Maybe treating housing as an investment was a mistake • Hacker News Board

Re: Maybe treating housing as an investment was a mistake

#331

Post by nemo44x » Mon, Mar 06, 2023, 6:07 PM UTC

rs999gti wrote: post #309

nemo44x wrote: post #262

Earlier quoted context omitted.

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room. But you see young people renting for 15 years in expensive plac…

I don't know why you are being downvoted. Buying small, building equity, and trading up has always been a thing in home ownership.

It's the same people who voluntarily choose to pay top dollar to go to an out of state university when their local university is just as good and then find themselves 100k in debt and with an unemployable degree and complain the system is broken.

Re: Maybe treating housing as an investment was a mistake

#332

Post by s1artibartfast » Mon, Mar 06, 2023, 6:07 PM UTC

arcticbull wrote: post #3

My refrain remains: housing cannot be both affordable in perpetuity and a good investment. These are mutually exclusive goals. Let people build.

I don't think that is true at all. A good investment can be one that tracks inflation and simply pays out the labor and capital you put into it.

Owning should be cheaper than renting in the long run for the same reason it is cheaper to cook at home than eating out.

Savings by owning should be commensurate with the risk taken, cost of upkeep, and time value of money.

Re: Maybe treating housing as an investment was a mistake

#333

Post by aeternum » Mon, Mar 06, 2023, 6:07 PM UTC

treis wrote: post #231

photon12 wrote: post #6

> 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…

The solution in the past was for people to move to a different city. Migration is way down compared to generations past and continues to fall: https://www.pewresearch.org/fact-tank/2021/12/16/in-2020-few... The change in city living is also a big difference. Cities used to have parts of the city with the lowest cost of living in the metro area. Things like boarding houses and single room apartments w/ shared bathroom…

It is strange that it is easier than ever to move and stay connected yet most people don't.

Re: Maybe treating housing as an investment was a mistake

#334

Post by billiam » Mon, Mar 06, 2023, 6:07 PM UTC

smallerfish wrote: post #256

dfxm12 wrote: post #58

Earlier quoted context omitted.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

I did an FHA loan on my first house 15 years ago, and the down payment was peanuts. Unless you have a poor FICO or your debt ratio is high, you probably qualify. https://www.fha.com/fha_loan_requirements

I don't think you got the point of this article. Maybe read it again?

Re: Maybe treating housing as an investment was a mistake

#335

Post by greenie_beans » Mon, Mar 06, 2023, 6:08 PM UTC

photon12 wrote: post #6

> 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…

this is a good example of the myth of bootstraps.

i bet you can find a response to this comment that says, "well your friend should find another job or move to a city with a lower cost of living."

Re: Maybe treating housing as an investment was a mistake

#336

Post by abeppu » Mon, Mar 06, 2023, 6:09 PM UTC

I do think one of the rare things about Alice in the example at the top is that she realizes the change in her incentives in a very self-aware way.

I recall speaking to a Boomer who has owned their own home for decades, whose daughter and son-in-law were both living with her. She seemed genuinely perplexed at why it was considerably harder for her daughter to be able to afford her own place. "Everyone who wanted their home value to increase got what they wanted; housing is more expensive now because you closed the door behind you" was not the response she wanted.

I similarly recall being at a Q&A with a state politician in front of an audience of high school students. He was asked a question about affordability of higher education, and gave some self-righteous up-by-your-bootstraps answer about having waited tables to put himself through school. He didn't seem willing to grapple with the idea that if you want that to be achievable then state school tuition can't increase faster than wages for multiple decades.

Re: Maybe treating housing as an investment was a mistake

#337

Post by pixelesque » Mon, Mar 06, 2023, 6:09 PM UTC

gwright wrote: post #282

kspacewalk2 wrote: post #225

Earlier quoted context omitted.

The standard in Canada, for example, is a 25 year mortgage which you renew every 5 years (fixed or variable, your choice).

Could you clarify what you mean by "renew"? That sounds a mortgage with rates that are reset every five years, which doesn't sound like "fixed" to me.

If it's the same as in the UK, Australia and NZ, then the rates are "fixed" for sub-durations within the overall length of the mortgage/home loan, and at the end of the sub-duration, you negotiate what the "fixed" rate is for the next sub-duration with the bank / mortgage lender.

So for a twenty year "fixed" mortgage, you could end up splitting that into "fixed" rate chunks of 3 years, 3 years, 5 years, 3 years, 1 year, 3 years, years, 2 years.

So the rate is "fixed" for what's often called the "fixed period" (sub-duration), giving you a bit of stability, but over the longer term of the overall mortgage, things can track interest rates more generally as you renew the rate.

Re: Maybe treating housing as an investment was a mistake

#338

Post by czbond » Mon, Mar 06, 2023, 6:09 PM UTC

pcthrowaway wrote: post #274

czbond wrote: post #57

Earlier quoted context omitted.

I mean... that's life. What schools should teach is not just "here is a career that matches you're skills" - but more so, "if you choose this career, these are the most probable outcomes and life paths you'll end up in" If AI takes engineering, medical, and law work away from those professionals - they too could have spent many hours to learn, to then earn little. Every human has worth, but we all value the type of w…

Medical and Legal are 2 of the last professions that are likely to get automated. Lawyers are entirely composed of people who can legislate away the threat of AI practicing law (taking their jobs) And robots aren't known for their bedside manner yet. Also, there's a lot of liability in practicing medicine, which companies would probably be unwise to take on

Counter argument:

Law AI will be used for case defense prep, argument creation, research, analysis (essentially what law graduates and non-partner style attorneys do) as cost savings / ROI enhancement. Attorneys will have to specialize in mostly customer facing / court facing roles. This will cut the staff needed to perform those duties.

Real Law AI change will have to be consumer driven.

Medical AI.... with so much malpractice & liability, AI will reduce those risks for practicioners, increase ROI to practiciioners (less payments to insurance), and also require back office practicioners to become more customer facing. Maybe instead of 10 radiologists, you can use 1.

Medical AI will be used on low tier ailments (eg: urgent care headaches, etc) to help nurses see more cases, etc - initially replacing the low end work. Doctors can then have a more normal schedule, but feed a collective AI model to where 1 doctor can then oversee 50...200 cases. Those models will first be rolled out to developing countries until a generation of doctors in the US are dwindled except in emergency care situations.

Re: Maybe treating housing as an investment was a mistake

#339

Post by nemo44x » Mon, Mar 06, 2023, 6:09 PM UTC

Miraste wrote: post #319

nemo44x wrote: post #262

Earlier quoted context omitted.

Buy a "starter house" and begin to build equity. It's how people have always done it. You buy a really small house that isn't in the most desirable location and start making payments into it. Down the road you have built equity and you can sell your starter home and buy a nicer, larger house. You maybe have some family to support then and need more room. But you see young people renting for 15 years in expensive plac…

This is completely ignoring the increase in house prices, unless by "not the most desirable location" you mean "move to the middle of Kansas." The fact is, in many areas, buying any house at all is not feasible for the vast majority of young adults.

> This is completely ignoring the increase in house prices

Guess what, the small and lower cost place you bought 10 years ago went up in price too. So you have equity and you've been in the rising market.

> The fact is, in many areas, buying any house at all is not feasible for the vast majority of young adults.

100% untrue. Buying a house in the place they feel they deserve to live is. You can buy a home that is a 30m commute by train or bus to NYC for <= $400k.

Re: Maybe treating housing as an investment was a mistake

#340

Post by lotsofpulp » Mon, Mar 06, 2023, 6:09 PM UTC

jackson1442 wrote: post #260

kongolongo wrote: post #214

Earlier quoted context omitted.

I don't think that necessarily is a a bad thing. Just because someone can theoretically afford a mortgage payment now its pretty difficult to predict say 5+ years out whether or not that steady job will hold, especially if they're young and have a short credit history. The down payment adds a cushion for that risk. There's less inherent risk to renting, you're looking at a commitment of 6 months to a max of maybe 2 y…

My rent for a 1 bed, 1 bath apartment is higher than the mortgage on a family member's 4 bed, 3 bath. _That's_ the issue: homeowners are putting less money into an investment vehicle while renters are burning even more money. If rent actually reflected the value received versus owning a home I'd be less opposed to it.

*In some places.