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Why You Should Never Buy a Home Again

jamesaltucher.com

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Re: Why You Should Never Buy a Home Again

#91

Post by orijing »

pshapiro wrote: post #90
orijing wrote: post #78

Earlier quoted context omitted.

Possibly true, but what if employees had the additional flexibility that being tied down to their homes prevented? I think you are confusing this effect with a more general bias towards mobility relative to other countries. The most recent housing market collapse has made America much slower at readjusting to restructuring of the economy--for example, workers in Florida can't easily sell off their homes to move to a…

What do you mean by, "Possibly true"?

Sorry for being unclear. I was referring to:

> Americans move much more frequently than people in most other countries.

That fact may be true, but my point is that it may hide the effects of uncontrolled-for variables

Re: Why You Should Never Buy a Home Again

#92

Post by teyc »

dctoedt wrote: post #64

One big macro-scale drawback to home ownership is that it impedes labor mobility: It anchors homeowners to a particular city and makes it harder for them to consider moving elsewhere to find employment. A few months ago I heard economists on Marketplace saying this was a significant national policy problem.

Labour mobility is a relatively new concept too. In the days before nuclear families, people have large extended families to rely on for childcare, and are in a better position to look after their elderly without having to send them to a nursing home. I'm not saying labour mobility is a bad thing, but they have their own policy issues.

Re: Why You Should Never Buy a Home Again

#93

Post by teyc »

frankus wrote: post #16

The man's got a point. And I say that as a homeowner of nine years. The first point I would make is that unless you're independently wealthy, you're either going to be renting housing or renting money. All else equal, thirty years later you'll own some money or you'll own some property, respectively. The trick is in the "all else equal" part, because given rent versus price ratios, interest rates, and inflation expec…

There is not one right rule to follow. It all depends on investment trends, the cost of maintenance, the competition for tenants.

In Australia, where 98% of people live on 2% of its land, buying can make sense because it is a hedge against travelling time. As population grows, competition becomes more intense for suburbs that are closer to the city, buying a plot means that you have got a shorter commute than future residents.

Ownership is also a hedge against rent rises. A retiree who is risk averse may find it better to own the property they live in rather than try to pay rent on a fixed pension.

Re: Why You Should Never Buy a Home Again

#94

Post by teyc »

ulrich wrote: post #12

This is a very biased view and it might become invalid in different market conditions. Just think of a great inflation or any market collapse. If you own a house, you can still live in there. But you can only burn your cash for heating. As long as our financial system works, cash is of course the best form of an asset.

That's absolutely right.

All discussions about the merits of investing in houses must be compared to something else that is available at the moment.

Cash may be king now, but one needs to always be aware of inflation.

I am surprised though at his figures for housing:

> Housing returned 0.4% per year from from 1890 to 2004.

I wonder where he got that from.

There are times when you can buy for less than the cost of replacement, due to rising cost of building materials, labour et c.

Re: Why You Should Never Buy a Home Again

#95

Post by gamble »

rahoulb wrote: post #74
TamDenholm wrote: post #59

Earlier quoted context omitted.

I understand that your point probably is "as long as you pay your mortgage and taxes, no one can kick you out". I think the likelyhood of being kicked out in both instances is extremely low if you continue to pay your rent/mortgage.

last year there were a number of stories in the UK press (not that that is necessarily an indicator of accuracy) about renters having a month's notice to move out as the landlord had defaulted on the mortgage (and not informed the tenants).

They were lucky not to live in the US! Since the foreclosure crisis began, a lot of people have found out their rental home was foreclosed when the sheriff showed up on their door to evict them.

Re: Why You Should Never Buy a Home Again

#96

Post by nir »

billswift wrote: post #87
jaltucher wrote: post #70

Earlier quoted context omitted.

Yeah, go buy a REIT or a housing-related stock. Then you haev all the investment benefits of owning a house EXCEPT - you don't have to pay extra taxes - no maintenance - you can sell any second you want. So go figure.

Anyone who takes advice from or goes into business with someone who could write "EXCEPT - you don't have to pay extra taxes - no maintenance - you can sell any second you want" is an idiot and deserves anything bad that happens as a result.

Could you explain? I think the intention is that you earn from the housing market's growth while keeping your investment liquid?

Re: Why You Should Never Buy a Home Again

#97

Post by mrschwabe »

ericb wrote: post #38
mrschwabe wrote: post #31

I'll buy a home with cash. Never with debt. Mortgages are pointless. I'd rather pay my rent to a landlord than a bank.

Mortgages are an excellent inflation hedge. Consider it--you borrow a large pool of dollars to buy the home. The value of the dollar drops through the floor. Now you are paying back the loan which was for a fixed amount and doesn't change with dollars worth half as much.

Sure, if your timing is perfect. This isn't 1975 though. Who knows what's going to happen.

Re: Why You Should Never Buy a Home Again

#98

Post by billswift »

nir wrote: post #96
billswift wrote: post #87

Earlier quoted context omitted.

Anyone who takes advice from or goes into business with someone who could write "EXCEPT - you don't have to pay extra taxes - no maintenance - you can sell any second you want" is an idiot and deserves anything bad that happens as a result.

Could you explain? I think the intention is that you earn from the housing market's growth while keeping your investment liquid?

The problem is in the first two - taxes and maintenance. You are still paying your share of them. You are likely paying more, proportionately, than you would if you owned the property directly, because you are also paying someone else to handle them for you.

Re: Why You Should Never Buy a Home Again

#99

Post by itsnotvalid »

orijing wrote: post #78
pg wrote: post #77

"Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes." If that was their plan (which I doubt), it wasn't very effective. Americans move much more frequently than people in most other countries.

Possibly true, but what if employees had the additional flexibility that being tied down to their homes prevented? I think you are confusing this effect with a more general bias towards mobility relative to other countries. The most recent housing market collapse has made America much slower at readjusting to restructuring of the economy--for example, workers in Florida can't easily sell off their homes to move to a…

Main reason for the lack of mobility for places other than US is because of the size of the mobilizable area one can take. Before the formation of EU, Europeans can only move within their own nation, and comparing that to US, you can see the big difference in terms of land size and number of cities to choose from.

With that regard, one need some other forms of statistics to compare if there is no such housing prison (which exists all over the world) and how would this different from the current situation.

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