

I think many people don't want to invest in an asset that gets handed down, if they plan on having no children.