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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

#791

Post by gwright »

hindsightbias wrote: post #477
gwright wrote: post #373

Earlier quoted context omitted.

I'm not so sure. There is a Planet Money episode that talks about the effect the digital spreadsheet had on accounting employment: > Thanks to spreadsheets, there are 400,000 fewer accounting clerks than in 1980, but 600,000 more regular accountants. Might something like GPT-6 cause employment to shift to higher value job responsibilities? https://www.npr.org/sections/money/2015/02/25/389027988/epis...

Developers are really dumb wanting to optimize code development.

This seems like a pretty limited viewpoint. We could all be coding in assembler still but generally we find value in using something higher level. Does that make us all dumb?

Re: Maybe treating housing as an investment was a mistake

#792

Post by CatWChainsaw »

higgins wrote: post #55
yboris wrote: post #42

Related: Is It Better to Rent or Buy? - an interactive data visualization / calculator. https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

is there a non-paywall version of this online?

try uBlock origin (and/or uMatrix, it's still very useful even though it's out of support).

Re: Maybe treating housing as an investment was a mistake

#793

Post by avmich »

vel0city wrote: post #738
petsfed wrote: post #707

Earlier quoted context omitted.

Great, if only there were adequate jobs in those places, so we could all own homes without needing $300K annual family income. The dissonance comes from the fact that a lot of hackernews readers make apparently high incomes, but the cost of living in their areas keeps them squarely working class. The best example I can give is in the Bay Area. I lucked out with $2850/month to rent a 1400 square foot house in San Lean…

Ever thought about maybe not living in California? You don't need to be on the West Coast to have a tech job.

This is the thought which comes around often.

The problem is, for an intellectual, it's important to live in an environment rich with mental talent. Bay Area is the intellectual capital of the world, and while Einstein could maintain his patent clerkship and have famous physicists visit him in Bern (http://norvig.com/performance-review.html) for the lesser minds in another era settling on another place is a loss.

Re: Maybe treating housing as an investment was a mistake

#794

Post by findthewords »

kitsunesoba wrote: post #162
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 too went for a down payment below 20% (somewhere closer to 5%) because saving up a full 20% would've been daunting to say the least, and as such pay PMI. Still a better deal than renting by a large margin, and the feeling that the cash being put into payments is going towards owning something rather than being set aflame is nice. That said I agree with the sibling comments that 20% down payments shouldn't be as out…

We can take a look at the St. Louis Fed "Fred" database take a look at historical affordability of 20 % down payment. Let's divide two numbers, a and b to get a ratio of yearly median wage divided by median house price, from 1980 to 2023. [1]

a) Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over

b) Median Sales Price of Houses Sold for the United States

We see that the a/b ratio was 0.25 in 1980, and has declined to 0.05 today.

Therefore, a 20 % down payment in 1980 would equal to a 4 % down payment today. Conversely, a 20 % down payment on a house in 2023 (median wage, median house) is equal to a (25/5)*20 % = 100 % down payment in 1980!

[1] https://fred.stlouisfed.org/series/LES1252881600Q#0

Re: Maybe treating housing as an investment was a mistake

#795

Post by CatWChainsaw »

mikebenfield wrote: post #16

I honestly don't understand why this wasn't always obvious. A good investment is one that increases in value (aka cost) dramatically. Dramatic increases in the cost of housing might have negative consequences. What part of this requires deep insight to see?

The part where making money is so intoxicating, I assume.

Re: Maybe treating housing as an investment was a mistake

#796

Post by pksebben »

mywittyname wrote: post #517
redmorphium wrote: post #290

Earlier quoted context omitted.

You do pay tax on that. However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.

> This is the step-up in basis and is key to building generational wealth in the US. Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny. Property taxes are a much more significant form of taxation than capital gains. And w…

capital gains ought to be taxed like regular income. it's insane that we cut breaks for wealth generation that requires no effort, and is scalable

Re: Maybe treating housing as an investment was a mistake

#797

Post by thunkshift1 »

nojvek wrote: post #681
crisdux wrote: post #374

In my metro, the median listing price for a home just peaked. Driven by low supply, high demand - stemming from a variety of factors. I've made competitive offers on many homes, only to be beaten by all cash offers or people putting more cash down for an appraisal gap. I get angry when I think about neighboring properties that sold for 50% less only 3 years ago, financed at 2.5% interest rates - while I must make a d…

Even on a software eng salary in Seattle area, housing 40m away from city took many many years of saving to afford downpayment. As we were saving, the price went up faster than we could meet 20%. The rents also went up. It feel like the bar kept on moving faster than we could catch up. This was 5 years ago. At current >1M prices, that would not be possible. 2 bedroom rents in Bellevue are > $2500/month. Kind of nuts.

Why the insistence on 20% down? Avoiding pmi is not worth the upfront cash

Re: Maybe treating housing as an investment was a mistake

#798

Post by selimthegrim »

avmich wrote: post #793
vel0city wrote: post #738

Earlier quoted context omitted.

Ever thought about maybe not living in California? You don't need to be on the West Coast to have a tech job.

This is the thought which comes around often. The problem is, for an intellectual, it's important to live in an environment rich with mental talent. Bay Area is the intellectual capital of the world, and while Einstein could maintain his patent clerkship and have famous physicists visit him in Bern ( http://norvig.com/performance-review.html ) for the lesser minds in another era settling on another place is a loss.

Yes, because all universities in the US are in 5 places only.

Re: Maybe treating housing as an investment was a mistake

#799

Post by s1artibartfast »

yawnr wrote: post #778
s1artibartfast wrote: post #741

Earlier quoted context omitted.

What exactly seems to be the problem or concern? With 300k income you should be able to save a 200k/20% down payment in a year, especially if you have 6 figures already. With todays rates you looking at 70k/year mortgage and <25% of your income.

What…? 300K post taxes is basically 150K, the are probably paying 60K+ in rent and another 30+ in other basic cost of living expenses.

If you take your numbers at face value and don't try to cut costs, that is still 60k savings per year and would take 2 years instead of 1 to hit a down payment.

If you take the mortgage interest tax deduction, you will be spending about 35k/yr less on taxes and have more disposable income relative than renting at 60k/yr rent VS (70k mortgage - 35k less taxes).

If two years is too long for the road map, you can rent a room in Palo Alto for 15k/yr or a 1Br apartment for 30k/yr.

If you are paying a 50% tax rate, I would also look at tax avoidance strategies. Maxing out the 401k and HSAs to get that down. Each person can always borrow 50k back from the 401 account to put toward the down payment.

Re: Maybe treating housing as an investment was a mistake

#800

Post by housewrecking »

dheera wrote: post #122
sclarisse wrote: post #90

Earlier quoted context omitted.

Who exactly is being “shafted” by occupying $100,000 worth of house/land, that has not otherwise been paid for, for $216 a month? That’s a great rate.

No, that's not a great rate. It's only "$100K worth" because some other rich bums have collectively occupied and bought multiple houses that they don't live in and increased the price of land, AND lobbied for no more housing to be built to artifically keep the market price high. They treat housing as an investment, rather than a dwelling, which is exactly what's being discussed here. It's ridiculous that 99%+ of peop…

This simply doesn’t make sense without $0 materials and $0 labor (ideally robotic). Like it’s so far outside the realm of possible why even bother writing it?
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