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It's more typical to think of 'affording' in terms of your expected lifetime income, and this is generally a good predictor of people's spending habits. Lending

It's more typical to think of 'affording' in terms of your expected lifetime income, and this is generally a good predictor of people's spending habits. Lending generally enables this. Avoiding debt entirely is a very risk-averse strategy. As ridiculous as house prices are, they are still generally affordable for many (and whether renting or buying is a better overall financial decision is dependent on many factors which depend on your location, how long you expect to own the house, and your risk profile for real estate vs any other kind of investment. Factors like rental rights can also factor pretty heavily).

dheera 3y ago
Why is avoiding debt a risk averse strategy? I actually do a lot of high risk investments with a small percentage of my net worth -- bitcoin, options, you name it. But I do it with hard cash to my name. If I lose a chunk of that I don't owe anyone anything. I just never thought spending someone else's money and then owing them was even anywhere close to my moral radar of things I would do. The only one time I took a debt is for a car when I had the cash to buy it but it was 2022 and I took a loan at 2% and put the balance of the car in treasury and municipal bonds at ~5% and paying back the loan slowly while selling off the bonds. I wouldn't take a loan if I didn't have the money. Before I could afford a car I just rented cars.
- rcxdude 3y ago
  because the risk with debt is not being able to pay it back - and you are paying the lender for their side of that risk (generally paying less the more of that risk falls on your side, like secured debt). It's a service they are freely offering (and in fact benefits them disproportionately on average), I don't see how it's a moral issue at all.
  - dheera 3y ago
    The moral issue I have is that simply put, if I don't have the money for something, I wasn't meant to have that something. I need to earn the money for it, after which I deserve to have that something. However, the most basic clean-and-functional versions of basic necessities (food, water, shelter, and transportation) should be accessible to everyone working a full-time job, in my opinion, without having to spend other peoples' money. 3 out of those 4 are attainable even with a low-paying job, it's really just shelter that is the problem.
    - rcxdude 3y ago
      Do you believe that taking investment is immoral as well, then? That access to resources should be entirely based on past work/achievements, with no judgement applied to anything to be done in the future? That does seem to be the standard you are applying to yourself, at least. (And again, I do agree that housing is incredibly overpriced in much of the world, it's just that debt vs not doesn't have much to do with it. The high price of mortgages is the same reason the rent is high, and the rent being too high is a problem even if it doesn't involve debt)
      - dheera 3y ago
        Investment is different. In the worst case scenario business goes bankrupt, which usually means you shut down the entity, sell off the assets, and everyone including the owners just go off and gets new jobs and live happily ever after. Personally going bankrupt means you're now facing the possibility of actually being homeless on the streets.
      - throwaway2037 3y ago
        > housing is incredibly overpriced in much of the world Can we please stop this on HN? No, it isn't -- "much of the world". It is overpriced in tiny areas (with incredibly vibrant local economies) of very wealthy countries. Even if you leave Paris, 25+km outside of the city, the property is suddenly reasonably priced. Same for Berlin. (Forget London!) Same for Tokyo. Same for Milan. Also, mostly we have our parents' generation to blame for outrageous house prices in these tiny areas -- they consistently supported and voted for NIMBY-friendly policies. The solution is "simple", but, politically, very difficult to implement: Make housing a human right, not a casino.
    - JadeNB 3y ago
      > The moral issue I have is that simply put, if I don't have the money for something, I wasn't meant to have that something. I need to earn the money for it, after which I deserve to have that something. There's a difference between having money and earning money. If you find $20, are you therefore $20 more deserving? If you are mugged and the thief gets $100, does that make you $100 less deserving? There are plenty of people who have lots of money through no good deed, and plenty who have little through no evil deed, and I think confusing monetary holdings with morality is a very poor road to go down.
- LouisSayers 3y ago
  > Why is avoiding debt a risk averse strategy? Note that they said avoiding ALL debt. For example, my student loan collects interest at a rate of 2.9%. Therefore, it makes sense to maintain that debt if I believe (and accept the risk) of making an investment that pays back a rate of 10%. Financially it might make sense to keep that debt, pay the minimum and invest cash into let's say an index fund. If you have a hardline stance that you NEVER want any debt, then you are basically saying you're highly risk averse (at least when it comes to ending up in the negative).
wyre 3y ago
>As ridiculous as house prices are, they are still generally affordable for many What? Technically this is true because “many” people already own homes and can use that wealth towards another. However, when talking about the unafordability of homes the target market being discussed should be first-time home buyers (unless you have an investment podcast or something). In my HCoL bubble the only people I know that can afford their first house are high-income DINKs, or living 30mins outside of the city, or have a high-paying remote job and can relocate to a LCoL area with its own drawbacks.
- rcxdude 3y ago
  I did mostly mean it in that weasly-way. My main point is that if you can afford the mortgage, you can afford the house, you don't need to be able to make a cash payment for it to afford it. Housing is for sure becoming very difficult to afford even by that definition in a lot of places (and it's not particularly reasonable that even if you can, that housing should take up such a large fraction of your lifetime earnings).
- geraldwhen 3y ago
  Yes, you do live in a bubble. 65% of US families own a home. https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/ https://www.statista.com/statistics/184902/homeownership-rat... Most cities aren’t San Francisco and New York City. Even in both California and New York, there are many areas with affordable homes for single income families.

dheera 3y ago

Why is avoiding debt a risk averse strategy? I actually do a lot of high risk investments with a small percentage of my net worth -- bitcoin, options, you name it. But I do it with hard cash to my name. If I lose a chunk of that I don't owe anyone anything. I just never thought spending someone else's money and then owing them was even anywhere close to my moral radar of things I would do. The only one time I took a debt is for a car when I had the cash to buy it but it was 2022 and I took a loan at 2% and put the balance of the car in treasury and municipal bonds at ~5% and paying back the loan slowly while selling off the bonds. I wouldn't take a loan if I didn't have the money. Before I could afford a car I just rented cars.

rcxdude 3y ago
because the risk with debt is not being able to pay it back - and you are paying the lender for their side of that risk (generally paying less the more of that risk falls on your side, like secured debt). It's a service they are freely offering (and in fact benefits them disproportionately on average), I don't see how it's a moral issue at all.
- dheera 3y ago
  The moral issue I have is that simply put, if I don't have the money for something, I wasn't meant to have that something. I need to earn the money for it, after which I deserve to have that something. However, the most basic clean-and-functional versions of basic necessities (food, water, shelter, and transportation) should be accessible to everyone working a full-time job, in my opinion, without having to spend other peoples' money. 3 out of those 4 are attainable even with a low-paying job, it's really just shelter that is the problem.
  - rcxdude 3y ago
    Do you believe that taking investment is immoral as well, then? That access to resources should be entirely based on past work/achievements, with no judgement applied to anything to be done in the future? That does seem to be the standard you are applying to yourself, at least. (And again, I do agree that housing is incredibly overpriced in much of the world, it's just that debt vs not doesn't have much to do with it. The high price of mortgages is the same reason the rent is high, and the rent being too high is a problem even if it doesn't involve debt)
    - dheera 3y ago
      Investment is different. In the worst case scenario business goes bankrupt, which usually means you shut down the entity, sell off the assets, and everyone including the owners just go off and gets new jobs and live happily ever after. Personally going bankrupt means you're now facing the possibility of actually being homeless on the streets.
    - throwaway2037 3y ago
      > housing is incredibly overpriced in much of the world Can we please stop this on HN? No, it isn't -- "much of the world". It is overpriced in tiny areas (with incredibly vibrant local economies) of very wealthy countries. Even if you leave Paris, 25+km outside of the city, the property is suddenly reasonably priced. Same for Berlin. (Forget London!) Same for Tokyo. Same for Milan. Also, mostly we have our parents' generation to blame for outrageous house prices in these tiny areas -- they consistently supported and voted for NIMBY-friendly policies. The solution is "simple", but, politically, very difficult to implement: Make housing a human right, not a casino.
  - JadeNB 3y ago
    > The moral issue I have is that simply put, if I don't have the money for something, I wasn't meant to have that something. I need to earn the money for it, after which I deserve to have that something. There's a difference between having money and earning money. If you find $20, are you therefore $20 more deserving? If you are mugged and the thief gets $100, does that make you $100 less deserving? There are plenty of people who have lots of money through no good deed, and plenty who have little through no evil deed, and I think confusing monetary holdings with morality is a very poor road to go down.
LouisSayers 3y ago
> Why is avoiding debt a risk averse strategy? Note that they said avoiding ALL debt. For example, my student loan collects interest at a rate of 2.9%. Therefore, it makes sense to maintain that debt if I believe (and accept the risk) of making an investment that pays back a rate of 10%. Financially it might make sense to keep that debt, pay the minimum and invest cash into let's say an index fund. If you have a hardline stance that you NEVER want any debt, then you are basically saying you're highly risk averse (at least when it comes to ending up in the negative).

wyre 3y ago

>As ridiculous as house prices are, they are still generally affordable for many What? Technically this is true because “many” people already own homes and can use that wealth towards another. However, when talking about the unafordability of homes the target market being discussed should be first-time home buyers (unless you have an investment podcast or something). In my HCoL bubble the only people I know that can afford their first house are high-income DINKs, or living 30mins outside of the city, or have a high-paying remote job and can relocate to a LCoL area with its own drawbacks.

rcxdude 3y ago
I did mostly mean it in that weasly-way. My main point is that if you can afford the mortgage, you can afford the house, you don't need to be able to make a cash payment for it to afford it. Housing is for sure becoming very difficult to afford even by that definition in a lot of places (and it's not particularly reasonable that even if you can, that housing should take up such a large fraction of your lifetime earnings).
geraldwhen 3y ago
Yes, you do live in a bubble. 65% of US families own a home. https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/ https://www.statista.com/statistics/184902/homeownership-rat... Most cities aren’t San Francisco and New York City. Even in both California and New York, there are many areas with affordable homes for single income families.