3 ms·

I guess this is about me! I am renting for a reasonable rate. There is a similar house on my street for 1 mil. While I could buy it, I could also live off that

I guess this is about me! I am renting for a reasonable rate. There is a similar house on my street for 1 mil. While I could buy it, I could also live off that 1 mil if it was in liquid investments for the rest of my life. The dividends would pay my rent, expenses and then some. Why should I put such a massive investment on a single asset? It can be difficult to even insure a house in my state, the so called “insurance crisis.” My financial plan is to work while I can bare it, then head off to a cheaper place once I can’t. I’ve never been too interested in accumulating great stores of things and don’t have champagne taste. I save a lot of what I make. I’m assuming that the economic good time will end during my lifetime, so live a simple and enjoyable life that I think I will be able to sustain even if my ability to work is destroyed. I think that makes me a big picture pessimist but a small picture optimist.

atom058 4y ago
I just had a discussion about this with my family, and I'm in your camp of living small and avoiding the painful adjustments that might come in future. If I wanted to, I could get a house or buy an apartment, but it would require me to put in most of my wealth to cover the mortgage. Currently in a rent-controlled apartment, so my housing costs after buying would go up about x5 with the interest rates we're seeing now. And then my utilities, insurance and other maintenance costs on top. I feel I'd need to earn 2-3 times what I'm earning now to be comfortable with that level of spend. I would feel trapped if I'd have to sustain property ownership on my current salary level, as it would force me to keep working certain jobs and long hours. But many of my peers seem to have made a different choice
swatcoder 4y ago
Same here. I had good luck buying after the 2008 bust and selling some time later, and am open to taking advantage of an opportunity like that if we see another big dip. But otherwise, there's no rush to be house poor again in an overheated market like this. It was stressful then and intensified the golden handcuffs experience that often comes with working in tech. Accumulating flexible savings and then maybe buying a modest "retirement" home later in cash or with a small/short-term mortgage seems to be the way.
lotsofpulp 4y ago
> There is a similar house on my street for 1 mil. While I could buy it, I could also live off that 1 mil if it was in liquid investments for the rest of my life. The dividends would pay my rent, expenses and then some. The option is usually not paying $1M cash for the house or investing $1M cash into a dividend paying investment. The option is usually paying $200k or less and then a stream of payments for a certain time period, and you could still invest at least some portion of the remaining $800k since the mortgage debt cannot be called by the lender so you do not have to worry about unexpected increases in mortgage payments.
- dougmwne 4y ago
  And I would pay quite a bit for borrowing that 800k since the era of rock bottom interest rates is over. I have run the numbers multiple times. After the property taxes, utilities, maintenance, debt servicing and insurance, I’d be spending quite a bit more of my income for housing than I do now for a similar property. The people who own my house have benefited from absolutely massive asset appreciation over the past 10 years and are grandfathered in on much lower property taxes. I would pay 4x the property tax, double the loan rate and the possibility of the home price going up 4x like they experienced seems pretty remote. I think the fact on the ground is that the housing market is not fair and that some people get incredibly lucky in their timing and others would be just better off renting.

atom058 4y ago

I just had a discussion about this with my family, and I'm in your camp of living small and avoiding the painful adjustments that might come in future. If I wanted to, I could get a house or buy an apartment, but it would require me to put in most of my wealth to cover the mortgage. Currently in a rent-controlled apartment, so my housing costs after buying would go up about x5 with the interest rates we're seeing now. And then my utilities, insurance and other maintenance costs on top. I feel I'd need to earn 2-3 times what I'm earning now to be comfortable with that level of spend. I would feel trapped if I'd have to sustain property ownership on my current salary level, as it would force me to keep working certain jobs and long hours. But many of my peers seem to have made a different choice

swatcoder 4y ago

Same here. I had good luck buying after the 2008 bust and selling some time later, and am open to taking advantage of an opportunity like that if we see another big dip. But otherwise, there's no rush to be house poor again in an overheated market like this. It was stressful then and intensified the golden handcuffs experience that often comes with working in tech. Accumulating flexible savings and then maybe buying a modest "retirement" home later in cash or with a small/short-term mortgage seems to be the way.

lotsofpulp 4y ago

> There is a similar house on my street for 1 mil. While I could buy it, I could also live off that 1 mil if it was in liquid investments for the rest of my life. The dividends would pay my rent, expenses and then some. The option is usually not paying $1M cash for the house or investing $1M cash into a dividend paying investment. The option is usually paying $200k or less and then a stream of payments for a certain time period, and you could still invest at least some portion of the remaining $800k since the mortgage debt cannot be called by the lender so you do not have to worry about unexpected increases in mortgage payments.

dougmwne 4y ago
And I would pay quite a bit for borrowing that 800k since the era of rock bottom interest rates is over. I have run the numbers multiple times. After the property taxes, utilities, maintenance, debt servicing and insurance, I’d be spending quite a bit more of my income for housing than I do now for a similar property. The people who own my house have benefited from absolutely massive asset appreciation over the past 10 years and are grandfathered in on much lower property taxes. I would pay 4x the property tax, double the loan rate and the possibility of the home price going up 4x like they experienced seems pretty remote. I think the fact on the ground is that the housing market is not fair and that some people get incredibly lucky in their timing and others would be just better off renting.