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You and your parents saved up a lot of money and made an explicit choice as to how to invest it. That's not the same as doing absolutely nothing and waking up t

You and your parents saved up a lot of money and made an explicit choice as to how to invest it. That's not the same as doing absolutely nothing and waking up to an email that your apartment is now rent controlled. > Renters on the other hand always get screwed as capital concentrates and rent is pushed up. You seem to have a very strong pro-housing bias. Here you imply that renters are people who cannot afford to buy a house. There are other ways to invest, right? Those investments can cover increasing rents and even beat real-estate investing.

Spooky23 8y ago
I think renters are structurally at a disadvantage due to lack of agency — landlords have more power over renters than they have in the past. Keeping children in school, keeping jobs, etc all are far more difficult for folks in society that have the least ability to cope with change.
dahart 8y ago
Isn’t it actually true that the majority of renters in the US and globally are people who can’t afford to buy, and not people with spare wealth they’re investing some other way? I’ve heard the argument on HN before that renting and investing might be better than buying a house, and while I’m certain it’s true for a few people, I’m still a bit puzzled by the argument that if you can afford a house that rent and investing might be better. Can you elaborate a bit on when that makes financial sense? If you can afford a house, wouldn’t buying and investing be even better than renting and investing? The problem with rent is that it’s 100% money loss, while buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent. In order for renting to make more sense than buying, you have to be able to make returns on your investment that exceed your rent plus whatever returns you’d get investing while buying a house. What I think this means is that your down payment on your house needs to be the thing than enables investment returns of an extra $1k or more above investing while renting, in other words, offset whatever rent would have been. It’s not clear to me that starting with, say, $200k more to invest, could actually yield so much bigger returns that suddenly renting makes more sense. Is my analysis way off somehow? If so, would you be willing to outline a renting & buying scenario where investing + renting makes more money? Does it require a narrow band of income where you can afford to buy but not invest any extra?
- twiceaday 8y ago
  My point was that depending on local housing market conditions a smart stock/bond market investor can beat yoy rent increases and with enough capital actually cover their rent. Your statement of averages doesn't seem related to parents point, and does not contradict my point. In terms of your first statement, it seems true. However, I also think it's true that most people are unreasonably scared of the stock market while being unreasonably comfortable with investing 500% of their life savings into one property. And I think that for many people owning a house is similar to having a child, is not up for debate. You can't tell them they can't afford it. They will go deep into debt because they want to experience that aspect of life. Unlike, say, buying S&P 500 which is usually done purely for investing reasons. > buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent. I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting: buying fees, longer commute, repairs, bigger-than-otherwise utility bills, property tax, mortgage interest, PMI, possible HOA fees, etc. It's also easy to lose track of how much money you didn't make on the market by not investing. This is obviously cherry picking (even though this very often happens when people discuss their housing returns) but over the last 10 years S&P 500 nearly 4x-ed. In terms of housing vs stock market as an investment, check out this calculator [1]. You might not be able to get a good mortgage for the duration of your home ownership. The housing growth rate can stall relative to market based on local conditions. Property taxes and home-ownership fees can add up. The cost of buying and selling your home can be high. There are many variables that can tilt things one way or another. And lastly, housing is a market just like the stock market and they are interconnected. I just don't believe in free money. I believe in the 'efficient-enough market hypothesis.' For a given amount of risk you should expect the same return. If you are looking at an unreasonably good investment you are likely just underestimating the risk. Gains are made via relative price differences. The better an investment seems the more pressure there is to buy it thus raising its absolute price thus reducing growth opportunities for subsequent buyers. When does the buying pressure stop? It stops when the investment doesn't seem better than others. Thus the markets settle on maximum uncertainty. To me housing is an investment, one of many. It's not automatically the best one in all circumstances. [1] https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

Spooky23 8y ago

I think renters are structurally at a disadvantage due to lack of agency — landlords have more power over renters than they have in the past. Keeping children in school, keeping jobs, etc all are far more difficult for folks in society that have the least ability to cope with change.

dahart 8y ago

Isn’t it actually true that the majority of renters in the US and globally are people who can’t afford to buy, and not people with spare wealth they’re investing some other way? I’ve heard the argument on HN before that renting and investing might be better than buying a house, and while I’m certain it’s true for a few people, I’m still a bit puzzled by the argument that if you can afford a house that rent and investing might be better. Can you elaborate a bit on when that makes financial sense? If you can afford a house, wouldn’t buying and investing be even better than renting and investing? The problem with rent is that it’s 100% money loss, while buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent. In order for renting to make more sense than buying, you have to be able to make returns on your investment that exceed your rent plus whatever returns you’d get investing while buying a house. What I think this means is that your down payment on your house needs to be the thing than enables investment returns of an extra $1k or more above investing while renting, in other words, offset whatever rent would have been. It’s not clear to me that starting with, say, $200k more to invest, could actually yield so much bigger returns that suddenly renting makes more sense. Is my analysis way off somehow? If so, would you be willing to outline a renting & buying scenario where investing + renting makes more money? Does it require a narrow band of income where you can afford to buy but not invest any extra?

twiceaday 8y ago
My point was that depending on local housing market conditions a smart stock/bond market investor can beat yoy rent increases and with enough capital actually cover their rent. Your statement of averages doesn't seem related to parents point, and does not contradict my point. In terms of your first statement, it seems true. However, I also think it's true that most people are unreasonably scared of the stock market while being unreasonably comfortable with investing 500% of their life savings into one property. And I think that for many people owning a house is similar to having a child, is not up for debate. You can't tell them they can't afford it. They will go deep into debt because they want to experience that aspect of life. Unlike, say, buying S&P 500 which is usually done purely for investing reasons. > buying is under most normal circumstances returned, usually at a profit, sometimes at a small loss, and almost never a complete loss comparable to rent. I would like to see numbers to back it up. It's very easy to lose track of how much money you spent on your house that you wouldn't have spent if you were renting: buying fees, longer commute, repairs, bigger-than-otherwise utility bills, property tax, mortgage interest, PMI, possible HOA fees, etc. It's also easy to lose track of how much money you didn't make on the market by not investing. This is obviously cherry picking (even though this very often happens when people discuss their housing returns) but over the last 10 years S&P 500 nearly 4x-ed. In terms of housing vs stock market as an investment, check out this calculator [1]. You might not be able to get a good mortgage for the duration of your home ownership. The housing growth rate can stall relative to market based on local conditions. Property taxes and home-ownership fees can add up. The cost of buying and selling your home can be high. There are many variables that can tilt things one way or another. And lastly, housing is a market just like the stock market and they are interconnected. I just don't believe in free money. I believe in the 'efficient-enough market hypothesis.' For a given amount of risk you should expect the same return. If you are looking at an unreasonably good investment you are likely just underestimating the risk. Gains are made via relative price differences. The better an investment seems the more pressure there is to buy it thus raising its absolute price thus reducing growth opportunities for subsequent buyers. When does the buying pressure stop? It stops when the investment doesn't seem better than others. Thus the markets settle on maximum uncertainty. To me housing is an investment, one of many. It's not automatically the best one in all circumstances. [1] https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...