5 ms·

Obligatory reminder that inflation is likely good for you if you carry mortgage or other similar amortized debt. As salaries ratchet up, it will become progres

by runako 5y ago

Obligatory reminder that inflation is likely good for you if you carry mortgage or other similar amortized debt. As salaries ratchet up, it will become progressively easier for you to pay your mortgage. Inflation is not all negative!

hackeraccount 5y ago
I (well, realistically my wife and I) just bought a house and I remember thinking "now would be a good time for a bout of inflation." I'm not quite as certain about that anymore but the rate we got is a fair bit less then 7% so I suppose we're making out on this to some degree. Not on groceries though.
- runako 5y ago
  It's not (just) about the interest rate on your mortgage, though. The real benefit comes as salaries ratchet up in response to inflation, which will happen as long as the inflation is somewhat persistent. Thinking back to the mid-90s, for example, CS grads from prestigious schools were jockeying to earn $40k-$60k at prestigious tech firms. They were able to purchase houses on those salaries. If someone purchased a house in e.g. San Mateo after a couple of promotions to $75k, they might have spent in the neighborhood of $250k[1]. A few rounds of inflation later, the payments on that mortgage are inconsequential to that person (who may still, in 2022, hold a mortgage there). TL;DR; compensation and inflation are linked. 1 - https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-story.html https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-...
vinyl7 5y ago
Sucks for all us millennials who haven't yet been able to buy a home, and probably won't be able to going forward
- runako 5y ago
  Great thing that it's possible to work remotely from low-cost areas now! If the median home price in your area is more than $320k, you might consider going remote and buying elsewhere. (If home ownership is a top priority.)
  - seanp2k2 5y ago
    Great thing too that many companies are applying BS “cost of labor” adjustments if you choose to not work at / near HQ.
    - runako 5y ago
      Genuine question: are they doing real COL adjustments, or window dressing? For example, the Bay Area can reasonably costs 2-3x+ relative to other major US cities. Are remote jobs really cutting total comp by 50%-60% for remote workers in the US? Or are the differences more cosmetic, like 20%? I have seen this before and it is always a huge win for the employee.
  - brimble 5y ago
    Low-cost areas are almost all not places you want to live with a family, if you have a choice. They almost all have poor services for families and mediocre to bad public schools. Unless you can afford to have one parent not work and that parent is good at teaching kids at many ages and in many subjects and that parent won't go insane doing that for years on end, which is at any rate opportunity-cost probably more expensive than just moving somewhere less cheap in the first place (especially if the other parent is that capable, surely their earning potential is significant). So this works well for single people with remote jobs or couples who never want kids and for whom neither partner's work requires proximity to a decent city.
    - runako 5y ago
      > Low-cost areas are almost all not places you want to live with a family, if you have a choice. The unsaid foundation of this obvious bit of snobbery is that only a handful of coastal US cities are suitable for families. The median house price in the US is $408k. If you live in a market with a higher median price (for example: Washington, D.C. is $600k, LA is over $900k, SF has a median of $1.3m), you like in one of the most expensive US markets. It's obviously silly to say that people living in e.g. Atlanta ($375k) or Charlotte ($355k) or Chicago (median: $324k) are all living in places with "poor services for families and mediocre to bad public schools." (Also: the median sale price in SF will buy you a mansion in most of those other cities.) Everybody won't be able to buy both a home and the experience in living in one of the most expensive cities, but they should be aware that it's a choice.

by runako 5y ago

hackeraccount 5y ago

I (well, realistically my wife and I) just bought a house and I remember thinking "now would be a good time for a bout of inflation." I'm not quite as certain about that anymore but the rate we got is a fair bit less then 7% so I suppose we're making out on this to some degree. Not on groceries though.

runako 5y ago
It's not (just) about the interest rate on your mortgage, though. The real benefit comes as salaries ratchet up in response to inflation, which will happen as long as the inflation is somewhat persistent. Thinking back to the mid-90s, for example, CS grads from prestigious schools were jockeying to earn $40k-$60k at prestigious tech firms. They were able to purchase houses on those salaries. If someone purchased a house in e.g. San Mateo after a couple of promotions to $75k, they might have spent in the neighborhood of $250k[1]. A few rounds of inflation later, the payments on that mortgage are inconsequential to that person (who may still, in 2022, hold a mortgage there). TL;DR; compensation and inflation are linked. 1 - https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-story.html https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-...

vinyl7 5y ago

Sucks for all us millennials who haven't yet been able to buy a home, and probably won't be able to going forward

runako 5y ago
Great thing that it's possible to work remotely from low-cost areas now! If the median home price in your area is more than $320k, you might consider going remote and buying elsewhere. (If home ownership is a top priority.)
- seanp2k2 5y ago
  Great thing too that many companies are applying BS “cost of labor” adjustments if you choose to not work at / near HQ.
  - runako 5y ago
    Genuine question: are they doing real COL adjustments, or window dressing? For example, the Bay Area can reasonably costs 2-3x+ relative to other major US cities. Are remote jobs really cutting total comp by 50%-60% for remote workers in the US? Or are the differences more cosmetic, like 20%? I have seen this before and it is always a huge win for the employee.
- brimble 5y ago
  Low-cost areas are almost all not places you want to live with a family, if you have a choice. They almost all have poor services for families and mediocre to bad public schools. Unless you can afford to have one parent not work and that parent is good at teaching kids at many ages and in many subjects and that parent won't go insane doing that for years on end, which is at any rate opportunity-cost probably more expensive than just moving somewhere less cheap in the first place (especially if the other parent is that capable, surely their earning potential is significant). So this works well for single people with remote jobs or couples who never want kids and for whom neither partner's work requires proximity to a decent city.
  - runako 5y ago
    > Low-cost areas are almost all not places you want to live with a family, if you have a choice. The unsaid foundation of this obvious bit of snobbery is that only a handful of coastal US cities are suitable for families. The median house price in the US is $408k. If you live in a market with a higher median price (for example: Washington, D.C. is $600k, LA is over $900k, SF has a median of $1.3m), you like in one of the most expensive US markets. It's obviously silly to say that people living in e.g. Atlanta ($375k) or Charlotte ($355k) or Chicago (median: $324k) are all living in places with "poor services for families and mediocre to bad public schools." (Also: the median sale price in SF will buy you a mansion in most of those other cities.) Everybody won't be able to buy both a home and the experience in living in one of the most expensive cities, but they should be aware that it's a choice.