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Maybe treating housing as an investment was a mistake

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Re: Maybe treating housing as an investment was a mistake

#341

Post by davidw »

spaniard89277 wrote: post #130
pradn wrote: post #25

It's practically impossible for US society to get out of treating housing as an investment. Americans believe in home ownership as evidence of prudence (hard work + savings), acumen (housing always goes up so it's smart to buy a house!), and sense of security and achievement. These ideas aren't going to change any time soon. That's the ideological component. Home-owners also protect their investments because they're…

[flagged]

Before you go smashing things, you could do some of the basics like electing pro-housing people, show up at public hearings to say 'yes!' to housing, write letters to the editor and all that kind of thing.

It's pretty effective.

Re: Maybe treating housing as an investment was a mistake

#342

Post by bumby »

nemo44x wrote: post #262
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…

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 also, IMO, part of the problem. As you “move up” more and more undiversified wealth is tied up in your illiquid “investment” leading to overly protectionist policies.

Imagine if 70% of Americans invested their wealth in, I dunno, IBM. Don’t you think that’s going to incentivize some crony policies?

Re: Maybe treating housing as an investment was a mistake

#343

Post by jalk »

actionablefiber wrote: post #163
SoftTalker wrote: post #113

Earlier quoted context omitted.

That’s normal. I bought my first house in the early 1990s. Saving the down payment was tough. I lived in a real shithole apartment, anything nice and the rent ate up too much of my cash flow. And I I had to pay PMI, but the monthly payment was still cheaper than rent.

> I bought my first house in the early 1990s. Saving the down payment was tough. Compare housing prices since 1990 vs. wage growth over the same period. For the overwhelming majority of people entering the workforce today, there is no way to realistically save for a down payment unless you forego saving for anything else - no 401k, no IRA, no emergency fund, no car, no family.

Don't forget that the interest rate was around 10% in the early 1990ies

Re: Maybe treating housing as an investment was a mistake

#344

Post by ascagnel_ »

bmitc wrote: post #223
hinkley wrote: post #75

Earlier quoted context omitted.

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My property taxes are about a third of my total payment every month, where the other two thirds are the actual mortgage. The property taxes are over 50% of what my total rent was before I got a house, which was not low. I'm happy with my town's management, who seems to use their budget quite well, but property taxes can really get you. I think taxes should be increased on those with investment homes, second homes, ma…

Does your local government provide a breakdown of property taxes? If they do, it's well worth checking, because it can become one of those things where you don't like the total amount, but you find each element of it to be reasonable.

Just looking at my latest report on my property tax bill (which was about $3k USD for 2022):

- about 45% of the amount went to local city administration, which includes civic services like police, fire, etc.; the city had a nearly balanced budget for the year (- about 55% of the amount went to the local school board (who are directly voted on by the city's populace and can directly levy property taxes) for teachers, administrators, building maintenance, etc.; the school board did not have a balanced budget on account of bond issues for new construction in anticipation of ongoing new housing construction

- 3% went to the local library (whose board is partially appointed by the mayor and partially self-selected), which had a small budget surplus

Re: Maybe treating housing as an investment was a mistake

#345

Post by dcre »

gurumeditations wrote: post #329
nineplay wrote: post #268

Earlier quoted context omitted.

People aren't paid by how hard they work, they're paid by how much money they generate and how hard they are to replace. A head chef might be hard to replace but popular bars and restaurants are not, as we saw during Covid. They have often been replaced by people deciding to save money and eat at home. Your cognitive dissonance isn't unusual but I think it does a disservice to our ability to have productive discussio…

They’re talking about how it is ridiculous that nothing but pure luck and circumstance of a screwed up housing market/system means they ended up with a sweet deal with affordable quality housing while their friend is forced to deal with living in a closet for much higher prices despite working hard.

Generous of you to explain.

Re: Maybe treating housing as an investment was a mistake

#346

Post by gautamdivgi »

pradn wrote: post #25

It's practically impossible for US society to get out of treating housing as an investment. Americans believe in home ownership as evidence of prudence (hard work + savings), acumen (housing always goes up so it's smart to buy a house!), and sense of security and achievement. These ideas aren't going to change any time soon. That's the ideological component. Home-owners also protect their investments because they're…

School districts are connected to housing. As long as schools are “locally funded”, you will always have a rush for houses in the better schools.

The problem with housing is lack of public transport as well. You could get houses farther away from the city. But the lack it public transport makes commutes terrible.

If you want a great school district things get really pricey. But if you’re single or don’t have kids I’m not sure if you want to pay the taxes.

More than anything if we need to improve housing I would focus on public transport more than anything else.

Re: Maybe treating housing as an investment was a mistake

#347

Post by greenie_beans »

nineplay wrote: post #268
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…

People aren't paid by how hard they work, they're paid by how much money they generate and how hard they are to replace. A head chef might be hard to replace but popular bars and restaurants are not, as we saw during Covid. They have often been replaced by people deciding to save money and eat at home. Your cognitive dissonance isn't unusual but I think it does a disservice to our ability to have productive discussio…

this is true, but it doesn't make it right.

Re: Maybe treating housing as an investment was a mistake

#348

Post by nimos »

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.

Basically correct - fixed is fixed over the 5 years, variable changes within those 5 years.

Re: Maybe treating housing as an investment was a mistake

#349

Post by orangepurple »

mortehu wrote: post #283
highwaylights wrote: post #140

Earlier quoted context omitted.

This astonishes me about the US real estate market and is something I was only educated to on HN in the last week or so. I had absolutely no idea that 30 year fixed mortgages were not only widely available but the common standard there.

I just love this quote from Sid Verma: "A lot of Americans are bragging that in their country they can get a fixed mortgage for 30 years. But it's worth remembering that for cultural and historic reasons, a lot of Europeans choose to reject socialism." https://twitter.com/_SidVerma/status/1575185906218442752?s=2... Note that the mortgages aren't even fixed rate, since you can replace them with a lower rate mortgage i…

Insignificant penalty?! Maybe if all you think about is your monthly payment and not the total payment amount over time.

You should check the amortization schedule of a typical 30 year fixed rate loan. You are paying nearly nothing but interest for about 10 years, THEN you start paying down the principal balance significantly more. The first ten years you are basically renting your property from the bank. When you refinance the property the amortization schedule starts all over again where you are barely paying down your principal balance. The banks always need their cut before you are allowed to build equity.

Re: Maybe treating housing as an investment was a mistake

#350

Post by Miraste »

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.

"Buying small" is often no longer possible due to the insane increase in housing cost relative to wages, making that advice out of touch. Going on to blame this on the youth and their nightlives doesn't exactly reverse this impression.
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