11–20 of 1001 posts
My refrain remains: housing cannot be both affordable in perpetuity and a good investment. These are mutually exclusive goals. Let people build.
Japan has plenty of societal ills, but at least Tokyo has been doing amazing on this front.
The biggest real world advantage for the average person for buying a house is forced savings. If a mortgage is $3K and rent is $2K per month, Joe Sixpack is not going to save $1K in a sinking fund. He’s going to spend some extra non-zero portion of that money. So in the long run, for average real consumers, not a theoretical economically minded consumer, a mortgage forces frugality.
* I'm paying for a landlord's mortgage, for a good that should be easily accessible, at insane prices.
* I cannot save up that money, while my landlord does, allowing them to purchase more houses.
Rent is theft.
The analysis from 1, 2, and 3 seem obviously financially bad. Because they stop at a particular point in time. The point of buying over renting, when using a fixed-APR mortgage, is to lock in a monthly rate (that will eventually sunset to only the cost of maintenance and taxes). And peace of mind that only an act of god or being fired will force you to move. This is never guaranteed with rent, unless you have one of those multi-decade leases. And good luck finding a house with a multi-decade lease.
For an investing analogy, buying a house is like buying an annuity. Not buying the market. When a person buys an annuity they are still considered to be "investing".
Not an investment avenue for the corporate/hedge/elite money holders.
Housing as an "investment" is a tool for extracting crippling debt from the populous as a means of behavioral control through financial stress.
Housing prices only keep pace with inflation. America realizes it totally forgot about a few million homes it built, greatly expanding supply. Housing prices rise only 2%. Alice is much, much worse off for buying. In total, buying costs ~$1.75M, where renting would have cost her ~$1.3M. Because her finances were tied up in the house while the home value has gone up so little, Alice has minimal savings. Her daughter receives some financial aid, but takes on hundreds of thousands of student loan debt to go to college.
Yes, in 18 years Alice will spend $1.75M, but she'll also own a big share or all of the house. On the other side when renting she ends owning nothing after 18 years. Or is the calculator taking in consideration the selling price of the house?
The biggest real world advantage for the average person for buying a house is forced savings. If a mortgage is $3K and rent is $2K per month, Joe Sixpack is not going to save $1K in a sinking fund. He’s going to spend some extra non-zero portion of that money. So in the long run, for average real consumers, not a theoretical economically minded consumer, a mortgage forces frugality.
Reality in the UK is that if you can find the downpayment on a mortgage, the monthly outgoings in that mortgage (both the interest and the capital) are less than the rent. Sure you might have to replace a roof every 50-100 years (I had a quote in 2021 for my 60 year old roof for 4% of the value of the house), or a new heating system every 30 years (just replaced mine from the 80s, 3% of the cost of the house), but on the whole the vast majority of the cost is in that mortgage payment
> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…