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Most will turn up their noses for buying a sofa this way, and yet most folks here will happily suffer just as shocking a cost in order to buy a house.

• arbuge 12y ago
  Which is particularly ironic when you consider that the cost of the house typically exceeds the cost of the furniture several times over.
  • SnowProblem 12y ago
    Unlike a couch though, you need a place to live. Is it cheaper to continue renting until you can afford to buy outright? I thought the answer was no.
    • bane 12y ago
      Correct http://assayviaessay.blogspot.com/2014/04/rent-or-buy.html http://assayviaessay.blogspot.com/2014/04/rent-or-buy.html
• jeffwass 12y ago
  A key difference is that the sofa is a wasting asset, with decreasing resale value over time. A house usually retains or has increasing resale value.
  • kchoudhu 12y ago
    > A house usually retains or has increasing resale value I'm not sure we should be so willing to trust this statement after 2008.
• downandout 12y ago
  Not that this makes it much better, but the house at least has a chance of not being a depreciating asset. The $1500 sofa is worth $800 the day after it's delivered.
• tdees40 12y ago
  That statement assumes interest rates are irrelevant. Sure, if you have a 4% interest rate (the going rate these days), you'll pay 72% more than the value of your house, but that completely ignores the time value of money. A 4% interest rate is pretty great (especially when it's tax deductible!), and just saying that because the undiscounted cash flows that you spend are greater than the initial value of the house means very little.
• jschmitz28 12y ago
  No. Nobody on here would take a loan on a house with "effective annual interest rates of more than 100 percent" as mentioned in the article. It's true that people spend much more on a house than if they bought it outright, but they do so at interest rates low enough to where it makes financial sense because the expected return from investing the rest in a low cost index fund beats out the loan interest.