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You need to take into consideration the ROI of your down payment as well. The S&P 500 goes up at a pretty consistent 7-10 percent yearly clip. Your $100k down p

You need to take into consideration the ROI of your down payment as well. The S&P 500 goes up at a pretty consistent 7-10 percent yearly clip. Your $100k down payment will be worth about a quarter of a million dollars in ten years. Are you going to save that sort of money owning vs renting over a decade? Maybe. Maybe not. It's fuzzy.

ghaff 5y ago
It varies depending upon the situation but I've never been convinced it's a slam dunk financial decision. Factors like: - Can you rent the type of property you want - For houses in particular, are you willing to put work in - How mobile do you want to be - How important is it to customize the property to how you want it etc.
- shados 5y ago
  It's not a slam dunk if you just look at the numbers. With appreciation, my home, taking into account maintenance, renovations, significant raises in HoA fees and insurance, etc, and correlating that with how much it appreciated in value, probably comes a little shy of a triple-fund portfolio investment. The catch is, I get to live in it. I made it awesome. I put a ton of money on the kitchen, the bathroom, etc to make it something I'll never be able to rent (without paying 9-10k/month anyway, and I can't afford that). I was able to do all that while still coming up only SLIGHTLY below renting + investing the extra. There's a certain emotional value to buying a house that the math can't capture. Even JUST with the financial math, it's pretty close (and sometimes an amazing investment, in the right market). But once you tack on the emotional value, it shits all over the alternative (for people who want a home to call their own). I can't think of any other purchase where you can get something you really want, AND have that thing be a mediocre or better investment at the same time. I can't live inside of my S&P500 position.
dragonwriter 5y ago
> The S&P 500 goes up at a pretty consistent 7-10 percent yearly clip. Your $100k down payment will be worth about a quarter of a million dollars in ten years. Bay Area housing prices tend to appreciate at that rate or faster, and you can acheive much more leverage with better downside risk protection buying housing, since California is a non-recourse state. Plus, it replaces a rental expense you would otherwise have, which a stock market investment doesn’t: you can’t live in an ETF. Risk is higher, too, so its not all upside.
- selectodude 5y ago
  of course your mileage may vary. Renting is more expensive because it is offloading risk in other ways. I don't need to keep a repair fund for a new roof, or a new dishwasher, or a new furnace. Housing is exceptionally illiquid with a 6 percent+ haircut whenever one decides to sell. In california, specifically, a repeal of proposition 13 would destroy both the value of homes home and tax bills would skyrocket. Risk is priced in to both asset classes. Nothing is set in stone.
  - darrylb42 5y ago
    If your dishwasher breaks you can buy something nice and not have the cheapest noisiest machine the landlord buys. Yes there are maintenance items if you own and need to set aside money for those things.

ghaff 5y ago

It varies depending upon the situation but I've never been convinced it's a slam dunk financial decision. Factors like: - Can you rent the type of property you want - For houses in particular, are you willing to put work in - How mobile do you want to be - How important is it to customize the property to how you want it etc.

shados 5y ago
It's not a slam dunk if you just look at the numbers. With appreciation, my home, taking into account maintenance, renovations, significant raises in HoA fees and insurance, etc, and correlating that with how much it appreciated in value, probably comes a little shy of a triple-fund portfolio investment. The catch is, I get to live in it. I made it awesome. I put a ton of money on the kitchen, the bathroom, etc to make it something I'll never be able to rent (without paying 9-10k/month anyway, and I can't afford that). I was able to do all that while still coming up only SLIGHTLY below renting + investing the extra. There's a certain emotional value to buying a house that the math can't capture. Even JUST with the financial math, it's pretty close (and sometimes an amazing investment, in the right market). But once you tack on the emotional value, it shits all over the alternative (for people who want a home to call their own). I can't think of any other purchase where you can get something you really want, AND have that thing be a mediocre or better investment at the same time. I can't live inside of my S&P500 position.

dragonwriter 5y ago

> The S&P 500 goes up at a pretty consistent 7-10 percent yearly clip. Your $100k down payment will be worth about a quarter of a million dollars in ten years. Bay Area housing prices tend to appreciate at that rate or faster, and you can acheive much more leverage with better downside risk protection buying housing, since California is a non-recourse state. Plus, it replaces a rental expense you would otherwise have, which a stock market investment doesn’t: you can’t live in an ETF. Risk is higher, too, so its not all upside.

selectodude 5y ago
of course your mileage may vary. Renting is more expensive because it is offloading risk in other ways. I don't need to keep a repair fund for a new roof, or a new dishwasher, or a new furnace. Housing is exceptionally illiquid with a 6 percent+ haircut whenever one decides to sell. In california, specifically, a repeal of proposition 13 would destroy both the value of homes home and tax bills would skyrocket. Risk is priced in to both asset classes. Nothing is set in stone.
- darrylb42 5y ago
  If your dishwasher breaks you can buy something nice and not have the cheapest noisiest machine the landlord buys. Yes there are maintenance items if you own and need to set aside money for those things.