5 ms·

I don't think that's good advice. I, and most people I know who have invested in home ownership over the past 30-40 years, have done way better than we could ev

by sdellis 5mo ago

I don't think that's good advice. I, and most people I know who have invested in home ownership over the past 30-40 years, have done way better than we could ever have in the stock market or 401k. It's way more tangible for people than trusting some index fund with their savings, especially if they can maintain the home, improve it, and do repairs mostly themselves. And bonus... when you sell, you don't have to wait until you're 60 years old to spend it!

jedberg 5mo ago
My advice was to not delude yourself into thinking you're buying as an investment, and instead convince yourself to buy for psychological reasons. That seems in line with what you said.
Paracompact 5mo ago
> I, and most people I know who have invested in home ownership over the past 30-40 years, have done way better than we could ever have in the stock market or 401k. https://www.macrotrends.net/3072/us-house-price-index https://www.macrotrends.net/3072/us-house-price-index (~3x in the past 30 years, about 3.7% return per year) https://www.macrotrends.net/2324/sp-500-historical-chart-data https://www.macrotrends.net/2324/sp-500-historical-chart-dat... (~15x in the past 30 years, about 9.3% return per year) This is in line with conventional wisdom on return rates for these asset classes: https://awealthofcommonsense.com/2024/01/what-is-the-historical-rate-of-return-on-housing/ https://awealthofcommonsense.com/2024/01/what-is-the-histori... Unless you are comparing retrospectively hot-shot real estate with retrospectively mediocre stocks, then stock market investment has always won out substantially over real estate investment in terms of raw return rate. This makes sense, given that if the opposite were really true, then it would make no sense to invest in productive businesses as opposed to holding companies that just hoarded empty houses indefinitely.
- jstanley 5mo ago
  You're missing that most people are able to buy houses on borrowed money, so their housing investment is effectively levered up 10x or more, at least at the beginning. It's not a choice between $1m in housing appreciating at 3% and $1m in stocks appreciating at 9%. It's a choice between $1m in housing appreciating at 3% or $100k in stocks appreciating at 9%.
  - jandrewrogers 5mo ago
    The problem with leveraged investments is that they can put you deep underwater. Many people in Seattle that bought $1M leveraged with $100k now own a $800k asset. They've lost twice as much as they invested. They would have been much better off investing that in stocks without leverage.
    - defen 5mo ago
      Multiple people in this thread have mentioned the Seattle real estate market going to shit (for sellers) - is that related to tech layoffs or is something else going on? San Francisco's market is just as crazy as ever.
      - jandrewrogers 5mo ago
        Seattle real estate has been trending downward for a couple years now. It isn't a single factor but the confluence of several. Initially it was only in some market segments but seems to have spread to most of them now. The inventory of housing currently on the market is anomalously high and there are relatively few buyers. I know a few people that will be lucky to sell for as much as they paid a decade ago. People who bought during the COVID bubble are underwater. This feels more like the beginning of a macro trend than a temporary blip.
        locusofself 5mo ago
        I don't think the data supports this at all. Home prices have doubled here since 2014. We are having a modest dip right now.
        pixelatedindex 5mo ago
        Yeah, but rent doesn’t seem to go down that much though. Opportunity cost of moving is real, security deposits are sizable. I wanted to rent for as long as possible but there’s no rent cap and the apartments keep jacking up the rent. At least now they have some sense to cap the rental raise percent but I’ve had to deal with 15-20% increases before, and not to mention the cost of parking in an apartment. I probably made a mistake buying but I couldn’t take the bullshit from landlords and all the headaches that come with people wanting more money.

by sdellis 5mo ago

jedberg 5mo ago

My advice was to not delude yourself into thinking you're buying as an investment, and instead convince yourself to buy for psychological reasons. That seems in line with what you said.

Paracompact 5mo ago

> I, and most people I know who have invested in home ownership over the past 30-40 years, have done way better than we could ever have in the stock market or 401k. https://www.macrotrends.net/3072/us-house-price-index https://www.macrotrends.net/3072/us-house-price-index (~3x in the past 30 years, about 3.7% return per year) https://www.macrotrends.net/2324/sp-500-historical-chart-data https://www.macrotrends.net/2324/sp-500-historical-chart-dat... (~15x in the past 30 years, about 9.3% return per year) This is in line with conventional wisdom on return rates for these asset classes: https://awealthofcommonsense.com/2024/01/what-is-the-historical-rate-of-return-on-housing/ https://awealthofcommonsense.com/2024/01/what-is-the-histori... Unless you are comparing retrospectively hot-shot real estate with retrospectively mediocre stocks, then stock market investment has always won out substantially over real estate investment in terms of raw return rate. This makes sense, given that if the opposite were really true, then it would make no sense to invest in productive businesses as opposed to holding companies that just hoarded empty houses indefinitely.

jstanley 5mo ago
You're missing that most people are able to buy houses on borrowed money, so their housing investment is effectively levered up 10x or more, at least at the beginning. It's not a choice between $1m in housing appreciating at 3% and $1m in stocks appreciating at 9%. It's a choice between $1m in housing appreciating at 3% or $100k in stocks appreciating at 9%.
- jandrewrogers 5mo ago
  The problem with leveraged investments is that they can put you deep underwater. Many people in Seattle that bought $1M leveraged with $100k now own a $800k asset. They've lost twice as much as they invested. They would have been much better off investing that in stocks without leverage.
  - defen 5mo ago
    Multiple people in this thread have mentioned the Seattle real estate market going to shit (for sellers) - is that related to tech layoffs or is something else going on? San Francisco's market is just as crazy as ever.
    - jandrewrogers 5mo ago
      Seattle real estate has been trending downward for a couple years now. It isn't a single factor but the confluence of several. Initially it was only in some market segments but seems to have spread to most of them now. The inventory of housing currently on the market is anomalously high and there are relatively few buyers. I know a few people that will be lucky to sell for as much as they paid a decade ago. People who bought during the COVID bubble are underwater. This feels more like the beginning of a macro trend than a temporary blip.
      - locusofself 5mo ago
        I don't think the data supports this at all. Home prices have doubled here since 2014. We are having a modest dip right now.
      - pixelatedindex 5mo ago
        Yeah, but rent doesn’t seem to go down that much though. Opportunity cost of moving is real, security deposits are sizable. I wanted to rent for as long as possible but there’s no rent cap and the apartments keep jacking up the rent. At least now they have some sense to cap the rental raise percent but I’ve had to deal with 15-20% increases before, and not to mention the cost of parking in an apartment. I probably made a mistake buying but I couldn’t take the bullshit from landlords and all the headaches that come with people wanting more money.