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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

#831

Post by angarg12 »

vore wrote: post #643
korroziya wrote: post #620

Earlier quoted context omitted.

Most working class people die with savings below five figures. You should re-evaluate how good you're doing. Of course, if you live in California or New York, you're basically broke, since the cost of living in those states is designed to keep people poor. But that's why people left those two states in droves over the last few years.

I don't think the parent post was punching down on working class people, but rather making the point that if housing is unaffordable for even someone with a 300k household income, it is truly catastrophic for people on the average wage.

Thank you for this comment, in case someone misunderstood my original post.

I'm from a working class family myself. My parents were factory workers, and they managed to buy a new 4 bed apartment in a new part of town and raise 3 children.

And yet I don't feel I'm doing materially better than my parents at my age. I definitely don't feel upper middle class even if my income suggest so. As you point out I can't imagine how people with more average incomes get by.

Re: Maybe treating housing as an investment was a mistake

#832

Post by nickpinkston »

If you want to make an impact to housing affordability, I'd ask you to consider getting involved in the YIMBY movement.

I joined the board of YIMBY Action who lead the fight for housing affordability in CA and across the US, and I did so because I see the change this movement can bring, and we're making some major gains throughout the US.

Even just signing up to get the emails or a modest donation is a huge help!

They also have a great Slack for all things housing.

https://yimbyaction.org/

Re: Maybe treating housing as an investment was a mistake

#833

Post by jahewson »

Nemo_bis wrote: post #746
marcus_holmes wrote: post #640

I love this, but it missed out one factor: the banks. Mortgages before the 80's were tied to your income, and for most households that was a single income. House prices couldn't rise beyond a fairly low point because no-one could get a mortgage for them. Then in the 90's this broke two ways: most households had 2 incomes as the norm became that married women also worked, and the banks started giving mortgages on much…

Hence in many countries in Europe, e.g. in the Nordics, there's one simple way to gradually reduce prices: reduce the supply of mortgages for more expensive housing. The state backstops most mortgages, but by the same mechanism (or with the help of the banking regulator) also sets the rules on how to give them. When prices get too hot, the regulators simply decrease, or refuse to increase, the nominal amount of the m…

The more expensive housing in the US is famous for all-cash transactions so I don't think this works.

Re: Maybe treating housing as an investment was a mistake

#834

Post by s1artibartfast »

silisili wrote: post #822
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.

300k isn't 300k, as we all know. Probably want to drop 40k in 401k, maybe some in an HSA, probably paying for health insurance. Then the Fed and potentially state/city want their share, which is about a third if you're lucky, closer to half if you're not. Then you're paying outrageous rents, transportation/parking costs, etc. It's easy for me to believe that a family making 300k in Seattle could be living paycheck to…

I believe that anyone at any income can be living paycheck to paycheck or even growing their debt.

However, having lived through it, I think more of the challenge is prioritization and sticker shock for high earners, opposed to financial impossibility. For example, you are allowed to take a year off contributing to your 401k to buy a house if it is a higher priority to you, or simply borrow the down payment from the 401k. Smart people often get bogged down in opportunity costs and wanting it all.

Re: Maybe treating housing as an investment was a mistake

#835

Post by kitsunesoba »

findthewords wrote: post #794
kitsunesoba wrote: post #162

Earlier quoted context omitted.

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…

Wow, that's brutal. Not much more can be said.

Re: Maybe treating housing as an investment was a mistake

#836

Post by throwway120385 »

kongolongo wrote: post #214
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 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…

The real risk with renting to a person is if they refuse to pay and refuse to leave. Most places you still have to let them live there for several months while you go through the eviction process. And in retaliation they can destroy your house.

Re: Maybe treating housing as an investment was a mistake

#837

Post by tchaffee »

angarg12 wrote: post #551
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…

> I spend an inordinate amount of mental energy calculating how we can jump into the property ladder as quickly and safely as possible

You buy a cheap house far away from where you work, and rent it to someone. Let them pay your mortgage and before you know it, you've got enough equity to put towards another house. Rinse and repeat.

Re: Maybe treating housing as an investment was a mistake

#838

Post by nathants »

whether or not housing should be an investment, it is. legislation and culture have grown around this idea for decades. sometimes the only way to win is actually to play the game.

the nice part of housing being and investment is that you can live in it.

you wouldn’t treat your index funds like a pet, so don’t treat your house like one either.

buy houses that are newish to avoid maintenance. take out a heloc immediately just in case you need cash later. sell as soon as you max out the tax free profit on a home sale.

if you work remote, be open to moving around. compare new housing in dallas vs austin as an example. it’s like that everywhere. look in the town over, the state over, and in random locations too.

Re: Maybe treating housing as an investment was a mistake

#839

Post by missedthecue »

lbotos wrote: post #100
joshocar wrote: post #79

Earlier quoted context omitted.

In general, chefs, and anyone who works in the kitchen, are severally underpaid for the skill and amount of work the job takes. It's long hours in a hot, cramped, very high stress environment for peanuts. Not to mention the terrible hours. I have a very brief stint in the food industry when I was a kid and it was enough for me to say I would never do it as a career.

Is them being underpaid not a function of buyers not willing to pay more for the goods? I'm not under the impression that most restaurateurs are "raking it in" staff be damned. Sure, at the ultra high end, yes, but for most restaurants a chef pay is function of the market, right?

I agree. It's already $60 minimum for two people to eat out in the US. What's it going to be in order for everyone to have "fair" wages? $50 a plate for hamburgers?
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