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

Re: Maybe treating housing as an investment was a mistake

#551

Post by angarg12 » Mon, Mar 06, 2023, 6:54 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…

I'm a new immigrant to the US, and housing is my single biggest worry together with my work visa.

Our household income is north of 300k, but housing still seems unaffordable. It might sound like whining, but we only achieve this level of income recently, so our lifelong savings are in the low 6 figures. We got no assets or property abroad, and no family that can help us to get in the property ladder.

Even old, basic houses in our suburbs outside town go for ~$1M. I spend an inordinate amount of mental energy calculating how we can jump into the property ladder as quickly and safely as possible. My current plan involves saving for a few years and dump a good chunk of cash into a down payment; it doesn't seem we could ever afford a property otherwise.

I wonder how property prices affect "the american dream". It's baffling to me that I'm so worried about housing while making a top ~5% income.

Re: Maybe treating housing as an investment was a mistake

#552

Post by gambiting » Mon, Mar 06, 2023, 6:54 PM UTC

llbeansandrice wrote: post #530

gambiting wrote: post #455

Earlier quoted context omitted.

Sure but obviously that number needs some common sense, right. To make a clearly ridiculous example - if you were making 100k a month and paying 25k for rent you wouldn't be poor in any possible meaning of that word. If you bring home 6k a month after taxes, and after rent you're left with 4.5k, I'd also argue that's not "barely making ends meet". That leaves a very comfortable breathing room that is unimaginable lux…

Now add on: - All forms of insurance - saving for retirement - Rising food costs - Any Healthcare expenses - Car costs - Child care - Subscriptions (phone, internet) - Utilities All in Seattle

If you can't fit all of that in four and a half thousand dollars then I don't know what to tell you. I'll repeat myself - someone who has 4.5k left after paying rent is not struggling to make ends meet by any definition of the word, in Seattle or elsewhere.

Re: Maybe treating housing as an investment was a mistake

#553

Post by carlosjobim » Mon, Mar 06, 2023, 6:54 PM UTC

anonymouskimmer wrote: post #359

carlosjobim wrote: post #299

Earlier quoted context omitted.

The restaurateurs might be raking it if they own the real estate. If you pay rent for your location you are probably scraping by, and whipping your staff to bring in the money for your landlord. A chef's pay is a function of the market, and that's why everybody is exiting the industry right now. Head chefs and restaurant owners are used to decades of low wages and think it's quite insulting that anybody would dare as…

I thought a new means of breaking out on your own are food trucks. A quick search shows that they often net 6 figures, though I don't know if that includes the salaries of the help.

To me that's a whole different game, since the fact of being in a truck greatly limits the quality and variety of food and service you can offer. But I think it can be a good business, with less costs. The main problem with food trucks is that you can't sell alcoholic beverages, so you'll lose the most important part of your income.

Edit: To add to my previous point: A person who can be a successful food truck entrepreneur would probably make a much better return investing his skill and money into a non-food venture. Food trucks are expensive, for the price you need to pay to get that business going, you could buy the equipment needed to start a more lucrative business.

Re: Maybe treating housing as an investment was a mistake

#554

Post by loldk » Mon, Mar 06, 2023, 6:54 PM UTC

acabal wrote: post #460

Indeed, and the article is right in saying there isn't really a way out. Humanity paints itself into these kinds of corners fairly frequently over the course of history: entrenched systems where many suffer, but where too many powerful people benefit for it to be able to change. Traditionally, the solution has been violent revolution. That's really the only way to (for example) tell 66% of Americans that their bigges…

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Re: Maybe treating housing as an investment was a mistake

#555

Post by holyknight » Mon, Mar 06, 2023, 6:55 PM UTC

The main problem is inflation, and the second problem is that most houses are owned by people (boomers and silent gen people) who already have a lot of wealth (not millionares or anything but they got the opportunity to buy cheap and save for longer time) so there is no real incentive to make housing prices go down and make the net worth of that demographic plummet (you must also remember that almost all politicians belong to that same demographic). So basically us young and poor people are financing the wealth and comfort of the older generation through inflation.

Re: Maybe treating housing as an investment was a mistake

#556

Post by amyamyamy2 » Mon, Mar 06, 2023, 6:55 PM UTC

ericmay wrote: post #501

lukeschlather wrote: post #470

Earlier quoted context omitted.

In a well-functioning city, a head chef should be able to comfortably afford to rent a 2-3 bedroom apartment within walking distance of their restaurant. They should not be spending 1/3rd of their income and only getting a studio out of it.

You can, just move out of Capitol Hill in Seattle which is one of the most desirable areas in one of the most desirable cities located in one of the most desirable geographies in the wealthiest country on earth. This place looks nice! https://www.zillow.com/homedetails/2742-Lincoln-St-NE-Minnea...

Most people are not willing to move away from all of their family, friends, and career. Software engineers are uniquely privileged in that we can work remotely, many, many other careers cannot do that

Re: Maybe treating housing as an investment was a mistake

#557

Post by mzmzmzm » Mon, Mar 06, 2023, 6:55 PM UTC

ericmay wrote: post #501

lukeschlather wrote: post #470

Earlier quoted context omitted.

In a well-functioning city, a head chef should be able to comfortably afford to rent a 2-3 bedroom apartment within walking distance of their restaurant. They should not be spending 1/3rd of their income and only getting a studio out of it.

You can, just move out of Capitol Hill in Seattle which is one of the most desirable areas in one of the most desirable cities located in one of the most desirable geographies in the wealthiest country on earth. This place looks nice! https://www.zillow.com/homedetails/2742-Lincoln-St-NE-Minnea...

The studio is worth it if you're walking to your restaurant 6 or 7 days a week and checking out other neighborhood hot spots. If you're commuting to an office tower a few days and on Zoom or hiking the rest, it's not. And of course if you make it easier or harder to drive to the office (and consequently worse or better to get around on foot) the prices would shift to reflect that, a good example of how the crisis Andre Cooper is writing about hamstrings unrelated things like transportation policy.

Re: Maybe treating housing as an investment was a mistake

#558

Post by snapetom » Mon, Mar 06, 2023, 6:55 PM UTC

mjr00 wrote: post #10

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on. This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their ho…

And it's not just the home you own. For decades now, the tax and financial system, at least in the US, has incentivized being a landlord even if you are below middle class. Everything you put into a rental is deductible, low down payments, rising rents made it very, very easy to at least break even against a mortgage payment.

Re: Maybe treating housing as an investment was a mistake

#559

Post by hahla » Mon, Mar 06, 2023, 6:56 PM UTC

llbeansandrice wrote: post #530

gambiting wrote: post #455

Earlier quoted context omitted.

Sure but obviously that number needs some common sense, right. To make a clearly ridiculous example - if you were making 100k a month and paying 25k for rent you wouldn't be poor in any possible meaning of that word. If you bring home 6k a month after taxes, and after rent you're left with 4.5k, I'd also argue that's not "barely making ends meet". That leaves a very comfortable breathing room that is unimaginable lux…

Now add on: - All forms of insurance - saving for retirement - Rising food costs - Any Healthcare expenses - Car costs - Child care - Subscriptions (phone, internet) - Utilities All in Seattle

Most of these costs (saving for retirement, insurance, subscriptions, car) would be consistent across the US and is not unique to Seattle. $100k in a very expensive city is not much by any means, however what's more concerning is the costs you outlined are consistent and rising for even those living in LCOL or making even less than $100k.

Re: Maybe treating housing as an investment was a mistake

#560

Post by whateveracct » Mon, Mar 06, 2023, 6:56 PM UTC

gambiting wrote: post #455

Robotbeat wrote: post #442

Earlier quoted context omitted.

“House poor” was typically having to pay at least 25% of your take-home income on housing.

Sure but obviously that number needs some common sense, right. To make a clearly ridiculous example - if you were making 100k a month and paying 25k for rent you wouldn't be poor in any possible meaning of that word. If you bring home 6k a month after taxes, and after rent you're left with 4.5k, I'd also argue that's not "barely making ends meet". That leaves a very comfortable breathing room that is unimaginable lux…

$90k salary and $2k rent was my situation when I moved to Seattle many years ago. It definitely was comfortable.

My wife was able to also get comparable work and that money wasn't at all needed to help make ends meet, so it went right into student loans and those got paid right quick.

I moved from the Midwest and people warned me about the CoL etc. But you just gross more even if the apartment etc is a bigger percent. And cash is king especially if you have debt or just like buying nice things or both.