4 ms·

With the mortgage route, owning a house isn't beneficial until you pay it off, which for most people isn't until they are well into their 60's. The main benefit

by _8j50 3y ago

With the mortgage route, owning a house isn't beneficial until you pay it off, which for most people isn't until they are well into their 60's. The main benefit of owning a home is immediate improvement in quality of life, which is worth it only if you have a children to raise in my subjective opinion. Often, it's the people in the area that make or break the housing market, which blog posts like this always overlook. There are maybe a handful of metropolitan areas/megapolis in the US where the majority of americans could live and feel welcome. Land and building costs are probably cheaper in Idaho or rural Ohio but it may not be safe for anyone who can't assimilate to the goings ons if those areas. That can be said much of rural US. That's why not many remote workers relocate to cheaper and prettier places in the US. I am however a huge proponent of high speed rail connecting remote suburbs with city centers. Building new housing on unincorporated land and connecting it via high speed rail that is. Imagine suburbs in NE california or south of Reno,NV (or much of south central NV) to LA and SF. Or Denver with western colorado. Point is, much of the US is not developed. People would want to live in rural areas if it meant easy and fast access to cities. Even considering remote suburbs part of the big city in terms of tax, laws and infrastructure support.

willis936 3y ago
>With the mortgage route, owning a house isn't beneficial until you pay it off This is wrong. It's (financially) beneficial as soon as your equity surpasses the difference in payments between rental and buying, which is nearly immediately.
- _8j50 3y ago
  This makes no sense, how does equity factor in? You mean if you sell the house? If so, that's only true if you are not just going to buy another house. So long as you have a monthly mortgage your liquidity will continue to be strangled by those payments. Your quality of life will not improve until you start having extra liquidity. Money is meaningless if you can't buy stuff with it. Being technically able to liquify your assets is not the same as having actual liquidity.
  - willis936 3y ago
    Of course you can buy things with it. Liquid is liquid. Assets are assets. Assets can be liquidated. You have an asset when you have equity in your housing and you don't when you rent. The difference is burning 30-60% of your income vs. not burning that amount. Tired of owning a home? Liquidate, rent, and you have that cash.
    - _8j50 3y ago
      Yeah, I suppose that's true so long as your preconition of equity being more than the difference of mortgage+downpayment minus what you would have paid in rent. For $1k rent vs $40k downpayment + a nice total monthly payment on a house of 1800, in 10 years rent would be 120-130k and home ownership 250k+. In 20yrs, a home would cost you 470k+ and assuming rent goes up by 500 in 10 yrs then by year 20, renting costs you 300k. Assuming repairs and maintenance don't cost over 100k in 10 yrs and 170k in 20 years, your equity is solid. But simply leaving that extra 800 mortgage cost (vs rent) in your bank with no interest gets you 92k in 10 yrs and 196k in 20 years. The home equity according to my quick napkin math at best gets you 10kish more in 10 years and will be 20k+ less than savings in 20 years. Rent is unpredictable but so are insurance rates, natural disasters, the city/neighborhood driving down home prices for random reasons,etc...the element of risk is non-negligible. Money invested or saved is also equity. Planning 20+ years ahead is crazy to me as well unless you have kids. To me, housing is not equity or investment. It is shelter and if the quality of live benefit near term is better or long term for kids would be better then it is worth it for that alone. The whole homes are equity thing is a scam to make people even more addicted to mortgage. People should be able to save and buy a house cash, that should be the norm and investing in houses should be illegal.
- bombcar 3y ago
  Don’t forget property tax and maintenance; rents include that but owning doesn’t. It does become advantageous to own at some point, but without appreciation it’s more like 5 to seven years (unless you have a strange market or a rental inversion).

by _8j50 3y ago

willis936 3y ago

>With the mortgage route, owning a house isn't beneficial until you pay it off This is wrong. It's (financially) beneficial as soon as your equity surpasses the difference in payments between rental and buying, which is nearly immediately.

_8j50 3y ago
This makes no sense, how does equity factor in? You mean if you sell the house? If so, that's only true if you are not just going to buy another house. So long as you have a monthly mortgage your liquidity will continue to be strangled by those payments. Your quality of life will not improve until you start having extra liquidity. Money is meaningless if you can't buy stuff with it. Being technically able to liquify your assets is not the same as having actual liquidity.
- willis936 3y ago
  Of course you can buy things with it. Liquid is liquid. Assets are assets. Assets can be liquidated. You have an asset when you have equity in your housing and you don't when you rent. The difference is burning 30-60% of your income vs. not burning that amount. Tired of owning a home? Liquidate, rent, and you have that cash.
  - _8j50 3y ago
    Yeah, I suppose that's true so long as your preconition of equity being more than the difference of mortgage+downpayment minus what you would have paid in rent. For $1k rent vs $40k downpayment + a nice total monthly payment on a house of 1800, in 10 years rent would be 120-130k and home ownership 250k+. In 20yrs, a home would cost you 470k+ and assuming rent goes up by 500 in 10 yrs then by year 20, renting costs you 300k. Assuming repairs and maintenance don't cost over 100k in 10 yrs and 170k in 20 years, your equity is solid. But simply leaving that extra 800 mortgage cost (vs rent) in your bank with no interest gets you 92k in 10 yrs and 196k in 20 years. The home equity according to my quick napkin math at best gets you 10kish more in 10 years and will be 20k+ less than savings in 20 years. Rent is unpredictable but so are insurance rates, natural disasters, the city/neighborhood driving down home prices for random reasons,etc...the element of risk is non-negligible. Money invested or saved is also equity. Planning 20+ years ahead is crazy to me as well unless you have kids. To me, housing is not equity or investment. It is shelter and if the quality of live benefit near term is better or long term for kids would be better then it is worth it for that alone. The whole homes are equity thing is a scam to make people even more addicted to mortgage. People should be able to save and buy a house cash, that should be the norm and investing in houses should be illegal.
bombcar 3y ago
Don’t forget property tax and maintenance; rents include that but owning doesn’t. It does become advantageous to own at some point, but without appreciation it’s more like 5 to seven years (unless you have a strange market or a rental inversion).