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I think this argument gets confused because some people refer to it as an investment/asset while others refer to it in emotional terms as a means to pursue happ

by bumby 5y ago

I think this argument gets confused because some people refer to it as an investment/asset while others refer to it in emotional terms as a means to pursue happiness. They aren’t always the same thing.

willis936 5y ago
For most people it's both. There's a reason home ownership is often a component of "the American Dream". Owning land and a house is a huge step in status and financial security. Owning a house is also a huge luxury. It's strange to deny either of these realities. Some people don't want luxuries, okay, but it should be clear that nearly everyone does.
- bumby 5y ago
  Recognizing it is one thing, but thinking it’s a good “investment” is another. Often funding/chasing status is a fools errand IMO. Part of the problem is that homes being the largest asset that a person owns because they’re chasing the status of that American Dream. Can you think of any other illiquid asset that people would suggest piling a majority of your net worth into?
  - willis936 5y ago
    There is no other asset I can own that alleviates the financial burden of burning nearly half of my take-home pay in perpetuity to fund some rich landlord's beach vacations.
    - xur17 5y ago
      But it doesn't remove that financial burden entirely (or even close to entirely). You're still paying: * opportunity cost * property taxes * interest
      - jurassic 5y ago
        You're paying many of these things in a rental as well. But at the end of 30 years the landlord keeps the asset.
        refurb 5y ago
        I was living in a place in SF that would have cost me 3x to purchase versus my rent. I could take the leftover and invest in other assets. I'm actually ahead of where I would be had I owned since condos have dropped in SF with Covid.
        bumby 5y ago
        If someone is well-off enough to be in a position to choose, renting is essentially paying a premium for freedom of movement. Used smartly, this can be an avenue to dramatically increase earnings over time because in today’s economy switching jobs is one of the faster ways to increase wages. While previous generations may not have had that problem, I think it changes the own/rent calculus for younger people.
      - deleted 5y ago
        [deleted]
    - bumby 5y ago
      If you’re spending that large of a percentage on housing you’re already running against most prudent financial advice and probably shouldn’t be thinking of housing as an investment asset
      - willis936 5y ago
        I live in the real world, not the fantasy one they haves think exist. I understand where you're coming from though. You wouldn't want social mobility to become the norm.
        bumby 5y ago
        You may want to revisit the HN guidelines. With that aside, I absolutely do want to foster social mobility. I actually think it’s still possible but probably not in the dream-world way many people think where it comes completely on their own terms. In most cases, it involves avoiding a few basic things like substance abuse, onerous debt, living outside ones means, and having kids before one is financially stable. But that often flies in the face of what people emotionally want or are told to pursue, so sometimes people want to go into massive debt for depreciating assets or to go to college because that’s what “everyone” does, or to live in an expensive, trendy area because it’s cool or they think that’s where they need to be to chase status. Barring those types of mistakes, social mobility (towards the upper middle class level at least) is generally available. I’m willing to bet many people on HN are already close to that status even if it doesn’t feel like it because they’re comparing themselves to economic outliers rather than the average citizen.
- paulcole 5y ago
  > Owning a house is also a huge luxury. It's strange to deny either of these realities. I'll happily deny this reality. Owning a home is a huge luxury to some, but it is also a huge burden to some.
eloisant 5y ago
It is kinda wrong to see your primary residence as an investment. You can't sell it unless you find a different place to live.
- bumby 5y ago
  I don’t disagree, but that’s the reality of many Americans. Their home is their largest asset by type. This is also why home ownership is one of the largest drivers of wealth. Maybe it shouldn’t be.
  - eloisant 5y ago
    It's an asset but not an investment. It's factored in your net worth (i.e. your wealth) but it's not something you can leverage like the rest of your wealth. Note that if you're a homeowner, and the overall market goes up, you don't benefit from it at all. Your wealth goes up on paper, but it doesn't change anything in your life except it will be more expensive if you want to move.
    - bumby 5y ago
      I completely understand the distinction, but it’s not entirely different from other assets for the typical American. The two largest wealth assets are their homes and 401k/pensions. Both those groups have a lot of friction before their gains can be realized. And many people do downsize as they get older, meaning it’s less expensive to move events if their home value increased. Unfortunately, many people (just skim this thread) assume home values always go up so they consider them an investment.

by bumby 5y ago

willis936 5y ago

For most people it's both. There's a reason home ownership is often a component of "the American Dream". Owning land and a house is a huge step in status and financial security. Owning a house is also a huge luxury. It's strange to deny either of these realities. Some people don't want luxuries, okay, but it should be clear that nearly everyone does.

bumby 5y ago
Recognizing it is one thing, but thinking it’s a good “investment” is another. Often funding/chasing status is a fools errand IMO. Part of the problem is that homes being the largest asset that a person owns because they’re chasing the status of that American Dream. Can you think of any other illiquid asset that people would suggest piling a majority of your net worth into?
- willis936 5y ago
  There is no other asset I can own that alleviates the financial burden of burning nearly half of my take-home pay in perpetuity to fund some rich landlord's beach vacations.
  - xur17 5y ago
    But it doesn't remove that financial burden entirely (or even close to entirely). You're still paying: * opportunity cost * property taxes * interest
    - jurassic 5y ago
      You're paying many of these things in a rental as well. But at the end of 30 years the landlord keeps the asset.
      - refurb 5y ago
        I was living in a place in SF that would have cost me 3x to purchase versus my rent. I could take the leftover and invest in other assets. I'm actually ahead of where I would be had I owned since condos have dropped in SF with Covid.
      - bumby 5y ago
        If someone is well-off enough to be in a position to choose, renting is essentially paying a premium for freedom of movement. Used smartly, this can be an avenue to dramatically increase earnings over time because in today’s economy switching jobs is one of the faster ways to increase wages. While previous generations may not have had that problem, I think it changes the own/rent calculus for younger people.
    - deleted 5y ago
      [deleted]
  - bumby 5y ago
    If you’re spending that large of a percentage on housing you’re already running against most prudent financial advice and probably shouldn’t be thinking of housing as an investment asset
    - willis936 5y ago
      I live in the real world, not the fantasy one they haves think exist. I understand where you're coming from though. You wouldn't want social mobility to become the norm.
      - bumby 5y ago
        You may want to revisit the HN guidelines. With that aside, I absolutely do want to foster social mobility. I actually think it’s still possible but probably not in the dream-world way many people think where it comes completely on their own terms. In most cases, it involves avoiding a few basic things like substance abuse, onerous debt, living outside ones means, and having kids before one is financially stable. But that often flies in the face of what people emotionally want or are told to pursue, so sometimes people want to go into massive debt for depreciating assets or to go to college because that’s what “everyone” does, or to live in an expensive, trendy area because it’s cool or they think that’s where they need to be to chase status. Barring those types of mistakes, social mobility (towards the upper middle class level at least) is generally available. I’m willing to bet many people on HN are already close to that status even if it doesn’t feel like it because they’re comparing themselves to economic outliers rather than the average citizen.
paulcole 5y ago
> Owning a house is also a huge luxury. It's strange to deny either of these realities. I'll happily deny this reality. Owning a home is a huge luxury to some, but it is also a huge burden to some.

eloisant 5y ago

It is kinda wrong to see your primary residence as an investment. You can't sell it unless you find a different place to live.

bumby 5y ago
I don’t disagree, but that’s the reality of many Americans. Their home is their largest asset by type. This is also why home ownership is one of the largest drivers of wealth. Maybe it shouldn’t be.
- eloisant 5y ago
  It's an asset but not an investment. It's factored in your net worth (i.e. your wealth) but it's not something you can leverage like the rest of your wealth. Note that if you're a homeowner, and the overall market goes up, you don't benefit from it at all. Your wealth goes up on paper, but it doesn't change anything in your life except it will be more expensive if you want to move.
  - bumby 5y ago
    I completely understand the distinction, but it’s not entirely different from other assets for the typical American. The two largest wealth assets are their homes and 401k/pensions. Both those groups have a lot of friction before their gains can be realized. And many people do downsize as they get older, meaning it’s less expensive to move events if their home value increased. Unfortunately, many people (just skim this thread) assume home values always go up so they consider them an investment.