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Doesn't housing primarily only need to be a better "investment" than renting, not vs other assets? Housing-as-investment seems to come in two forms, but I don'

Doesn't housing primarily only need to be a better "investment" than renting, not vs other assets? Housing-as-investment seems to come in two forms, but I don't think either needs unsustainable growth? 1) you'll have at least one asset going into retirement, or 2) you're going to borrow against the first one to buy another, rent it out, etc, which doesn't need a ton of appreciation in value as you start getting the cumulative income streams Consider that in many parts of the country housing is still a "good investment" but you don't have coastal-California-level unaffordability. Housing prices in the most desirable cities are a result of extremely heightened inequality. However, ownership is a path to security and insulation from the whims of the super-wealthy, so undercutting that doesn't seem like a great anti-inequality strategy.

bretpiatt 7y ago
Home ownership has created wealth for two independent reasons: 1. In many markets in the US housing has been a good investment (for a bunch of reasons too long to discuss here). 2. Owning a home with a mortgage on it forces the owner to "put money in savings" each month as they pay down principal on the loan. The rent v. own discussion is a complex financial decision. If you buy a house with 20% down you're using 5:1 leverage. Even in historically strong housing markets if you put the same amount of principal into a 5:1 levered SP500 you'd have made much more money buying stocks than you would that home. So if your rent = interest + maintenance and you could afford to invest the same in principal in equities you'd do much better. Now I don't know any investment advisor who would tell a client (and I'm not one at all so take my advice for what it is -- the thoughts of a business person) to go all in on a 5x leveraged equity portfolio.

bretpiatt 7y ago

Home ownership has created wealth for two independent reasons: 1. In many markets in the US housing has been a good investment (for a bunch of reasons too long to discuss here). 2. Owning a home with a mortgage on it forces the owner to "put money in savings" each month as they pay down principal on the loan. The rent v. own discussion is a complex financial decision. If you buy a house with 20% down you're using 5:1 leverage. Even in historically strong housing markets if you put the same amount of principal into a 5:1 levered SP500 you'd have made much more money buying stocks than you would that home. So if your rent = interest + maintenance and you could afford to invest the same in principal in equities you'd do much better. Now I don't know any investment advisor who would tell a client (and I'm not one at all so take my advice for what it is -- the thoughts of a business person) to go all in on a 5x leveraged equity portfolio.