4 ms·

> What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent. Right, but in most markets rent prices track pro

> What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent. Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born. > From a finance perspective there's no difference between a house and a share in a corporation. From an investor's perspective, perhaps. But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements. Consumer finance is finance.

gruez 6y ago
>Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born. and that's fine, because rents are tracked directly in the CPI. >But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements. That's what they tell themselves, but from an analytical perspective there's no difference between buying a $1M house that provides you $5000/month return in the form of imputed rent, and buying $1M in stocks/bonds that provides you $5000/month return in cash, which you can use to pay rent.
- throwawaygh 6y ago
  > but from an analytical perspective there's no difference Only for embarrassingly impoverished analytical frameworks. Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :)
  - gruez 6y ago
    >Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :) That does indeed make a x% return in the housing market more attractive than a x% return in the stock market, but has to be considered against all the other factors as well eg. diversification, actual returns (historically stocks have higher returns), risk (10x leverage also means 10x more loss), costs (stocks require no upkeep, houses require yearly maintenance), etc. At the end of the day though, it's still an investment as opposed to something you consume.

gruez 6y ago

>Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born. and that's fine, because rents are tracked directly in the CPI. >But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements. That's what they tell themselves, but from an analytical perspective there's no difference between buying a $1M house that provides you $5000/month return in the form of imputed rent, and buying $1M in stocks/bonds that provides you $5000/month return in cash, which you can use to pay rent.

throwawaygh 6y ago
> but from an analytical perspective there's no difference Only for embarrassingly impoverished analytical frameworks. Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :)
- gruez 6y ago
  >Unless you know of a bank that will loan me seven figures at sub-3% interest rates based on 10% down and my income, and then let me spend that money in the stock market :) That does indeed make a x% return in the housing market more attractive than a x% return in the stock market, but has to be considered against all the other factors as well eg. diversification, actual returns (historically stocks have higher returns), risk (10x leverage also means 10x more loss), costs (stocks require no upkeep, houses require yearly maintenance), etc. At the end of the day though, it's still an investment as opposed to something you consume.