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I'd point out that the data for homes is averaged nationally. Historically, there have been Good Places and Bad Places to buy a home. Home price growth in in-de

I'd point out that the data for homes is averaged nationally. Historically, there have been Good Places and Bad Places to buy a home. Home price growth in in-demand coastal areas is very different than in rural areas. In the US, "Flyover states" I'm sure skew this number heavily. Part of this is captured by the Volatility Index mentioned > Individual houses are 4x the volatility of a housing index, close to the same volatility as the stock market. But it bears calling out explicitly. Economically depressed areas will have very poor growth relative to inflation. Economically prosperous, desirable, growing areas will, by definition, have an increasing population and a finite area to accommodate that population. NIMBYism exacerbates this effect by reducing supply of new homes. If you pick a good location, buying a home is a fantastic purchase. It ties up that investment money in an asset that you can actually USE. You can improve it, make modifications and tweaks to your liking, which renters cannot. And often times these improvements result in positive net positive return. You'll never get forced out because your landlord wants to sell. You'll never have to deal with toxic landlords at all. You'll get to deduct all that mortgage interest from your taxes (if you itemize). And in California, your monthly payments will never rise YoY more than $MONTHLY_TAX * .02

readthenotes1 1y ago
"You'll never get forced out because your landlord wants to sell." Where I live, the highest source of inflation for me has been property taxes. It's almost as if my landlord wants me to sell.
- derekp7 1y ago
  I had the double whammy of property taxes AND insurance increases on my last house. Budget was a bit tight, but that almost sent me over the edge. I learned my lesson on my next house purchase, and made sure there was a ton of leg room in the budget, along with things I could very quickly drop from the budget if needed.
- sorcerer-mar 1y ago
  Hot take: that’s actually desirable. Sell and let someone who can make better use of it (i.e. more readily stomach the property tax) take possession. Calcified landed gentry just sitting on dirt that appreciates due to the efforts and investments of everyone around them is Bad, Actually.
  - readthenotes1 1y ago
    Not for those of us who like our home and have made a life here. What you're advocating for is treating potential club members better than current club members. It doesn't make that much sense. If you really were advocating for sensible policies, you would be advocating for many many more multifamily dwellings and/or taxes being directly proportional to the cost of the infrastructure needed to support it--generally by linear feet of roadway taken instead of property square feet.
    - sorcerer-mar 1y ago
      No I'm advocating for the prevention of feudalism where a permanent landed gentry can extract wealth in perpetuity through no contribution whatsoever than having a deed. I agree that property square feet is a bad metric. The right way to do this is actually to tax based on the unimproved value of the land, which would in fact create many many more multifamily dwellings by virtue of increasing the carrying cost of land as the market demand for density increases.
      - archagon 1y ago
        In my opinion, a person should not be forced to move just because of economic circumstances outside their control. Unless you're a spry 20-something with no real connections, moving will be incredibly disruptive and potentially traumatic. One person's "landed gentry" is another's "housing stability."
        sorcerer-mar 1y ago
        In my opinion, options should be balanced against each other and then we should pick the least-bad or most-good ones. The "allow zero carrying costs indefinitely on any land" option entails runaway wealth inequality, skyrocketing housing costs, major impediments to family and household formation, and destruction of the payoff period for any capital expenditures made in a geography as younger generations have to create new cities from scratch over and over again, creating enormous financially unsustainable infrastructure sprawl (see: Houston) as redevelopment is too difficult against the vested interests of the landed gentry (see: NYC and SF). This of course causes decay, bankrupts cities and states, and ends up reducing the quality of life for everyone, including the landed gentry. The "incur carrying costs" option entails old people reverse mortgaging their property until they die, or selling and moving into something more suitable for their needs.
centra_minded 1y ago
You can filter for SF/NYC home appreciation in the tool at the bottom of the post to see the difference between in-demand areas and overall.
bravetraveler 1y ago
I'd point out that while an asset, yes, it is a liability. Not in the typical financial sense, either! I'm hesitant on buying because I have next to no certainty in my role. If I be a good little Business Man and make someone else filthy rich, have all the make-up beers, and show up on time: at-will employment is still a thing. I may still be forced out by circumstance. Equity might make the hit softer, I don't know. I do know a rainy day fund will be useful.
- nradov 1y ago
  Well if you have to move to take a new job then you can always sell your home or rent it out. You'll take a hit on transaction costs or property management fees but you're unlikely to lose all of your equity.
  - bravetraveler 1y ago
    > Well if you have to move to take a new job then you can always sell your home or rent it out. Right, that's 'forced out' with extra steps :) I'm buying a home to live in (and if we're honest, die). Not employment. It may not even pay! > unlikely Hence the hesitation [for certainty]. This is half a statement about the market and half about my capacity for it. If I lost my job - the more likely case - I don't want this burden, too. To your/OPs point: this can be an opportunity... but so is that fat down payment! Losing the position with savings/options: video games and burn-out recovery for the next three years. Comfortably trying on the next fad. Without savings/options but a house/debt: panic, hot potato, and paperwork with a much more urgent job search.
- msgodel 1y ago
  The ugly thing is that you're most likely to get laid off when the market is down. I've argued this with people so many times and I think some of them are finally starting to see what I was saying. btw I don't think getting rid of at will employment will change that. These cycles are so long they'll certainly find a way to get rid of you during a down cycle if they want to.
  - 1y ago
pitpatagain 1y ago
The mortgage interest deduction is incredibly over rated. For most people the last few years of high standard deduction + salt cap mean few people really get much benefit from it. At lower tax brackets it's a pretty minor discount on your interest to begin with. The much bigger tax thing this article doesn't consider is the $250k/$500k single/married capital gains exemption on sale of primary residence.
Velorivox 1y ago
> If you pick a good location, buying a home is a fantastic purchase. It ties up that investment money in an asset that you can actually USE. Also: It's a leveraged investment for most people (mortgage). If you put in 20% and your house tripled in value over the last ten years (which is what happened in SF & Seattle afaict), you make an annualized return of 27% (for a whopping 1070% total, i.e. more than 10x), after accounting for your payments (with realtor fees the number is slightly less but not meaningfully). Meanwhile as a renter your rent would likely have at least doubled over the same period, doubling the size of the nonrecoupable leak in your financial hull. That's 1070% as opposed to 224%, i.e. 10x vs. 2x in the S&P. This is the reality of what has happened over the past 10 years, by the way, I am not using hypotheticals. Do note that home values tripling in price over the last decade is not common, even among these expensive cities, you have to be looking at specific types of housing in "luxury" neighborhoods. TL;DR: Location matters. A LOT.
- DontchaKnowit 1y ago
  I mean you can make any investment look great if you just make up the return. What percentage of houses triples in value over 10 years? And home much are you spending in maintaining, insuring, and paying taxes in 10 years? I think your point still stands but its not nearly as fabulous an investment as you are suggesting
  - deleted 1y ago
    [deleted]
  - Velorivox 1y ago
    > I think your point still stands Thanks. > its not nearly as fabulous an investment as you are suggesting In case it wasn't clear, I'm not trying to give investment advice (my comment is very focused on what happened, not what will happen). I am however, implying that a lot of people made bad financial decisions by misapprehending their situation and consuming the wrong "content". I believe many people can be spared significant regret if they double-check, disbelieve, or replace much of what they’re told by the internet.
  - 1y ago

readthenotes1 1y ago

"You'll never get forced out because your landlord wants to sell." Where I live, the highest source of inflation for me has been property taxes. It's almost as if my landlord wants me to sell.

derekp7 1y ago
I had the double whammy of property taxes AND insurance increases on my last house. Budget was a bit tight, but that almost sent me over the edge. I learned my lesson on my next house purchase, and made sure there was a ton of leg room in the budget, along with things I could very quickly drop from the budget if needed.
sorcerer-mar 1y ago
Hot take: that’s actually desirable. Sell and let someone who can make better use of it (i.e. more readily stomach the property tax) take possession. Calcified landed gentry just sitting on dirt that appreciates due to the efforts and investments of everyone around them is Bad, Actually.
- readthenotes1 1y ago
  Not for those of us who like our home and have made a life here. What you're advocating for is treating potential club members better than current club members. It doesn't make that much sense. If you really were advocating for sensible policies, you would be advocating for many many more multifamily dwellings and/or taxes being directly proportional to the cost of the infrastructure needed to support it--generally by linear feet of roadway taken instead of property square feet.
  - sorcerer-mar 1y ago
    No I'm advocating for the prevention of feudalism where a permanent landed gentry can extract wealth in perpetuity through no contribution whatsoever than having a deed. I agree that property square feet is a bad metric. The right way to do this is actually to tax based on the unimproved value of the land, which would in fact create many many more multifamily dwellings by virtue of increasing the carrying cost of land as the market demand for density increases.
    - archagon 1y ago
      In my opinion, a person should not be forced to move just because of economic circumstances outside their control. Unless you're a spry 20-something with no real connections, moving will be incredibly disruptive and potentially traumatic. One person's "landed gentry" is another's "housing stability."
      - sorcerer-mar 1y ago
        In my opinion, options should be balanced against each other and then we should pick the least-bad or most-good ones. The "allow zero carrying costs indefinitely on any land" option entails runaway wealth inequality, skyrocketing housing costs, major impediments to family and household formation, and destruction of the payoff period for any capital expenditures made in a geography as younger generations have to create new cities from scratch over and over again, creating enormous financially unsustainable infrastructure sprawl (see: Houston) as redevelopment is too difficult against the vested interests of the landed gentry (see: NYC and SF). This of course causes decay, bankrupts cities and states, and ends up reducing the quality of life for everyone, including the landed gentry. The "incur carrying costs" option entails old people reverse mortgaging their property until they die, or selling and moving into something more suitable for their needs.

centra_minded 1y ago

You can filter for SF/NYC home appreciation in the tool at the bottom of the post to see the difference between in-demand areas and overall.

bravetraveler 1y ago

I'd point out that while an asset, yes, it is a liability. Not in the typical financial sense, either! I'm hesitant on buying because I have next to no certainty in my role. If I be a good little Business Man and make someone else filthy rich, have all the make-up beers, and show up on time: at-will employment is still a thing. I may still be forced out by circumstance. Equity might make the hit softer, I don't know. I do know a rainy day fund will be useful.

nradov 1y ago
Well if you have to move to take a new job then you can always sell your home or rent it out. You'll take a hit on transaction costs or property management fees but you're unlikely to lose all of your equity.
- bravetraveler 1y ago
  > Well if you have to move to take a new job then you can always sell your home or rent it out. Right, that's 'forced out' with extra steps :) I'm buying a home to live in (and if we're honest, die). Not employment. It may not even pay! > unlikely Hence the hesitation [for certainty]. This is half a statement about the market and half about my capacity for it. If I lost my job - the more likely case - I don't want this burden, too. To your/OPs point: this can be an opportunity... but so is that fat down payment! Losing the position with savings/options: video games and burn-out recovery for the next three years. Comfortably trying on the next fad. Without savings/options but a house/debt: panic, hot potato, and paperwork with a much more urgent job search.
msgodel 1y ago
The ugly thing is that you're most likely to get laid off when the market is down. I've argued this with people so many times and I think some of them are finally starting to see what I was saying. btw I don't think getting rid of at will employment will change that. These cycles are so long they'll certainly find a way to get rid of you during a down cycle if they want to.
- 1y ago

pitpatagain 1y ago

The mortgage interest deduction is incredibly over rated. For most people the last few years of high standard deduction + salt cap mean few people really get much benefit from it. At lower tax brackets it's a pretty minor discount on your interest to begin with. The much bigger tax thing this article doesn't consider is the $250k/$500k single/married capital gains exemption on sale of primary residence.

Velorivox 1y ago

> If you pick a good location, buying a home is a fantastic purchase. It ties up that investment money in an asset that you can actually USE. Also: It's a leveraged investment for most people (mortgage). If you put in 20% and your house tripled in value over the last ten years (which is what happened in SF & Seattle afaict), you make an annualized return of 27% (for a whopping 1070% total, i.e. more than 10x), after accounting for your payments (with realtor fees the number is slightly less but not meaningfully). Meanwhile as a renter your rent would likely have at least doubled over the same period, doubling the size of the nonrecoupable leak in your financial hull. That's 1070% as opposed to 224%, i.e. 10x vs. 2x in the S&P. This is the reality of what has happened over the past 10 years, by the way, I am not using hypotheticals. Do note that home values tripling in price over the last decade is not common, even among these expensive cities, you have to be looking at specific types of housing in "luxury" neighborhoods. TL;DR: Location matters. A LOT.

DontchaKnowit 1y ago
I mean you can make any investment look great if you just make up the return. What percentage of houses triples in value over 10 years? And home much are you spending in maintaining, insuring, and paying taxes in 10 years? I think your point still stands but its not nearly as fabulous an investment as you are suggesting
- deleted 1y ago
  [deleted]
- Velorivox 1y ago
  > I think your point still stands Thanks. > its not nearly as fabulous an investment as you are suggesting In case it wasn't clear, I'm not trying to give investment advice (my comment is very focused on what happened, not what will happen). I am however, implying that a lot of people made bad financial decisions by misapprehending their situation and consuming the wrong "content". I believe many people can be spared significant regret if they double-check, disbelieve, or replace much of what they’re told by the internet.
- 1y ago