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Non homeowners are paying way more whilst getting less in return. I really dont understand the logic of being OK with paying double for a house, just because t

by adflux 5y ago

Non homeowners are paying way more whilst getting less in return. I really dont understand the logic of being OK with paying double for a house, just because the buyer can sell it for the same amount (or higher) afterwards. I could purchase a 150m2 house with my salary a decade ago. Now I could find a 75m2 house that would be too expensive for me. I dont care about being able to sell the house for more money afterwards, it doesn't matter, because I have to live somewhere anyways. So any profits gained will (probably) be factored into the purchase price of the next house I'm buying.

em-bee 5y ago
i am confused by your first sentence. what do non-homeowners sell?
- adflux 5y ago
  Some people say "Well, you're paying more but you can also sell it for more afterwards". But non-homeowners are still paying more for less. That's the argument I am trying to make (poorly)
  - xapata 5y ago
    My rent doesn't change with interest rates.
    - JKCalhoun 5y ago
      That's true, rent keeps going up? A fixed loan doesn't change with interest rates either.
      - xapata 5y ago
        Rent increases are a cause of inflation (as part of the basket of goods that defines inflation), which in turn causes interest rate increases, which then cause home price decreases. Homes are like fixed-income securities. When interest rates go up, the value of existing securities goes down.
    - sremani 5y ago
      So does my mortgage that is why it is called 15 year FIXED.
      - xapata 5y ago
        Yes, as I said, you care about the monthly payment, not the lump sum price of the house.
    - matwood 5y ago
      Daily no. But higher interest rates and high inflation absolutely leads to higher rents each year when your lease renews (unless of course your in some rent controlled environment).
    - xwdv 5y ago
      No, but in 20 years you’ll be paying rent with expensive 2041 dollars while the 30 year fixed rate mortgage is still being paid in cheap 2021 dollars.
      - xapata 5y ago
        Yes, but it turns out I came out ahead from 1990-2021 by having all my investments in the stock market instead of housing.
  - dragonwriter 5y ago
    > Some people say "Well, you're paying more but you can also sell it for more afterwards". No, they don’t, even talking about non-homeowners, because non-homeowners aren’t paying that much more (rents aren’t increasing the way purchase prices are, the rstio between them is increasing), and non-homeowners have nothing to sell, unless you are referring to subleasing as selling. > But non-homeowners are still paying more for less. I think you mean “first-time homebuyers”, but that just means it is more attractive to invest elsewhere while renting than jump into personal home ownership. No one is losing anything, certain choices are just becoming less favored.
xapata 5y ago
> paying double for a house Are you talking about monthly payment or lump sum? When the lump sum doubles yet the monthly payment is the same, has the cost really changed? To me, no. I was never going to buy lump sum, so I only care about monthly payment.
- basch 5y ago
  Presumably, owing money for 60 years instead of 30 years will cost you much more in the long run. And more baked in interest early in the loan means less recovered when you sell.
  - xapata 5y ago
    How the hell do you find a 60-year loan? Sign me up! Remember, leverage is what makes home ownership a good investment.
    - basch 5y ago
      The premise I replied to was the lump sum doubling and the monthly staying the same. The only way for that to happen is to extend the period.
      - xapata 5y ago
        You forgot interest rates changing, which is the primary cause of the recent home price changes. Remember, the mortgage market has a set of standard terms, like a 30-year-fixed.
- nicoburns 5y ago
  Your liability has. If the interest rates goes back up to late 20th rates, your monthly payment isn't going to stay the same.
  - foogazi 5y ago
    Only if its a variable rate loan
foogazi 5y ago
> I really dont understand the logic of being OK with paying double for a house Double what? The price someone paid years ago under totally different market conditions? In the future prices might be halved or double again - act accordingly

by adflux 5y ago

em-bee 5y ago

i am confused by your first sentence. what do non-homeowners sell?

adflux 5y ago
Some people say "Well, you're paying more but you can also sell it for more afterwards". But non-homeowners are still paying more for less. That's the argument I am trying to make (poorly)
- xapata 5y ago
  My rent doesn't change with interest rates.
  - JKCalhoun 5y ago
    That's true, rent keeps going up? A fixed loan doesn't change with interest rates either.
    - xapata 5y ago
      Rent increases are a cause of inflation (as part of the basket of goods that defines inflation), which in turn causes interest rate increases, which then cause home price decreases. Homes are like fixed-income securities. When interest rates go up, the value of existing securities goes down.
  - sremani 5y ago
    So does my mortgage that is why it is called 15 year FIXED.
    - xapata 5y ago
      Yes, as I said, you care about the monthly payment, not the lump sum price of the house.
  - matwood 5y ago
    Daily no. But higher interest rates and high inflation absolutely leads to higher rents each year when your lease renews (unless of course your in some rent controlled environment).
  - xwdv 5y ago
    No, but in 20 years you’ll be paying rent with expensive 2041 dollars while the 30 year fixed rate mortgage is still being paid in cheap 2021 dollars.
    - xapata 5y ago
      Yes, but it turns out I came out ahead from 1990-2021 by having all my investments in the stock market instead of housing.
- dragonwriter 5y ago
  > Some people say "Well, you're paying more but you can also sell it for more afterwards". No, they don’t, even talking about non-homeowners, because non-homeowners aren’t paying that much more (rents aren’t increasing the way purchase prices are, the rstio between them is increasing), and non-homeowners have nothing to sell, unless you are referring to subleasing as selling. > But non-homeowners are still paying more for less. I think you mean “first-time homebuyers”, but that just means it is more attractive to invest elsewhere while renting than jump into personal home ownership. No one is losing anything, certain choices are just becoming less favored.

xapata 5y ago

> paying double for a house Are you talking about monthly payment or lump sum? When the lump sum doubles yet the monthly payment is the same, has the cost really changed? To me, no. I was never going to buy lump sum, so I only care about monthly payment.

basch 5y ago
Presumably, owing money for 60 years instead of 30 years will cost you much more in the long run. And more baked in interest early in the loan means less recovered when you sell.
- xapata 5y ago
  How the hell do you find a 60-year loan? Sign me up! Remember, leverage is what makes home ownership a good investment.
  - basch 5y ago
    The premise I replied to was the lump sum doubling and the monthly staying the same. The only way for that to happen is to extend the period.
    - xapata 5y ago
      You forgot interest rates changing, which is the primary cause of the recent home price changes. Remember, the mortgage market has a set of standard terms, like a 30-year-fixed.
nicoburns 5y ago
Your liability has. If the interest rates goes back up to late 20th rates, your monthly payment isn't going to stay the same.
- foogazi 5y ago
  Only if its a variable rate loan

foogazi 5y ago

> I really dont understand the logic of being OK with paying double for a house Double what? The price someone paid years ago under totally different market conditions? In the future prices might be halved or double again - act accordingly