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

Re: Maybe treating housing as an investment was a mistake

#991

Post by pradn » Wed, Mar 08, 2023, 4:29 PM UTC

gautamdivgi wrote: post #346

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…

School districts being connected to housing, and therefore to class, is one of the other features of America that seem permanent. Schools have become more segregated since an integration peak in the 70s. This issue too, has deep ideological roots: the right of parents to provide for their children, to raise them the way they wish. We're the only major country that does this.

Re: Maybe treating housing as an investment was a mistake

#992

Post by pradn » Wed, Mar 08, 2023, 4:31 PM UTC

owenmarshall wrote: post #241

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…

I'd agree, it's a structural problem. The mortgage interest deduction is my favorite example. It is a hugely regressive tax break which has been targeted across the political spectrum. Seriously, when was the last time you can remember the Cato Institute agreeing with Barack Obama on tax policy? But I can't see how it ever goes away: it would definitely increase taxes on voters, so what politician signs up for it? It…

The SALT tax cap in the Trump-era tax reform was both progressive (less state subsidies for property taxes on high-value homes), and hit Democratic-leaning states harder (since they tend to have higher home prices). So movement toward a less regressive taxing regime. But I don't expect an across-the-board reduction in the mortgage interest deduction. The same ideological components to home ownership are at play. And construction is a very large employer as well.

Re: Maybe treating housing as an investment was a mistake

#993

Post by pradn » Wed, Mar 08, 2023, 4:49 PM UTC

HDThoreaun wrote: post #507

majani wrote: post #406

Earlier quoted context omitted.

Also, aesthetically, you have to admit, most YIMBY cities are ugly AF compared to NIMBY cities. Aesthetics are very important to human beings; people love pretty things.

I don't admit. I think high density cities look much nicer than suburbia.

It really depends on urban density. I'm only familiar with big cities in the USA.

There's few new buildings in the West Village in Manhattan, with beautiful red-brick townhomes that fetch multi-millions. And new ones tend to adhere to some of the features of existing buildings. On the other hand, Seattle has some exquisite old homes with stunning curb appeal - and a whole lot of plain old looking buildings that were probably the cheaply made ones in the 1950s. So age is only one factor.

The new construction in SLU or the UDistrict in Seattle or Williamsburg in NYC is all cookie-cutter boxy panels - not particularly pleasing to most I think. I can't think of new parts of any town I've been to in the US I've loved. Happy to hear if anyone has any though!

Most would agree Berlin isn't as pretty as Cologne.

Re: Maybe treating housing as an investment was a mistake

#994

Post by falcolas » Wed, Mar 08, 2023, 6:21 PM UTC

latchkey wrote: post #967

falcolas wrote: post #232

Earlier quoted context omitted.

Nothing's wrong with it, but it's a bit orthogonal as viewing the property itself as an investment. Instead it's acting as guarantee against other investments.

That is the whole point though. People tend to stop at layer 1, when they are sitting on something that has value for other things as well.

I think one problem with this is that you paying banks twice (mortgage, home equity loans) for that money from your own property. And at almost 10% APR each.

It's really hard to reliably make over 10% on an investment.

Re: Maybe treating housing as an investment was a mistake

#995

Post by vel0city » Wed, Mar 08, 2023, 6:51 PM UTC

petsfed wrote: post #816

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.

I was living happily in Wyoming when my employer said "move to California, or find another job" which, if you don't know the Wyoming economy, translated to "leave Wyoming for us, leave Wyoming for somebody else, or go work in a coal mine".

I get that. Wyoming sure can be beautiful and full of certain opportunities but embedded software isn't often one of those.

There are markets other than California and Wyoming though. I'm sure you're aware, but its always good to compare compensation versus living expenses. Almost every time I've been given a chance to move it meant I'd be trading my lifestyle in a negative direction (from my perspective) and smaller savings in the end even if the salary was over 2x my current. Everyone has their own priorities in life though, I hope you find a way to achieve yours.

Good luck in life friend.

Re: Maybe treating housing as an investment was a mistake

#996

Post by albertopv » Thu, Mar 09, 2023, 7:21 AM UTC

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…

Dude, italian SWE, you are already much richer than I will ever hope to bw.

Re: Maybe treating housing as an investment was a mistake

#997

Post by mikestaub » Thu, Mar 09, 2023, 8:08 PM UTC

dfxm12 wrote: post #58

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…

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…

There is a huge opportunity for a DAO to buy, fractionalize, insure, and create a rent-to-own program. Real estate investors can be disintermediated.

Re: Maybe treating housing as an investment was a mistake

#998

Post by 3pm » Fri, Mar 10, 2023, 1:58 AM UTC

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.

No, it is basically 215K post taxes. Taxes are marginal. 300K couple faces ~28% _effective_ tax rate in California. Even marginal tax rate is far from the 50% you claim - it is ~36%. They will have to be making 2M or higher in order to be paying 50% effective rate.

Re: Maybe treating housing as an investment was a mistake

#999

Post by lnsru » Fri, Mar 10, 2023, 7:49 PM UTC

misiti3780 wrote: post #443

lnsru wrote: post #36

Earlier quoted context omitted.

Close to my numbers. My old rent plus monthly savings are close to monthly bank payment for my home. My real consumption is dropping to zero since I want to get rid of mortgage as quick as I can.

why do you want to pay off your mortgage so fast?

I don’t like it. I don’t know future interest rate.

Re: Maybe treating housing as an investment was a mistake

#1000

Post by marginalien » Fri, Mar 10, 2023, 9:00 PM UTC

Interesting read. However, the author misses some important motivations why people choose to buy instead of renting. For example, I don‘t expect it to generate much value for myself, but for my kids, as they will inherit it one day. Imagine not having to choose between renting or buying a home in the first place. That’s the start I want to provide my kids with. I thinks it’s a good one.

The other reason why I chose to buy is self-discipline. Yes, renting typically leaves you with some money at the end of the month that you can use to invest in the stock market - which oftentimes yields more benefits in the long run over buying (and financing) a home. But that’s just theory. In practice, many people (and I’m including myself here) will use the extra money not to invest in stocks etc. but to consume at a higher level - to buy the more expensive car, to take the more expensive trip, eat out for dinner a lot etc. Knowing that I rather chose to buy and finance a home because that way I am forced to spend my money in something that even my kids will benefit from rather than consuming it.