5 ms·

I'm currently holding off despite having a baby on the way, a tech job, and 3/4 of the money saved up. Rates are, barring a crash(which will also hammer home p

I'm currently holding off despite having a baby on the way, a tech job, and 3/4 of the money saved up. Rates are, barring a crash(which will also hammer home prices) likely staying elevated for another year, possibly more. Those rates also allow me to make thousands per month, risk-free, in interest off my savings. I'm able to rent for $3-4k/month, while mortgage+taxes+insurance+maintenance would set me back around $5k/month. Housing inventory is poor, so if I did buy I'd have to opt for a suboptimal location and/or construction. The one circumstance I could see that would possibly make me regret holding off is financial repression by the fed where rates are held below inflation and houses keep appreciating, but I don't see a big risk to that over the next year. I do expect rates to hold, and maybe even rise, since we're running huge deficits(requiring massive treasury issuance) and going into an election year (where no politician will choose austerity). I think it will eventually drop housing prices. Even in the best case for housing, values will likely stay flat in nominal terms.

lotsofpulp 3y ago
>Those rates also allow me to make thousands per month, risk-free, in interest off my savings. If you are in a state with income tax, I would take a minute, even immeasurable, increase in risk by putting it in US Treasuries (like TTTXX at Merrill), resulting in no state income taxes for 95%+ of your return. In case you already are not doing that.
- plagiarist 3y ago
  You just buy TTTXX and it gives the same state tax advantage as buying the treasuries directly?
  - lotsofpulp 3y ago
    Yes, same with VUSXX (vanguard), FSIXX (fidelity), and UTIXX. There might be a negligible amount subject to state income tax, but I am not exactly sure why.
- 01100011 3y ago
  I'm in a mix of paper(6 month US T-Bills), and various UST ETFs with durations anywhere from 0-3 months out to 2Y. US T-Bills(aka shorter duration Treasury bonds) are the place to be right now. We're currently seeing a "bear steepener" where the long end(10Y+) sells off(aka rates go up) so investing further out the curve exposes you to significant duration risk. It's anyone's guess if rates go up or down from here, but with the USG running huge deficits(in a booming economy no less) requiring large treasury issuance in parallel with quantitative tightening and rate hikes by the fed, it's not likely that rates will come down anytime soon.
seanmcdirmid 3y ago
Buying gives you stability, you don’t have to worry about double digit rent increases; it also gives you agency to make the home more suited to your needs. I wouldn’t trust what the government is doing to have any bearing on rates. Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else. Those treasury bonds get expensive when their yields pop above inflation.
- 01100011 3y ago
  I don't have to worry about double digit rent increases. Between rent control and a softening rental market most folks shouldn't be too worried about that right now. If you think burning thousands per month makes you more stable then by all means do it. I think you should check your math and go with the path that increases your net worth but that's just me. > Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else. Right, and that's the government's incentive to pursue financial repression as I mentioned. But that also weakens the dollar and allows inflation to rip again so the government is somewhat boxed-in and has some hard choices to make. My guess is that no repression occurs, rates stay positive as they are now, the government continues to run huge deficits until after the election, and then they pay for it with huge tax increases in 2 years. Right now it feels like the boomers are squeezing the wealth out of the country for their final years and will leave us with quite the bill that only AI-driven productivity gains can resolve.

lotsofpulp 3y ago

>Those rates also allow me to make thousands per month, risk-free, in interest off my savings. If you are in a state with income tax, I would take a minute, even immeasurable, increase in risk by putting it in US Treasuries (like TTTXX at Merrill), resulting in no state income taxes for 95%+ of your return. In case you already are not doing that.

plagiarist 3y ago
You just buy TTTXX and it gives the same state tax advantage as buying the treasuries directly?
- lotsofpulp 3y ago
  Yes, same with VUSXX (vanguard), FSIXX (fidelity), and UTIXX. There might be a negligible amount subject to state income tax, but I am not exactly sure why.
01100011 3y ago
I'm in a mix of paper(6 month US T-Bills), and various UST ETFs with durations anywhere from 0-3 months out to 2Y. US T-Bills(aka shorter duration Treasury bonds) are the place to be right now. We're currently seeing a "bear steepener" where the long end(10Y+) sells off(aka rates go up) so investing further out the curve exposes you to significant duration risk. It's anyone's guess if rates go up or down from here, but with the USG running huge deficits(in a booming economy no less) requiring large treasury issuance in parallel with quantitative tightening and rate hikes by the fed, it's not likely that rates will come down anytime soon.

seanmcdirmid 3y ago

Buying gives you stability, you don’t have to worry about double digit rent increases; it also gives you agency to make the home more suited to your needs. I wouldn’t trust what the government is doing to have any bearing on rates. Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else. Those treasury bonds get expensive when their yields pop above inflation.

01100011 3y ago
I don't have to worry about double digit rent increases. Between rent control and a softening rental market most folks shouldn't be too worried about that right now. If you think burning thousands per month makes you more stable then by all means do it. I think you should check your math and go with the path that increases your net worth but that's just me. > Lower interest rates actually make it cheaper for the government to borrow as it does for everyone else. Right, and that's the government's incentive to pursue financial repression as I mentioned. But that also weakens the dollar and allows inflation to rip again so the government is somewhat boxed-in and has some hard choices to make. My guess is that no repression occurs, rates stay positive as they are now, the government continues to run huge deficits until after the election, and then they pay for it with huge tax increases in 2 years. Right now it feels like the boomers are squeezing the wealth out of the country for their final years and will leave us with quite the bill that only AI-driven productivity gains can resolve.