4 ms·

a house isn’t a particularly good investment. it’s just the one everyone, in america, makes because they’re financially illiterate. anyone can buy ETFs now with

by mylons 5y ago

a house isn’t a particularly good investment. it’s just the one everyone, in america, makes because they’re financially illiterate. anyone can buy ETFs now with zero commission and zero gate keeping.

setr 5y ago
It’s money you have to spend (shelter is non-optional), and mortgage is definitely a better investment than renting (you’ll get at least some of it back on selling, unless it dips very far) whereas rent is guaranteed to be burnt. And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle, assuming you can put up the standard up-front capital requirements. As far as I can tell, it’s quite reasonable.
- chii 5y ago
  interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. > assuming you can put up the standard up-front capital requirements. which is also a cost - just more difficult to imagine as a cost. This cost is called the cost of capital, and is non-zero. If you take the minimum return, which is the risk-free rate from buying treasuries, this can be considered your cost of capital for this upfront deposit. More, if you consider this capital could be invested in the markets for some risk. It isn't always clear cut which wins out, mortgage or renting. For the past few decades, mortgages have been winning out due to declining interest rates, but that might not last.
  - drdec 5y ago
    > interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. You keep saying this but my mortgage payment for the past six years has been 0. And when I had a mortgage the payment always was comparable with the rent I was paying on a 2 bedroom apartment before buying the house. That apartment would never accommodate my family of four. If renting works for you that's great, keep renting. But don't pretend it's because it is somehow cheaper than owning - it's not.
- klipt 5y ago
  > And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment. And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments.
  - sgtnoodle 5y ago
    Anecdotally, I live in the bay area and bought a house 4 years ago in a very desirable location, and my mortgage + property tax is cheaper than the equivalent rent would be.
  - jjav 5y ago
    > And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments. You're paying for all of that when renting as well, so not a differentiator.
    - klipt 5y ago
      It is a differentiator if those things would add up to more than rent. In that case renting is literally saving money that you can e.g. put into the stock market instead of real estate.
_3u10 5y ago
It may or may not be but rent is an even worse investment.
robbedpeter 5y ago
Life is not all about money or investment. Sometimes it's about stability - owning a home lets you plan for the future in ways that nothing else allows for. It puts you out of reach of all sorts of predatory folks and companies.
- rootsudo 5y ago
  That, itself is an investment. Stability is an investment. Forecasting is speculation and risk, and stability is to mitigate risk and that is an investment opportunity (or not.)
sgtnoodle 5y ago
Believing people are stupid for owning their homes is a rather interesting opinion, especially with the implication that putting the same money in the stock market instead is smarter. It certainly seems higher risk and potentially more lucrative as a result, but you can't live in an ETF. As someone with both a mortgage and ETFs, I've been pleased with the return on both over the years.
- mylons 5y ago
  illiterate in finance is ignorance, not stupidity.
darkerside 5y ago
This discounts the power of investing on margin because loans are easily available to people. And it makes sense, because people are more likely to pay back a loan on their home then on a stock. Or, maybe you're right and everyone but you is dumb.
jjav 5y ago
> anyone can buy ETFs now If you're ok with living in a homeless encampment and putting the money into ETFs, sure. Otherwise, you still need to rent so might as well buy.

by mylons 5y ago

setr 5y ago

It’s money you have to spend (shelter is non-optional), and mortgage is definitely a better investment than renting (you’ll get at least some of it back on selling, unless it dips very far) whereas rent is guaranteed to be burnt. And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle, assuming you can put up the standard up-front capital requirements. As far as I can tell, it’s quite reasonable.

chii 5y ago
interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. > assuming you can put up the standard up-front capital requirements. which is also a cost - just more difficult to imagine as a cost. This cost is called the cost of capital, and is non-zero. If you take the minimum return, which is the risk-free rate from buying treasuries, this can be considered your cost of capital for this upfront deposit. More, if you consider this capital could be invested in the markets for some risk. It isn't always clear cut which wins out, mortgage or renting. For the past few decades, mortgages have been winning out due to declining interest rates, but that might not last.
- drdec 5y ago
  > interest payments from the mortgage can be directly compared with rent, but not the principle repayment portion of the mortgage. You keep saying this but my mortgage payment for the past six years has been 0. And when I had a mortgage the payment always was comparable with the rent I was paying on a 2 bedroom apartment before buying the house. That apartment would never accommodate my family of four. If renting works for you that's great, keep renting. But don't pretend it's because it is somehow cheaper than owning - it's not.
klipt 5y ago
> And the difference between rent and mortgage as a monthly payment isn’t that far for same-lifestyle That doesn't seem to be true in the Bay Area which has a very high buy/rent ratio because everyone expects housing here to be a great investment. The property tax alone on a townhouse can be higher than the rent on a similar apartment. And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments.
- sgtnoodle 5y ago
  Anecdotally, I live in the bay area and bought a house 4 years ago in a very desirable location, and my mortgage + property tax is cheaper than the equivalent rent would be.
- jjav 5y ago
  > And property tax, mortgage interest, HOA fees/utilities like garbage and water, are pure expenses like rent, not investments. You're paying for all of that when renting as well, so not a differentiator.
  - klipt 5y ago
    It is a differentiator if those things would add up to more than rent. In that case renting is literally saving money that you can e.g. put into the stock market instead of real estate.

_3u10 5y ago

It may or may not be but rent is an even worse investment.

robbedpeter 5y ago

Life is not all about money or investment. Sometimes it's about stability - owning a home lets you plan for the future in ways that nothing else allows for. It puts you out of reach of all sorts of predatory folks and companies.

rootsudo 5y ago
That, itself is an investment. Stability is an investment. Forecasting is speculation and risk, and stability is to mitigate risk and that is an investment opportunity (or not.)

sgtnoodle 5y ago

Believing people are stupid for owning their homes is a rather interesting opinion, especially with the implication that putting the same money in the stock market instead is smarter. It certainly seems higher risk and potentially more lucrative as a result, but you can't live in an ETF. As someone with both a mortgage and ETFs, I've been pleased with the return on both over the years.

mylons 5y ago
illiterate in finance is ignorance, not stupidity.

darkerside 5y ago

This discounts the power of investing on margin because loans are easily available to people. And it makes sense, because people are more likely to pay back a loan on their home then on a stock. Or, maybe you're right and everyone but you is dumb.

jjav 5y ago

> anyone can buy ETFs now If you're ok with living in a homeless encampment and putting the money into ETFs, sure. Otherwise, you still need to rent so might as well buy.